Q2 2025 Electrovaya Inc Earnings Call
Good day, everyone and welcome to the electrical volume second quarter 2025 financial results.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host John Gibson, Chief Financial Officer at Elektra by Sir the floor is yours.
Thank you good afternoon, everyone and thank you for joining today's call to discuss <unk> Q2 2025.
Actual results today's call is being hosted by Dr. Raj that's good to see you electrify and myself John Gibson CFO.
Today <unk> issued a press release concerning its business highlights and financial results for the three months period ended March 31, 2025, if you like a copy of the release you can access on our website. If you want to ear financial statements. A nice discussion analysis you can access those documents on SEDAR plus website at www dot Cedar plus dossier or on the SEC.
Edgar website at SEC Gov forward Slash Edgar.
As with previous calls our comments today are subject to the number of provisions relating to forward looking information, we will provide information relating to our current views regarding market trends, including their size and potential for growth and our competitive position within our target markets.
Although we believe that the expectations reflected in such forward looking statements are reasonable they do obviously involve risks and uncertainties and actual results may differ materially from those expressed or implied in such statements.
Additional information about factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward looking statements may be found in the Companys press release announcing the Q2 fiscal 2025 results at the most recent annual information form and management's discussion and analysis under risks and uncertainties as well as another public disclosure documents filed with <unk>.
In security regulatory authorities.
Raj: Also please note that the numbers discussed on the call are in U S dollars unless otherwise noted I'd now like to turn the call over to Raj.
Raj: Thank you John and good evening, everyone. It's a pleasure to address you today as we discuss our Q2 fiscal year 2025 quarter.
Raj: This quarter marks another key milestone in Electrifies maturation, not only in terms of our financial results and achieving profitability, but also in how we are positioning the company for scale margin expansion and long term market leadership.
Raj: With our eighth straight quarter of positive adjusted EBITDA strong order momentum and funding secured for Jamestown, we're laying the groundwork for the next phase of our profitable and sustainable growth.
Raj: We're also seeing an early impact from our strategy to develop a recurring revenue streams, including energy service programs and software enabled a battery insights.
Raj: Which we expect to contribute more meaningful more meaningfully over time.
Raj: I'll go through some of our key highlights and updates for the quarter the underlying the strength of our business and our trajectory for growth.
Raj: During the quarter, we delivered strong financial performance with $15 million in revenue, which is up 40% year over year, maintaining over 30% gross margins. Most importantly, we crossed the inflection point to provide a net profit of over $800000.
Raj: During the quarter, we closed a $51 million direct loan from the export import bank of the United States, a pivotal step towards expanding our lithium ion cell manufacturing in Jamestown New York.
Raj: This project was well received at the bank and received the deal of the year award for their make more in America initiatives.
Raj: In tandem with the Exxon facility. We also closed a $20 million working capital facility from the bank of Montreal. This financing significantly reduces our cost of capital and improves our working capital availability.
Raj: We've had a very strong order intake during the quarter with over $25 million in new orders. This momentum has continued into the current quarter and we have strong visibility and confidence of further growth into our next fiscal year.
Raj: Outside of our material handling vertical we are seeing growing interest from multiple robotic applications for which we are actively developing products. We also continue to feel growing interest for our high voltage battery products during the quarter, We announced we received orders from our second global construction OEM through.
Raj: Our partnership with Sumitomo Corporation power mobility.
Raj: This order is for high voltage battery systems for a leading Japanese headquartered construction equipment manufacturer.
Raj: We remain on track for our cell production in Jamestown.
Raj: Next year, we placed nearly all our key equipment purchases and have qualified the material vendors for all the input materials for our lithium ion cells.
Raj: Notably we had the foresight in years back to avoid Chinese supply chain for this venture, including both on the materials and equipment side.
Raj: This is going to protect us from potential future disruptions and is also something that many of our strategic customers are looking for.
Raj: To support flawless execution in Jamestown, we have also added some key members to our staff, including our senior battery engineer with over 20 Years' experience, who has joined US from LG Chem and was also closely involved in the construction and commissioning of our recent North American Giga fab.
