Q4 2024 Fluence Energy Inc Earnings Call
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Unknown Executive: Good day and welcome to Fluence Energy's fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Good day and welcome to <unk> Energy's fourth quarter 2024 earnings conference call. At this time, all participants are in listen only mode.
After the Speakers' presentation there'll be a question and answer session instructions will be given at that time.
Lexington May: I would like to turn the call over to Lex May, Vice President of Investor Relations.
As a reminder, this call maybe recorded.
Speaker Change: I would like to turn the call over to <unk>, Vice President of Investor Relations.
Unknown Executive: Please go ahead. Thank you.
Speaker Change: Go ahead.
Speaker Change: Thank you.
Lexington May: Good morning, and welcome to Fluence Energy's fourth quarter 2024 earnings conference call. A copy of our earnings presentation, press release, and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures are posted on the investor relations section of our website at fluenceenergy.com.
Speaker Change: Morning, and welcome to fluids Energy's fourth quarter 2024 earnings conference call a copy of our earnings presentation press release, and supplementary metric sheet covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP.
Financial measures are posted on the Investor Relations section of our website at Fluence energy Dot com.
Lexington May: Joining me this morning on our call are Julien Nebreda, our President and Chief Executive Officer. Ahmed Pasha, Chief Financial Officer and Rebecca Boll, our Chief Products Officer.
Speaker Change: Joining me this morning on our call are Hooley, and Nebraska, our president and Chief Executive Officer.
Speaker Change: That Pasha, our Chief Financial Officer, and Rebecca ball, our Chief products Officer.
Lexington May: During the course of this call, Fluence Management may make certain forward-looking statements regarding various matters relating to our business and company that are not historical facts. Such statements are based upon the current expectations and certain assumptions and are, therefore, subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information.
Speaker Change: During the course of this call management may make certain forward looking statements regarding various matters relating to our business and company that are not historical facts.
Speaker Change: Such statements are based upon the current expectations and certain assumptions and are therefore subject to certain risks and uncertainties.
Speaker Change: Many factors could cause actual results to differ materially.
Please refer to our SEC filings for our forward looking statements and for more information regarding certain risks and uncertainties that could impact our future results.
Speaker Change: You are cautioned to not place undue reliance on these forward looking statements, which speak only as of today.
Speaker Change: Also please note that the company undertakes no duty to update or revise forward looking statements for new information.
Lexington May: This call will also reference non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of these non-gap measures to the most comparable gap measure is available in our earnings materials on the company's investor relations website.
Speaker Change: This call will also reference non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of these non-GAAP measures to the most comparable GAAP measure is available in our earnings materials on the company's Investor Relations website.
Lexington May: Following our prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak on this call, please limit yourself to one initial question and one follow-up. Thank you very much.
Following our prepared comments, we will conduct a question and answer session with our team.
Speaker Change: During this time to give more participants an opportunity to speak on this call. Please limit yourself to one initial question and one follow up.
Julien Nebreda: I'll now turn the call over to Julien. Thank you, Lex. I would like to send a warm welcome to our investors, analysts, and employees who are participating on today's call.
Speaker Change: Thank you very much I'll now turn the call over to Julio.
Julio: Thank you Alex I would like to stay in that one world come to our investors analysts employees, who are participating on today's call.
Julien Nebreda: I will review our Q4 and full-year results briefly and then provide an update on our business and the strong growth prospect we continue to Ahmed will then go into more detail on our financial results and outcomes. Beginning of slide four, we deliver strong financial performance, more specific. We reported a profit for fiscal year 24, our first ever on a full year basis, and generated free cash. These results demonstrate that we can generate strong profitable growth at scale. We also met or exceeded our outlook in all key metrics. More specifically, we generated a record of approximately 2.7 billion in revenue with a 12.6% gross margin.
Julio: I will review, our Q4 and full year results briefly and then provide an update on our basis on the throne growth prospects, we continue to see.
Amit will then go into more detail on our financial results and outlook.
Amit: Beginning on slide four we delivered strong financial performance more specifically we.
Amit: We reported a profit for fiscal year 'twenty for our first ever on a full year basis and generated free cash flow.
Amit: These results demonstrate that we can generate strong profitable growth at scale.
Amit: We also met or exceeded our outlook in all key metrics more specifically, we generated a record of approximately $2 7 billion in revenue with a 12.6% gross margin.
Julien Nebreda: earned 78 million dollars of adjusted EBITDA, which is almost 140 million dollars higher than fiscal year 23. An $18 million better than the midpoint of our expectations. Second, we make good progress in demonstrating the value of our services and digital business. as we achieve our goal of increasing our annual recurring revenue by 80% to 800 million. We continue to make strides in our digital software, and it is getting acknowledged by the market. Earlier this month, Fluence was named the top integrator on the Guidehouse Inside Leaderboard for energy storage software. The recognition highlights our exceptional technological development and strong partner relationships.
Amit: And $78 million of adjusted EBITDA, which is almost $140 million higher than fiscal year 'twenty three.
Amit: And $18 million or better than the midpoint of our expectations.
Amit: Second we made good progress in demonstrating the value of our services and digital businesses as we achieve our goal of increase in our annual recurring revenue by 80% to $800 million.
Amit: We continue to make strides in our digital software and it is getting that knowledge by their mark.
Amit: Earlier this month, Florida was named the top integrator on the guide house inside Leaderboards for energy storage software.
Amit: The recognition highlights our exceptional exceptional technological development, our strong partner relationships.
Julien Nebreda: Sir. To support our future growth, we continue to add to our backlog with another strong quarter of more than a billion dollars of order in. Our backlogs have grown this year by 55% to $4.5 billion, providing strong visibility to future revenue.
Sure.
Amit: To support our future growth, we continue to add to our backlog with another strong quarter of more than a billion dollars of order intake.
Amit: Our backlogs have grown this year by 55% to $4 5 billion, providing strong visibility to future revenue.
Julien Nebreda: And finally, to our proactive approach to margin expansion and working capital management, we generated $72 million of free cash flow for the year and ended the quarter with $580 million of Turning to slide five, I would like to provide an overview of the market growth of energy storage. which continues to surpass expectations and why we do not expect the growth to decline in light of the recent changes in the U.S. government administration. First. After a long period of stagnation, we're seeing electricity demand growth globally, which is driven by rapid economic development, the growing deployment of data centers, and the electrification of sectors such as transportation, commercial building, and selected industrial processes.
Amit: And finally.
Amit: Our proactive approach to margin expansion and working capital management, we generated 72 million of free cash flow for the year.
Amit: We ended the quarter avoids $518 million of cash.
Amit: Turning to slide five I would like to provide an overview of the market growth of energy storage.
Which continues to surpass expectations and why we do not expect the growth to decline in light of the recent changes in the U S Government administration.
Amit: First.
After a long period of stagnation, we're seeing electricity demand growth globally, which is driven by the rapid economic development. They grow in deployment of data centers and the electrification of sectors, such as transportation commercial building and selected industrial processes.
Julien Nebreda: As an example, the U.S. electricity demand is projected to rise 15 to 20 percent in the next decade, and we're seeing similar trends in other countries. Renewable energy has been the fastest growing source of power generation for a significant time already. Current growth projections will put renewables at about 50% of global electricity production in 2016. This rapid adoption reflects the attractive levelized cost of renewable energy and the faster deployment time for renewable energy as compared to gas and oil. For most markets, renewal energy paired with BESS is the fastest and most economical way to meet electricity.
As an example, the U S electricity demand is projected to rise 15% to 20% in the next decade, and we're seeing similar trends in other countries.
Amit: Second ring.
Amit: Renewable energy has been the fastest growing source of power generation for a significant time already.
Core and growth projections will put renewals at about 50% of global electricity production in 2000 and a third.
Amit: Rapid adoption reflects the attractive Larry life cost of renewable energy.
Amit: And the faster deployment time for renewal antitrust compared to gas and nuclear.
For most markets renewal energy bear with Beth is the fastest and most economical way to meet electricity needs.
Julien Nebreda: Sir, the energy storage industry has been benefiting from declining lithium carbonate prices. which declined by almost 50% year over year. The lower input cost has reduced the cost of battery storage system by 40%. These more favorable price levels have resulted in a 140% increase over the last 12 months in our volume of orders from existing and new customers, as their projects became more attractive.
Amit: Sir.
Amit: The energy storage industry has been benefiting from declining in lithium carbonate prices, which declined by almost by almost 50% year over year.
Amit: The lower input cost has reduced the cost of battery storage system by 40%.
Amit: These more favorable price level have resulted in a 140% increase over the last 12 months in our volume of orders from existing and new customers as their projects became more attractive.
Julien Nebreda: Turning to slide six. Customer demand for energy storage is reflected in our current backlog of $4.5 billion. the highest level in our history. It is important to note that during the last two years, we have experienced the highest interest rates in three days. And despite that, our backlog has doubled since 2020. This higher volume sets a good foundation for future growth in our recurring services and digital.
Amit: Turning to slide six.
Amit: Customer demand for energy storage is reflected in our current backlog of $4 5 billion.
Amit: The highest level in our history.
Amit: It is important to note that during the last two years, we have experienced the highest interest rate in three decades.
Amit: And despite that our backlog has doubled since 2022.
These higher volume sets a good foundation for future growth in our recurring services and digital basis.
Julien Nebreda: Turning to slide 7. The strong growth prospects for energy storage are also reflected in our pie. As a reminder, our pipeline is a rolling 24-month view, thus giving us confidence in our ability to continue our growth trajectory. I am pleased to share that we have increased our pipeline by $500 million from the end of last quarter to approximately $21 billion. This is particularly impressive considering that during the quarter we converted $1.2 billion into value. To provide more perspective, our pipeline has increased 60% from this time last year. which reflects significant growth prospects for energy storage growth.
Amit: Turning to slide seven.
Amit: The strong growth prospects for energy storage are also reflected in our pipeline.
Amit: As a reminder, our pipeline we've had a rolling 24 month view, thus, giving us confidence in our ability to continue our growth trajectory.
Amit: I am pleased to share that we have increased our pipeline by $500 million from the end of last quarter to approximately $21 billion correct.
Amit: This is particularly impressive considering that during the quarter, we converted at $1 $2 billion into backlog.
Amit: To provide more perspective, our pipeline has increased 50% from this time last year, which reflects significant growth prospects for any storage globally.
Julien Nebreda: We continue to see a very robust international market, which will further diversify our geographic mix in the coming years. Nearly half of our $21 billion pipeline is in the U.S. market. and the rest in the international market, with Germany, Australia, Canada and Chile representing the bulk.
We continue to see a very robust international market, which will further diversify our geographic mix in the coming year.
Amit: Nearly half of our $21 billion pipeline is in the U S market.
Amit: And the rest in the international market, with Germany, Australia, Canada, and Chile, representing the bulk of it.
Julien Nebreda: Turning to slide 8. Speed and innovation are key elements of our strategy for growth. To that point, we have been the first to bring innovation to the U.S. by offering domestic content battery technology to the U.S. storage market and to establish a robust U.S. supply chain. Even before the Inflation Reduction Act, or IRA, we recognized the need for a U.S.-based supply chain and begun localizing our operations to reduce reliance on Chinese. As shown on slide 8, this U.S. supply chain is essential to delivering our domestic content offers. Today, we can offer a 100% non-Chinese product supported by six U.S.
