Q4 2024 Gauzy Ltd Earnings Call
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Scott: Good morning, and welcome to the Galaxy limited fourth quarter and full year 'twenty 'twenty four earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A at this time I would like to turn the conference Overachieving as Scott Investor Relations. Thank you.
Speaker Change: You may begin.
Scott: Thank you operator, and thank you everyone for joining us today.
Speaker Change: During the call today are gouging, CEO and cofounder H O peso and CFO mayor, but like.
Speaker Change: On this call management will be making forward looking statements not historical facts, which are based on management's current expectations beliefs projections and assumptions many of which by their nature are inherently uncertain.
Speaker Change: These forward looking statements are subject to risks and uncertainties actual results could differ materially from our forward looking statements if any of our key expectations beliefs projections or assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call or in our latest.
Speaker Change: <unk> reports and filings with Securities and Exchange Commission each of which can be found on our website www Dot galaxy Dot com, we do not undertake any duty to update any forward looking statements. This call contains time sensitive information that is accurate only as of today March 11th 2025.
Speaker Change: As required by law.
Speaker Change: <unk> disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
Speaker Change: Today's presentation also includes references to non-GAAP financial measures.
Speaker Change: You should refer to enter the information contained in the company's fourth quarter and full year press release for definitional information and reconciliations of historical non-GAAP measures.
Speaker Change: The comparable financial measures with that let me turn the call over to al.
al: Thank you very much Dan and good morning, everyone. Thank you for joining us today as we discuss our fourth quarter and full year 2024 adults.
Speaker Change: 'twenty 'twenty four was a transformative year for Gallagher following ours.
Speaker Change: Well do an IPO, we've demonstrated strong execution across all.
Speaker Change: Facets of our business.
Speaker Change: Achieving record levels on all key financial metrics revenue gross margin and EBITA, while expanding our global flip.
Speaker Change: I want to express my deepest appreciation to our exceptional team for their dedication and professionalism and to our investors for their continued support for.
Speaker Change: For today's call I'll focus my remarks on three key topics first I'll discuss our impressive fourth quarter and full year, 2024, performing which underscores the strength of our business model and growing demand all of our technology.
Speaker Change: I can I'll highlight the significant business milestones, we achieved across our four business divisions, including major contract wins and strategic partnerships that will drive our growth in 2025 and beyond and finally I'll share our outlook for 2025, including the exciting innovation and expansion opportunity that will.
Speaker Change: Further accelerate our growth trajectory.
Speaker Change: Our fourth quarter performance demonstrated strong execution across our business segments with robust demand is driving revenue growth in aeronautics architecture and safety that we successfully addressed previous production constrained by adding a second shift at our French facility, which has significantly enhanced our ability to me.
Speaker Change: Meet accelerating demand from our global customer base.
Speaker Change: For the fourth quarter, we delivered record revenue of $31 $1 million representing growth of 41, 8% compared to the fourth quarter of 2020 Scoop. This impressive growth was driven by particularly strong.
Speaker Change: Performance in safety check Aeronautics and architecture for the full year, our revenue reached a new record level of $103 $5 million up 32, 8% compared to 2023, including record revenue from all four segments.
Speaker Change: A staggering 80% of our 2020 for revenue.
Speaker Change: Recurring from existing customers. This is this repeat business is what gives us confidence in our strong growth outlook in 2025 and beyond.
Speaker Change: We made significant progress in improving our gross margin, which expanded to 36, 5% in the fourth quarter up 800 basis points from 28, 5% in the prior year quarter.
Speaker Change: For the full year gross margin improved to 28, 7% a 310 basis point increase from 25, 6% in 2023. This groundbreaking achievement reflects both the benefits of scale and operating efficiencies.
Speaker Change: Importantly, we achieved our goal of producing positive adjusted EBITDA for the first time ever in the fourth quarter, reaching zero point $2 million compared to negative $6 million in the prior year quarter. This achievement.
Speaker Change: A significant milestone in our journey towards sustained profitability and demonstrate our commitment to balancing strong growth with financial discipline.
