Q4 2024 Energy Vault Holdings Inc Earnings Call

Speaker Change: [music].

Greetings and welcome to the energy bolts fourth quarter 2024 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad.

Anyone should require operator assistance. Please press star zero on your telephone keypad.

Michael Beer: It is now my pleasure to introduce Michael Beer, CFO of Energy Vault. Please go ahead. Thank you.

Speaker Change: It's now my pleasure to introduce Michael Beer CFO of energy Paul. Please go ahead.

Thank you.

Michael Beer: Hello and welcome to Energy Vault's 2024 Financial Results Conference Call. As a reminder, Energy Vault's earnings press release and presentation are available now on our investor website, and we will be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations portion of our website. This call is now being recorded. If you object in any way, please disconnect now.

Speaker Change: Hello, and welcome to energy Volts, 2024 financial results Conference call.

Speaker Change: As a reminder, energy bolts earnings press release and presentation are available now on our Investor website, and we will be referring to the presentation. During this call.

Speaker Change: A replay of this call will be available later today on the Investor Relations portion of our website. This call is now being recorded if you're injecting any way. Please disconnect now.

Michael Beer: Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. Please refer to our most recent 10-K filing for a list of those factors that cause our results to differ from those anticipated in any forward-looking state. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.

Speaker Change: Note that energy bolts earnings release, and this call contains forward looking statements that are subject to risks and uncertainties. These forward looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. Please refer to our most recent 10-K filing for a list of those factors may cause our results to differ from those anticipated.

Speaker Change: Any forward looking statements.

Speaker Change: We undertake no obligation to publicly update or revise any forward looking statements expect except as required by law.

Michael Beer: In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the Safe Harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.

Robert: Please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe Harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. Joining me on the call today is Robert <unk>, Our chairman and Chief Executive Officer at this time I'd like to hand, the call over to Robert pick Honey.

Robert Piconi: Joining me on the call today is Robert Piconi, our Chairman and Chief Executive Officer. At this time, I'd like to hand the call over to Robert Piconi. Great, Michael, thank you and welcome everybody to our earnings call. 2024 represented a very important foundational year for us and the company in our evolution and growth. We continue to focus on that growth and focus on what customers are requiring, focus on solving their problems and executing delivering energy storage systems while setting the initial framework for increasing our exposure to the ownership of energy infrastructure assets that we develop, build and deliver.

Speaker Change: Okay.

Robert: Great Michael Thank you and welcome everybody to our earnings call.

Robert: 'twenty 'twenty four represented a very important foundational year for us in the company in our evolution and growth.

Robert: We continue to focus on that growth and focus on what customers are requiring focus on solving their problems and executing delivering energy storage systems, while setting the initial framework for increasing our exposure to the ownership of energy infrastructure assets, we develop build and deliver.

Robert Piconi: and beginning now to operate, enabling us to capture more reliable and predictable revenue streams at higher margins into markets where we continue to expect power price volatility and variability, where our software management and bidding platform can enable superior financial returns.

Robert: And beginning now to operate enabling us to capture more reliable and predictable revenue streams and higher margins.

Robert: In the markets, where we continue to expect power price volatility and variability, where our software management and bidding platform can enable superior financial returns.

Robert Piconi: On that point here, right up front on the call, we made an important announcement today regarding the Stony Creek BESS, or Battery Energy Storage System. And I was asked many, many questions from some investors that I received some emails on to expand a bit on what the nature of the contract is and what it means for Energy Vault. So I thought I would do that up front since we just announced that this morning. We're very excited about the partnership that we've had with Enervest from the beginning. As most all of you saw back in October, we did an announcement that started as a award, as an award of an energy storage system for one gigawatt hour.

Robert: On that point here right upfront on the call. We made an important announcement today regarding the Stony Creek be SaaS or battery charge system.

Robert: And I was asked many many questions from some investors that I've received some emails on to expand a bit on what the nature of the contract is and what it means for energy ball. So I thought I would do that upfront since we just announced it this morning.

Robert: We're very excited about the partnership that we've had with the inner best from the beginning.

Robert: As opposed to all of you saw back in October we get an announcement that started out as a award an award at.

Robert: In the energy storage system for one gigawatt hour.

Robert Piconi: We did not state the duration of that system because we were in parallel of flying. or the LTSA or the Long Term Energy Service Agreement with Enervest for the contract with New South Wales. So we specifically did not specify, for example, if it was a two hour, four hour, eight hour system. We were successful and awarded that contract in February of this year. As originally announced, it would have been a contract of about $350 million Aussie dollars as we announced, so roughly about $220 million U.S. dollars. Now with the Altesa award, that converts essentially into a longer term contract.

Robert: We did not state the duration of that system, because we were in parallel of flying.

Robert: Or the old tests that were at a long term energy service agreement with interest.

Robert: For the contract with New South Wales. So we specifically did not specify for example, if it was a two hour for our eight hour system.

Robert: We were successful in awarded that contract.

Robert: In February of this year as originally announced it would've been a contract of about $350 million.

Robert: Aussie dollars as we announced so roughly about 220 million U S dollars.

Robert: Now with the El Paso award that converts essentially into a longer term contract.

Robert Piconi: So that contract is announced in October initially would have resulted in somewhere around 125 million of potential REVREC into this year in 2025. Once we won the long term energy service agreement that in partnership with Enervest, we did a consortium bid on it. We began to work on the agreements with Enervest about Intending to sign an agreement to actually acquire the entire project in line with our build-own-and-operate strategy. From a financial perspective, and this is all public information, and we try in the announcements in the one that we made on the Altesa award, there's links in that announcement that go right to the public.

Robert: So that contract is announced in October initially would've resulted in somewhere around $125 million of potential Rev. Rec.

Robert: Into this year and 2025 once we won the long term energy service agreement that in partnership with <unk>, we'd get a consortium bid on it.

Robert: We began to work on the agreements with interest about intending to sign an agreement to actually acquire the entire project in line with our build own and operate strategy.

Robert: From a financial perspective, and this is all public information and we try and the announcements and the and the one that we made on the El Tessa Award, there's links and that announcements they go right to the public.

Robert Piconi: documentation on the AEMO, A-E-M-O services website which works with the New South Wales government. on the development of the plans and the resource plans for their grid evolution. However, we will share a little bit and I will share a little bit now about what that El Tessa and the implications around revenue, for example, are for the for the company. The agreement works essentially as a contract over 14 years. There's various things that can happen over the life of that contract. The contract guarantees a minimum of $20 million, and I'm just going to use U.S. dollars to make it easier for everyone over that 14-year period.

Robert: Documentation on the aim O H E M O Services' website, which works with the New South Wales government.

Robert: On the development of the plans and the resource plans for their grid evolution.

Robert: However, we will share a little bit and I will share a little bit now about what that all test and the implications around revenue for example, or for the for the company.

Robert: The agreement works essentially as a Ah contract over 14 years, there's various things that can happen over the life of that contract the contract guarantees a minimum of $20 million and I'm, just going to use U S dollars to make it easier for everyone over that 14 year period.

Robert: Hi.

Robert Piconi: We're allowed to participate in the market under merchant revenue through the life of the contract. But the $20 million is a guaranteed minimum with other characteristics and things through the life of the contract through the 14 years. We can operate the system longer than 14 years. and also if we have merchant revenue above the $20 million, we're allowed to take 100% of that revenue up to $36 million. per year. Above $36 million, there is a sharing. essentially with the government of 50-50 on that revenue. So those are annual numbers of the contract and you get a sense just by those numbers and all of you all very good at math here on this call You know, it has the potential for significant revenues.

Robert: We're allowed to participate in the market under merchant revenue through the life of the contract, but the $20 million of guaranteed minimum with other characteristics and things through the life of a contracted of 14 years.

Robert: We can operate the system longer than 14 years.

Robert: And also if we have merchant revenue above the 20 million were allowed to take 100% of that revenue up to $36 million.

Robert: Per year.

Robert: Above 36 million there is a sharing.

Robert: Essentially with the government of 50 50 on that revenue.

Robert: And so those are annual numbers are of the contract and you get a sense just by those numbers and all of your very good at math here on this call.

Robert: It has the potential for significant revenues, obviously that year to year there'll be differences the merchant revenue might be very high in some years are maybe lower than others, but obviously, having a government.