Amit: Turning to slide eight.
Amit: Speed and innovation are key elements of our strategy for growth.
Amit: To that point, we have been the first to bring innovation to the U S by offering domestic content battery technology to the U S storage market.
Amit: And to establish a robust U S supply chain.
Amit: Even before the inflation reduction act or IRA we recognize the need for a U S based supply chains and began localizing our operations to reduce reliance on Chinese imports.
As shown on slide eight this U S supply chain is essential to the leering, our domestic content offering.
Amit: Today, we can offer 100% non Chinese probe supported by six U S production facilities owned and operated by our supply chain partners.
Julien Nebreda: production facilities owned and operated by our supply chain partners. Five of which are located in states that were won by President Trump and benefit from the IRA manufacturing. The development of these domestic supply chains has created thousands of associated jobs and strengthened our commitment to the U.S. energy.
Five of which are located in states that were won by President Trump and benefit from the IRS manufacturing incentives.
Amit: Development of these domestic supply change has created thousands of associated jobs and strengthened our commitment to the U S energy security.
Julien Nebreda: Even though we believe that a full repeal of the IRA is unlikely, we have positioned Fluence to be successful both under the current regime or under a new regime defined by HART. I'm pleased to announce that in September, we've begun producing our first U.S.-made battery modules at our Utah facility. This model production line is equipped with cutting-edge robotics and automation technology, enhancing both our production efficiency and product quality. Additionally, this month we'll receive our UL 1973 certification at the module level. Signifying that our modules meet the highest standards for safety, performance, and quality. The certification is a significant milestone.
Even though we believe that a full repeal of the IRA is unlikely we are position fluids to be successful both under the current regime or on the new regime defined by Howard.
Amit: I am pleased to announce that in September we began brother, you'll send our first U S made by through modules that are used the facility.
Amit: This module production line is equipped with cutting edge robotics and automation technology.
Amit: Hadn't seen both our production efficiency and product quality.
Amit: Additionally, this month will receive our <unk> 1973 certification at the module level.
Signifying that our molecules meet the highest and therefore safety performance and what.
Amit: The certification is a significant milestone reinforcing our commitment to alere built reliable top tier energy storage products.
Julien Nebreda: reinforcing our commitment to delivering this reliable top tier energy storage product.
Julien Nebreda: Moving to slide 9. As you may recall, in the summer of 2023, we reached an agreement with the ASC to secure two dedicated battery cell production lines at their facility in Tennessee. This U.S.-based cell production provides us with a distinct competitive advantage. allowing us to offer American-made products to our customers. a unique capability among our people. The first line started producing its initial battery cells as part of the commissioning process and is expected to begin ramping up production at the end of the year. As battery cells are produced, they will be transported to our dedicated contract manufacturing facility in Utah.
Amit: Moving to slide nine.
Amit: As you may recall in the summer of 2023, we reached an agreement with ASC.
Amit: To secure two dedicated battery cell production lines at their facility in Tennessee.
Amit: This U S based cell production provides us with a distinct competitive advantage, allowing us to offer American made products to our customers.
Amit: Our unique capability among our peers.
Amit: The first line startup brother, Youll see little niche about 30 sales as part of the commissioning process and is expected to begin ramping up production at the end of the year.
Amit: As battery sales are produce they will be transported to our dedicated contract manufacturing facility in Utah.
Julien Nebreda: Here, we will produce our US-made battery modules and integrate them with other components to create finished products ready for deployment at customers. We anticipate a gradual ramp up in module production over the coming quarters as we scale this capability. which is a key step in fulfilling our commitment to a robust, localized supply chain. We have recently made the strategic decision to upgrade the second cell production. to manufacture the 530 amp hour cells instead of the 305 amp hour. By taking the strategic step to invest in manufacturing the 530 cell, we will be among the first to bring this technology to the U.S.
Amit: Here, we will produce our U S made battery modules and integrate them with our components to create finish probes ready for deployment at customer sites.
Amit: We anticipate a gradual ramp up in module production over the coming quarters as we scale this capability.
Amit: Which is a key step in fulfilling our commitment to a robust localized supply chain.
We have recently made the strategic decision to upgrade the second cell production line.
<unk> mono factor there 500 theory.
Amit: Our cells instead of the three of five of our sales.
Amit: By taking the strategic steps to invest in mono a factor in the 530 sale, we will be among the first to bring this technology to the U S market.
Julien Nebreda: market. which provides superior density, resulting in slower degradation and longer battery life, thus providing significant value to our planet. Furthermore, these enhancements double our U.S. manufacturing capacity, which enables us to meet our entire near-term volume expectations in the United States with qualified domestic content products.
Which provides superior.
Amit: Resulting in lower degradation and longer battery life.
Amit: Providing significant value to our cost.
Amit: Furthermore, these enhancements double our USL manufacturing capacity, which enables us to meet our entire near term volume expectations in the United States with qualified domestic content products.
Julien Nebreda: Additionally, it secures our exclusivity for a potential third line to support our long-term growth of Finally, I would like to discuss the impacts of any potential increase in tariffs on Chinese values. Today, imported batteries pay a duty of 7.5%. And this is set to increase to 25% in 2020. If the tariff is raised even further, or ahead of the current schedule, it could cause some short-term disruptions in the market while the markets digest the new price. However, we have taken proactive measures to mitigate the potential impact on our U.S. products that are planning to utilize foreign cells in 2021.
Amit: Additionally, it secures our exclusivity for a potential third line to support our long term growth objectives.
Amit: Finally, I would like to discuss the impacts of any potential increase in tariffs on Chinese VAT.
Amit: Today imported routers pay a duty of seven 5% and this is set to increase to 25% in 2026.
Amit: If the tariff is raise even further or ahead of the corus schedule. It could cause some short term disruptions in the market while the markets Digest the new price. However, we have taken proactive measures to mitigate the potential impact on our U S products that are planning to utilize.
Amit: <unk> sales in 2025.
Julien Nebreda: which include bringing the foreign sales into the country sooner than. We have also secured contracts with cell manufacturers that provides a cost sharing of tariffs. Those further mitigating are. Our view is that in the long run, higher tariffs should benefit U.S.-based storage providers, such as giving us a competitive edge over other players that lack domestic manufacturing. I am confident that in a high tariff scenario, our domestic content strategy will be able to deliver significant value to our customers and shareholders. Those will remain steadfast in our ability to grow and thrive in this new political environment, regardless of direction.
Amit: Which include bringing these foreign sales into the countries sooner than planned.
Amit: We have also secured contracts with settlement of factors that provides a cost sharing of tariff increases thus.
Amit: Thus further mitigating our risks.
Amit: Our view is that in the long run higher tariffs will benefit U S based storage providers.
Amit: Florida.
Amit: Given our competitive edge over other players that lack domestic manufacturing capabilities.
Amit: I am confident that in the high tariff as an either.
Amit: Our domestic contain strategy, we'll be able to deliver significant value to our customers and shareholders.
Amit: Thus, we remain steadfast in our ability to grow and thrive in this new political environment, regardless of tariff policy.
Julien Nebreda: We solidified our business model for potential policy shift. And we believe we are best positioned to capture the growing demand for resilient, cost-effective energy storage.
Amit: We solidified our business model for potential policy shift and we believe we are best position to capture the growing demand for resilient cost effective energy storage solutions.
Julien Nebreda: This concludes my prepared remarks.
Amit: This concludes my prepared remarks, I will now turn the call over to Amit.
Ahmed Pasha: I will now turn the call over to Ahmed. Thank you, Julien, and good morning, everyone. Today, I will review our fourth quarter and full year 2024 financial results and our outlook for fiscal 2020. Overall, as Julien mentioned, we are pleased with our financial performance, which reflects significant improvement across all dimensions of our business. We achieved strong growth in both revenue and profitability while continuing to invest in maintaining our leadership position and delivering substantial value to our customers and investors.
Amit: Thank you Julian and good morning, everyone. Today, I will review, our fourth quarter and full year 2024 financial results and our outlook for fiscal 2025 overall.
Overall as William mentioned, we are pleased with our financial performance, which reflect significant improvement across all dimensions of our business. We achieved strong growth in both revenue and profitability, while continuing to invest in maintaining our leadership position and delivering substantial value to our customers and.
Amit: Investors.
Ahmed Pasha: So let me begin by summarizing my thoughts on the four.
Speaker Change: So let me begin by summarizing my thoughts on the fourth quarter.
Ahmed Pasha: Turning to slide 11. We generated our highest ever quarterly revenue of $1.2 billion, which was approximately 82% higher than the same quarter last year, and 154% improvement from Q3. Furthermore, we generated $159 million of adjusted gross profit, representing a gross profit margin of approximately 13%. This was our fifth consecutive quarter of double-digit gross profit margin. The result for the fourth quarter reflects our laser focus on project execution, which has enabled us to achieve project milestones on time and on budget.
Turning to slide 11.
Speaker Change: We generated our highest ever quarterly revenue of $1 2 billion, which was approximately 82% higher than the same quarter last year and 154% improvement from Q3.
Furthermore, we generated $159 million of adjusted gross profit representing a gross profit margin of approximately 13%.
Speaker Change: This was our fifth consecutive quarter of double digit gross profit margin.
Speaker Change: The results for the fourth quarter.
Our laser focus on project execution, which has enabled us to achieve project milestones on time and on budget.
Ahmed Pasha: After operating expenses, we generated a record $87 million of adjusted EBITDA in the Turning to slide 12.
Speaker Change: After operating expenses, we generated a record $87 million of adjusted EBITDA in the fourth quarter.
Speaker Change: Turning to slide 12, now I would like to take a moment to discuss our full year performance for fiscal 2024.
Ahmed Pasha: Now I would like to take a moment to discuss our full year performance for fiscal 2025. We delivered approximately $2.7 billion of revenue, representing 22% growth from fiscal 23. We continue to build on our strong presence in the Americas and also saw revenue accelerate in Europe and Asia. With growth across the world, Europe and Asia now represent 40% of our business versus 30% in the last two years. In terms of gross profit margin, we exceeded our goal by a percentage point, yielding an adjusted gross profit margin of 12.9%. These strong results helped us to deliver 78 million in adjusted EBITDA, which is well in excess of our guidance range of 55 to 65 million dollars.
Speaker Change: We delivered approximately $2 7 billion of revenue representing 22% growth from fiscal 'twenty three.
Speaker Change: We continue to build on our strong presence in the Americas and also saw revenue accelerate in Europe and Asia.
Speaker Change: With growth across the World Europe, and Asia, now represents 40% of our business versus 30% in the last two years.
In terms of gross profit margin, we exceeded our goal by a percentage point, yielding an adjusted gross profit margin of 12, 9%.
These strong results helped us to deliver a $78 million in adjusted EBITDA, which is well in excess of our guidance range of $55 million to $65 million.
Ahmed Pasha: This outperformance is largely driven by our strong execution that enabled us to come in under budget on select projects, as we benefited from key initiatives that leverage our scale and improve structural In fact, as you can see on slide 13, over time, we have steadily increased our gross profit margin, which had been negative until 2022. This continued improvement demonstrates our focused approach to better drive quality, cost, and execution productivity across the value chain.