Speaker Change: Looking back at 2024, I'm incredibly proud of what we accomplished in our first seven months as a newly public company we.
Speaker Change: We delivered consistent growth and achieve profitability during the year, while expanding our market leadership positions across our core technologies.
Speaker Change: Our commitment to innovation and operational excellence has strengthened our relationship with global OEM.
Speaker Change: As MSC cruise lines, Embraer, Ferrari Tong and Ford trucks, who recognize the transformative value RT clause he is bringing to their platform.
Speaker Change: Now let me highlight some of the key business milestones, we achieved during the fourth quarter and subsequent period.
Speaker Change: Some of our most exciting development continues to come in our safety Tech Division, especially from galleries advanced driver assistance system.
Speaker Change: Our Adas was chosen to fully replace traditional side mirrors on capital District Transportation Authority of New York Public buses.
Speaker Change: And that Utah.
Speaker Change: The world's largest bus OEM had increased fourth quarter orders.
Speaker Change: Year over year positioning Ghazi, two extended global share with buses using our smart vision Adas.
Speaker Change: In addition, we recently announced that we have secured renewal of <unk>.
Speaker Change: F M CSA exemption, which allows us to be the only company in the U S to fully remove mirrors on municipal buses and replace them with our smart vision system in all 50 states.
Speaker Change: This is an opportunity or retrofit over 900000 buses today, representing a multibillion dollar market annually. In addition, we initiated a multi year silver production program with Ford trucks, with our newest smart vision III AI based Adas platform, representing an additional multibillion dollar.
Speaker Change: Opportunity with Oems in new production.
Speaker Change: And our automotive division, our silver production program with Ferrari to supply, our SPD or suspended particle device smart glass technology to support their first ever for Cedar and accelerating as the overwhelming majority of customers up for the smart glass option over carbon.
Speaker Change: We also expect to ramp deliveries to two other large Oems in 2025, and we're especially excited that will be featured by Daimler at the Shanghai Auto show This spring.
Speaker Change: And our architecture Division our exciting technology is now fully on display at three major iconic landmark.
Speaker Change: As we alluded to last quarter. We are featured on the facade at the MSC cruise ship terminal in Miami the largest terminal in the world. We are an integral part of the Dubai frame.
Speaker Change: And our inspiring structure that stands at 150 meters tall, one of the most recognizable tourist attractions in the middle East.
Speaker Change: You can experience our exciting technology in the elevators that take you to the top of the Washington Monument in Washington D. C. These projects provide tremendous recognition of lousy unique off rig is an architecture.
Speaker Change: We are a global provider in our building materials.
Speaker Change: And seeing the fastest growth in the U S, which now represents over half of our sales in this segment.
Speaker Change: As we look ahead to 2025, we expect to commence shipping our new B IPV technology, which is a transparent PV solar cell integrated into facade and skylight showcased for the first time at blocked that 2024.
Speaker Change: Finally, I'm extremely proud to announce that our team secured in order to deliver 5000 windows per year to a major U S manufacturer of recreational vehicle cabin with a potential to grow in the quarters ahead.
Speaker Change: In our Innerwear Nowadays Division. The addition of our second shift in France helped us deliver the majority of our delayed shipments from the prior quarter and positions us to better serve this accelerating net adds.
Speaker Change: As a reminder, we are already roughly 95% market share in cockpit cheating, which we still see growth due to planes flying more hours per year, which accelerates their maintenance and replacement cycle.
Speaker Change: We are rapidly growing in cabin changing as well the new partnerships with two aircraft manufacturers and a number of major International Airlines.
Speaker Change: We've made significant progress with our prior year development and in expanding our strategic partnerships, we partnered with umbrella to harness AI.
Speaker Change: Breakthroughs in Adas with road safety enhancing technology already operational in four trucks.
Speaker Change: We bolstered our presence in South Korea through strategic collaboration with maybe a industrial positioning goudy wells to capture adoption of smart vision camera monitoring system in a market that average averages over 255000 commercial vehicles sales per year.