Robert Piconi: Obviously the year-to-year there'll be Differences the merchant revenue might be very high in some years or maybe lower than others, but obviously having a government backed off taker And having that, you know, predictable revenue streams with that type of a very high credit worthy Off-taker is something that's behind a lot of what we're doing in the build own and operate strategy I also got some questions on how we would look at financing something like that And there's standard mechanisms there in Australia with a lot of the a lot of extremely large funds. There's global funds From across the US and Europe that work in Australia Understanding project financing structures obviously with a government offtake agreement like that So having an LTSA again stands for a long-term energy services agreement There are very standard mechanisms and with an offtaker like that you get, you know Essentially very attractive project financing structures to develop the project So I wanted to share some of that information on a from a financial perspective.

Robert: <unk> off taker.

Robert: And having that predictable revenue streams with that type of a very high credit worthy off taker as something that's behind a lot of what we're doing and the build own and operate strategy.

Robert: I also got some questions on how we would look at financing something like that and there is standard mechanisms there in Australia with a lot of the a lot of extremely large funds. There's global funds are from across the U S and Europe that work in Australia understanding project financing structures, obviously with a government offtake agreement like that so.

Robert: Having an L test that again stands for a long term energy services agreement.

Robert: They are very standard mechanisms and with an off take or like that you get you know what.

Robert: Essentially I'm very attractive project financing structures to develop the project. So I wanted to share some of that information on add on it from a financial perspective I've received some questions also around what does the profitability look on on projects like that and this is al It was out in our investor presentation.

Robert Piconi: I received some questions Also around what is the profitability look on on projects like that and this is out was out in our investor presentation on and I think in a similar type of profitability structure In the US but in our presentation from the main yesterday as well just referring to it if you go back to that presentation You know that the EBITDA ranges on on projects like that are anywhere between 75 to 85% So I thought I would share that up front with you since I received some questions on that.

Robert: And I think in a similar type.

Robert: Type of profitability structure.

Robert: In the U S, but in our presentation from the May Investor day, as well just referring to it if you go back to that presentation.

Robert: You know that the EBITDA ranges on on projects like that are anywhere between 75% to 85%.

Robert: So I I thought I would share that upfront with you since I received some questions on that we're really excited about the partnership to continue to work towards the final close of that contract with inner burst and then the further development.

Robert Piconi: We're real excited about the partnership to continue to work toward the final close of that contract with Enervest and then the further development of that. Ross Warby and the team have been really good partners. They're working in other projects in Australia and look forward to focusing and continuing to develop this project.

Robert: Of that Ross wire being the team have been really good partners say, they're working in other.

Robert: The other projects in Australia, and look forward to focusing and continuing to develop this project.

Robert Piconi: A few perspectives from 2024 and then we'll jump right to 2025 and turn it back to Michael then for more detailed financial review. But I do want to highlight and just jump right into the numbers of what we announced today. Our contract bookings increased significantly quarter-over-quarter by 90%. It's one of our larger increases on a quarter-over-quarter basis, but grew that backlog importantly to $660 million from $350 million the last time we were on the call here. That's about a 3x growth from our investor day that we had back in May 2024, and about a 4x growth or quadrupling that number one year ago.

A few perspectives from 2024, and then well jump right to 2025 and turn it back to Michael then for more detailed financial review, but I do want to highlight and just jump right into the numbers of what we announced today.

Robert: Our contract bookings increased significantly quarter over quarter by 90%. It's one of our larger increases on a quarter over quarter basis, but grew that backlog importantly to $660 million from 350 million are the last time, we were on the call here.

Robert: That's about a three X growth from our Investor day that we had back in May 2024, and about a forex growth or quadrupling that number one year ago. So I think that as you look at them.

Robert Piconi: So, I think that as you look at... The projections, and you look at the trajectory of the company, the bookings number is a very good indicator around how our future revenue is secured. And very important, I think, that we continue to see and build momentum there. It continues to be an important leading indicator for our future growth, and obviously the revenue expectation behind that. The main regional drivers there were squarely in Australia and the United States, and that's with utilities and IPPs generally. The recognized revenue on 2024 finished just over $46 million, which was reflecting some of the Q4 battery hardware deliveries.

Robert: Their projections and you look at the trajectory of the company. The bookings number is a very good indicator around how our future revenue is secured.

Robert: And very important I think that we continue to see and build momentum there. It continues to be an important leading indicator for our future growth and and obviously that the revenue expectation behind that.

Robert: The main regional drivers there were squarely in Australia, and the United States, and that's with utilities and I P. Pes are generally.

Robert: The recognized revenue on 2024 finished just over $46 million, which was reflecting some of the Q4 battery hardware deliveries. This is slightly below the lower end of the guidance given our transitional year for project starts.

Robert Piconi: This is slightly below the lower end of the guidance, given our transitional year for project starts, but it also represents some conscious choices that we made to own some of the energy infrastructure assets this year that we're developing and delivering. Overall, that impacted us by about $100 million in the year, but we believed and continue to believe that this will be in the longer-term interest of our shareholders and our company to build more longer-term, recurring, predictable revenue streams at high margins. We are playing into a market that we continue to expect to have significant price volatility and variability, and therefore, with our software platform, an ability to manage that and do economic dispatching and bidding into the market.

Robert: But it also represents some conscious choices that we made to own some of the energy infrastructure assets. This year that we're developing and delivering overall that impacted us by about $100 million in the year, but we believed and continue to believe that this will be in the longer term interests of our shareholders and our company to build more.

Robert: Longer term recurring predictable revenue streams.

Robert: At high margins and we are playing into a market that we continue to expect to have significant price volatility and variability and therefore with our software platform and ability to manage that and do economic dispatching and bidding into the market.

Robert Piconi: Our growth margins improved year-over-year from about 5% in the last year to 13.5%. Again, slightly below where we should have finished in the 15% to 20% range, obviously a large increase from last year. We were impacted on a specific customer project where we had a supplier that fell out from a bankruptcy and had to step in and essentially execute their work for the customer. These things happen in projects. For anyone in our industry that is building out energy infrastructure, those things happen. Interestingly, this same customer, because of the nature of how we solved that problem, and despite the supplier issue and we minimized the impact to them, we were awarded a second project that was already delivered 100%, at least for the battery infrastructure, into Q4.

Robert: Our gross margins improved year over year from about 5%.

And the last year to 13, 5% again slightly below where we should finish in that 15% to 20% range. Obviously, a large increase from last year. We were impacted on a specific customer project, where we had a supplier that fell out from a bankruptcy and had to step in.

Robert: And and and essentially execute their work for that.

Robert: The customer.

Robert: Now that these things happen and projects for anyone that are in our industry that is building out energy infrastructure those things happen.

Robert: And interestingly this same customer because of the nature of how we solve that problem and despite the supplier issue and we minimize the impact to them. We were awarded a second project.

Robert: That was already delivered 100% at least for the battery infrastructure into Q4 so.

Robert Piconi: There are always issues that crop up in projects. I think how you solve that and how you focus on ensuring you minimize the impact to the customer goes a long way in future relationship in business.

Robert: You know that there's always issues to crop up in projects and I think how you solve that and how you focus on ensuring you minimize the impact of the customer goes a long way and future relationship in business.

Robert Piconi: We progressed the project financing on our first own and operate project, the Calisoga Resiliency Center, the Optacre Pacific Gas and Electric, which is under commissioning now. Interestingly, we held in January an investor and analyst event there, really not to give any broader customer or company guidance, I should say, but really just to showcase what's the largest and will be the first green hydrogen hybrid system in the world of its size and one that we're very excited now to be in the commissioning stage and been a great partnership with PG&E and the local community there. We also, from a financing perspective there, received earlier in the month a priced bond and financing commitment.

Robert: We progressive project financing on our first owned and operated project the Calistoga religious resiliency center, the off taker of Pacific gas and electric which is under commissioning now.

Robert: Interestingly, we held in January our Investor and analyst event, there really not to give any broader customer or company guidance I should say, but really just to showcase whats the largest and will be the first green hydrogen hybrid system.

Robert: In a world of its size and and one that we're very excited now to be in the in the commissioning stage and been a great partnership with with P. Janie and the local community there.

Robert: We also from a financing perspective, there and received earlier earlier in the month that are priced bond and a financing commitment.