Speaker Change: This outperformance is largely driven by our strong execution that enabled us to come in under budget on select projects as we benefited from key initiatives that leverage our scale and improved structural costs.
Speaker Change: In fact as you can see on slide 13.
Speaker Change: Our time, we have steadily increased our gross profit margin, which has been negative until 2022.
Speaker Change: This continued improvement demonstrates our focused approach to better drive quality cost and execution productivity across the value chain.
Ahmed Pasha: Turning to slide 14, I would like to highlight that in fiscal 24, we generated positive free cash flow for the first time as a public company. More specifically, we delivered $72 million of free cash flow versus negative $115 million last year. This was largely driven by significantly improved profitability as we saw a $140 million positive swing in adjusted EBITDA versus last year. Given the capital-wide nature of our business model, growth in free cash flow should track growth in EBITDA, excluding any changes in working capital. Free cash flow will be an important source of funding for the long-term growth of our business.
Speaker Change: Turning to slide 14, I would like to highlight that in fiscal 'twenty four we generated positive free cash flow for the first time as a public company more specifically, we delivered $72 million of free cash flow versus negative $115 million last year.
This was largely driven by a significantly improved profitability as we saw a $140 million positive swing in adjusted EBITDA versus last year.
Speaker Change: Given the capital light nature of our business model growth in free cash flow should track growth in EBITDA, excluding any changes in working capital.
Speaker Change: Free cash flow will be an important source of funding for the long term growth of our business.
Ahmed Pasha: Turning to slide 15, we are initiating revenue guidance for fiscal 25 with a midpoint of $4 billion. This is in line with our prior expectations and represents 50% growth from fiscal 24. We feel confident about our ability to achieve this target, which is primarily driven by three factors. First, approximately two-third of our 2025 revenue is currently in our backlog, consistent with where we were at this point last year. Second, we are in advanced and exclusive negotiations on a number of projects totaling $1.5 billion in value. And third, we have an increasing number of opportunities illustrated by our growing pipeline of projects across the world, as Julien mentioned.
Turning to slide 15, we are initiating revenue guidance for fiscal 2005, with a midpoint of $4 billion.
Speaker Change: This is in line with our prior expectations and represents 50% growth from fiscal 'twenty four we feel confident about our ability to achieve this target, which is primarily driven by three factors first.
Speaker Change: Approximately two third of our 2025 revenue is currently in our backlog consistent with where we were at this point last year.
Speaker Change: Second we are in advanced and exclusive negotiations on a number of projects totaling $1 5 billion in value.
Speaker Change: And third we have an increasing number of opportunities illustrated by our growing pipeline of projects across the world as Julian mentioned.
Ahmed Pasha: For fiscal 25, we expect an adjusted gross profit margin of between 10 and 15 percent. As a result, we expect to deliver an adjusted EBITDA midpoint of $180 million. And for ARR, we continue to see traction in our platform and expect to end the fiscal year with $145 million of ARR. Additionally, from a timing perspective and consistent with last year, we expect Fiscal 25 revenue to be back-end loaded, with approximately 20% of annual revenue in the first half and the remaining 80% in the second half of fiscal year. Due to the relatively flat nature of our fixed cost versus our quarterly revenue profile, we expect adjusted EBITDA to be negative in the first half of the year, consistent with last year.
Speaker Change: For fiscal 'twenty five we expect an adjusted gross profit margin of between 10 and 15%.
Speaker Change: As a result, we expect to deliver an adjusted EBITDA midpoint of $180 million.
Speaker Change: And for <unk>, we continue to see traction in our platform and expect to end the fiscal year, we had $145 million of IRR.
Speaker Change: Additionally, from a timing perspective, and consistent with last year, we expect fiscal 'twenty five revenue to be back end loaded with approximately 20% of annual revenue in the first half and the remaining 80% in the second half of fiscal year.
Speaker Change: Due to relatively flat nature of our fixed cost versus our quarterly revenue profile, we expect adjusted EBITDA to be negative in the first half of the year consistent with last year.
Ahmed Pasha: Finally, looking ahead to Fiscal 26, we continue to expect strong growth, as Julien discussed. Using our Fiscal 25 revenue guidance midpoint of $4 billion as a base, we expect our growth to be in line with energy storage market as a whole, or approximately 30% plus annually for Fiscal 26 and beyond.
Speaker Change: Finally, looking ahead to fiscal 2006, we continue to expect strong growth as <unk> discussed using our fiscal quantify revenue guidance midpoint of $4 billion as a base, we expect our growth to be in line with energy storage market as a whole are approximately 30% plus annual.
Speaker Change: For fiscal 2006 and beyond.
Ahmed Pasha: Turning to slide 16 with an update on our liquidity. As you can see, we finished the year with $963 million in total liquidity, roughly half of which is cash on hand, and the rest is availability in our credit facility. Our liquidity reflects improving profitability and our new revolver we signed earlier this year, which further enhances our solid liquidity profile and financial flexibility.
Speaker Change: Turning to slide 16, with an update on our liquidity as you can see we finished the year with $963 million in total liquidity roughly half of which is cash on hand, and the rest is availability in our credit facilities.
Speaker Change: Liquidity reflects improving profitability and our new revolver, we signed earlier this year, which further enhances our solid liquidity profile and financial flexibility.
Ahmed Pasha: Turning to slide 17, in terms of our 2025 liquidity outlook, we see the need for approximately 300 million of additional working capital to support the significant future growth that we are projecting. This is split roughly evenly between, first, working capital required to support substantial growth in revenue in 2025 and beyond, and second, working capital needed to invest in our domestic manufacturing capability to enable 100% of our U.S. demand to qualify for domestic contracts. For this opportunity, we have several options available to us, including our existing cash, which will be augmented by future pre-cash flow, borrowing capacity under our revolver, and balance sheet capacity for either debt or debt-like securities, as we currently have no debt.
Speaker Change: Turning to slide 17 in terms of our 2025 liquidity outlook, we see the need for approximately $300 million of additional working capital to support the significant future growth that we are projecting.
Speaker Change: This is split roughly evenly between first working capital required to support substantial growth in revenue in 2025, and beyond and second working capital needed to invest in our domestic manufacturing capability to enable 100% of our U S demand to qualify if our domestic corn.
Speaker Change: Correct.
To fund this opportunity we have several options available to us, including our existing cash which will be augmented by future free cash flow borrowing capacity under our revolver.
Speaker Change: And balance sheet capacity for either debt or debt securities as we currently have no debt.
Ahmed Pasha: Overall, we believe that we have flexibility with respect to funding that will enable us to capitalize on enormous opportunity in this business, cementing ourselves as a global leader in battery storage. As we consider these funding options and the timing, we will be guided by our commitment to maintain strong liquidity and optimal capital structure.
Speaker Change: Overall, we believe that we have flexibility with respect to funding that will enable us to capitalize on enormous opportunity in this business cementing ourselves as a global leader in battery storage as.
Speaker Change: As we consider these funding options and the timing, we will be guided by our commitment to maintain strong liquidity and optimal capital structure.
Ahmed Pasha: In summary, we are pleased with our current year performance and entering fiscal 25 with momentum. With backlog and development pipeline at record levels, we are well-positioned to deliver continued profitable topics.
In summary, we are pleased with our current year performance and entering fiscal 'twenty five with momentum.
Speaker Change: With backlog and development pipeline at record levels, we are well positioned to deliver continued profitable topline.
Julien Nebreda: With that, let me turn the call back to Julien for his closing remarks. Thank you, Ahmed. Turning to slide 18 and in conclusion, I want to emphasize the key takeaway from this quarter's First, our Q4 performance demonstrates our ability to deliver profitable growth. This was an important test for us as we generated 45% of our fiscal year revenue in the final quarter of the year. U.S. demand for battery storage is not going to be impacted by the change in political environment. We're seeing real load growth for the first time in days. and Renewables Plus Storage is one of the fastest and most economic ways to serve the Third, we have a clear competitive advantage as we have established a U.S.
Speaker Change: With that let me turn the call back to <unk> for his closing remarks.
Speaker Change: Thank you Amit.
Turning to slide 18, and in conclusion I want to emphasize the key takeaway from this quarter's results.
Speaker Change: First our Q4 performance demonstrates our ability to deliver profitable growth.
Speaker Change: This was an important test for us as we generated 45% of our fiscal year revenue in the final quarter of the year.
Speaker Change: <unk>.
Speaker Change: USA mindful about their storage is not going to be impacted by the changing political environment, we're seeing real load growth for the first time in decades, and renewables plus storage is one of the fastest and most economic ways to serve this load.
Speaker Change: Sarah we have a clear competitive advantage as we have established a U S supply chains that will enable us to meet U S demand to domestic sources of products and.
Julien Nebreda: supply chain that will enable us to meet U.S. demand through domestic sources of production. and Ford. Our strategy of rapid innovation allows us to meet our growing customer needs with solutions that are resilient to a changing world. Provide our customers with a secure route to value and the profit returns our shareholders.
Speaker Change: Four.
Speaker Change: Our strategy of rapid innovation allows us to meet our growing customer needs with solutions that are resilient to a changing world.
Provide our customers with a secured route to value.
And the profit returns our shareholders.
Unknown Executive: With that, I would like to open up the call for.
With that I would like to open up the call for questions.
Unknown Executive: Thank you. If you'd like to ask a question, please press star 1 1. If your question has been answered and you'd like to remove yourself from the queue, please press star 1 1 again.
Speaker Change: Thank you.
Speaker Change: You'd like to ask a question. Please press star one one.
If your question has been answered and we'd like to remove yourself from the queue. Please press star one again.
George Gianarikas: Our first question comes from George Gianarikas with Canaccord Genuity, your line is open. Good morning, George. How are you? Doing great. Good morning, everyone. Thank you for taking my question.
Speaker Change: Our first question comes from George <unk> with Canaccord Genuity. Your line is open.
Good morning, Josh how are you.
Speaker Change: Great Good morning, everyone.
Speaker Change: Thank you for taking my questions.
Julien Nebreda: Maybe just to start off with your guidance for fiscal 25 and your backlog coverage, given all the changes. In Washington, in the back end loaded nature of your revenue guidance, can you just sort of discuss how cancelable or solid your backlog is just to give some sort of confidence that you can reach 2080 split going into next year. Thank you, George. So as we said, we have roughly six, you know, two thirds of our revenue got midpoint guidance in our backlog. And we are roughly one point, you know, we are around 1.5 billion in contract.
Speaker Change: Maybe just to start off with your guidance for fiscal 'twenty, five and your backlog coverage given all the changes.
Speaker Change: And in Washington, and the backend loaded nature of your revenue guidance can you just wanted to discuss how.
Speaker Change: Cancel our solid your backlog is just to give some sort of confidence that you can reach this 2080 split going into next year. Thank you.
George: Thank you George.
Speaker Change: As we said we have roughly.
Speaker Change: Two thirds of our revenue got midpoint guidance in our backlog already.
Speaker Change: And we are roughly one point.
Speaker Change: Around $1 5 billion in contracts that were in late stages of negotiating terms or we are.