Raj: <unk>.
Raj: Our labs Division continues to make progress with regards to our solid state battery efforts. Currently we have pouch cells cycling consistently and we are now working to scale, our processes with larger equipment and further process optimization.
Speaker Change: With that I'd like to pass the call back to John Gibson, who will go into the financial results in more detail.
John Gibson: Thanks Raj.
John Gibson: Q2 marks a strong step forward in both our financial performance and operational readiness, we continue to build the financial muscle needed support scalable profitable growth positive cash from operations and a stronger working capital base give us further confidence in our ability to fund other key initiatives in the second half of the year.
John Gibson: Revenue for the quarter ended March 31, 2025 was $15 million compared to $10 7 million in the prior year revenue for the six months ended March 31 was $26 2 million compared to $22 8 million in the prior year the increase in year over year revenue was driven by the increased customer demand.
John Gibson: Working capital capabilities have also increased considerably over the past few months months, which has enabled more efficient execution.
John Gibson: Going forward, we expect to further take advantage of our strengthened financial patient position to effectively U S.
John Gibson: Execute on orders.
John Gibson: We continue to move closer to a breakeven point of $50 million and maintain or 2025 revenue guidance with the ramp up continuing in Q3.
John Gibson: Gross margin for the quarter was 31, 1% a slight decrease from the prior year margins, primarily due to product mix and the prior year, having some high margin prototype batteries six month gross margin was 39% for 2025 and 31 eight for 2024.
John Gibson: The company that experienced some martial increased cost on certain components due to recent tariffs. However, these have been offset by continued optimization of our supply chain and internal production efficiencies leading to an overall minimum effect on our gross margins. We don't expect further significant fluctuations going forward.
John Gibson: This management believes the company is well prepared to maintain strong margins throughout 2025 and beyond.
Operating profit increased significantly significantly for both the quarter and the year to date.
John Gibson: Operating profit for Q2 of 2025 was $1 4 million compared to 0.7 million for the prior year and a six month figure it was $1 2 million compared to 0.6 million in the prior year and this also includes approximately 340000 of nonrecurring expenses.
John Gibson: From Q1 2025.
John Gibson: Our adjusted EBITDA was 2 million for the quarter compared to $1 5 million in the prior year with a six month figure being $2 6 million compared to $2 million in the prior year. We have now recorded eight consecutive quarters of positive adjusted EBITDA. This gives us strong capability to continue our growth plans and support operations going forward.
John Gibson: The company generated a net profit of <unk> 8 million for Q2 2025, a significant increase from the net loss of eight 0.8 million in the prior year. Furthermore, the company generated a net profit for the six months ending March 31st 0.4 million compared to a net loss of $1 million in the prior year.
Speaker Change: Management believes the financial performance this quarter represents a true inflection point in our profitability going forward any further revenue growth, which we have line of sight for for the rest of this fiscal year will contribute to increased overall profitability.
Speaker Change: The company generated positive cash flow provided by operations of $3 2 million.
Speaker Change: Negative changes in working capital of $7 9 million compared to an overall positive cash flow from operations of <unk> 3 million in the prior year. The movement in net changes in working capital is purely a timing issue as tariff uncertainty during the quarter met the majority of invoicing happens towards the end of March to date, we have received over two thirds of the total.
Speaker Change: Cash receivable balance in cash.
Speaker Change: The company ended Q2 2025 with positive net working capital of $26 2 million compared to negative working capital 0.2 million in the prior year.
Speaker Change: Increase and this demonstrates that can discontinued improved financial and operational performance of the company and management is committed to continue this positive trend.
Speaker Change: Yeah.
Speaker Change: At March 31, 2025, total debt was $13 1 million compared to $18 4 million in the prior year. The company has availability within its bank facility of over $10 million minus me because I need continues to manage cash conservatively through the recent financing will reduce our overall finance costs and provide us with additional working capital headroom as we increased production in 2025.
Speaker Change: We have adequate liquidity to support our anticipated growth for the remainder of fiscal year 2025.
Speaker Change: That concludes the financial overview I'll now turn the call over to Raj for concluding remarks.