Robert Piconi: That commitment and that partner was not in our announcement, but it's Eagle Point. and really appreciate the partnership with Jennifer Powers and the team there for that. And we're expecting that to close in the month of April. That will add about $28 million back to the balance sheet as we close. We're continuing to manage our cash without equity dilution and now having the project financing model now well in place and now beginning to execute execute those financings and expecting to begin to put some cash back on the balance sheet as we go through the year.

Robert: That's our commitment and that partner was not in our announcement.

Robert: But its eagle point.

Robert: And really appreciate the partnership with Jennifer powers and the team there.

Robert: For them for that and we're expecting that to close in the month of April.

Robert: That will add about 28 million back to the balance sheet as we close.

Robert: We're continuing to manage our cash without equity dilution and now having the project financing model now well in place and now beginning to execute execute those financings.

Robert: And expecting to begin to put some cash back on our balance sheet as we go through the year.

Robert Piconi: And also, I should mention in protecting our cash on top of the operating expense reductions that we executed last year in 2024, we are continuing to look at our infrastructure and our resource allocation to, I'd say, first, adapt that resource allocation to the most promising, secure, near-term accretive project. So we're taking actions to, in some cases, eliminate or optimize or reduce areas that are non-core. These are not easy decisions to make at times, but if anything, and as all of you know, in this market, if you look at the last three years, it's amazing to me the amount of change we've seen, just between things like the lithium ion pricing and how that's evolved, how markets have evolved with data centers and AI and what's that striving in terms of power demand.

Robert: And also I should mention in protecting our cash on top of the operating expense reductions that we executed last year. In 2024, we are continuing to look at our infrastructure and our resource allegation too I'd say first adapt at resource allocation to the most promising secure near term accretive projects.

Robert: So we're taking actions to in some cases eliminate or optimize or reduce areas that are noncore.

Robert: Are not easy decisions to make at times, but if anything and as all of you know in this market. If you look at the last three years, it's amazing to me the amount of change we've seen.

Robert: Just between things like the lithium ion pricing and how that's evolved how markets have evolved with Datacenters and AI and watch that's driving in terms of power demand and just fundamentally.

Robert Piconi: And just fundamentally, generally, the need for more and more cost-effective, sustainable, and safe energy storage. These are things that also number two here as we approach this year, we've done it with a milestone approach to our budget and build up and unlocking investment when projects become pretty much certain. So given the market conditions that do require some tough choices at times and for our organization as we have to adapt, we will continue to look at ways to reduce both fixed and variable costs while investing in the most promising areas.

Robert: Generally the need for more and more cost effective sustainable and safe energy storage.

Robert: These are things that are also number two here as we approach this year, we've done it with a milestone approach to our budget and buildup and unlocking investment when projects become pretty much certain so given the market conditions that Dave.

Robert: They do require some tough choices at times and for our organization as we have to adapt we will continue to look at ways to reduce both fixed and variable cost while investing in the most promising areas.

Robert Piconi: For more information visit www.FEMA.gov As I mentioned, one thing we know and will continue to see every year, the one constant is you should adapt or you'll be eliminated.

Robert: As I mentioned, one thing we know and we'll continue to see every year. The one constant is you should adapt or you'll be eliminated.

Robert: And as we've demonstrated I think for those of you that know us over the last three or four or five years as we evolve with technology as we evolve the software has to be involved with solutions.

Robert: And what we've announced and are now delivering in the in the markets and I think that's one of the things we've been able to.

Robert: To do and it's a tribute to the organization, we have and the people and the talent and their abilities to understand the need for that.

And be able to adapt and operate and operate at a high level in that environment.

Robert Piconi: Before getting to 2025, one note on the energy infrastructure strategy we have been executing. We have focused on creating A small number but large and megawatt project portfolio of assets within our decision control to build, own, and operate, what we expect will be an important part of consistent revenue, cash, and profit generation in the future. These things take some time to build, obviously, and eventually begin to become a double-digit percentage of our revenue over time. That portfolio, with an update, now consists of six projects. A few of which, and the first one, Calistoga, we're expecting here online in the next quarter with the financing that we've just mentioned.

Before getting into 2025, one note on the energy infrastructure strategy, we have been executing we are focused on creating.

Robert: A small number but large in megawatt project portfolio of assets within our decision control to build own and operate.

Robert: What we expect will be.

An important part of consistent revenue cash and profit generation in the future.

Robert: These things take some time to build obviously and eventually begin to become a double digit percentage of our revenue over time.

Robert: That portfolio with an update now consists of six projects.

Robert: A few of which in the first one calistoga, we're expecting here online in the next quarter with the financing that we've just mentioned that a project is built mechanically complete.

Robert Piconi: That project is built, mechanically complete. The entire portfolio, as an update, represents now a total of 840 megawatts. That 840 megawatt has a potential of generating well over 2 to 2.5 billion in revenue streams over a 10 to 15 year period. There's obviously variability in that depending on, for example, having contract offtake agreements, which on the first three projects, we've actually announced those contract agreements. Some of those projects still have to get through the financing structure, but our first one now is completed here or set to complete, let's say, and close in April on the financing in Calistoga.

Robert: The entire portfolio is an uptake represents now a total of 840 megawatt.

Robert: That 840 megawatt has the potential of generating well over two to $2 5 billion in revenue streams over a 10 to 15 year period.

Robert: There is obviously variability in that dependent on.

For example, having contract offtake agreements, which.

Robert: On the first three projects, we've actually announced.

Robert: Those contract agreements some of those projects still have to get.

Get through the financing.

Robert: But our first one now is.

Robert: Completed here or are set to complete let's say in the in close in April on our financing and Calistoga.

Robert Piconi: These offtakers on the first projects include public utilities and government backed financial institutions. Those are the type of offtakers that help ensure getting the best type of terms relative to the project financing that you get. But in every case, you want to minimize with these offtakes, the merchant risk, obviously, there's upside there on merchant revenue, with all the ability to capitalize on market participation for those upsides during times of more volatility in the power supply demand, and thus in the associated price.

Robert: These off takers on the first projects include public utilities and government backed financial institutions. Those are the type of off takers that help.

Robert: Sure we're getting the best type of terms relative to the project financing that you get.

But in every case you want a minimized with these off takes the merchant risk, obviously theres upside there on merchant revenue with all the ability to capitalize on market participation for those upsides during times of more volatility in the power supply demand and thus and the associated pricing.

Robert Piconi: I want to shift to 2025 now. We've provided some additional charts in the investor deck that will help simplify and bridge some of the numbers, which I invite you to review. We're going to be bridging, I think, back to some of the things we've talked about as we had our first Analyst Investor Day, where we set some guidance between what was 2024, which we knew was going to be a bit of a gap revenue year, and then as we looked at 2025. Coming off this last year, as we held some projects on our balance sheet and had some projects that moved to a little bit later in the year, we are expecting a large uptick in recognized revenue on the projects under execution, as well as pending opportunities to achieve upside given desire to have deliveries secured prior to the end of 2025 here in the US, given tariff increases in 2026.

Robert: I wanted to shift to 2025 now.

We've provided some additional charts in the investor deck that will help simplify and bridge some of the numbers.

Robert: Which I invite you to review.

Robert: We're going to be bridging I think back to some of the things we've talked about as we are.

<unk> had our first analyst and Investor day were reset some guidance between what was 2024, which we knew was going to be a bit of a GAAP revenue year and then as we looked at 2025.

Robert: Coming off.

Robert: This last year as we held some projects on our balance sheet and had some projects that moved to a little bit later in the year, we are expecting a large uptick and recognize revenue on the projects under execution.

Robert: Well as pending opportunities to achieve upside given desire to have deliveries secured prior to the end of 2025 here in the U S. Given tariff increases in 2026.

Robert Piconi: We're working hard on all the near term opportunities and deliveries this year, with the benefit of a large contracted backlog, obviously, which is a strong position to be in as we enter and are now almost to the end of the first quarter here in 2025. To bridge some numbers for everyone, and during our Investor Day in May a year ago, we provided an outlook, and the 2025 portion of that was resulting in about $450 million of revenue. I mentioned some of the bridges in the investor deck on our website, our outlook that we're giving for revenue for the year is 200 to 300 million.