Speaker Change: Before I turn it over to mail I want to emphasize that we are introducing our 10 year committed and contracted backlog for the first time.
Speaker Change: This reflects accelerating long term demand across all our segments are our current customers serial production programs indicate a projected revenue pipeline exceeding $1 billion.
Speaker Change: Of which a minimum of $409 million is contracted and committed backlog.
Speaker Change: We will continue to disclose our purchase orders currently at $31 million, which we expect to ship in the next few months.
Speaker Change: This new matrix, along with our strong fourth quarter performance demonstrates the visibility and predictability of our revenue model, which is increasingly characterized by a long term supply agreements with minimum annual commitments.
With that I will turn it over to me for an update on <unk> financial results.
Speaker Change: Thank you Yao.
Speaker Change: I'd like to begin by providing a detailed overview of our fourth quarter and the full year 'twenty 'twenty four financial results, which demonstrate our strong execution and continued progress toward our long term financial objectives.
Speaker Change: For the fourth quarter, we generated revenues of $31 1 million, which was up 41, 8% from $22 million in the prior year period.
Speaker Change: This impressive growth was primarily driven by particular strength in safety and architectural divisions as well as strong performance.
Speaker Change: So long as the additional of second shift at our production facilities.
Speaker Change: Gross profit for the fourth quarter was $11 4 million, an increase of 81, 4% compared to $6 3 million is the prior year quarter.
Speaker Change: This equated to gross margin in the fourth quarter of 36, 5% and 800 basis point improvement from 28, 5% is the prior year period.
Speaker Change: This substantial margin expansion was primarily due to the benefit of scale and operational efficiencies.
Speaker Change: Operating expenses for the fourth quarter were $15 8 million up five 5% compared to 15 million in the prior year quarter.
Speaker Change: This increase was mainly due to increases in share based compensation expenses offset by decreases in sales and marketing costs.
Speaker Change: Net loss for the fourth quarter narrowed significantly to $11 4 million compared to $20 7 million the prior year quarter.
Speaker Change: Mainly due to an increase in gross profit and a decrease in financial expenses.
Speaker Change: non-GAAP adjusted net loss for the fourth quarter of <unk> 7 million compared to $11 2 million.
Speaker Change: A quarter with the improvement primarily due to the higher gross profit.
Speaker Change: And then you all mentioned, we achieved a significant milestone in the fourth quarter by generating positive adjusted EBITDA of 0.2 million compared to negative 6 million in the prior year quarter.
Speaker Change: This improvement was driven by our strong revenue growth margin expansion and operating leverage.
Speaker Change: For the full year to 124 revenue increased 32, 48% to $103 5 million compared to $78 million in 2023.
Speaker Change: Gross profit for the full year was $29 7 million up 49, 1% from $19 9 million is Wednesday.
Speaker Change: Full year gross margin expanded 310 basis points to 28, 7% compared to 25, 6% in 2023.
Speaker Change: Net loss for the full year was $53 2 million a significant improvement from the net loss of $79 $3 million in 2023.
Speaker Change: non-GAAP adjusted net loss for the full year was $29 3 million an improvement from $36 8 million in the prior year.
Speaker Change: Adjusted EBITDA for the full year improved to negative $14 2 million from negative $20 7 million in 2023.
Speaker Change: Now turning to our segment results starting with safety deck.
Speaker Change: Revenue in this segment were $13 million in the fourth quarter up 73% compared to $7 5 million the prior year quarter.
Speaker Change: This strong growth was driven by robust demand across the segments product lines.
Speaker Change: Gross profit as a safety stock or $3 million up from 1 million is the prior year quarter.
Speaker Change: Gross margin improved to 23% compared to 12, 7% in the prior year period, primarily due to the benefit of scale.
Speaker Change: And I would ask segment's revenue was $13 4 million in the fourth quarter up 26, 7% compared to $10 6 million over the prior year.
Speaker Change: Gross profit increased 62, 2% to $6 8 million compared to $4 2 million in the prior year quarter.
Speaker Change: Gross margin expanded significantly to 51, 1% up from 39, 9% in the prior year period.