Raj: Thank you John in closing Q2 reflects the beginning of a new growth phase for electro via one defined by consistent execution profitability and increased visibility into long term scale.
Raj: Our strategy to develop a U S based manufacturing coupled with supply chains that are primarily north American or from Japan, and South Korea appears to be accretion decision today.
Raj: I believe this provides electrify and additional significant competitive advantage going forward.
Raj: Electrify it has all the pieces in place to achieve our vision of becoming the leading lithium ion technology and manufacturing company for the heavy duty and mission critical applications. This includes our highly differentiated lithium ion battery technology.
Raj: Talented team strong financial partners profitability in our base operations, and leading customers and partners Inc.
In closing we remain on track to exceed our $60 million in revenue for fiscal 2025, and with Jamestown advancing we're confident in our path to becoming a leading north American manufacturer for mission critical battery applications that concludes our remarks this evening, John and I would now.
Raj: Now be pleased to hold a question and answer session.
Speaker Change: Certainly everyone. At this time, we will be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time.
Speaker Change: We do ask that while posing your question. Please pick up your handset if you're listening on speaker phone to provide optimum sound quality.
Speaker Change: Once again, if you have any questions or comments. Please press star one on your phone.
Speaker Change: Thank you. Your first question is coming from Daniel Magner from Raymond James Your line is live.
Daniel Magner: Hey, John Congrats on a great quarter.
Speaker Change: Thanks Danielle.
Speaker Change: As it relates to the 25 million in new orders are.
Speaker Change: Are those all coming from the material handling segment or.
Speaker Change: Or are there different verticals that are.
Speaker Change: Are in there.
Speaker Change: There's $25 million from just material handling and on top of that as further orders from other sectors.
Speaker Change: So.
Speaker Change: Got it Carroll handling.
Speaker Change: Bulk of our business and that's where most of the.
Speaker Change: Our regular orders are coming from.
Speaker Change: Got it.
Speaker Change: And I guess way.
Speaker Change: Given what's happened in the U S a and the new administrations policies.
How has that impacted I guess, the type and cadence of discussions youre, having with customers.
Speaker Change: It's accelerating.
Speaker Change: Interest in our products, it's making us more competitive as well where premium offering right now and.
Speaker Change: With uncertainty on pricing from some of our competitors, it's making us a more attractive option just just from that but also what we're finding is customers are looking for long term partners and.
Speaker Change: Price is just one of those aspects, but we're able to <unk>.
Speaker Change: Provided that that stability, especially with.
Speaker Change: Jamestown coming online our financial position also helps with consistent and.
Speaker Change: And growing results. So I think all of this is filtering into providing our customers with added confidence to order more so we're seeing we're seeing quite a bit of that we're also seeing interest from other sectors.
Speaker Change: More so than we had previously one being the energy storage space.
Speaker Change: Where we're getting a strong call of course takes a bit of time for us to get our products ready for that but that's another area, where we are well underway to launching systems for.
Okay.
Speaker Change: That's great and congrats again I'll jump back in the queue.
Speaker Change: Thank you. Your next question is coming from Eric Stine from Craig Hallum. Your line is live.
Eric Stine: Hi, Raj John.
Hey, Eric.
Speaker Change: So just going back to the orders and the $25 million just material handling can you just drill down into that a little bit I know you know one of the themes here in the first half of the year as the recovery in orders of the resumption.
Speaker Change: From your Fortune 100 customer I know you've had some repeat orders from.
Speaker Change: Logistics and in cold storage et cetera, I'm, just wondering if you could talk about how that kind of breaks down between that customer who's kind of resumed at higher levels, new customers et cetera.
Yeah, I'd say, it's a combination of all the above so that fortune 100 customer.
Speaker Change: <unk> fairly significant orders during the quarter.
Speaker Change: However, they're continuing to order in the current quarter.
Speaker Change: And we expect that number to grow substantially so they're a big part of it what we've also seen is.
Speaker Change: Our one of our OEM partners.
Speaker Change: We launched a leasing program with them last year, that's generating a lot of mid sized orders for us.