Robert: We're working hard on all the near term opportunities in deliveries this year with the benefit of a large contracted backlog, obviously, which is a strong position to be in as we enter and are now.

Robert: Almost to the end of the first quarter here in 2025.

Robert: To bridge some numbers for everyone and during our Investor day in May a year ago, we provided an outlook and the 2025 portion of that was resulting in about $450 million of revenue.

Robert: I mentioned some of the bridges in the investor deck on our website our outlook that we're giving for revenue for the year is 200 to 300 million. So a midpoint of $250 million that fits squarely in line with this guidance with two main impacts to that recognize revenue.

Robert Piconi: So a midpoint of 250 million that fits squarely in line with this guidance with two main impacts to that recognized revenue. One we've just talked about today that started in October 2024 of the InterVest project that we were awarded that initially started as a standard build and transfer project with our energy storage solutions. That was converted, as we mentioned here earlier on the call, to a long-term energy service agreement that will have multiples of that, what would have been EPC revenue, and at higher profitability over time. So we're very excited about fulfilling that, albeit it is an impact to the initially anticipated revenue this year in terms of revenue recognition.

Robert: Why don't we just talked about today that started in October 2024 of the.

Robert: Interest project that we were awarded that initially started as a standard build and transfer project with our energy storage solutions.

Robert: That was converted as we mentioned here earlier on the call to a long term energy service agreement that will have multiples of that.

Robert: What would've been EPC revenue ended higher profitability over time. So we're very excited about fulfilling that albeit it is an impact to the initially anticipated revenue this year in terms of revenue recognition.

Robert Piconi: We expect that asset to be a minimum of the 14, 15 years, but be able to operate even well beyond that. The other impact that was significant and no secret is we've talked about on prior calls, we've seen a tremendous price erosion and degradation in the pricing associated with lithium-ion and LFP technologies. While that can be a good thing for project economics, and as you saw, we moved from a 5%, just over 5% gross margin in 2024 to a 13.5% or so gross margin, I'm sorry, from 2023 to 2024 to 13.5%. But that impact and that steep of a decline obviously is going to reduce the overall sizing of projects and total revenue.

Robert: We expect that.

Robert: Asset to be a minimum of the 14 15 years, but be able to operate even well beyond that.

Robert: The other impact it was significant and no secret as we've talked about on prior calls and we've seen a.

Robert: Tremendous price erosion in degradation in the pricing associated with lithium ion and an L. S T technologies.

Robert: While that can be a good thing for project economics, and as you saw we moved from a 5% just over 5% gross margin in 2024 to 13, 5% or so gross margin I'm, sorry from 2023 to 2024 to 13, 5%.

Robert: But that impact and that steep of a decline obviously is going to reduce the overall sizing of projects and total revenue.

Robert Piconi: So with that reduction was the other impact on our overall revenue for the year. But feel very good about having a backlog and achieving that range of revenue. A lot of things the teams are working hard on to try to deliver that revenue and try to deliver on the upsides that they target every year.

Robert: So with that reduction was the other impact on our overall revenue for the year.

Robert: But feel very good about having a backlog and achieving that that range of revenue a lot of things. The teams are working hard on to try to try to deliver that revenue and try to deliver on the upsides that that they target every year.

Robert Piconi: But the trade-off of the long-term at higher revenue and profit. over the long term versus the short term at much lower margin, we believe is the right one for the long term growth and profitability of the company and our shareholders.

Robert: But the trade off of the the long term at a higher revenue and profit.

Robert: Over the long term versus the short term at much lower margin. We believe is the right one for the long term growth and profitability of the company and our shareholders.

Robert Piconi: As noted above on cash and protecting the balance sheet, and here in 2025, we are only entering into projects. that we would own that have already contracted off takers with attractive IRR returns and that's the ability to have a high likelihood of financing and we'll make decisions as we progress here. We're very focused and selective on which projects we may go into. We have a process and a governance for how we look at those things. We obviously got started here with utilizing our own balance sheet cash on the first two projects as they were slightly smaller in nature and are now going to be backfilling some of that cash with the project financing.

Robert: As noted above on cash and protecting the balance sheet and here in 2025, we are only entering into projects.

Robert: That we would own that have already contracted off takers with attractive IRR returns and that's the ability to have a high likelihood of financing and we will make decisions as we progress here, we're very focused and selective on which projects. We may go into we have a process and a governance for how we look at those things.

Robert: <unk>, obviously got started here with utilizing our own balance sheet cash and on.

Robert: On the first two projects as they were slightly smaller in nature and are now going to be back filling some of that cash with the project financings.

Michael Beer: With that up front on those comments, I'd like to turn it over to Michael Beer. Thanks, Rob. As you highlighted, the company currently maintains a revenue backlog of $660 million, which increased 90% from the figure reported during our 3Q earnings results, and 3X that reported from our May 2024 Investor Analyst Day. This reflects a number of new projects in Australia, the U.S., and Switzerland, including the 100-megawatt, 200-megawatt-hour Horsham project in Victoria, Australia, the 125-megawatt, 1-gigawatt-hour Stony Creek project in New South Wales, which you already went into great detail on the 14-year long-term energy service agreement, the ALTESA.

Michael Bayer: With that upfront on those comments I'd like to turn it over to Michael Bayer.

Robert: Yeah.

Thanks, Rob as you highlighted the company currently maintains a revenue backlog of $660 million, which increased 90% from the figure reported during our <unk> earnings results and three ex that reported from our May 2024, Investor Analyst day.

Robert: Flex the number of new projects in Australia, U S and Switzerland, including the 100 megawatt 200 megawatt hour horsemen project in Victoria, Australia. The 125 megawatt one gigawatt hour Stony Creek project in New South Wales, and which you already went into great detail on the 14 year long term energy service agreement the El Paso.

Michael Beer: All told, we have 2.6 gigawatt-hours in projects in Australia either contracted in agreement for acquisition or awarded with the 400-megawatt-hour ASIN project already under construction. We're encouraged by the traction within our third-party build and transfer business, and the evolution of our build, own, and operate strategy, now representing 2.4 gigawatt hours via our EPC, EEQ, and long-term offtake agreements, with another 9.4 gigawatt hours, or $2.1 billion, in our developed pipeline of awarded or shortlisted opportunities, which the team is working to convert. Note, we adjust our developed pipeline for prevailing battery prices and FX rates for those projects overseas, which reflects the approximate 40% decline in battery prices and associated implications around changes in the tariff ratio.

Robert: All told we had $2 six gigawatt hours in projects in Australia, either contracted.

Robert: The agreement for acquisition or awarded with a 400 megawatt hour eastern projects already under construction.

Robert: Encouraged by the traction within our third party build and transfer business and the evolution of our build own and operate strategy now representing two four gigawatt hours via our EPC EQ and long term off take agreements with another $9 four gigawatt hours or $2 1 billion in our developed pipeline of awarded.

Robert: Short listed opportunities, which the team is working to convert.

Robert: Note, we adjust our developed pipeline for prevailing battery prices and FX rates for those projects overseas, which reflects the approximate 40% decline in battery prices and associated implications around changes in the tariff regime.

Michael Beer: As discussed during our investor and analyst tour at the Calistoga Resiliency Center in California earlier this quarter, the company continues to work with our financial partners around the optimal capital structure for those projects under the own and operate umbrella, leveraging our long-term energy storage agreement. We're in the process of finalizing a project financing transaction on the CRC project and in the market to secure project financing and ITC monetization for the CrossTrails project prior to completing that spend. As previously announced, with the Altesa award associated with the $350 million Australian dollar Stoney Creek project, we believe that project will have attractive returns with an appropriate level of project finance yet.

Robert: As discussed during our Investor and Analyst tour at the Calistoga Resiliency Centre in California earlier this quarter. The company continues to work with our financial partners around the optimal capital structure for those projects under the own and operate umbrella leveraging our long term energy storage agreements.

Robert: We're in the process of finalizing project financing transaction on the CRC project and in the market and secure project financing and ITC monetization for the cross sales project prior to completing that spend.

Robert: As previously announced with El Test award associated with the 350 million Australian Stony Creek project. We believe that project will have attractive returns within the appropriate level of project finance yet to be secured.