Speaker Change: This improvement reflects the successful shift in deliveries for the third quarter to the fourth quarter as we added operational capacity to meet strong demand.
Speaker Change: Architectural segment revenue was $4 1 million in the fourth quarter up 31, 8% compared to $3 1 million in the prior year quarter, driven by growing worldwide demand.
Speaker Change: Gross profit increased 54.
Speaker Change: 8% to $1 5 million compared to 1 million in the prior year quarter.
Speaker Change: Gross margin expanded to 37, 6% up from 32% in the prior year period, due primarily by high revenues driving the benefits of scale.
Speaker Change: Now automotive segments revenue was zero point $7 million in the fourth quarter compared to 0.8 million in the prior year quarter.
Speaker Change: We expect our automotive segment show improving results in 2025 is our new programs with major Oems begins to ramp up.
Speaker Change: Turning to our balance sheet and liquidity position. We ended the year with total liquidity of 46 million, including $5 6 million of cash and cash equivalence and 35 million of available capacity under our Undrawn trade line.
Speaker Change: Total debt at year end was 38 4 million, including $13 2 million of short term receivables financing.
Speaker Change: December 31st 2024, we had basic and diluted ordinary shares outstanding of $18 million 720 287.
Speaker Change: I'm also pleased to announce that we are providing initial guidance for the full year 2025 revenue.
Speaker Change: We expect revenue to be in the range of $130 million to $140 million, representing approximately 30% growth at the midpoint compared to 2024.
Speaker Change: Basically the benefit of scale the favorable operating leverage the stronger recurring revenue base that we have we expect adjusted EBITDA to be positive for the full year towards 25.
Speaker Change: Based on our typical seasonality and latest visibility in our end markets. We expect in the second half to be stronger than the first half and to drive full year growth and profitability.
Speaker Change: This guidance reflects the strong demand, we're seeing across all of our segments. The growing adoption of our technology with the leading Oems and the expanded production capacity, we have put in place to meet this demand now I will turn it back to over to Eyal for closing remarks.
Speaker Change: Thank you ma'am.
Speaker Change: As we look ahead to 2025, we are incredibly excited about the opportunities in front of the momentum in our business continues to build especially with our smart vision Adas system, gaining significant traction in transportation systems across major global Mike.
Speaker Change: The strength of our long term backlog growing pipeline of innovation and expanded production capacity give us confidence in our growth trajectory.
Speaker Change: Introduction of the 10 year committed and contracted backlog, which currently stands at $409 million provides.
Speaker Change: Provides unprecedented visibility into our long term growth potential this metric demonstrates the strategic nature of our relationships with customers, who are increasingly committing to multiyear supply agreements as they recognize the transformative value of our technology.
Speaker Change: We will continue to invest in innovation, expanding our technology leadership and light envision control the colleagues.
Speaker Change: Our product roadmap includes exciting new developments across all four of our business divisions, which we believe will further accelerate adoption and expand our addressable markets.
Speaker Change: Operationally, we will maintain our focus on scaling efficiently balancing strong growth with continued margin expansion and progress towards sustained profitability. The operational improvements we've implemented including the additional production capacity position us well to capitalize on the growing demand of our products.
Speaker Change: We also recognize the importance of sustainability and driving adoption of our products.
Speaker Change: Our technology has enabled significant energy savings and building improved fuel efficiency and transportation and enhance public safety for drivers and passengers.
Speaker Change: These benefits align perfectly with global sustainability initiatives and regulations, creating additional tailwind for our business.
Speaker Change: In closing I want to express my gratitude to our employees customers partners and shareholders for their continued support and confidence in gout.
Speaker Change: We have built a strong foundation as a public company in 2024, we are well positioned to deliver accelerating growth and improving financial performance in 2025 and beyond.
Speaker Change: Thank you for your time today now we will open up the line for questions.
Speaker Change: Thank you and then I'll begin the question and answer session to ask a question you May press star followed by the number one I guess telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw. Your question you May press star followed by the number two once again the asbestos.