Speaker Change: Yeah, that's that's great to see that momentum. So that's smaller orders, but those are very helpful to fill in the gaps on what.
Speaker Change: With regards to production planning.
Speaker Change: And then other major end customers, we have a leading discount retailer who has been ordering consistently.
Speaker Change: And will be a major part of our fiscal 2025.
Speaker Change: Revenue.
Speaker Change: And then.
Speaker Change: So Raymond and Toyota are steady steadily providing us our other customers as well.
Speaker Change: We're breaking into some other.
Speaker Change: Major and end users as well potentially with <unk>.
Speaker Change: <unk> energy services.
Speaker Change: Looking at energy as a service as opposed to just selling the batteries.
Speaker Change: That's something that's currently not very significant for us, but it's could become quite significant for us and especially in fiscal 2026.
Speaker Change: So it's a smorgasbord really of interest.
Speaker Change: Okay, Great color. There, maybe then just turning to some of the emerging applications.
Speaker Change: No.
Speaker Change: So now you've got a second construction OEM through so many thoma when you think about those new applications I mean, I would think that sumitomo opens up.
Speaker Change: A significant number of potential customers and end markets, but do you think about that as you potentially add other trading house partners or as Sumitomo gets you the market reach that you want.
Speaker Change: Well in Japan, it's very much a relationship a bit.
Speaker Change: Business and we have a great relationship with Sumitomo Corporation I think we'll maintain that we will not be looking to.
Speaker Change: Work with other trading partners right now today, we have the two construction Oems, which have been we press released but theres a great deal more of activity in the background.
And we.
Speaker Change: We are we're very enthusiastic about the momentum that we're gaining out there in Japan.
Speaker Change: We will probably be setting up.
Speaker Change: A operation there eventually as well to support some of that growth that we're seeing.
Speaker Change: So where we're very very pleased with that relationship, but we built up and things moved in in the battery space. It takes time of course to get yourself qualified and in and into production programs. It doesn't happen overnight.
Speaker Change: But you have to seed those those positions and then once you have.
Speaker Change: It turns into a garden eventually.
Speaker Change: And I guess, just a follow up and then I'll jump back in line, but the the as you said great deal more activity in the background is that.
Speaker Change: Is that more construction equipment or has that broadened out to other applications.
Speaker Change: Yeah.
Speaker Change: Its construction.
Speaker Change: Two in construction, there's a third in construction as well we're talking to there there are other robotic applications that we're looking at in Japan as well.
Speaker Change: That seems to be the.
Speaker Change: The general focus yeah. The batteries themselves are very similar to each other so.
Speaker Change: Application wise.
Speaker Change: We can kind of fairly easily pivot towards a different size of vehicle.
Speaker Change: Yes.
Speaker Change: Okay. Thank you very much.
Speaker Change: Thank you. Your next question is coming from Craig Irwin from Roth Capital. Your line is live.
Craig Irwin: Hi, good evening and thanks for taking my questions Suraj can you maybe comment a little bit about the forklift battery shipments in the quarter.
Craig Irwin: Proportionately, where most of them into pre existing installations any greenfield.
Craig Irwin: <unk> is out there.
Craig Irwin: How would you how would you explain the mix within the the forklift batteries.
Craig Irwin: You know I'd say it was a bit.
Craig Irwin: Proximately, a 50 50 mix, which is new for US most of it in previous quarters is mostly.
New vehicles, new sites this was a pretty diverse mix.
Craig Irwin: With the discount retailer, we've been supplying that's mostly into existing distribution centers.
Yeah.
Speaker Change: With the Fortune 100 are other customer there it's I.
Speaker Change: I would say new sites.
Speaker Change: And then on this on.
On the leasing program with Toyota that's probably.
Speaker Change: Mostly existing.
Speaker Change: Distribution centers are smaller numbers, but adding up.
Speaker Change: Adding up to being coming a significant sum.
Speaker Change: Excellent excellent and then maybe can you can you update us on the the progress diversifying your markets diversifying here.
Speaker Change: Markets outside of the lift truck markets, you mentioned robotics.
