Q2 2025 Energy Vault Holdings Inc Earnings Call
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Speaker #4: Good day, and welcome to the Energy Vault second quarter 2025 earnings call. Currently, all phone lines are in listen-only mode. Later, there will be an opportunity to ask questions during a question-and-answer session.
Speaker #4: You may register to ask a question at any time by pressing the star then one on your telephone keypad. Please be advised, today's program is being recorded.
Speaker #4: It is now my pleasure to turn the program over to Michael Beer, Chief Financial Officer for Energy Vault.
Speaker #5: Thank you. Hello and welcome to Energy Vault second quarter 2025 financial results conference call. As a reminder, Energy Vault's earnings press release and presentation are now available on our earnings on our investor website.
Speaker #5: And we'll be referring to these presentations during the call. I believe there was a slight delay on Business Wire, so please access those on our website if you were unable to get that, that email.
Speaker #5: 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 #5: 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 figures or events the results due to a variety of factors.
Speaker #5: Please refer to our most recent 10K or 10Q filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement.
Speaker #5: We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information.
Speaker #5: Please refer to Safe Harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.
Speaker #5: 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.
Speaker #6: Michael and thanks to all of you joining the call. Before jumping into the Q2 financial results, as normal here, I, I thought I would kick off highlighting one of the significant announcements made this morning before the market opened.
Speaker #6: As all of you know a ittle over a year ago, at our May 2024 investor day, we outlined a bold strategy to leverage our significant technology and operational expertise in designing, building, and monitoring storage systems to also developing, owning, and operating energy storage systems.
Speaker #6: Given the significant benefits of having less lumpy and more predictable revenue streams, there are highly profitable, recurring, and supported by long-term off-take agreements. This strategy was focused on getting more portfolio exposure to a much higher profit pool segment within the energy ecosystem and really fundamentally creating more long-term value for our shareholders.
Speaker #6: We proceeded to execute on getting our first two owned projects in Texas and California placed in service as expected this year, and recently announced, and also completed the project financings for both of them as recently announced and have been putting cash, therefore, back on the balance sheet.
Speaker #6: While the first two projects were funded our balance sheet, the announcement this morning now answers what's been on investors' minds about how Energy Vault will fund the execution our growing project development portfolio.
Speaker #6: With a $300 million preferred equity investment to fund the ment, construction, and operation of our storage IPP owned and operated projects. Which we call asset vault.
Speaker #6: I wanna go over a little bit about what this means as highlighted from the announcement. The $300 million equity will enable over $1 billion in CapEx and project financing toward constructing and operating the new storage IPP projects.
Speaker #6: While the funds are targeted at an initial $1.5 gigawatt of projects already progressing in mid to later stage development, it also funds earlier stage development or DevEx of our total 3 gigawatt development pipeline of projects in the US, Australia, and Europe.
Speaker #6: In addition to the first two projects recently placed in service in the US and now a part of asset vault, the next projects coming online in the next two to three years will create annual EBITDA cash streams of over $100 million, predictable and recurring.
Speaker #6: Just as critical in funding the projects is that this investment of the $300 million preferred equity is non-dilutive to common shareholders. We've built mechanisms for milestone-based equity participation that align us as partners along the way.
Speaker #6: This is critical given many of the convertible-type financings done have been highly dilutive to existing shareholders from other deals that is not the case here.
Speaker #6: Important to also note that EBITDA streams from asset vault are in addition and complements Energy Vault's synergistic energy storage solutions business, the third party global utilities, IPPs, and other high-demand energy users.
Speaker #6: On top of that, as with the case with the first two energy assets already in service in the US and Texas and California, the asset vault subsidiary will contract to Energy Vault all of the product design, construction, commissioning, and long-term service agreements, thereby providing additional cash flow streams and liquidity back to the parent company.
Speaker #6: We're going to be having a virtual investor day post-close of the transaction that we'll schedule to go over in more detail, including some of the language around this part of the business.
Speaker #6: You're onna hear us talking more and using megawatts, for example, instead of megawatt hours, as that's what we're being contracted to deliver. And we'll be going over some KPIs related to multiples of those, megawatts, to come up with, the relevant financial statistics.
Speaker #6: J-just a few thoughts here, before jumping back to the results. I'm sure it's not lost on everyone how important the timing is of this investment.
Speaker #6: And the transformation that investment like this will enable in our forward financials. As a company, we have been good in the position and structure something like this as we've remained without debt at the corporate level since becoming a public company.
Speaker #6: And given project timing, initially used our balance sheet to get the first two projects underway here in the US. But we're really excites me about this.
Speaker #6: And I want to highlight to investors, as a final point here, that this now becomes about execution. Having run a few public and private companies in my career, focus is so important to successful execution.
Speaker #6: And one of the things that Energy Vault has quickly built a strong reputation on in market and demonstrated in spades with our customers and our partners is that we are excellent at execution.
Speaker #6: We deliver. That's managing supply chains, building, commissioning, and reliably and safely executing projects, and monitoring and operating assets. You can imagine the diligence a company like ours undergoes, especially these days, and in these markets as a newer growth company whether that be the banks that did the two project financings that we recently completed, infrastructure funds like we just announced this morning, government-owned entities like we have contracted with in Australia the last year, and even public utilities who are not in the business of taking any risk.
Speaker #6: And generally here, bankability is fundamental. As part of their DD, all of these groups I just mentioned have talked to our prior customers or partners where we have executed projects.
Speaker #6: And I think the results now and how we are expanding the business and these agreements speak for itself. With that, I'm gonna turn to the Q2 financial results.
Speaker #6: And have seven main points to highlight. Fundamentally, we start always contract revenue here in the backlog. a tremendous signal to investors increase, increasing again quarter over quarter, 47%.