Michael Beer: As mentioned in our press release this afternoon, we're filing an extension for our annual report on Form 10-K to allow additional time to complete financial statement preparation and analysis due to a pending transaction which could affect subsequent events with. Okay, looking back at 2024 results, we achieved Q4 2024 revenue of $33.5 million, principally associated with the Jupiter-St.Gauld II equipment delivery. Full year 2024 revenue of $46.2 million was slightly below the low end of the guidance range due to rapidly declining battery prices and the timing of gravity-related license revenue recognition. As discussed previously, as part of the shift to retain ownership of accretive energy storage assets, management believes that the year-over-year decline in FY24 was in part attributable to the $100 million in projects retained on the company's balance sheet versus recognizing revenue through our build and transfer business.

Robert: As mentioned in our press release. This afternoon, we're filing an extension for our annual report on Form 10-K to allow additional time to complete financial statement preparation and analysis due to a pending transaction, which could affect subsequent events footnote.

Robert: Okay looking back at 2024 results. We achieved Q4 2020 for revenue of $33 5 million principally associated with the Jupiter St called to equipment delivery full.

Robert: Full year 2020 for revenue of $46 $2 million was slightly below the low end of the guidance range due to rapidly declining battery prices and the timing of gravity related license revenue recognition.

Robert: As discussed previously as part of the shift to retain ownership of accretive energy storage assets management believes that the year over year decline in FY 'twenty four.

Robert: In part attributable to the $100 million in projects retained on the Companys balance sheet versus recognizing revenue through our build and transfer business.

Michael Beer: Over the course of the year, the company invested $59 million into these assets, but had yet to complete the associated project financing or monetization of the associated tax credit credits as of 12-31-24, currently underway. On gross margin, our Q4 2024 gap gross margin of 7.7% improved versus the 3.4% margin a year ago, what was impacted by unfavorable revenue mix on equipment deliveries for the project in Texas. 2024 full year gap gross margins of 13.4% improved notably versus the 5.1% recorded a year ago, due to higher margin O&M services and SAS license revenue, but fell slightly below the low end of the guidance range due to a one-time warranty impact in which Energy Vault stepped in for a bankrupt supplier and the slippage in timing of recognition of gravity license revenue.

Robert: Over the course of the year the company invested $59 million into these assets, but have yet to complete the associated project financing or monetization of the associated tax great credits as of 12 $31 24 currently underway.

Robert: On gross margin, our Q4 2024, GAAP gross margin of seven 7% improved versus the three 4% margin a year ago, but was impacted by unfavorable revenue mix on equipment deliveries for the project in Texas.

Robert: 2020 for full year GAAP gross margins of 13, 4% improved notably versus the five 1% recorded a year ago due to a higher margin O&M services and SaaS license revenue, but fell slightly below the low end of the guidance range.

Due to a onetime warranty impact, which energy bolt stepped in for a bank of supplier and the slippage in timing of recognition of gravity license revenue.

Michael Beer: Adjusted Operating Expenses. Excluding the impact of stock-based compensation and other one-time items, our Q4 2024 adjusted operating expense of $16.1 million improved 15% year-over-year, reflecting cost-side actions taken earlier in the year. Full year 2024 adjusted operating expenses of $64.5 million, improved 19% year over year. During the company's Investor Analyst Day, management discussed the company's focus on core markets and activities to drive shareholder value, and has continued to tailor its approach on the cost side to right size and resource appropriate. We remain focused on portfolio optimization toward near-term and secure growth opportunities and expect cost optimization initiatives will continue in 2025, focused on accretive and cash-generative projects, as well as resource allocation to critical and near-term milestone-based initiatives.

Robert: Adjusted operating expenses.

Robert: Excluding the impact of stock based compensation and other one time items. Our Q4 2024, adjusted operating expense of $16 $1 million improved 15% year over year, reflecting cost side actions taken earlier in the year.

Robert: Full year 2024, adjusted operating expenses of $64 $5 million improved 19% year over year.

Robert: During the company's Investor Analyst Day management discussed the company's focus on core markets and activities to drive shareholder value and has continued to tailor its approach on the cost side to rightsize and resource appropriately.

Robert: We remain focused on portfolio optimization towards near term and secured growth opportunities and expect cost optimization initiatives will continue in 2025 focus on accretive and cash generative projects as well as resource allocation to critical and near term milestone based initiatives.

Michael Beer: Now turning to adjusted EBITDA, again, excluding stock-based comp, provision for credit losses, a write-down of an investment, and reorganization-related expenses, our full-year 2024 adjusted EBITDA improved modestly year-over-year to a loss of $57.9 million within the guidance range of a loss between $45 million and $60 million, and that's despite weaker revenue and total gross margin contribution due to our call-side initiatives implemented during the year. The company ended the year with total cash and cash equivalents of just over $30 million and no debt on the balance sheet as of 12-31-2024. Restricted cash also declined notably to less than $3 million at year end.

Robert: Now turning to adjusted EBITDA again, excluding stock based comp provision for credit losses, a write down of an investment and reorganization related expenses, our full year 2024, and adjusted EBITDA improved modestly year over year to a loss of <unk>.

Robert: $57 $9 million within the guidance range of a loss between $45 million and $60 million and thats. Despite weaker revenue and total gross margin contribution due to our cost side initiatives implemented during the year.

Robert: The company ended the year with total cash and cash equivalents of just over $30 million and no debt on the balance sheet as of 12 31 2024.

Robert: Tricky cash also declined notably to less than $3 million at year end total cash was below the guidance range as certain customer payments slipped into the new year and the Calistoga project financing to fund later than anticipated.

Michael Beer: Total cash was below the guidance range as certain customer payments flipped into the new year and the Calistoga project financing was signed later than anticipated. The company reported 59 million of cash used in investing activities, primarily related to construction of projects on owned and operated projects during the year. And the company ended the year with a total balance of property and equipment of a roughly $100 million. Largely again, associated with Calistoga and Snyder Tech. The company has now received a funding commitment from an investor inclusive of tax credit and expected closure in April 2025, returning $28 million to the balance sheet.

Robert: Company reported $59 million of cash used in investing activities, primarily related to construction of projects on owned and.

Robert: Operating projects during the year and the company ended the year with a total.

Robert: Balance of property and equipment of a roughly $100 million.

Robert: Largely again associated with Calistoga in Snyder, Texas.

Robert: The company has now received funding commitment from an investor inclusive of tax credit and expected closure in April 2025, returning $28 million to the balance sheet Calistoga achieved mechanical completion is now under commissioning of the system with full operation expected in Q2 in time for the critical fire season.

Michael Beer: Calistoga achieved mechanical completion is now under commissioning of the system with full operation expected in Q2 in time for the critical fire season. Meanwhile, the company is currently in the market for project financing and ITC monetization at Crossrails, but we've yet to complete that transaction or manage the spend accordingly. The company also continues to maintain significant bonding capacity in excess of a billion dollars to facilitate additional growth projects in both the U.S. and Australia. We continue to execute on the Build, Own and Operate strategy and have identified a strong funnel for storage asset ownership and infrastructure projects in the U.S.

Robert: Meanwhile, the company is currently in the market for project financing and ITC monetization across trails, but we've yet to complete that transaction or manage the spend accordingly.

Robert: The company also continues to maintain significant bonding capacity in excess of $1 billion to facilitate additional growth projects in both the U S and Australia.

Robert: We continue to execute on the build own and operate strategy and have identified a strong funnel for storage asset ownership and infrastructure projects in the U S and Australia totaling over 30 gigawatt hours.

Michael Beer: and Australia, totaling over 30 gigawatt hours. We also see a host of advantages and synergies across our legacy business, our traditional business, as we leverage our project management expertise, solutions based approach, and diversified storage product portfolio. While inherently more capital intensive than the EPC business, these accretive own and operated projects enhance earnings visibility and our margin profile. Despite multi-quarter progress around this strategy and our traction to date in identifying, securing a slate of attractive projects, we will manage and improve investment depending on the nature of the offtake agreement, available tax credits, and the use of project commitments.

Robert: We also see a host of advantages and synergies across our legacy business, our traditional business as we leverage our project management expertise solutions based approach and diversified storage product portfolio.

Robert: While inherently more capital intensive than the EPC business is accretive owned and operated projects enhance earnings visibility and our margin profile.

Despite multi quarter progress around the strategy and our traction to date and identifying securing a slate of attractive projects, we will manage improve investment depending on the nature of the off take agreement available tax credits and the use of projects now.