Julien Nebreda: that were in late stages of negotiations, or we are, you know, selected by the customer for for the contract that roughly that 1.5 billion in more than half will be revenue that will be covered in 20 that will convert into revenue. into 25. So we feel very confident of our midpoint guidance range. You know, we have some wood to chop, there's some more contracts that we need to sign, but we feel very good with where we are.
Speaker Change: Selected by the customer for the contract that roughly that $1 5 billion more than half will be revenue that will recover in 'twenty that will convert into revenue in 'twenty.
Speaker Change: 25, so we feel very confident of our midpoint guidance range, we have some wood to chop there some more contracts that will need to sign but we feel very good with where we are today.
Julien Nebreda: terms of our backlog, as you know, we make we take a very, very strict view of our backlog. And we really looked at, you know, in order to have things considered into our backlog, they need to be things that are signed and that there is a, that we believe we can, you know, that there is a real commitment from our customers. to take those projects on time and deliver. So they're binding deals. So we feel very confident that we have seen very little to none. You know, we have seen delays, as you know, as we have talked last year, but we have not seen real delays.
In terms of our backlog as you know we would make would take a very very strict view of a backlog situation then we'd really look at.
In order to have seen considering door bigler, they need to be things that are signed and that there is that we.
Speaker Change: We believe we can there.
Speaker Change: There is a real commitment from our customers to take those projects on time and deliver so their binding deals.
Speaker Change: So we feel very confident that we have seen very little to none in delays as you know as we have talked last year, but we have not seen real.
Julien Nebreda: in cancellations of projects on the backlog once we signed it. Essentially, because we take a very, very strict view. As I always said, there are contracts we have signed that are still subject to certain conditions that are in pipeline. They're not in backlog because they're not at the stage where they can be considered at that point. So we feel very confident about the 66% coverage in our backlog. The contracts were in late stage of negotiation or will be selected that will represent around $1.5 billion of backlog or around $800 million of revenue for the year 2025.
Speaker Change: Okay.
Speaker Change: Cancellations of projects coming back on the backlog once we signed that essentially because we take a very various review as I always said there are contracts. We have signed that are still subject to certain conditions that are in pipeline. They are not in backlog because they are not at this stage, where they can be considered at that point. So we feel very confident about the 66.
Speaker Change: Coverage in our backlog the contracts we're in late stage of negotiation or we've been selected that will represent.
Speaker Change: Representing around one 5 billion of backlog by around $800 million of revenue for the year 425, and then a small portion of our need to cover we really we will be able to cover from now to March of next year.
George Gianarikas: And then a small portion we need to cover, we believe we will be able to cover. Thank you.
George Gianarikas: Maybe as a follow up, just to ask about your market share. Can you help us discern what's happening in your bake-offs, particularly as it relates maybe to Tesla or Vartzilla? How comfortable do you feel that you're maintaining your market share levels and the deals that you're winning or losing?
Thank you and maybe as a follow up just to ask about your market share can you help us discern what's happening in your bake offs, particularly as it relates to having to Tesla or of our Taylor.
Speaker Change: How comfortable do you feel that you are maintaining your market share levels in the deals that you're winning or losing thank you. Good very very good point.
Julien Nebreda: Thank you. Good. Very, very good point. We, you know, we work in front of the meter, outside of China, which is a lot of some of our players do, you know, behind the meter and CNI and some of our competitors, some of our competitors do work in China. So we have to kind of build our own view of what the time we are. But with our view of time, we see our market share sustained, you know, it moves up and down a little bit, but generally sustaining over time. We have a very competitive offering and Tesla is clearly a very important competitor.
Speaker Change: We work.
Speaker Change: In front of the meter.
Outside of China, now, which is a lot of some of our players do you know behind the meter in C&I in some of our competitors all of our competitors do work in China. So we have to kind of build our own view of what the time we are.
Speaker Change: With our view over time, we see our market share.
Speaker Change: <unk>, it moves up and down a little bit, but generally sustain it over time, we have a very competitive offering.
Speaker Change: Clearly a very important competitor or some of the Chinese have become very very aggressive as of late but generally we feel that we have a competitive offering that wins that we've been able to keep our hour.
Julien Nebreda: Some of the Chinese have become very, very aggressive as of late, but generally we feel, you know, that we have a competitive offering that wins and we've been able to keep our market Having said that. We more and more, and we try to highlight this in our presentation, in our prepared remarks. Innovation is the driver of growth. being ahead of the market and you know what we have done in the U.S. and some things we're working on to really keep the market being ahead of the market. That's a way we're going to win at the end of the day.
Speaker Change: Our market share.
Speaker Change: Having said that we.
Speaker Change: More and more and we try to highlight this in our in our.
In our presentation notes in our in our prepared remarks.
Speaker Change: Innovation is a driver of value being ahead of the market. While we have done in the U S and some things we're working on that to really keep the market being ahead of the market. That's a way we're going to win at the end of having that and ignore what the proud of having resilient supply chains that can deliver value to our customers.
Julien Nebreda: Having an innovative product, having a resilient supply chain that can deliver value to It's a competitive industry. As I tell my team all the time, I love competition, as long as I'm winning. I love it. It's great to be in a place that you're required to constantly be thinking what to do, how to do it better, and to find a route to win it. We've been very successful. We are committed to keep being continue in this range, this position.
Speaker Change: We work so.
Speaker Change: Compared to the industry.
Speaker Change: My team all the time I love competition as long as I'm waiting.
Speaker Change: I love it it's great to be in a place that you are required to constantly be thinking what to do how to do it better and to file.
That route to when we've been very successful we are committed to keep being continuing these rates these policies.
George Gianarikas: Thank you. Thank you, George.
Thank you.
Josh: Thank you Josh.
Unknown Executive: Thank you.
Brian Lee: Our next question comes from Brian Lee with Goldman Sachs and Company. Your line is Hey, Brian. Good morning. How are you? Hey, Julien. Good morning. I'm doing well. Thanks for taking the questions.
Thank you. Our next question comes from Brian Lee with Goldman Sachs <unk> Company. Your line is open.
Hey, Brian Good morning, how are you.
Brian Lee: Good morning, I'm doing well thanks.
Speaker Change: Taking the questions.
Brian Lee: I wanted to maybe follow up on George's question just on the revenue guidance you have, you know, the parameters you're providing are helpful, right, this, you know, kind of two-thirds backlog coverage, the late-stage negotiations, but I just want to kind of rewind a little bit. If you think about this time last year, you know, you had a $3 billion revenue midpoint. Some stuff didn't really play out the way you wanted in the back half of the year. So you're coming in about 10% shy of what you thought the midpoint was going to be for fiscal 24.
Speaker Change: I wanted to maybe follow up on George's question, just on the revenue guidance you have the.
Speaker Change: The parameters you are providing are helpful.
Speaker Change: Kind of two thirds backlog coverage late stage negotiations, but.
Speaker Change: I just wanted to kind of rewind a little bit if you think about this time last year.
Speaker Change: You had a $3 billion revenue mid point, some stuff didn't really play out the way you want it in the back half of the year, so you're coming in about 10% shy.
Speaker Change: Of what you thought the midpoint was going to be for fiscal 'twenty four.
Brian Lee: You're using the same kind of parameters to set the midpoint, it seems like, for 25.
Speaker Change: You're using the same kind of parameters to set the midpoint it seems like for 25 so.
Brian Lee: So can you maybe just walk us through, you know, maybe one, what happened in 24 to make you miss the initial revenue midpoint that you were expecting coming into the year? Why is that not going to repeat in 25?
Can you maybe just walk us through.
Speaker Change: Maybe one what happened in 24 to make you missed the initial revenue midpoint that you were expecting coming into the year why is that not going to repeat in 'twenty five and are there any.
Julien Nebreda: And are there any, you know, parameters in 25 that look on a year-on-year basis better than 24, where even with the same backlog coverage coming into the year, you feel even more confident about hitting the midpoint this year versus, you know, maybe not having been able to do so last year? Great. Good question. Thanks. So where are, you know, we are similar coverage and we had the last two years, no? So both in 23 and 24, it hasn't changed. Roughly two thirds by the beginning of the year. I think the difference this year is the fact that we have 1.5 billion of contracts in late stages of negotiation or what we have been selecting.
Speaker Change: Parameters in 'twenty five that look on a year on year basis, better than 24 were even with the say backlog coverage coming into the year you feel even more confident about hitting the midpoint of this year versus.
Speaker Change: Maybe not having been able to do so last year.
Speaker Change: Great. Good question. Thanks.
Speaker Change: So where are we at similar coverage we had the last two years now.
Speaker Change: Both in 'twenty, three and 'twenty four it hasnt changed roughly two thirds.
At the beginning of the year seeing the difference this year.
Speaker Change: Is the fact that we have $1 5 billion of contracted in late stages of negotiations or what we have been selected which gave us very very clear.
Julien Nebreda: which gave us, you know, very, very clear line of sight to meeting our numbers. So that's, that's all I'll tell you if I were to compare last year to this. Last year, so that's the main difference, I think, from where we are. And we have clearly a route, a very clear route to reaching our mid-time with, you know, our midpoint with projects and, you know, customers we're working on that, where we have not been selected yet, or where we have still, you know, competing somehow. But we believe we did normally a normal hit rate, we should be able to get to our midpoint.
Speaker Change: Line of sight to meeting our numbers. So that's I'll tell you if I were to compare last year to this year.
Speaker Change: Last year.
Speaker Change: So that's the main difference I think for where we are and we have clearly at route.
A clear route to reaching our mid time with our midpoint with projects on <unk>.
Speaker Change: Customers were working on that where we have not been selected yet or where we are feel compete.
Speaker Change: Competing somehow but we believe we would.
Speaker Change: Normally abnormal heat rate, we should be able to get to our midpoint constantly.
Julien Nebreda: And so that's what I would say where we are today, you know, I think that way you compare last year, as you know, what we had was a project that got delayed due to certain issues. And, you know, it could happen again. But I if you ask me where I am today, looking at the backlog, looking at the projects that we have, we're in late stages, late stage and looking at the route to meeting the midpoint, I feel very. Okay, that's helpful.
Speaker Change: So that's what I will say, where we are today I think that where you look over last year. As you know what we had was a project that got delayed due.
Speaker Change: Due to certain issues on you know.
Speaker Change: It could happen again, but I, if you ask me, where I am today looking at the backlog looking at the projects that we have we're in late stages.
Speaker Change: States are looking at a route to meeting the midpoint I feel very comfortable what maybe at the midpoint.
Speaker Change: Okay. That's helpful. And then maybe just quick follow ups. The $1 5 billion in late stage can you give us some sense of the mix breakdown is that.
Brian Lee: And then maybe just quick follow ups. The $1.5 billion in late stage, can you give us some sense of the mixed breakdown? Is that, you know, mostly US? Is that all international? And then on the close margin guided, the 10 to 15, I mean, you ended up doing 100 basis points better than the 10 to 12 from last year. Why not a tighter range?
Speaker Change: Most of the U S is that all international and then.
Speaker Change: Gross margin guidance, the 10% to 15, I mean, you ended up doing.
Speaker Change: 100 basis points better than the 10 to 12 from last year, why why do not a tighter range what's the.
Ahmed Pasha: What's the a better precision from last year versus this year where it's a wider range. Thanks, guys.