Speaker Change: Darwin to join the queue.
Speaker Change: Okay.
Speaker Change: And your first question comes from the line of Josh Nichols with B Riley. Please go ahead.
Speaker Change: Okay.
Josh Nichols: Yes, Thanks for taking my question good to see the company.
Josh Nichols: EBITDA profitability and what im digging into a little bit just wanted to get a little bit more color. It's good to see this this long term backlog that you started disclosing.
Josh Nichols: I'm looking at the 2025 and revenue guidance in terms of visibility how much of that is like already in the backlog.
Josh Nichols: It provides very good visibility for 2025.
Josh Nichols: Yeah.
Josh Nichols: Hi, Josh.
Speaker Change: Thanks for the question Thanks for taking the time today.
Josh Nichols: This is a.
Speaker Change: Speaking so.
Speaker Change: Out of the 49 that we have disclosed and we will start it.
Speaker Change: His report.
Speaker Change: Hum.
Speaker Change: On an annual on a yearly basis.
Speaker Change: I'd say that less than 50%.
Speaker Change: Of that backlog is going to be there's going to be shipped in 'twenty five.
Speaker Change: So that should give.
Speaker Change: She'd give you kind of the cadence of how much is actually committed and contracted and how much were.
Speaker Change: We're still making next year.
Speaker Change: Which is which is which is also.
Speaker Change: From recurring customers.
Speaker Change: Very solid.
Speaker Change: So 50% of our guidance. So we are providing guidance for the first time, maybe it's worth saying, so I would say less than 50%.
Speaker Change: Just a bit less than 50% is going to go away from that backlog that backlog is the contracted and committed.
Speaker Change: Supply agreements we have.
Speaker Change: We kept it for 10 years.
Speaker Change: So, but we're doing we're doing a lot of business with recurring customers that provide us with orders on a quarterly basis.
Speaker Change: In all segments that are not including in the included in that upper or nine <unk>.
Speaker Change: Contracted and committed.
Speaker Change: So yes, so that's kind of to give you and that number is growing.
Speaker Change: All the time, the contracted and committed but we thought as we have long term.
Speaker Change: Contracts, it's worth giving this information to investors and to the market to two <unk>.
Speaker Change: Understand kind of better how visible we are.
Speaker Change: With with our guidance.
Speaker Change: No I appreciate that the context I know you touched on it before but I know, there's definitely a little bit of seasonality to the business.
Speaker Change: Second half going to be stronger than the first half.
You could just provide a little bit more granularity since for we're getting late in the quarter in terms of what type of like typical quarter over quarter step down you see in terms of revenue for <unk> relative to <unk>.
Speaker Change: Thanks, Josh This is Mary Thank you for the question.
Speaker Change: As we always said we are a full year business that shows up some typical seasonality Q1 is our slowest Q2 higher Q3's, mostly like Q2, maybe a bit.
Speaker Change: Lower due to vacation patterns in euros in Europe, and then Q4 is our strongest strongest.
Speaker Change: Quarter ever ever in there and in the years during <unk>.
Speaker Change: <unk> for the last yes.
Speaker Change: Some more some more insight into that Josh for me is also you should expect.
Speaker Change: As it's always been an <unk> to have the second half of the year drive.
Speaker Change: We got we gave guidance that we're going to be EBITDA positive adjusted EBITDA positive on a full year you should expect that age to the second half is going to drive.
Speaker Change: Drive that that matrix.
Speaker Change: Fair enough and then just one follow up for me then I'll pass the torch and when Youre looking at the different revenue segments I assume that you would expect safety checks kind of took the lead in terms of its contribution to the growth followed by our aeronautics to a lesser extent or.
Speaker Change: A little bit more granularity on the breakout between the three segments would be helpful.
Speaker Change: So yeah.
Speaker Change: Youre right I mean.
Speaker Change: This year, we expect and you see it in the figures of 24.
Speaker Change: The safety Tech Division, which is really what.
Speaker Change: What we also considered part of their automotive.
Speaker Change: <unk> segment, but on the Adas side.