Robert Piconi: But that'll hand the call back over to Rob. Well, thank you.

Rob: With that I'll hand, the call back over to Rob.

Rob: Okay.

Rob: Alright, thank you.

Robert Piconi: Just to close here before we open up for questions, I want to Thank all of our employees at Energy Vault and the teams that are out executing globally on our projects supporting our customers. helping our communities. There's been a lot of I think events in particular here in the United States that impacted many of our employees, in some cases severely. And just a special thank you for those here in California that worked through the fires here in Southern California and others that were impacted by the other tragedies that took place.

Rob: Just to close here before we open up for questions.

Rob: I wanted to.

Rob: Thank all of our employees and energy vault and the teams that are out executing globally on our projects supporting our customers.

Rob: Helping our communities.

Rob: There's been a lot of I think events in particular here in the United States that impacted many of our employees and some cases severely and just a special thank you for those.

Rob: Those here in California that.

Rob: Worked through that the fires here in southern California, and others that were impacted by.

Rob: The other tragedies.

Rob: Tragedies that took place.

Operator: With that, Operator, I'll turn it back to you. Thank you.

Rob: With that operator, I'll turn it back to you.

Speaker Change: Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation Honeywell in the Carolinas in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before.

Operator: We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions.

Rob: Pressing the star keys.

Rob: One moment, please while we poll for questions.

Okay.

Operator: Thank you.

Rob: Thank you. Our first question is from Thomas Boyes with Cowen. Please proceed with your question.

Thomas Boyes: Our first question is from Thomas Boyes with Cowan. Please proceed with your question. Thank you very much for taking the questions.

Thomas Boyes: Thank you very much for taking the questions maybe excuse.

Robert Piconi: Maybe, excuse me, the first one is just what are the gating factors to hitting kind of your operational target for Calistoga? And is that linked to having the $28 million actually coming in? Or is there something else? Yeah, no, thanks, Thomas. On the operational targets that we have in terms of where we are with the project, it's in commissioning now. So the project's mechanically complete, and we're essentially going through now the activities to have the software now get the systems tested, sort of section by section, and then ramped up. We are then filling the green hydrogen tank, and then we'll be energizing the system here over the next 30 or 60 days as we go through that commissioning process.

Thomas Boyes: Excuse me. The first one is just what are the gating factors to hitting kind of your operational target for Calistoga.

Thomas Boyes: Is that linked to having the $28 million.

Thomas Boyes: Actually coming in or is there something else in Cleveland.

Thomas Boyes: Yeah no.

Thomas Boyes: Thanks Thomas.

Thomas Boyes: The operational targets that we have in terms of where we are with the project. It's in commissioning now so that the projects mechanically complete and we're essentially going through now the activities to have the software and now we get the systems tested sort of section by section and then ramped up we are.

Thomas Boyes: Then filling the green hydrogen tank.

Thomas Boyes: And then we'll be energizing the system.

Thomas Boyes: Here over the next 30 or 60 days as we go through that commissioning process. So in terms of operationally you asked about for successful it's getting to the I think <unk> and the timeframe. So we expect we don't expect to have.

Robert Piconi: So in terms of operationally, you asked about for successful, it's getting to the, I think, energization and the timeframes we expect. We don't expect to have issues here. We have fundamental technologies that each on their own have performed for many, many years between the hydrogen fuel cells, the tank from chart, and then we have a lithium ion system there, as you know, that essentially handles the grid forming and some of the black start capabilities and hosts our software that orchestrates the entire system.

Thomas Boyes: Issues here, we have a fundamental technologies that each on their own have performed for many many years between the hydrogen fuel cells.

Thomas Boyes: The tank from chart and then we have a lithium ion system. There as you know that essentially handles the grid, forming and some of the black start capability, then and hosts our software that orchestrates the entire system.

Robert Piconi: So I'd say we have a sort of a straight line here because we're we are McAfee employee and in commissioning to to have the system ramp up to your second question on the project financing that project financing is committed and so we go through a process into funding as normal that would be in the April timeframe but as far as that financing and then as the project gets to what's called you know either COD or or or operation and energization there's obviously things with that financing that then get unlocked let's say as we move that you know that system to full operation as well as things like monetizing tax credits which was included the the tax credit monetization was including in the in the finance Yeah, and I think importantly, you know, all of all of the capital to build that has already sort of gone out the door.

Thomas Boyes: So I'd say, we have a sort of a straight line here because we're we are makowski completing and commissioning to.

Thomas Boyes: To have the system ramp up.

Thomas Boyes: To your second question on the project financing.

Thomas Boyes: That project financing is committed and so we go through a process into funding as normal.

Thomas Boyes: Would be in the April timeframe, but as far as debt financing and then as the project.

Thomas Boyes: Gets to what's called an <unk>.

Thomas Boyes: Either C O D or our.

Thomas Boyes: Operation and Enriches Asian, Theres, obviously things with that financing that then get <unk>.

Thomas Boyes: <unk>, let's say is as we move that.

Thomas Boyes: That system to full operation as well as things like monetizing tax credits, which was included.

Thomas Boyes: The tax credit monetization was including in the in the financing.

Thomas Boyes: Yeah, and I think importantly, all of them all of the.

Thomas Boyes: The capital to build that is already sort of gone out the door and so as a result.

Robert Piconi: And so as a result, you know, that that cash would would return to us. So it wouldn't be allocated to completing the construction in other Of course, I appreciate the clarity there.

Thomas Boyes: Now that that cash would would return to us so it wouldn't be allocated to completing the construction and otherwise.

Thomas Boyes: So of course I appreciate the clarity there and maybe as my follow up just on.

Robert Piconi: And maybe as I follow up, just on the tariff impact, I mean, I'm just wondering quite of mitigating steps that you guys are taking. I've seen some reports where it's just on kind of where we are in the current tariff landscape that battery energy storage system costs could be up anywhere between like 6 to 15%. And obviously, there's some step changes that occurred to be in 2026.

Thomas Boyes: The tariff impact I mean, I was just wondering credit mitigating steps.

Thomas Boyes: But you guys are taking and I've seen some reports where just on kind of where we are in the current tariff landscape.

Thomas Boyes: Battery energy storage system cost to be up anywhere between 6% to 15% and obviously there are some step changes that occur to be in 2026.

Robert Piconi: So just want to get your view there and maybe an update on the core investment that you guys have made previously and maybe how that interplays into your position going forward. Okay. Well, great question. There's obviously a lot of focus on the tariffs as well here in the U.S. market. But I think as far as this year goes, while it delayed initially, I would say even into last year, some project decisions or let's say things took a little longer as the negotiations were longer of who absorbs the tariff. I think generally part of that decline in what we're seeing in Latamia and I think some of that is reflecting some ability of the suppliers to try to offset those tariffs.

Thomas Boyes: Just wanted to get your view there.

Thomas Boyes: Update on the.

Thomas Boyes: Core investment that you guys have made previously and maybe how that plays into your positioning going forward.

Thomas Boyes: Okay.

Thomas Boyes: Question Theres, obviously, a lot of focus on the on the tariffs as well here in the U S market, but we I think as far as this year goes we.

Thomas Boyes: Well all of the delayed initially I would say even enter into last year. Some project decisions or let's say things took a little longer as we you know the negotiations were longer of who absorbs the tariff I mean, I think generally yes.

Thomas Boyes: Part of that decline and what we're seeing in lithium ion I think some of that is is reflecting.

Thomas Boyes: Some ability of the suppliers to try to offset those tariffs.

Robert Piconi: We look at, as far as the U.S. goes, there's a push here this year on getting deliveries done prior to the end of the year where we have the larger tariffs that kick in up to 25%. So I think the good news about that is we have a lot of customers that would like to get deliveries into this year and into Q4, which that's nice for revenue recognition as things go. So I think we're seeing that dynamic. As we get into next year and the following years on that, I think there's going to be various initiatives.

Thomas Boyes: We look at them as.

Thomas Boyes: As far as the U S goes.

Thomas Boyes: Theres a push here this year on getting deliveries done prior to.

Thomas Boyes: Prior to the end of the year, where we have the larger tariffs kick in up to.

Thomas Boyes: Up to 25% so.

Thomas Boyes: I think the good news about that is.