Speaker Change: Better precision from last year versus this year, where its a wider range.
Ahmed Pasha: I will let Ahmed answer that point. So so I think the mix is roughly half of that is in the US and half is in Asia. The mix of $1.5 billion. And the range for... Amanda mentioned the range was... Yeah, I think the range for the 10% I think if you look at our last year guidance, there was about 10% from the midpoint, plus minus and this year is pretty much the same. 10% plus minus from the midpoint. Well, no, I was talking more about the last year you had a 200 basis point range on gross margins.
Speaker Change: I'll, let Amit I might answer that at that point.
So I think the mix is roughly half of that is in the U S.
And.
Speaker Change: <unk> is in Asia.
Speaker Change: The mix of $1 5 billion.
Speaker Change: Okay. Okay.
Speaker Change: And the range for Amanda mentioned the range was wide yeah, I think the range far.
Speaker Change: The 10% I think if you look at our last year guidance, there was about 10% from the midpoint plus or minus in this year is pretty much the same.
Speaker Change: 10% plus minus from the midpoint.
Speaker Change: No I was talking more about last year, you had a 200 basis point range on gross margins. This year youre kind of sticking to that 10% to 15% wider range.
Ahmed Pasha: This year, you're you're kind of sticking to the 10 to 15% wider range. And this year, we earned 13%. And on midpoint, I think we are giving 10 to 15, which is consistent with what we give last time for 25. And frankly, as we are working on it, I think we still have to sign more contracts. That's why we thought it makes sense to stick to what we gave the guidance for 25 in the past. But as we move progress in the subsequent quarters, we will update you where we stand. But hopefully, you know, we can improve it.
Speaker Change: Okay.
Speaker Change: Great point and this year, we earned 13% and our mid point I think we are giving 10 to 15, which is consistent with what we gave last time for 25 and frankly as we are working on it I think we still have to sign more contracts. That's why we thought it makes sense to stick to what we give.
Speaker Change: Guidance for 45 in the past, but as we move progress in subsequent quarters, we will update you, where we stand, but hopefully we can improve it but at this point, we thought it makes sense to just.
Brian Lee: But at this point, we thought it makes sense to just stick to 10 to 15%. But this is something that frankly, is our key focus to continue to improve our performance as you have seen in the last several quarters. So that is something that is on the top of our priority list to continue to improve and that will help improve the bottom line. Okay, makes sense, guys. Appreciate it. Thanks. Thank you, Brian. Thank you.
Speaker Change: Stick to 10% to 15% but.
Speaker Change: This is something that frankly is a key focus to continue to improve.
Speaker Change: Our performance as you have seen in the last several quarters. So.
Speaker Change: That is something that is on the top of our priority list to continue to improve and that will help improve the bottom line.
Speaker Change: Okay, great. Thanks, guys I appreciate it thanks. Thank.
Speaker Change: Thank you Brad.
Dylan Nassano: Our next question comes from Dylan Nassano with Wolf Research. Your line is open. Hey good morning everyone. Good morning Dylan, how are you? doing well.
Speaker Change: Thank you. Our next question comes from Dillon Maisano with Wolfe Research. Your line is open.
Dillon Maisano: Hey, good morning, everyone.
Speaker Change: And how are you.
Dylan Nassano: So I just want to, I guess, check in on the confidence level of the $21 billion in the pipeline. Unknown Speaker Environment that we're in. Are you feeling good about those assumptions that underlie that pipeline system? Yeah, that pipeline is essentially, you know, constantly being adjusted for pricing changes. So I won't tell you that 100% it is today, but generally 95% should reflect, you know, current prices. So it reflects, you know, where we see prices today, it's reflected in the in the total value. Got it, thanks.
Speaker Change: Doing well, so I just want to.
Speaker Change: Check in on the confidence level.
Speaker Change: Of the $21 billion in the pipeline, just given kind of the deflationary pricing environment that we're in.
Speaker Change: Are you feeling good about kind of those assumptions that underlie that pipeline figure.
Speaker Change: Yes that pipeline, which essentially.
Speaker Change: Constantly being adjusted for pricing changes top I won't tell you that 100%. It is today, but generally 95% should reflect current pricing. So it reflects.
Speaker Change: Where we see prices today.
I mean in the total value of the popular so.
Speaker Change: Got it thanks, and then on the the upgrade to the 530 amp ourselves it sounds like that's a higher value product.
Julien Nebreda: And then on the upgrade to the 530 amp hour cells, it sounds like that's a higher value product. So is it fair to say this would be accretive to overall gross margins? Well, it's difficult to tell you today how much gross margin we can capture out of it. I will say that it will be within the 10 to 15 percent. But it's the most recent technology in batteries, and we have made the decision to bring the most state-of-the-art technology to the U.S. One thing that we want to prove is that you can build these things in the U.S., you can manufacture these in the U.S.
Speaker Change: Is it fair to say if this would be accretive to overall gross margins.
Speaker Change: Yes.
Speaker Change: I got to tell you today, whether how much gross margin we can capture out of it I will say that it will be within the 10% to 15%.
The most recent technology in batteries and we have made the decision to bring the most the most state of the art technology to the U S.
Speaker Change: That we have.
Speaker Change: It's something that we want our brokers that you can build these things in the U S. Duke in matter of factories and diseases.
Julien Nebreda: with the same quality, with the same precision, with the same capabilities as any other market in the world. That's kind of what we're doing. We have the people, we have the energy, we have the capabilities, the infrastructure. It can be done here as good as you can do it. That's essentially the point of bringing that technology. Whether it brings gross margin, you know, we'll see over time. Today, I will say it's within the 10. Thank you.
Speaker Change: The U S with the same quality with the same precision with the same capabilities as any other market in the world.
Speaker Change: We're trying to do.
Speaker Change: People, we have and then you will have the capabilities and infrastructure. It can be on here as good as you can do it anywhere else.
Speaker Change: And surely the point of bringing that technology.
Whether it brings gross margin.
Speaker Change: See overtime today, I'll say within that 10% to 15%.
Speaker Change: Great. That's it for me thank you.
Speaker Change: Thanks.
Ameet Thakkar: Our next question comes from Ameet Thakkar with BMO Capital Markets. Your line is open. Ameet, good morning. Thank you. Thanks for taking my question.
Speaker Change: Our next question comes from Amit <unk> with BMO capital markets. Your line is open.
Speaker Change: Hi, good morning.
Speaker Change: Thank you. Thanks for taking my question I, just wanted to kind of rewind back to I guess.
Ameet Thakkar: I just wanted to kind of rewind back to, I guess, Love, kind of the update you all gave to 2025 last quarter. I think you kind of talked about a 35 to 40% revenue growth rate off of the original 3 billion dollar kind of midpoint. The low end of the guidance range for revenues 3.6 billion is a little bit light of that or what that would imply. I know you mentioned you're not really seeing much in the way of project cancellations.
Speaker Change: And then update you on the 2025.
Speaker Change: Last quarter I think.
Speaker Change: Kind of talked about a 35% to 40% revenue growth rate off of the original $3 billion kind of midpoint.
Speaker Change: The low end of the guidance range for revenue is $3 $6 billion.
Speaker Change: A little bit light of that or what that would imply I know you mentioned, you're not really seeing much in the way of project cancellations I was just going to kind of speak to kind of break.
Ameet Thakkar: I was just going to kind of speak to kind of, like, are you having some projects that kind of slipped from last quarter to this quarter's update into fiscal year 2026 or any color around that? Thank you. I don't think, Ameet, this is Ameet, I don't think there is anything you need to read too much into. I think if last quarter, if you recall, our midpoint was $2.75 billion, but we said that we continue to expect growth from the $3 billion midpoint, 35 to 40%. And we are lending it pretty much at the same place for the guidance we gave you.
Speaker Change: Having some projects that kind of slipped from last quarter to this quarter's update.
Speaker Change: Fiscal year 2026 or.
Speaker Change: Any color around that thank you.
Speaker Change: I don't think this is.
Amit I don't think there's anything you need to read too much into I think last quarter. We if you recall, we midpoint was $2 $75 billion in but we said that we continue to expect growth from the $3 billion, maybe 35% to 40% and we are learning it pretty much at the same place with the guidance we gave you.
Ahmed Pasha: And frankly, I mean, as we discussed, you know, I mean, based on what we have signed and what we have exclusive deals that we are working on, we feel pretty good that we can achieve that threshold. So our range is now $3.6 to $4.4. And I think midpoint with $4, I think this is pretty much at the same place that we discussed last time. So feel pretty good.
Speaker Change: Frankly, I mean, as we've discussed I mean based on what we have signed and what that what we have exclusive deals that we're working on.
Speaker Change: Feel pretty good that we can achieve that threshold. So our range is now three 6% to four four and I think midpoint before I think this is pretty much at the same place that we discussed last time, so feel pretty good obviously, we as Julian mentioned, we have to work too.
Ahmed Pasha: Obviously, we, as Julien mentioned, we have to work to chop. But at the same time, I think the pipeline and exclusivity we have on the deals, we feel pretty good that we can achieve.
Speaker Change: To chop, but at the same time.
Speaker Change: The pipeline in exclusivity we have on the deals we feel pretty good that we can achieve that threshold.
Ahmed Pasha: Okay, and just one quick follow up on you mentioned kind of a neat like a $300 million kind of working capital investment for the year, you're going to be EBITDA positive, I decided to be so this year, any of you on what we should kind of assume for kind of a cash conversion off of your, your kind of your adjusted EBITDA? And is that $300 million working capital investment? Is that kind of your peak need? Or is that kind of the average investment? That is something that we need for this year. I think upfront, as I discussed, you know, I mean, for to secure our US domestic content strategy, I think to implement on that plus the working capital needs for revenues growing roughly 50%.
Speaker Change: Okay, and just one quick follow up.
Speaker Change: <unk> kind of a neat.
Speaker Change: $300 million working capital investment for the year.
Speaker Change: Youre going to be EBITDA positive by deciding resale this year.
Speaker Change: The view on what we should kind of assume for kind of a cash converted off of here.
Speaker Change: Youre kind of at your adjusted EBITDA.
Speaker Change: And is that $300 million working capital investment is that kind of a good peak need or is that kind of the average investment over the year.
Speaker Change: That is something that we need for this year I think upfront as they discuss you know what I mean.
Speaker Change: So far to secure our U S domestic.
Speaker Change: Domestic content.
Speaker Change: <unk> I think to implement on that plus the working capital needs for revenues growing roughly 50%. So cash conversion question. Yes, I think cash is we are expecting $180 million I think our free cash flow will be positive before working capital needs. Because we have as we discussed revenue is back end loaded.
Ameet Thakkar: So cash conversion question. Yes, I think cash is we are expecting $180 million. I think our free cash flow will be positive before working capital needs because we have as we discussed, you know, revenue is back unloaded. So I think net net cash flow will be positive before working capital, but the cash will be coming in mostly at the back end. Thank you. Thank you, Ameet. Thank you.
Speaker Change: So I think net net.
Speaker Change: Cash flow will be positive before working capital, but the cash will be coming in mostly at the backend.
Speaker Change: Thank you.
Speaker Change: Thank you Amit.