Speaker Change: Gonna be.
Speaker Change: Probably.
Speaker Change: The biggest segment. This year, however, I would like to say that our margin wise and <unk>.
Speaker Change: It's gonna be.
Speaker Change: It's going to be well well contributed between the four segments.
Speaker Change: So automotive light controlling smart glass with with much higher and healthier figures.
Speaker Change: This year and and all four segments to be at to be honest, they're gonna are growing significantly within.
Speaker Change: Within the guidance we gave.
Speaker Change: But youre right safety Tech is probably going to be the bigger of the floor.
Speaker Change: Contributing to the topline.
Speaker Change: I appreciate it thanks, I'll hop back in the queue.
Speaker Change: Thank you Josh.
Speaker Change: And once again, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Next question comes from the line of Dan Levy with Barclays. Please go ahead.
Dan Levy: Hi, good morning, Thanks for taking the questions.
Speaker Change: Wanted to continue with the questioning on the revenue.
Speaker Change: I appreciate the comment that you gave that the backlog.
Speaker Change: At that point or $9 million less.
Speaker Change: Less than half that is going to get shifted in 'twenty five, but maybe you can talk about sort of what variables there could be that would impact whether that shift. Obviously, we know that there are macro concerns, but sometimes we've seen in the past companies, where they had line of sight on the backlog if something materializes the backlog.
Speaker Change: That will play out.
Speaker Change: As planned so just what are the different variables to consider on backlog and then more broadly on revenue for 2025.
al: Hi, Dan Good morning. Thanks. This is al.
Speaker Change: To answer the question.
Speaker Change: We want to be we want to be we want to be clear.
Speaker Change: We're now providing that committed and contracted backlog capped by 10 years, which is a mass ships. This is not a.
Speaker Change: This is the minimum take rates that are subscribed on our annual supply agreements between the different segments that that.
Speaker Change: That is 100%.
Speaker Change: Committed to be shipped.
Speaker Change: It doesn't come in the form of a purchase order that we said.
Speaker Change: You know, we don't get a purchase order for year 2026, 2027, with Ferrari, but we have a minimum.
Speaker Change: Take rate minimum commitment to us and we have to be ready and it's going to go out whatever happened in D&O. So this 409 and.
Speaker Change: That part of it that's going out in 25, which is.
Speaker Change: A little less than half of our guidance for this year is 100% going out we have many other customers, which are have recurring revenues with us.
Speaker Change: During the year. One example is <unk>, which we have not subscribed into the 409 because its not.
Speaker Change: Production multiyear annual commitment, but they provide us projections with.
Speaker Change: You know until now, 100% statistics or more that they they basically order.
That's for instance, does not go into the 409.
Speaker Change: And also it's only based on the minimum take rates committed to us. So that's how we should see this backlog it's really.
Speaker Change: Contracted committed audited.
Speaker Change: 100%.
Speaker Change: And that number is growing we are.
Speaker Change: We're taking out of it in 'twenty, five obviously, but we're winning more.
Speaker Change: Long term contracts that were going to add to that figure.
Speaker Change: But only once 100% committed to us.
Speaker Change: Great. Thank you.
Speaker Change: The second question.
Speaker Change: I was hoping you could address the cash and liquidity on the balance sheet, youre, saying youre going to be EBITDA positive, but maybe I don't know if you could give us a little short of what free cash flow will look like in 2025 how.
Speaker Change: How much capex and what the cash dry and $5 million of cash on the balance sheet. I know you have some added liquidity so presumably your free cash flow will be negative.
Speaker Change: Will you address that shortfall as a draw on your revolver will you have to raise new debt.
Speaker Change: So.
Speaker Change: Let me comment a lot I appreciate it thank you.
Speaker Change: Thank you Dan just as the mayor.
Speaker Change: First of all we expect to be EBITDA positive in 2025, and we expect to be cash flow positive in 2026.
Speaker Change: As we mentioned.
Speaker Change: The 20-F the company is currently finalizing a debt financing arrangement with our Israeli commercial bank.