Speaker Change: So there is there's a long list of different things that you are.
Speaker Change: Addressing everything from rail to military opportunities.
Speaker Change: Where do we sit right now with the the different customers that you're you're working with there you know you shared the second construction a customer with Sumitomo that that's that's online now but.
Speaker Change: Any additional color that you could share with us as far as repeat orders are test packs as far as you.
Speaker Change: You know where the customers are in their evaluations for for follow on orders and expansion to other opportunities.
Speaker Change: So with the one of our defense customers. They have placed repeat orders are then placed another repeat order just like last week. So again, it's small numbers, but it really demonstrates that the relationship is building and we're tracking to something more meaningful.
Speaker Change: We're seeing that type of activity on robotics.
Speaker Change: We have we've had a long history with a group called Jabil.
Speaker Change: They.
Speaker Change: Had been a relatively.
Speaker Change: Minor part of our revenue over the last few years.
Speaker Change: But started to scale things with US are now we've received more meaningful.
Speaker Change: Orders and are expecting to get into additional platforms with them.
Speaker Change: So that's exciting then there's a group called Bastian solutions similar idea there.
Speaker Change: So we're seeing some more activity in the robotics space Airport ground equipment again seed orders in that space as well.
Speaker Change: That's one which is a fairly adjacent market to material handling.
Speaker Change: And what have I missed there. So that's about it construction of course, we've mentioned that so those are the areas that we are seeing a fair bit of activity.
Speaker Change: And I would expect those to to scale up in next fiscal year.
Speaker Change: Excellent excellent and then last quarter, we talked about the potential to maybe pull forward pack production in Jamestown.
Speaker Change: Can you say whether or not this is a priority at the moment is this something that helps us strategically.
Speaker Change: Given that this facility will be producing cells in the not too distant future and.
Speaker Change: And does this maybe improve the potential for customer capture.
Speaker Change: As you as Youre looking at growth markets.
Speaker Change: So we have started Ah that operation already Craig So we have a team there and they're already working so the plan is that we all have that the Jamestown operations, which will support our growth.
Speaker Change: So they will be taking care of a certain portion of our targeted manufacturing goals.
Speaker Change: Over the next 12 months.
Speaker Change: That gets that the team they're very familiar with.
Speaker Change: With lithium ion batteries are and specifically our batteries.
Speaker Change: And well prepared for what happens afterwards, which is when we'd make when the cell and module production starts up.
Speaker Change: So that's already in place I think it benefits our electrified significantly in the fact that it provides us added capacity so.
Speaker Change: Instead of maybe adding a second shift here in Mississauga, we can have operations in both both plants meet our growing targets and.
Speaker Change: And it really benefits us.
Speaker Change: In operationally, so we're seeing that in terms of attracting.
Speaker Change: Attracting additional customers.
Speaker Change: I'm not sure just yet I think the cell and module production, let's scheduled next year really is.
Speaker Change: A piece of it is attracting a lot of interest.
Speaker Change: Because what will be one of very few lithium ion battery plants that can support customers in North America.
Speaker Change: Great and then lastly, if I could ask the financials question. So your total debt was down I guess around $3 8 million sequentially.
Speaker Change: But the the BMO facility is going to also deliver you I believe some substantial interest.
Speaker Change: Can you can you update us on the the interest rate on the BMO facility to how this compares to your legacy facility.
Speaker Change: And she.
Speaker Change: Should we expect you to be using that for growth working capital. So that you know that the net net interest can actually.
Speaker Change: Trend up or is this something where you know you're going to continue to have a very tight balance sheet and will see actual cash interest.
Speaker Change: Tightly controlled possibly going down over the next few quarters.
Speaker Change: Okay.
Speaker Change: Yeah. Good question Greg.
Speaker Change: Interest savings are.
Speaker Change: Over five points.
Speaker Change: From a previous lender.
Speaker Change: So what I'll say there is a that is a specific working capital loan we're always going to.
Speaker Change: Manage that.
Speaker Change: Tightly and save or save in our finance costs Theres No point, having millions of dollars in the bank for paying.