Christine Cho: Our next question comes from Christine Cho with Barclays. Your line is open. Good morning. How are you? Good morning. Good. How are you? Yeah, great.
Speaker Change: Thank you. Our next question comes from Christine Cho with Barclays. Your line is open.
Speaker Change: Good morning, James.
Speaker Change: Good morning, David how are you.
Speaker Change: Great.
Christine Cho: So I just have one question. You mentioned bringing in foreign cells sooner into the U.S. I'm sorry if I missed this, but is this included in your $300 million working capital needs? And then if you could also give us maybe a certain sort of idea or a ballpark percentage of how many of your U.S. conversations are actually interested in domestic cells, and have you noticed any changes since the election? Yeah, I mean, yes, the $300 million includes the acceleration of importing some batteries ahead of it. We see very, very strong demand for the domestic content offering, very, very strong.
Speaker Change: So I just have one question you mentioned, bringing in foreign itself sooner in the U S.
Speaker Change: I'm sorry, if I missed this but is this included in your 300 million working capital needs.
Speaker Change: And then if you could also give us may be certain sort of idea or a ballpark percentage of how many of your U S. Conversations are actually interested in domestic self and have you noticed any changes since the election.
Speaker Change: I mean, yes, the $300 million include the acceleration of some may not.
Speaker Change: Importantly, sunbathers ahead of it in terms, we see very very strong demand for the domestic content offering very very strong demand.
Julien Nebreda: You know, we see that, I will say that. may be out of selection, but the people that we're working with, the customers we're working are looking for this and see our offering against other peers who are offering. their what they offer as a Mexican then and they see are offering us providing more security and you know and more optionality in terms of doing it so very very strong demand hasn't really changed since the election to tell you the truth. Significantly, I will say, or at least not something that, you know, these are long, these are big projects that take time.
Speaker Change: We see that.
Speaker Change: I will say that.
Speaker Change: Maybe out of selection, but there are people that were working with our customers. We're working with are looking for weeks.
Speaker Change: See our offering against all of our all of our peers who are offering.
Speaker Change: They are what they offered us a message contained and they see our offering that's providing more security.
Speaker Change: And more optionality in terms of awareness, so very very strong demand hasnt really changed since the election to tabulate the vote.
Speaker Change: Significantly I would say or at least not something that.
Speaker Change: These are loans. These are big projects that take time I don't think we have seen either a may year may your.
Christine Cho: I don't think we have seen either a major, major, a movement since the elections. Before the elections, we did see it was clear that Trump was going to win. People, you know, saw a little bit more traffic. But after the elections, I don't think anything has significantly changed. Great, thank. Thank you, Christine. Thank you.
Speaker Change: Movement since the elections before the election, we did see us use clear that term was going to win people, so a little bit more traffic, but after the election sounds like anything that significantly change.
Speaker Change: Great. Thank you.
Speaker Change: Thank you Christine.
John Windham: Our next question comes from John Windham with UBS. Your line is open. Hey, good morning, John. Hey. Hey, good morning, Julien. I guess I'm doing good.
Speaker Change: Thank you. Our next question comes from Jon Windham with UBS. Your line is open Hey, good morning, John Hey, Hey, good morning.
I guess.
Speaker Change: I'm doing good.
John Windham: Before I get to the question, I'll say congratulations. It's been a little bit over two years, and I think slide 13 really shows the story of what you've been able to do at Fluence with improving gross margins consistently over time. So congratulations for that. Thank you very much. Yeah, no problem. It's been a fun story to follow.
Speaker Change: Before I get to the question I would say congratulations it's been a little bit over two years and I think slide 13.
Really shows the story of what <unk> been able to do at fluence with improving Chris gross margins consistently over time, so congratulations for that.
Thank you very modern.
No no problem it's been.
Speaker Change: It's been a fun story to follow.
John Windham: My question is, on the existing contracts that you have, if tariffs were applied, who bears the risk of that? Is it the customer, the battery manufacturer, or you? Does it vary on contract? Just a little bit of color on that would be very helpful. Thanks. I'll tell you. It varies. There are some where we have some deals with suppliers where we share some of the rates. We have some deals with customers. We share some of the rates. When you look at our current background, Roughly 10% of the total backlog is subject to tariff or Chinese tariff, you know, that where we will have to manage it, the Chinese.
Speaker Change: My question is on the existing contracts that you have.
Speaker Change: How would if tariffs were applied who bears the risk of that.
Speaker Change: Is it the customer the battery manufacturer you does it vary on contract if you're just a little bit of color on that would be very helpful. Thanks, I'll tell you talk E Berry.
Speaker Change: From where we are we have some deals with suppliers, where which are somewhat raise will have some deals with customers.
Speaker Change: There are some other rates when you looked at our current backlog.
Speaker Change: Roughly 10% of the total backlog is subject to tariff Chinese tariff that we're.
Speaker Change: We will have to manage it the Chinese tires.
Julien Nebreda: of the US backlog of the, you know, of our total backlog of 4.5, which the US represents. you know, 1.6, you know, one point, yeah, around 1.6, you know, 10, you know, 10% of that is subject to. We're taking the risk on tariff and you didn't ask but just to be clear that this what was announced yesterday or what the tweet that President Trump said, yes, 10%, that will be completely immaterial in our case. We will manage it, if that were to happen. In some cases, we have arrangements with our counterparties to pass through increasing tariffs.
Speaker Change: The U S backlog.
Speaker Change: Of our total bank level, four five which represents.
Speaker Change: 161 point, yeah around one six.
Speaker Change: 10% of that is subject to two.
We're taking the risk on tariff.
Speaker Change: Im going to ask but just to be clear that this quarter was announced yesterday or whether they do it.
Speaker Change: President Trump signed yet so the 10% that will be completely materials in our case, we will manage it.
Speaker Change: If that if that were to happen in some cases, we have arrangements with our counterparties to pass through increase in tariff. So I think net net it's not material. What we saw yesterday I think given that only $150 million or so of our.
Julien Nebreda: So I think net-net, it's not material, what we saw yesterday. I think given that only $150 million or so of our backlog has that exposure, and with 10%, I think we have flexibility to pass on to our customers. So we don't think I'm going to accelerate. Yeah. And then we can accelerate the batteries. I think that, in fact, reduces it further. So we feel pretty good that we can manage. Perfect, thank you. Thank you.
Speaker Change: Our backlog as that exposure and with 10% I think we have flexibility to pass onto our customers. So we don't think this was an accelerated.
Speaker Change: And then we can accelerate the batteries I think.
Speaker Change: It reduces it further so we feel pretty good that we can manage it.
Speaker Change: Perfect. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question comes from Andrew <unk> with Morgan Stanley. Your line is open.
Andrew Percoco: Hey, Andrew. Good morning. Hey, Julian. Good morning. Thanks for taking the question.
Andrew: Andrew Good morning.
Speaker Change: Good morning, Thanks for taking the question.
Andrew Percoco: I just wanted to come back to the seasonality point for 2025. I think over the last two years, it's been roughly a 40-60 split, first half, second half. I just want any more information you can provide on what's driving the shift to the second half of the year in 2025 more specifically. Is it project related? Is it any additional color you can give there? Is there any confidence around that second half number, just given how significant it is? I will tell you this. There's nothing structural in the market that drives this. We have looked in detail what's driving it in our case.
I guess I wanted to come back to the seasonality point for 2025.
Speaker Change: The last few years, it's been roughly.
Speaker Change: 40, 60 split first half second half just want any more information you can provide on what's driving the.
Speaker Change: The shift to the second half of the year in 2025 more specific project related it any more or any additional.
Color you can get there just any confidence around.
That second half number just given how significant it is.
Speaker Change: I would tell you this I mean theres nothing structurally in the market that drives this.
Speaker Change: So we have looked in detail, what's driving it and in our case if you looked at some of our competitors there are in some other.
Andrew Percoco: If you looked at some of our competitors, their peaks are in some other quarters, all around, to be sincere. So there's nothing structural in the market.
Speaker Change: All around sincere, but generally so there's nothing structural in the market. So it's probably a most likely a function of our internal incentives to our sales teams on our implementation teams and we're putting corrections to throughout the rest of these.
Julien Nebreda: So it's probably most likely a function of our internal incentives to our sales teams and our implementation teams. And we're putting corrections to address. However, the corrections will take some time to take effect. So we do believe that, you know, it's something that hopefully we will be able to see improvements over time. As there are not real restrictions in the market that will tell you why, it's not the way with the company. That would be my view. We feel confident that we can do it. We did it this quarter. We will be able to do it next year.
Speaker Change: The corrections will take some time to take effect. So we all believe that that is.
Speaker Change: Something that hopefully we will get you will we would be able to see improvements over time.
Speaker Change: There are not real restrictions in the market.
I'll tell you why that is.
Speaker Change: If not there's another way where the company needs to run so that would be my view, we feel confident that we can do it we did it this quarter, we will be able to do it next year, we don't see any problems at that our supply chain has worked very well. Our teams are very very good at this but it's clearly not necessarily a good faith. So we wanted to address it.
Julien Nebreda: We don't see any problems with that. Our supply chains work very well. Our teams are, you know, very, very good at this, but it's clearly not necessarily a good state.
Julien Nebreda: So we want to address it and we're working on it. Okay, understood. That's helpful.
Speaker Change: Working on it.
Speaker Change: Okay understood. That's helpful. And then maybe just on the bookings point obviously.
Julien Windham: And then maybe just on the bookings point, obviously, very strong fourth quarter for you guys. Can you just maybe comment on around what you're seeing from customers since the election, in terms of their bookings activity, or just the sentiment from customers in terms of how eager they are to sign incremental orders with you guys? Are they kind of in wait and see mode until the new administration finishes their transition plan? I'm just kind of curious that the state of the customer post election? We see our projects progressing, in the U.S. progressing. Great, thank you. I'll take the rest offline.
Strong fourth quarter for you guys can you just any comment on around what youre seeing from customers.
Speaker Change: Since the election.
Speaker Change: In terms of their bookings activity or or just the sentiment from customers in terms of how eager they are to sign incremental orders with you guys. When they kind of in wait and see mode until until they knew admission administration financials their transition plan and I'm curious if the state of the customer post election.
Speaker Change: As you know we are roughly half international so that hasnt really been affected by by the U S.
Speaker Change: Yes.
Speaker Change: Uncertainty in.
Speaker Change: In the U S. I would tell you today I mean were.
Speaker Change: A month or not even a month from the elections.
Speaker Change: Yeah.
Speaker Change: That hasn't really been I don't think he has been a major change at questions that youll get from time to time from customers or how would you manage is how do you manage that or why are we doing that we can answer them. So.
We see our.
Speaker Change: Projects progressing in the U S progressing normally.
Speaker Change: Great. Thank you I'll take the rest offline.
Unknown Executive: Great, thanks. Thank you.
Speaker Change: Great. Thanks.
Speaker Change: Andrew.
Benjamin Kallo: Our next question comes from Mark Strouse with J.P. Morgan. Your line is open. Good morning, Mark. Hey Julien, it's Drew on for Mark. Thank you very much for taking the questions. First one just on, just on what you're seeing for 2026 and the 30% target. I mean, is that, is that, you know, based off of, you know, conversations you're having with customers, or is that more of just, you know, you know, third party market outlooks? And then, and then in that 30%, you know, how much do you think there's a chance where, you know, you start really taking some share in the US given you're, you know, first to market here with the, with the US sell?