Speaker Change: We're at $10 billion.
Speaker Change: And we expect to enter into definitive definitive agreements with the banks.
Speaker Change: First half with 25 of course, we cannot.
Speaker Change: We can.
Speaker Change: There could be no assurance that the definitive agreement will be entered into.
Speaker Change: And yes, so as disclosed before.
Speaker Change: We up floor.
Speaker Change: And by the way the $10 million is now disclosed in the 20-F.
Speaker Change: With the you know.
Speaker Change: The cautionary notes that May have gave.
Speaker Change: We.
Speaker Change: We could expect to take.
Speaker Change: Take.
Speaker Change: Take a more a more more for in that facility up to 'twenty as disclosed in previous quarters.
Speaker Change: And that will be disclosed further right now where were we disclosed the $10 million.
Speaker Change: And I think that if you look at I wanted to give a note on capex.
Speaker Change: Which is really if you look at the full year EBITA.
Speaker Change: Positive, it's going to be the main the main difference between us being cash flow positive. We did we did drag some capex investments into Q4, because we felt we could we.
Speaker Change: We well we were stronger than expected.
Speaker Change: So we did make that investment in capex that is going to be instead of doing.
Speaker Change: Doing in 'twenty five also to be better ready that we need to be better ready for the guidance. We gave a if we're looking at $30 million to $140 million that we want to ship by.
Speaker Change: By year end.
So we're very careful with our 2025 cabinets and better Capex expenses are we went out we went as we.
Speaker Change: <unk>.
Speaker Change: We want to provide the.
Speaker Change: The guidance, we want to meet the guidance, we're providing on EBIT and cash flow for 'twenty six.
Speaker Change: But I think that within this.
Speaker Change: Revolver within this credit unused credit line between the unused credit line and the cash.
Speaker Change: Of our more than $40 million.
Speaker Change: 44 eight points.
Speaker Change: And coupled with the debt financing that we're hoping to finalize soon that should take us with no extra.
Speaker Change: We don't need extra financing all the way to cash flow positive.
Speaker Change: Okay. Thank you just maybe if I can squeeze in the last one.
Speaker Change: Any comments on that.
Speaker Change: The EBITDA positive target in 'twenty five with a different profit drivers are presumably there is some operating leverage on the incremental revenue.
Speaker Change: And what should we expect on gross margin and Opex. Thank you.
Speaker Change: Yeah, So we're trying to be very.
Speaker Change: Careful in providing exact numbers exact figures on adjusted EBITDA, we know to say.
Speaker Change: Guide.
Speaker Change: The guide you down debt and guide the market that it's going to be positive the difference.
Speaker Change: Within the guidance of 130, <unk> hundred 40 can have a big impact on positive positive impact on how much the EBITDA would be we'd like to be careful about you know the exact number but you were looking at single digit.
Speaker Change: Low single digit to be careful on positive EBITDA.
Speaker Change: The company.
Speaker Change: What we're trying to show as we as we grow.
Speaker Change: As we mature as a public company theyre more quarters.
Speaker Change: To look at.
Speaker Change: We'd like to say that the biggest effect on our gross margin, which is the API for understanding the profitability a scheme for this company.
Speaker Change: <unk> line as it grows.
Speaker Change: Hum it can grow exponentially with.
Speaker Change: The slight gross on an opex so our SG&A.
Speaker Change: And the businesses that we have in Aeronautics long term automotive long term, but the motive includes also safety check with Adas long term contracts.
Speaker Change: The incremental increases in sales and marketing and G&A is a rather small and that's what we've proved in Q4. So you should expect that you know.
Speaker Change: Based on a somewhat of course, we need to increase some expenses to to ship.
Speaker Change: 130 $140 million next year, but.
Speaker Change: It's a it's a slow.
Speaker Change: It's slow it's a it's a moderate change.
Speaker Change: That should provide us.
Speaker Change: A lot of a lot of leverage on the bottom line.
Speaker Change: So that kind of that's kind of I want to do.
Speaker Change: If you look at 2025.