Thomas Boyes: You know we have a lot of customers, who would like to get deliveries into this year and into Q4, which.

Thomas Boyes: That's nice for revenue recognition is as things go so I think we're seeing that dynamic.

Thomas Boyes: As we get into next year and the following years on that I think there's gonna be various initiatives. There's obviously things that are happening here in the U S with domestic players. The other thing with energy vault is we have a large set of forward revenue that's going to be coming in Australia. So we don't have those tariffs for example in Australia.

Robert Piconi: There's obviously things that are happening here in the U.S. with domestic players. The other thing with Energy Vault is we have a large set of forward revenue that's going to be coming in Australia. So we don't have those tariffs, for example, in Australia for the businesses we're supporting. We've announced many projects recently and have totaling there over 2.5 gigawatt hours. So I think having that global diversification is definitely helpful.

Thomas Boyes: For the businesses, we're supporting and we have announced many projects recently and have projects totaling there.

Thomas Boyes: But you know.

Thomas Boyes: Over two five gigawatt hours, so I think I think having that global diversification as is definitely helpful.

Robert Piconi: You asked about core power, so I'll mention this, that core had some difficulties after getting the conditional approval. in securing some of the equity associated with that. So they're associated with that conditional approval on the loan, not unlike, you know, I think some of the companies that had similar issues there. And so they're working through that and looking at alternatives for how they want to go forward to try to monetize. I think a piece of the business is they're more mobile and more C&I related type of business. So that continues. But as far as building out their factory, they have had a bit of a revamp in their strategy there.

Thomas Boyes: You asked about about core power. So I'll I'll mention this and that core had some difficulties in after getting a conditional approval.

Thomas Boyes: Approval.

Thomas Boyes: And securing some of the equity associated with that so there, especially with that that conditional approval on alone not unlike I think some of the companies that had similar issues there and.

Thomas Boyes: So they're working through that and.

Thomas Boyes: And looking at alternatives for how they want to go forward to try to monetize I think a piece of the business is.

Thomas Boyes: They're more mobile and more C&I related type of business. So that continues but as far as building out their factory they have.

Thomas Boyes: I had a bit of a revamping their and their strategy. There there are other domestic content options and other companies and ones that are a part of our part of our supply chain.

Robert Piconi: There are other, you know, domestic content options and other companies and ones that are a part of our supply chain. And we'll look to those as well as, you know, in some cases, you know, buying from outside of China. There's a lot of groups that are looking at building factories, both outside of China, outside the U.S. and some here in the U.S. So I expect this, you know, issue to get a little better over time. But in the meantime, you know, we're satisfied with what we've got this year and into next year and the other global markets we have where we don't have to deal with the tariff.

Thomas Boyes: We will look to those as well as you know in some cases.

Thomas Boyes: <unk> from outside of China, There is a lot of them.

Thomas Boyes: Groups that are looking at building factories outside of China outside the U S and some here in the U S. I expect I expect this issue to get a little better over time, but in the meantime.

Thomas Boyes: We're we're satisfied with what we got this year and into next year and the other global markets, we have or we don't have to deal with the tariff issues.

Thomas Boyes: Thanks a lot, appreciate the call and I'll hop back in queue. Thank you.

Speaker Change: Excellent I appreciate the color I'll hop back in queue.

Thomas Boyes: Thank you.

Speaker Change: Thank you. Our next question is from Chris Island House with Siebert Williams Shang. Please proceed with your question.

Chris Ellinghaus: Our next question is from Chris Ellinghaus with Siebert William Shanks. Please proceed with your question. Hey guys, good afternoon.

Speaker Change: Hey, guys good afternoon.

Robert Piconi: Rob, can you give us any update on Snyder? You mean our commercial demonstration unit there? Oh, sure. We have completed there and finalized some of the gravity, the first, let's say, two gravity demonstrations systems that are built at an MVP or minimum viable product. So, that's EVY, which is a slow gravity technology, and as well now just commissioning the EVX portion of that. So, those are – we use those to host customers. We also have our battery system there that hosts our software, as well as a PV, a solar array. So, we have a full, let's say, orchestration between renewable generation and storage and how the software is orchestrating across those technologies.

Speaker Change: Hi, Chris Rob can you give us any update on Snyder.

Speaker Change: Sure you mean that our commercial demonstration.

Speaker Change: Unit there are Oh sure.

Speaker Change: We have completed.

Speaker Change: Completed there the and finalized what are some of the gravity that first let's say two gravity demonstrations.

Speaker Change: Systems that are built at our.

Speaker Change: And MVP or minimum buyable product. So that's E b Y which is a slow gravity technology.

Speaker Change: And as well now.

Speaker Change: Commissioning the ex portion of that so those are we use those to host customers. We also have our our battery system. There that hosts our software as well as the PV a solar array. So we have a full.

Speaker Change: Let's say orchestration between renewable generation and storage and how the software is orchestrating across those technologies.

Robert Piconi: So, that's – we're completing some of those works just now and utilizing that site for hosting customers. We had customers, for example, at ESCOM made a visit there late last year, given some of the transitions. That's the largest and really is the power utility in South Africa that's going through their energy transition from coal right now. So, we have larger global customers that continue to visit it, and we're sharing, of course, everything we're doing there with Enel Green Power, which was the reason we were building out some of those assets in Texas as they're looking at technologies to evolve their global infrastructure.

Speaker Change: So the so that's a we're.

Speaker Change: Completing some of those works are just now and utilizing that site.

Speaker Change: For hosting customers, we had customers for example, about Eskom made a visit there are late last year given some of the transitions that are the largest and really is the power utility in South Africa.

Speaker Change: It's going through their energy transition from coal.

Speaker Change: Now so we have a.

Speaker Change: The larger global customers, who continue to visit it and we're sharing of course everything we're doing there with Enel Green power, which was the reason we were building out some of those assets.

Speaker Change: In in Texas as Theyre looking at technologies to evolve their their global infrastructure.

Robert Piconi: Is CapEx remaining for 2025 material? Not for Schneider. So we don't really have any all the all the hardware is there and acquired. We really don't have any near term plans on on any, any additional capex at all.

Speaker Change: As capex remaining for 2025 material.

Speaker Change: No not for cider. So we don't really have any all the all the hardware is there an acquired we really don't have any near term plans on.

Speaker Change: On any any additional capex at all.

Michael Beer: Yeah, I would I would I would just I would just highlight that, you know, we're of the belief that based on, you know, the IRA tax credits that that there is an associated, let's call it 13 to $15 million tax credit, you know, for that particular micro grid. And so that obviously would need to get would need to get monetized. Okay.

Speaker Change: I would just highlight that we're of the belief that based on.

Speaker Change: The Irish tax credits that there isn't a associated let's call it $13 million to $15 million tax credit.

Speaker Change: For that particular micro grids, and so that obviously, we'd need to get we need to get monetized.

Speaker Change: Okay.

Michael Beer: Um, Michael, um... The Q4 credit provision, can you give us some color there? Sure. So we had a credit asset associated with a gravity license from a customer in 2022. And given the delay in receipt of some payments, we took a conservative view in taking a reserve around that particular contract asset. We're still in communication and working with that particular customer for payment. But at this stage, we've gone ahead and taken a reserve and we'll continue to work with them to collect on that outstanding balance.

Speaker Change: Michael.

Speaker Change: The Q4 credit provision can you give us some color there.

Speaker Change:

Speaker Change: Sure. So we had a credit asset associated with a.

Speaker Change: Gravity license from a customer in 2022.

Speaker Change: And <unk>.

Speaker Change: Given the delay in receipt of some payments, we took a conservative view in.

Speaker Change: And taking a reserve around that around that particular contract asset.

Speaker Change: We're still in communication and working with that that particular customer for.

Speaker Change: For payment, but at this stage.

Speaker Change: Gone ahead and taken a reserve and we will continue to work with them to take to collect on that outstanding balance.

Michael Beer: Okay, you mentioned Crosstrail's project finance. Is there any color you can give us in terms of your expectation for timing or any roundabout magnitude there? Yeah, what I would say is, we're actively in the market having conversations today. And obviously, this is this would be viewed as a very attractive project with a with an offtake agreement in place. So we're, you know, we're, we're out there having those conversations today, and would be, you know, pretty encouraged that we'll, we'll be able to swiftly move to a close, but have not identified that that counterparty. And the goal would be obviously, you know, over the next couple of months to secure that and, and complete the, you know, complete the associated project.