Speaker Change: Thank you. Our next question comes from Mark Strouse with Jpmorgan. Your line is open hey, good morning, Mark.
Hey, good morning, its drew on for Mark.
Speaker Change: Very much for taking the questions.
Speaker Change: First one just on just on what Youre seeing for 2026, and the 30% target I mean is that is there.
Based off of.
Speaker Change: Conversations youre, having with customers or is that more of just.
Speaker Change: Third party market outlooks, and then in that 30%.
Speaker Change: Do you think Theres, a chance where you start really taking some share in the U S. Given your first to market here with the with the U S South.
Julien Nebreda: Our view of 206 is based out of our pipeline. We have a very strong pipeline. We see still projects coming in this quarter, even though our pipeline grew only by $500 million. In reality, $500 million on top of converting $1.2 billion and on top of adjusting the pipeline for pricing. So we feel very, very confident that we can meet the, the, you know, 30% growth that we were seeing it already in our pipeline.
Speaker Change: Our view of 2006 is based out of our pipeline.
Speaker Change: Have a very strong pipeline with future projects coming in this quarter, even though our pipeline grew only by $500 million in reality $500 million doubled compared to 1.2, Wheeler and any staff on top of adjusting the pipeline for pricing. So so we feel very very confident that we can meet.
30% growth that we're seeing it already in our pipeline.
Julien Nebreda: So that's, that's what, how we come up with our, with our guidance for 20, for our view for 20.
Speaker Change: That's how we come up with our with our guidance for 'twenty four or our view for 2006 to it.
Julien Nebreda: Okay, and then just different topic here. I mean, really, really big numbers in the digital orders are hitting backlog and then also in the pipeline as well. Can you talk about some of the traction you're seeing in digital business right now? Maybe what changed quarter over quarter? Those $100 million includes both. Digital and Service. you know, and did those roughly, you know, 75% is services, 25% is digital, just to give you a sense of where we are. Both are doing very, very well. Our digital business, we have, we continue what we announced, you know, a couple of years back.
Speaker Change: Okay and then just.
Speaker Change: On a different topic here.
Speaker Change: Really really big number in the digital orders are hitting backlog and then also in the pipeline as well can you just talk about some of the traction youre seeing in digital business right now and maybe what changed quarter over quarter.
Speaker Change: The $100 million.
Bruce Voss: Bruce Voss.
Bruce Voss: Digital and services.
Bruce Voss: And Ddos roughly.
Bruce Voss: 75% any services 25%.
Bruce Voss: Just to give you a sense of where we are both are doing very very well. Our databases. We are we continue where we announced a couple of years back.
Julien Nebreda: We are relaunching Mosaic with a new, with a new system that allows us to enter into new markets much faster. So we are, we enter in ERCOT, we now have a MISO project and we're now going into Japan. We're probably, you know, so that's great. It's working very well. And with our NISPERA approach, what we have done is continue investing in it, but we have created a lot of value, a lot of value in integrating into our service organization. We're not only offering to our customers, but we are also creating value to our service organization.
Bruce Voss: No.
Bruce Voss: We are relaunching mosaic with a new with the new system that allows us to enter into new markets. Much faster. So we are we enter and Erica will now have a MISO project and we're now going into Japan were probably so that's gravy and working very well and with our newsprint approach. What we have done is we'll continue investing in it.
Bruce Voss: But we have created a lot of value a lot of value in integrated into our service organization. So we're not only offering to our customers where we are also creating value to our service organization. So at the end of the day. We see this weakness is ISR conjunction and finally, we are making good progress with very very good Custer.
Julien Nebreda: So, at the end of the day, we see these businesses as a conjunction. And finally, we are making good progress with very, very good customers. We signed a few deals with Mazda. We are, you know, moving forward with them and we've been very happy. You know, once you get, you, these customers see the value that we can bring to the table, we see that movement really move forward. So very happy with it.
Speaker Change: Was that a few of the yahoos Mazda.
Speaker Change: We are moving forward with them and we'll be very happy once youll get it.
Speaker Change: These customers see the value we can bring to the table that we'd see that movement really move forward, so very happy with it.
Julien Nebreda: You know, today is still not material to our numbers or not the materiality we want from this. But we are very, very confident that it will be material very soon and that the strategy we're putting together is going on the right path.
Speaker Change: Today, it's still not material to our numbers are not the materiality. We won from this basis, but we would do are very very confident that it will be material very soon and that the strategy. We're putting together is going on the right direction.
Benjamin Kallo: Great. Thanks again, Julien. Thank you.
Speaker Change: Great. Thanks again.
Thank you.
Kashi Harrison: Our next question comes from Kashi Harrison. Your line is open. Hey, how's it going? Good morning, and thank you for taking the questions, actually. So, Julien, I want to go back to the late stage negotiations, $1.5 billion with $800 million that would shift in fiscal 2025. Can you give us what those equivalent numbers, those figures would have been entering the prior year? Or are you saying that there just wasn't a significant amount in late stage negotiations at this time? I don't think that, you know, last, good question, last year, we did not have. These, you know, the amount, the contracts that were in late stages were significantly smaller than what we have this year.
Speaker Change: Thank you. Our next question comes from Kashi Harrison Your line is open with Piper Sandler.
Speaker Change: Gotcha.
Speaker Change: Hey, How's it going good morning, and thank you for taking the question.
Speaker Change: Questions actually so.
Speaker Change: So really and I wanted to go back to the late stage negotiations, one 5 billion with 800 million that would ship in F 'twenty and fiscal 'twenty five.
Can you give us what those equivalent numbers those figures would have been entering.
Speaker Change: The prior year.
Speaker Change: Or are you, saying that there wasn't a significant amount in <unk>.
Speaker Change: Stage negotiations at this time last year.
Speaker Change: I don't think that lack of good question last year, we did not have.
Speaker Change: This.
Speaker Change: The contract that we're at late stages were significantly smaller than what we have this year. So we are this is particularly I think if you look at as I mentioned roughly half of that.
Julien Nebreda: So we are. Similarly, I think if you look at, you know, as I mentioned, roughly half... I don't think we have that at all.
Yeah, I don't think we have there.
Speaker Change: Yes.
Kashi Harrison: that time so that's significant this is a much better from that point of view we're in a much better position than we were last Got it. I appreciate the additional color there.
Speaker Change: At that time, so that's a significant this is a much better from that point of view, we're in a much better position than we were last year.
Speaker Change: Got it I appreciate the additional color there and then just my final question is on the gross margin range of 10% to 15%.
Julien Nebreda: And then just my final question is on the gross margin range of 10 to 15 percent. Can you just help us think through some factors that would push you towards the high end of guidance or the lower end of guidance? It's, you know, our growth margin is a combination of execution, you know, delivering things and commissioning and putting into reaching substantial completion and finding completion at a lower cost. That's what drives it, you know, and that's what we've been driving it this year. And I think our ability to get to the higher side of our range will depend very much.
Can you just help us think through.
Speaker Change: Some factors that would push you towards the high end of guidance or the lower end of guidance.
Speaker Change: Our gross margin is a combination of execution.
Speaker Change: You know delivering things in commissioning and put it into reaching substantial completion of final completion.
Speaker Change: A lower cost point.
Speaker Change: That's what drives it.
Speaker Change: Elsewhere, while we what we know what was driving that this year and I think that our ability to get to are the higher side of our range will depend very much on that.
Julien Nebreda: What I think is the challenge for 2025 that I think is important for you to understand, we have new products that are coming on. We've got GSP 2000, the GSP 5000. And so the combination of revenue for next year is going to be a little bit different, so we decided to go with a more conservative view on where we're going to end. But we are committed to doing this, and I think our team has done a great job at testing our new products in our labs and putting them through all the things that could happen.
Why do you think is a challenge for 20.
Speaker Change: But I think it's important for you to understand we have new products that are coming on and worry about DSP 2000, the ESP 5000.
Speaker Change: We saw a combination of revenue for next year is going to be a little bit different. So we decided to go with a concern about the a more conservative view on on where we where we're going on but we're committed to doing this and we have done a great asset our team has done a great job of testing, our new products and alive and well.
Speaker Change: Putting them through all the things that could happen. So we believe we will be able to do very very well, but the reality is that there will be new products coming out in 2020 five that will make it.
Kashi Harrison: So we believe we will be able to do very, very well, but the reality is that there will be new products coming out in 2025 that will make. Sky Limit Challenge. Thank you. I appreciate it. Thank you.
Speaker Change: Slightly more challenged.
Speaker Change: Got it. Thank you I appreciate it thank you.
Chris Dendrinos: Our next question comes from Chris Dendrinos with RBC Capital Markets. Your line is open. Good morning. I wanted to ask about pricing and you highlighted some of the price trends and the change in lithium pricing has brought down the average selling prices. I guess with where you sit today and thinking about some of the competitors out there, the CATLs and the LGs that are going direct to the consumer, how much price competition are you seeing in terms of prices continue to move lower? Obviously, you guys highlighted a pretty solid backlog here, so you're able to compete, but just trying to get a sense of where price sits today.
Speaker Change: Thank you. Our next question comes from Chris <unk> with RBC capital markets. Your line is open.
Speaker Change: Yes. Good morning, Thank you Hey, good morning, Brian.
Speaker Change: I wanted to kind of ask about pricing and you've kind of highlighted some of the price trends and the change in lithium pricing has brought down the average selling prices I guess with where you sit today and thinking about some of the competitors out there.
Speaker Change: <unk> and the <unk> that are going direct to the consumer.
Speaker Change: I guess, how much price competition are you seeing in terms of <unk>.
Prices continued to move lower obviously, you guys highlighted a pretty solid backlog here. So you are able to compete but just trying to get a sense of where price sits today and how.
Chris Dendrinos: how that competitive environment is kind of shaping up for 2025?
Speaker Change: How that competitive environment, it's kind of shaping up for 2025.
Julien Nebreda: Good, very good question. I mean, we do see a very competitive market. As I said, the Chinese have been, you know, more active recently, you mentioned too. What is the big change? And I think that puts us in a very competitive position. As the price of the capital... has come down. The relative value on the other parts, the EPC part, the commissioning, the logistics, the ability to provide reliability, to meet the needs of customers faster, has become more relevant. And if you're right, the Chinese might have some competitive advantage in some, the CapEx option, you know, maybe, we meet it today, but, you know, they clearly don't have it on the other side.
Speaker Change #100: Very good question I mean, we will see a very competitive market as I said the Chinese.
Speaker Change #100: Being more.
Speaker Change #100: More active recently you meant you mentioned two what is the big change and that I think that puts us in a very competitive as the price of the Capex part has come down.
Speaker Change #100: The.
Speaker Change #100: Relative value on the other parts the EPC part the commissioning the logistics they are related to provide reliability to meet the needs of customers faster has it got more relevant.
Speaker Change #101: I think youre right.
The Chinese might have some competitive advantage in some the capex option you know what maybe we made a delay but clearly they'll have it on the other one.