Speaker Change: The interest on it so youre always going to see that it will fluctuate based on timing as these things always do in cash receipts.
Speaker Change: And payments come during the weeks and months.
Speaker Change:
Speaker Change: Essentially the this facility will allow us the room, we need to grow and grow.
Speaker Change: Quickly.
Speaker Change: And that's what we're looking for in a banking partner someone who was flexible from an interest rate perspective, obviously there are we have.
Speaker Change: We can split our alone within our Canadian and U S dollars as we see fit and as our suppliers require it so youre going to get different rates, north or south of the border, but we were able to Munich.
Speaker Change: Manipulate where the moneys he sits deceiver on our interest costs.
Speaker Change: Understood well congratulations on the solid EBITDA number it's impressive thank you.
Thanks, Thanks, Greg.
Speaker Change: Thank you. Your next question is coming from Sameer Joshi from H C. Wainwright Your line is live.
Speaker Change: Hey, good afternoon guys.
Speaker Change: Congrats on a good quarter.
Speaker Change: Just following up on sort of your questions.
Speaker Change: When you would you just let us know if whether the Exim bank loan is going to be drawn down upon as you order and ERP suppliers or is it already in your bank and you wouldnt be paying interest starting well.
Speaker Change: So this is a draw based facility. So what we've done is we've issued all the purchase orders and when those are due for payment or draw from if it makes them and pay them.
Speaker Change: There's not really much point in us drawing it before its jude because otherwise we're going to incur interest on that so we're just going to target the judy's drawdown and from that moment on that's when the interest that accumulates.
Speaker Change: Makes sense.
Speaker Change: In terms of operating expenses, you'll start that initiative assembly at the Jamestown facility.
Speaker Change: And probably another.
Speaker Change: All getting hit next calendar year for a full commercial operations.
Speaker Change: We expect to see uptick in operating expenses or or any expense at least some of expenses will be sort of cogs.
Speaker Change: Hmm.
Speaker Change: Yeah, the majority of it will be Cogs.
Speaker Change: Okay.
Speaker Change: Oh.
Speaker Change: And then the last question for me is you have maintained your guidance and Oh come very strong in the second quarter historically, our third quarter reasons amazingly flat to second in the fourth quarter fiscal quarter is quite.
Speaker Change: Ill jump off.
Speaker Change: If you do that then it seems you might exceed well will exceed the 60 million guidance.
Speaker Change: Is that what you're looking at especially we didn't get to your 25 million orders received this quarter should we expect that going north of that.
Speaker Change: Yes, Sameer, we want to be conservative. However, we are expecting Q3 to show meaningful sequential growth, but you know we're halfway through the quarter. So that will most definitely exceed that.
Speaker Change: The Q2 result.
Speaker Change: And we hope to maintain growth into the Q4, so yes potentially can.
Speaker Change: Exceed our guidance our bye bye a strong margin, but we don't want to put it on a we don't want to have it yeah.
Speaker Change: There's a lot of volatility in the market right now so I think it's a prudent thing to keep it at that.
Speaker Change: Perhaps we'd rather have continued.
Speaker Change: Continued growth in our hockey stick throughout the year.
Speaker Change: Nice.
Speaker Change: Just I I would like to squeeze one more.
Speaker Change: You mentioned some of the obligations and it seems that these could be a newer applications I mean this could be.
Speaker Change: At least could command higher prices.
Speaker Change: And could be higher margin.
Speaker Change: Should we think of it that way or is it going to be the same.
Speaker Change: <unk> form factor and pricing and margins for everything.
Speaker Change: So we want to make sure we don't want to go after any verticals, where we can't.
Speaker Change: Get Italy, 30% margins of course, some of those verticals will be higher margins are.
Speaker Change: Especially on defense for instance, but volumes will be lower so.
Speaker Change: On margin.
Speaker Change: Margin wise, we will most definitely continue to.
Speaker Change: Exceed 30% threshold.
Speaker Change: Now with all the uncertainty on material prices.
Speaker Change: As of late.
Speaker Change: Yeah.