Speaker Change: Just a bridge kind of bridge Q4, and you'd see that you know we walk the talk of the crossing the EBITDA.
Speaker Change: With $31 million.
Speaker Change: We're we're guiding.
Speaker Change: Well above four times Q4, and we'd like you, we'd like you to get that confidence that.
Speaker Change: We can be.
Speaker Change: We can be healthy bottom line and end of 'twenty five.
Speaker Change: Great. Thank you.
Speaker Change: Okay.
Speaker Change: And your next question comes from the line of at Times have me with TD Cowen. Please go ahead.
Speaker Change: Great Hi, thanks, everybody good morning.
Speaker Change: Just two follow up questions from me first I was hoping you could talk a bit more about how to think about automotive gross margin as well as aeronautics throughout the year, both maybe full year and cadence and then secondly, just a follow up on the free cash flow.
Speaker Change: Can you share what you're expecting for Capex in 2025. Thank you.
Speaker Change: Yeah.
Speaker Change: Hi.
Speaker Change: Thanks for the question good morning.
Speaker Change: I'd like to just note.
Speaker Change: That we have for.
Speaker Change: This is important for us to know.
Speaker Change: Educate the market on the following when we speak about automotive the automotive segment. We have two business divisions that are serving that segment. It's both what we call automotive, which is light control and smart glass.
Speaker Change: And the rooftop of the proton then Ferrari or Mclaren models or the GM and then there is a safety Tech division, which is really within the automotive business I just want to make sure that everyone.
Speaker Change: Everyone does it.
Speaker Change: I'm the same guidelines.
And that's where we serve the commercial vehicle market with mainly with our Adas My vision to announce more vision three its AI based most of your production with Ford trucks, removing mirrors.
Speaker Change: And the only company to be able to do that on on buses in the U S. For instance, retrofitting compete cities like London.
Speaker Change: With our public transportation with Ada so when I.
Speaker Change: When I answered the one I'd like to answer the gross margin I would separate the automotive into introduced these too.
Speaker Change: So you're going to see a very significant and we showed that through 'twenty. Four we also guided on it that within the light control.
Speaker Change: SPD for instance.
Speaker Change: We've moved from minus 30% on gross margin.
Speaker Change: Small numbers, but that sometimes even much much harder to zero margin gross margin in end of the year you should expect.
Speaker Change: That light control.
Speaker Change: Smart glass division in automotive to have a very healthy gross margin in 2025.
Speaker Change: Even improving our total average of the of the company throughout the year and then in safety Tech, which delivers the Adas we have issued.
Speaker Change: Hum, we announced as my vision III with Ford trucks, we're starting we shipping we're shipping this is the first year and silver production to Ford.
Speaker Change: And that is are going to improve this platform, which has a much better margin is going to improve the total margin that you have for safety throughout the year quite significantly so.
We're expecting in both in both segments, we have rather unique offerings and products that allow us still to be to have healthy margins in.
Speaker Change: And it's really a matter of our scale to improve it we've shown it in Q4.
Speaker Change: And we're going to show it in 'twenty five.
Speaker Change: But you should you should expect.
Speaker Change: Both so all of the automotive segments, who have.
Speaker Change: I'd say, even a dramatic improvement in gross margin the gross profit and 25.
Speaker Change: May I will take the caveat regarding the free cash flow.
Speaker Change: Well I want to Echo again, what I said before we expect EBIT positive in 2025 and free cash flow positive in 2026 regarding the Capex, we expect to invest about $10 million in Capex next year.
Speaker Change: And is this year actually so when you were talking about it.
Speaker Change: Terrific.
Speaker Change: We appreciate all the detail. Thank you so much.
Speaker Change: Thank you.
Speaker Change: And I'm showing no further questions at this time I would like to turn the call back to El Paso for closing remarks.
Speaker Change: Thank you very much for joining us today, we look forward to future discussions and announcements to update you on our progress have a great rest of the day. Thank you very much everyone.
Speaker Change: Thank you and this concludes today's conference call. Thank you all for participating you may now disconnect.
Speaker Change: Yes.