Julien Nebreda: So, that's how we win. We offer our customers a total cost of ownership that's better than what they can get from any... And that's how we do it. And that will continue to work to deliver. And that's how, that's what's going to drive. the success in this market. As I said, that is technology, it's innovation. It is looking at and really understanding the customer and helping them resolve their needs in a way that's more efficient than what, you know, the other people do. And you know, the Chinese clearly have an advantage of some of the, those are more vertically integrated and they can, you know, build the things in China probably cheaper, but we, they do not have an advantage in the other parts of the value.
Speaker Change #101: So that's how we went we offer our customers a.
Speaker Change #101: Our total cost of ownership, that's better than what they can get for millennials.
Speaker Change #101: And that's how we do it and that will continue to work to <unk>.
Speaker Change #101: And that's how that's what's going to drive.
Speaker Change #101: The success in these markets, that's what I've said that is technology innovation.
Speaker Change #101: Looking at and really understanding the customer and helping them solve their needs in a way that's more efficient at what the other people who are they.
Speaker Change #101: Chinese clearly have an advantage of some of the more vertically integrated and they can build these things in China, probably tempered bought.
Speaker Change #101: We do not have an advantage in the other parts of the value chain.
Julien Nebreda: feel very, very, very, very confident that, you know, we're not only willing today that we will continue to win no matter how Aggressive were the Chinese players.
Speaker Change #101: Very very very very confident that were not only willing today that will continue to win no matter how.
Speaker Change #101: Aggressive where the Chinese players play.
Julien Nebreda: Got it. And then I guess maybe following up on the comments around playing in the value chain, I mean, do you see an opportunity to maybe increase the role you play in that value chain, whether it's taking on, you know, maybe more of the EPC role or something like that in the future, or are you kind of comfortable with where you all sit today? Thanks. We do offer EPC to some of our customers with partners, and, you know, we continue doing it. I don't see a reason why to expand it or not expand it, you know, when a customer needs it, and we can offer them a good offer, we do it, if not, the final answer.
Speaker Change #102: Got it and then I guess, maybe maybe following up on the comments around playing in the value chain. I mean, do you see an opportunity to maybe increase the role you play in that value chain, whether it's taking on maybe more of the EPC role or something like that in the future or are you kind of comfortable with where you all sit today, we do offer.
Speaker Change #103: EPC to some of our customers with partners.
Speaker Change #104: We'll continue Lou and I don't see a reason why to expand that are not funded.
When a customer needs it and we can offer them a good offer we thought if not the final. So another solution so that won't change I think.
Julien Nebreda: That won't change.
Speaker Change #105: Thank you.
Unknown Executive: Great, thank you.
Speaker Change #106: Great. Thank you.
Unknown Executive: One moment for questions.
Speaker Change #106: One moment for questions.
Julien Dumoulin-Smith: Our next question comes from Julien Dumoulin-Smith with Jeffries. Your line is open. Julien, good morning.
Speaker Change #107: Our next question comes from Julien Dumoulin Smith with Jefferies. Your line is open.
Speaker Change #108: Hey, Julien good morning.
Hannah: Hey, this is Hannah. Good morning. On for Julien. Yeah, clearly not Julien. I know. I sound a little bit different. No, Julien's out in Europe marketing. Good morning. Thank you for taking the question. Good morning, and congrats on the quarter.
Speaker Change #109: Hi, This is Ann good morning, Andre clearly not Julien.
Speaker Change #110: I know I sound, a little bit different.
Speaker Change #111: Hands out marketing.
Speaker Change #112: The question good morning, congrats on the quarter.
Hannah: So, a similar question to others asked before, but what would get you to the high end of the revenue guide versus the low end or, you know, slightly lower as we saw in full year 24? So, does the low end assume some scenario mix of project delays and maybe risk to the IRA and domestic content? And I know the focus is on the midpoint, but I'm just trying to understand what scenarios are baked into that $600 million range in guidance. Great. Good point. Good question. The driver of our ability to meet the high range, or, you know, will be essentially a capturing backlog entering, you know, that that's what will drive it.
Speaker Change #112: Question to others asked before.
Speaker Change #112: What would get you to the high end of the revenue guide versus the low end or slightly lower as we saw in full year 'twenty. Four. So there is the low end assumes some scenario mix of project delays and maybe risk to the Irene domestic content and I know the focus is on the mid point, but I'm just trying to understand what scenarios are baked into that 600.
Speaker Change #113: <unk> million dollars range in guidance great. Good point. Good question the driver of our ability to meet the higher range or will be essentially.
Speaker Change #114: Capturing backlog entering that that's what will drive it if we can contract there about being that bring their orders and we will be on the upper side of that range and hopefully even better if we don will be closer to a mid point.
Julien Nebreda: You know, if we can contract the bag, bring the bring the orders in, we will be on the upper side of the range and hopefully even better. If we don't, we'll be, you know, closer to a That's what I would say will be the big, big driver. And that's what we're working on. And we are dedicating all our teams are concentrated on that because that will define, say from here to March, generally, when this can happen. But so we have some time to do it, but that's our concentration.
Speaker Change #114: That's why what I will say will be the big driver and that's where we're working on and we are dedicating all of our teams our concentrate on that because that will define sadie from here to March generally when there is going to happen, but so we have some time to do it but that's our concentration.
Julien Nebreda: And just as a quick follow up there, thank you. So is that am I reading this in correctly, then that there is no real adjustment to any potential delays? No, you know, when we enter into these deals, there might be delays of, you know, weeks or over, you know, small delays. But generally, once we have signed the backlog, they put in a significant amount, the sites are ready, you know. The delays are minor, you know, if there are some, you know, transform and got late to a site and it takes us a little longer to do hot commission and things of that sort that happen in projects, but nothing that.
Speaker Change #114: Yes.
Speaker Change #115: And just as a quick follow up there. Thank you. So is that am I reading. It correctly, then that there is no real adjustment to any potential delays.
Speaker Change #114: No.
Speaker Change #116: When we enter into deals there might be delays of weeks or.
Speaker Change #116: Small delays, but generally once we have signed their backlogs there are they putting that significant amount of the sites are ready.
Speaker Change #116: The delays are minor.
Speaker Change #116: Some.
Speaker Change #116: Pharma got led to a site and it takes a little longer to Hot Commission. It seems all of that sort that that happened in projects, but nothing thats.
Julien Nebreda: that I will say will be meaningful, will affect our, our, you know, our ability to deliver our commitment substantially or materially. I think our objective, convert pipeline into backlog, into order from now to March of next year. Okay, thank you. Thank you.
But I will say will be meaningful will affect our hour.
Speaker Change #116: Our ability to deliver on our commitments.
Speaker Change #116: Partially or materially I think our objective convert pipeline into backlog into order from now to March of next year, that's all I need to.
Speaker Change #117: Okay. Thank you.
Okay. Thanks.
Ben Kallo: We have time for one final question and that question comes from Ben Kallo with Baird. Your line is open. Hey, good morning. Thanks for fitting me in. Good morning, Ben.
Speaker Change #118: Thank you we have time for one final question and that question comes from Ben <unk> with Baird. Your line is open.
Hey, good morning, Thanks for fitting me in.
Speaker Change #119: Good morning, Ben.
Julien Nebreda: Hi, so just two, lots of questions been asked, but just on the order pattern, the question around the election, could you just talk about how much, you know, safe harboring is entering into discussions at this point? And then my second question is, you know, the talk around Chinese competition. I think there was a worry there that there would be, you know, Chinese companies coming in and setting up shop in the United States. You know, have you seen any of that or do you think that gets stopped with the election? So thank you for those.
Speaker Change #119: Hi, So just two lots of questions been asked but.
Speaker Change #119: Just on the order of proud of the question around the election could you just talked about how much safe.
Speaker Change #120: Safe Harbor.
Speaker Change #120: The discussions at this point.
Speaker Change #120: And then my second question is.
Speaker Change #120: Talking about Chinese competition.
Speaker Change #120: I think there was a worry that there would be Chinese companies coming to shop for the United States.
Speaker Change #121: Have you seen any of that or do you think to start with the election. So thank you for those.
Julien Nebreda: You know, the Chinese competition is a global phenomenon, I'll answer that and then I will give it up to Ahmed for the first It's a global phenomenon. We see it globally. I say that it's less intense than in the U.S. than outside of the U.S. It's less intense in the U.S. If they come to the U.S. and put a factory here, you know, they should be allowed to compete and maybe they'll do it. I understood that to be your question. We believe that we compete with them. you know, irrespective of trade. You know, we will compete with any markets that are completely free, like Chile, like Australia, like the UK.
Speaker Change #120: Yes.
Speaker Change #122: The Chinese competition is a global phenomenon I'll answer and then ill give it up.
Speaker Change #122: For the first question.
Speaker Change #124: It's a global phenomenon.
Hey.
We see it globally I say that is less intense than in the in the U S that outside of the U S.
Speaker Change #124: Less intense in the U S a.
Speaker Change #124: If they come to our U S and put a factor here that you're allowed to compete maybe they'll do it.
Speaker Change #124: So that to your question.
We believe that we compete with them.
Speaker Change #124: You know irrespective of trade policies.
Speaker Change #124: We will compete with any markets without are completely free like Chile, like Australia like the U K. So if they if they were to come here and put a factor here in the U S and get the advantage of some of the.
Julien Nebreda: So you know, if they if they were to come here and put a factory in the US and get advantage of some of the, you know, I welcome them to do it, by the way, because I think bringing technology and jobs in the US is something that we should entice. The level of competition will be no different from the level of competition we see today in markets where we are open and we work.
Speaker Change #124: Welcome them to do it by the way because I think bringing technology in jobs in the U S. It's something that we choose and ties.
Speaker Change #124: There.
Speaker Change #124: Level of competition will be no different from the level of competition, we see today in markets, where we are open and we win projects all around the first question I will answer. Your first question I think was on the customer behavior and I think what we have seen since the election I think we have not frankly seen any material change.
Ahmed Pasha: The first question I think was on the customer behavior. And I think what we have seen since the election, I think we have not frankly seen any material change in terms of the impact. I think Julien already talked about, you know, I mean, our backlog, U.S. backlog, where we have roughly $1.6 billion of U.S. backlog, there's very little impact of the tariff. So net-net, I don't think there's any material impact with what we have seen yesterday. Okay, thank you guys. Thank you.
Speaker Change #124: And in terms of the impact I think <unk> already talked about you know I mean, our backlog.
Speaker Change #124: <unk> backlog we have.
Speaker Change #124: Roughly $1 $6 billion of U S backlog, there's very little impact of the tariff. So net net I don't think there's any material impact with what we have seen yesterday.
Speaker Change #125: Okay. Thank you guys.
Lexington May: I'd like to turn the call back over to Lex May for any closing remarks. Thank you for participating on today's call. If you have any questions, feel free to reach out to me. We look forward to speaking with you again when we report our first quarter results. Have a good day. Thank you for your participation. This does conclude the program.
Speaker Change #126: Thank you I would like to turn the call back over to Lax may for any closing remarks.
Lax May: Thank you for participating on today's call. If you have any questions feel free to reach out to me. When you look forward to speaking with you again, when we report our first quarter results have a good day.
Speaker Change #128: Thank you for your participation. This does conclude the program you may now disconnect.
Unknown Executive: You may now disconnect.
Okay.
Speaker Change #128: [music].