Speaker Change: It's hard to harder to predict things, but we expect there.
Speaker Change: The Jamestown cell and module production are going to enhance modules and.
Speaker Change: Enhanced margins.
Speaker Change: Whether.
Speaker Change: You know I R a exists or not at that point.
Speaker Change: So, but generally speaking when it comes to mining or construction or.
Speaker Change: Robotics, they're all strong margin.
Speaker Change: Applications.
Speaker Change: Got it.
Speaker Change: So for taking my questions and good luck.
Speaker Change: Thanks Amir.
Speaker Change: Thank you once again, everyone. If you have any questions or comments. Please press Star then one on your phone. Your next question is coming from Jeffrey Campbell from Seaport Research Partners. Your line is live.
Jeffrey Campbell: Thank you and congratulations on the strong quarter.
Jeffrey Campbell: Raj I wanted to start with some and this is probably a little off the drag, but Etfs recently announced a 20 K AD lay off.
Speaker Change: So they were closing 70 plus facilities and.
Jeffrey Campbell: Somehow they tried to blame Amazon for.
Speaker Change: Cut back I, just thought to ask how you're leasing business, which is M. EPS would be most relevant to.
<unk> continues to progress.
Okay.
Speaker Change: So.
Speaker Change: You know there are always going to be fluctuations with regards to these third party logistics companies some do better some do worse.
Speaker Change: But generally speaking.
Speaker Change: The industry as a hall is growing are in there.
Speaker Change: I need to.
Speaker Change: Repower lead acid batteries is increasing so that's what we're seeing we're seeing that transition from from lead acid to demanding better batteries and that's driving.
Speaker Change: Growth in orders for US previously, we got very little in the way of orders from third party logistics companies.
Speaker Change: Maryland, because they get five year contracts.
Speaker Change: And now with this program that we have with Toyota material handling, they're getting quite a bit of interest from that sector. So I don't want to speak about <unk>, specifically, but we're seeing demand going up and up.
Speaker Change: That's all we can really comment.
Speaker Change: Well, that's all I really care about so that's fine.
Speaker Change: You mentioned the possibility of setting up an operation in Japan.
Speaker Change: Wanted to.
Speaker Change: As you think ahead does this mean and assembly facility or might the country wanted Jamestown facility.
Speaker Change: Is that what's the word I know, it's just it would start out and if volume goes dramatically upwards, we would consider an assembly phase, but the first phase of it would be to support customers. There. So that's more like service sales support that kind of thing and then as demand.
Speaker Change: It would fall demand so if demand reaches a certain threshold, we would consider assess.
Speaker Change: Assembly, there as well.
Speaker Change:
Speaker Change: You noted a robotics as an early point of activity for electric there, but it sounds like.
Speaker Change: This is ready for a new phase and I'm just wondering if you could provide some color on what sort of robotics applications are really driving the potential growth.
Speaker Change: So it's a variety of things is that there is material handling robotics there's.
Speaker Change: Automated cleaning there's automated monitoring.
Speaker Change: Monitoring all sorts of new products.
Speaker Change: Exciting companies that are getting launched and what's common to them as they need good batteries.
Speaker Change: So.
Speaker Change: And we'll be there to support them with that.
Speaker Change: Okay.
Finally regarding battery storage for energy as a service.
Speaker Change: What battery modifications are made.
Speaker Change: Needing to make relative to material handling if any.
Speaker Change: Not not really needing to make any modifications we have software.
Speaker Change: To support that.
Speaker Change: We have already developed.
Speaker Change: Okay.
Speaker Change: Is that software similar to the things we've talked about in the past with the.
Monitoring the energy consumption of the batteries with a warehouse type environment or is this something exactly.
Speaker Change: Download lines yet.
Speaker Change: Okay, Great alright, thanks, a lot I appreciate it.
Jeffrey Campbell: Thanks Jeffrey.
Speaker Change: Thank you. Your next question is coming from Aaron Martin from <unk> investment partners.
Speaker Change: Line is live.
Aaron Martin: Hi, Raj John Congratulations on continued progress a lot of my questions have been covered.