Speaker Change: Okay.

Speaker Change: You mentioned cross Charles project financing.

Speaker Change: Is there any color you can give us in terms of your expectation for timing or.

Speaker Change: Any round about magnitude there.

Speaker Change: Yes, what I would say is were actively in the market.

Speaker Change: Having conversations.

Speaker Change: Today.

Speaker Change: And obviously this is this would be viewed as a very attractive project with a with an off take agreement in place.

Speaker Change: So were you know where we're at.

Speaker Change: They're having those conversations today and would be.

Speaker Change: Pretty encouraged that we'll.

Speaker Change: We will be able to swiftly move to a close but have not identified that that counterparty.

Speaker Change: And the goal would be obviously here over the next couple of months to secure that in and complete the.

Speaker Change: Complete the associated press.

Speaker Change: Jack.

Speaker Change: Okay.

Michael Beer: And lastly, in the revenue guidance for the year, Is, uh, can you give us any color of, uh... Licensing royalties included in that number. Today, we've not included anything material in that $250 or $200 to $300 million associated with Gravity, but you know, Gravity is, even historically, has been a fairly de minimis amount of revenue. It is, however, high margin, so it contributes quite nicely to the gross margin, but it's fairly de minimis in the overall mix from that perspective. We do obviously have contracts in place. We've talked about publicly with Gasol in South Africa, continuing to work with those folks and a host of others.

Speaker Change: And lastly.

Speaker Change: In the revenue guidance for the year.

Can you give us any color of.

Speaker Change: Licensing royalties included in that number.

Speaker Change: Today, we have not included anything material in that 250 to $200 million to $300 million associated with with gravity, but gravity is even historically has been a fairly de minimis amount of revenue. It is however high margin so it contributes quite nicely too.

Speaker Change: To the gross margin, but it's fairly de minimis in the overall mix from that perspective, we do obviously have contracts in place we've talked about publicly with guests all in South Africa, continuing to work with those folks and a host of others.

Michael Beer: But in terms of incremental, it's not a meaningful part of that $200 to $300. OK, that's helpful.

Speaker Change: But in terms of incremental.

Speaker Change: It's not a meaningful part of that of that 200 to 300, Okay. That's helpful and lastly, Rob you sort of.

Robert Piconi: And lastly, Rob, you sort of, sorry about that. alluded to this, I think, but with the decline in lithium-ion prices so significant. Would it be fair to say that, um, with that portion of the denominator being so much smaller, um... Would it be fair to say that margin is likely to be higher for 2025? By the way, it's a great question. Our expectations are, given our supply chain and the way we've, as we've won projects, Chris, and then going to secure based on a bucket of projects, for example, that are within a 90-day window of award, we try to go secure pricing.

Speaker Change: Sorry about that.

Rob: Alluded to this.

Speaker Change: But with the.

Speaker Change: Plumbing in lithium ion prices so significant.

Speaker Change: Would it be fair to say that.

Speaker Change: With that.

Speaker Change: Portion of the denominator being so much smaller.

Speaker Change: Yes.

Would it be fair to say that margin is likely to be higher for 2025.

Speaker Change: Hi by the way, it's a great question, our expectations are given our supply chain and the way we've.

Speaker Change: As we've won projects, Chris and then going to secure based on a bucket of projects. For example that are in within a 90 day window of award we try to go secure pricing.

Robert Piconi: And there's obviously a lot of interest from the supply side to aggressively price. So we are expecting margin expansion as we look at the year and something that I think we've managed well, even in the Australian market, as we begin to execute there. So we, you know, we're, we believe this will be a good thing for projects and also even the IRRs on, you know, Michael mentioned CrossTrails, you asked about, and we're in the market there on the financing, but you're, those, those projects are, you know, get, get interesting. And so as we grow that, now the revenue base start to go off that backlog a bit here, and we, we feel, we feel good about that.

Speaker Change: And there's obviously a lot of interest from from the supply side too aggressively priced. So we are expecting margin expansion is.

Speaker Change: We look at the year end.

Speaker Change: And something that.

Speaker Change: I think we've managed.

Speaker Change: Well, even in the Australian market is as we begin to execute there so.

Speaker Change: We were we believe this will be a good thing for projects and also even the IRR is.

Speaker Change: Michael mentioned cross trails, you asked about and we are in the market there on the financing, but those those projects are.

Speaker Change: <unk> get interesting and we're managing I think with the suppliers in a way that allow us to.

Speaker Change: To do it.

Speaker Change: Incrementally better and I think we've shown that.

Speaker Change: If you look at 2023.

Speaker Change: At the 5% growing that to 13, and a half and and were expecting some expansion again this year, especially as the higher revenues and we last year. We only had 46 just over 46 million in revenue and.

Speaker Change: So as we grow that now the revenue base start to go off that backlog a bit here and we feel we.

Speaker Change: We feel good about that.

Robert Piconi: Right. That makes sense.

Speaker Change: Alright that makes sense.

Robert Piconi: One more thing you talked about, you know, maybe some of the lithium ion cost reduction is sort of front running tariffs. Given a lot of purchasing for Australia that won't be affected by those tariffs, is there a pricing differential between a U.S. purchase right now and Australia? The answer is yes. We, I say, you know, generally, we're taking advantage of the fact that the The pricing, I think what one is out of Out of China has come down broadly, again, focused on the U.S., so we're taking advantage of that in Australia. And I think also even the providers are targeting Australia, I think, as a market to try to achieve a little better than what they're achieving, you know, potentially on the U.S.

Speaker Change: One more thing you talked about.

Speaker Change: Maybe some of the lithium.

Speaker Change: Cost reduction is sort of.

Speaker Change: Running tariffs.

Speaker Change: <unk>.

Speaker Change: Given a lot of purchasing for Australia.

Speaker Change: That won't be affected by those tariffs is there a pricing differential between a U S purchase right now in Australia.

Speaker Change: The answer is yes.

Speaker Change: <unk>.

Speaker Change: I'd say <unk>.

Speaker Change: Generally we are taking advantage of the fact that the.

Speaker Change: The pricing I think one is out of them.

Speaker Change: Out of out of China has come down broadly again focused on the U S. So we're taking advantage of that and in Australia and I think also even the debt providers are targeting Australia, I think there's a market to try to achieve a little better.

Speaker Change: And then what they're achieving potentially on the us side, but I'd say generally.

Robert Piconi: side. But I'd say generally we're, you know, trying to take advantage of that in terms of just the arbitrage there.

Speaker Change: We're we're.

Speaker Change: Trying to take advantage of that in terms of just the the arbitrage there.

Robert Piconi: Okay, thanks. I appreciate the color.

Speaker Change: Okay. Thanks, I appreciate the color.

Michael Beer: And just one comment on that, you know, as a company, we've been sort of duration agnostic, but obviously have a very unique foothold in, you know, long duration or ultra long duration opportunities. And quite frankly, at prevailing battery prices today, you know, these longer duration projects can pencil whereas maybe a couple of years they hadn't. So I think, you know, that is an interesting sort of driver and you're starting to see creep in a project with the slightly longer duration. Okay, that's helpful, Michael. Appreciate it. Thank you.

Speaker Change: And just one comment on that.

Speaker Change: As a company we've been sort of duration agnostic, but obviously you have a very unique foothold in long duration or ultra long duration opportunities and quite frankly.

Speaker Change: At prevailing battery prices today.

Speaker Change: These longer duration projects can pencil, whereas maybe a couple of years. They they had so I think that is an interesting sort of driver and you're starting to see creep in.

Speaker Change: Our project with slightly longer durations.

Michael: Okay. That's helpful. Michael appreciate it.

Speaker Change: Yes.

Thank you there are no further questions at this time I'd like to hand, the floor back over to Robert <unk> for any closing comments.

Operator: There are no further questions at this time. I'd like to hand the floor back over to Robert Piconi for any closing comments. All right, just to thank everyone for their time and joining the call, and we'll look forward to to get together once again here in a quarter. Thank you all very much. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Okay.

Robert: Alright, just to thank everyone for their time and and joining the call and we'll look forward to to get together once again here.

Speaker Change: Here in a quarter. Thank you all very much.

Speaker Change: Okay.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.