Speaker Change: Just going out a little slightly different way you've had very large amount of orders in the first half of the year.
Speaker Change: And it just didn't really even went into the year with.
Speaker Change: Some of the Greenfield opportunities that we were expecting to happen last fiscal year.
Speaker Change: The timing of the customer got pushed out to this year are you.
Speaker Change: Are those still on track, but the orders from you know that we thought were going to do in fiscal 'twenty 'twenty four or are they still on track for 2025.
Speaker Change: Well some of those got delivered are actually one of them has moved to 2026, but it's not going to affect our <unk>.
Our.
Speaker Change: Revenue guidance at all because we were getting other orders so.
Speaker Change: When it comes to new buildings the <unk>.
Speaker Change: <unk>, sometimes is a bit unpredictable.
Speaker Change: But generally speaking the trend I would say is where we're seeing.
Speaker Change: The order rates being sustained it's not just happening in the early part of the year I would expect it to continue that.
Speaker Change: That type of thing.
Speaker Change: Based on what we hear from the from our pipeline right. So there is orders that are issued and then there is orders that are of course are discussed and in place.
Speaker Change: I mean does that really then.
Speaker Change: I guess, that's really leading to my next question are we you know.
Speaker Change: As we think about the pipeline for 2026.
Speaker Change: Is that starting to build now whether it's orders or as you said you know pipeline the heads up we're getting from our customers.
Speaker Change:
Speaker Change: Or how should we start thinking about that.
Speaker Change: Yes, so we already have orders in hand, which are significant numbers of orders in our hands, which are due for 2026, and then pipeline on top of that that's been communicated now for instance, with the.
Speaker Change: Fortune 500 discount retailer, they've given us a fairly strong indication of what the.
Speaker Change: Are looking to do in 2026, and it would be probably larger than what they are paying in 2025, similar kind of communications for them from other major end users, including a fortune 100 customer we have so we're getting a.
Speaker Change: The visibility for 2026 is.
Speaker Change: It's getting better by the day.
Speaker Change: And it's good timing, because we really want to ensure that 2026 in fiscal 2027 numbers, we can maximize the production out of Jamestown. So that's what we wanted to see and that's what we're heading towards based on what were they.
Speaker Change: Based on information at hand, right now.
Speaker Change: Switching gears, a little bit towards gross margin you've done a great job there.
Speaker Change: When it comes to tariffs on a differentiator in the short term and the longer term obviously, the Jamestown facility.
Speaker Change: The aspect of having cell production there.
Speaker Change: As incredibly interesting to your customers.
Speaker Change: Shorter term before Jamestown is up and running on the sell side.
Speaker Change: How should we think about.
Speaker Change: Yes.
Speaker Change: Tariffs.
Speaker Change: And your cost of goods.
Speaker Change: Yeah, so tariffs are affecting some material prices and they've gone up at the same time, we've managed to get some material prices to go down.
Speaker Change: And then we've had optimizations in our in our own assembly process around $15 million in revenue is still I would say on a quarterly basis, a relatively small number we hope to get to much larger ones and so our buying power is growing.
Speaker Change: And that's offsetting any of these cost increases due to tariffs. So I would expect us to maintain them.
Speaker Change: Margins.
Speaker Change: Where they are probably where they are maybe grow them a little bit.
Speaker Change: And then when we start Jamestown of course, I would expect margins to grow more sharply.
Speaker Change: And is any of that involved passing on price increases to your customers. So that's really hasnt been necessary.
Speaker Change: Yes.
Speaker Change: And it really has not been necessary.
What we have noticed though is most of the competition has been increasing prices. So there is an opportunity to do so if we thought.
Speaker Change: We shut but right now we're not seeing the need to do so.
Speaker Change: He has more competitive as a result.
Speaker Change: Okay, great congratulations on the progress again.
Speaker Change: Thanks Darren.
Darren: Thank you there are no further questions in the queue.
Speaker Change: Yeah.
Speaker Change: That concludes our call and thank you for listening we look forward to speaking with you again. After we report our third quarter 2025 results have a wonderful evening.
Speaker Change: Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.