Speaker #6: To almost a billion dollars now, $954 million versus Q1. And up 120% year to date. This is driven by new third-party project and service agreements as well as long-term off-take agreements in the US and Australia.
Speaker #6: The revenue also increased on a year-over-year basis, by $8.5 million compared to the prior year period. This growth was driven by project deliveries in Australia and the commencement this quarter of our cross-trail battery energy storage system in Texas.
Speaker #6: The GAAP gross profit increased 140% versus prior year to 2.5 million as favorable geographic and revenue mix resulted in a gross margin of 29.6%.
Speaker #6: The adjusted EBITDA also improved 11% versus prior year, narrowing the loss to 13.7 million from a loss of 15.4 million in Q2 '24 aided by the improved gross margins just mentioned.
Speaker #6: And some of the reduced operating costs that, again, we took some additional steps this past quarter for an additional $6.5 million in cost savings initiatives.
Speaker #6: That's an annualized number. While continuing to invest, for example, in Australia to support some of the long-term growth and initial project starts there. I think importantly, cash improved 23% versus just last quarter to 58.1 million.
Speaker #6: At June 30th, finishing at the high end of the previous guidance range. Since then, and looking a bit forward, we completed the cross-trails project financing just last month of 17.8 million in July.
Speaker #6: And we're ecting another 27 million in net investment tax credit proceeds that's our anticipated in September. We continue to expect to be within the prior revenue recognition and cash ranges with much of the larger battery deliveries expected now the latter half of the year in Q4.
Speaker #6: Given some of the market shocks and pause from the tariff dispute with China that we absorbed in the first half of the year. Finally, and before turning over to Michael, one special thank you to go out to our Australia teams and partners from the other announcement, also quite important.
Speaker #6: we made this morning achieving final close of the acquisition of the $125-megawatt, 1-gigawatt-hour Stony Creek, battery energy storage system. Now the largest in ur new owned and asset portfolio.
Speaker #6: Well, of course, this was largely expected. Getting through final firm government and share transfer approvals are never guaranteed. And I wanna call out our local Energy Vault leaders, Luca Sadler and Raymond Gilfetter, and their teams, the legal team from Hamilton Locke, locally, our development partner, Ross Warvey, and his team from Enervest.
Speaker #6: And all of those here the US that worked across time zones. To complete this. We look forward to pushing this through to final DA approvals and into RTB are ready to build construction in the coming in the coming months.
Speaker #6: With that, I'll turn it over to Michael to go over the details of the financial results.
Speaker #7: Thanks, Rob. Turning latest backlog and develop pipeline. as you highlighted, the company currently maintains a revenue backlog of $954 million up 47% versus this time last quarter.
Speaker #7: And 120% year to date. Driven new third-party projects and service agreements as well as long-term off-take agreements in both the US and Australia. Notably, this includes our contracts with Consumers Energy, a new long-term service agreement with an existing customer, and our largest project in Australia to date, as you mentioned, the recently acquired $125-megawatt Stony Creek project in New South Wales, which is supported by a 14-year off-take agreement discussed previously.
Speaker #7: These figures compared to $550 million plus in recognized revenue or $1.1 gigawatt hours in, in executed projects to date. as depicted on slide five in the earnings presentation.
Speaker #7: Meanwhile, our total develop pipeline for our advanced projects, either third-party and/or those that we would look to own and operate, is around 2.4 billion dollars or roughly 6 gigawatt hours, which we expect to be strengthened by the launch of asset vault.
Speaker #7: Energy Vault's build, own, and operate arm, detailed in today's announcement and outlined in the last slide of our arnings presentation, which I'll uss further later on.
Speaker #7: Turning to Q2 results, on the revenue side, we delivered Q2 revenue of 8.5 million up 126% year over year. And that's driven by activity across our Australian project portfolio in the first month of commercial operations at cross-trails in Texas.
Speaker #7: GAAP gross margin of 29.6% was up from 27.8% a year ago, reflecting a stronger regional and business revenue mix. On adjusted operating expense, we're 16.2 million dollars improved 2% year over year despite the increased revenue and gross margin, demonstrating continued cost discipline.
Speaker #7: We implemented an additional 6.5 million dollars in annualized savings during June and July as the company continues to refine its long-term strategy offset by strategic investments in Australia to support that growth.
Speaker #7: On the adjusted EBITDA front, excluding stock-based compensation and other one-time items outlined on slide eight of the earnings presentation, adjusted EBITDA improved 11% year over year to a loss of 13.7 million dollars compared to a loss of 15.4 million dollars in Q2 2024.
Speaker #7: Driven by increased revenue and gross margin, as well as a slight decline in operating expenses. From a cash and project financing perspective, we ended Q2 with 58.1 million dollars in cash up 23% sequentially and at the upper end of our guidance range.
Speaker #7: Now turning to our business outlook. Reflecting the timing of US battery deliveries associated with the Consumers Energy projects and other project timelines in Australia, we're estimating full year 2025 revenue of between 200 and 250 million dollars within the prior guidance range.
Speaker #7: From a cash and project financing perspective, we are estimating between 60 and 75 million dollars in total cash at the end of the third quarter, unchanged versus prior guidance.
Speaker #7: And including the cross-trails project financing of 18 million dollars, which was completed in July, with another 27 million dollars in total net ITC proceeds anticipated in September.
Speaker #7: Offset by quarterly operating expenses, working capital, and other CapEx. Introducing asset vault. Earlier today, Energy Vault announced that it had entered into an exclusive agreement for a $300 million preferred equity investment subject to customary regulatory and closing conditions, estimated in the next 30 to 60 days.
Speaker #7: By partnering with a leading multi-billion dollar infrastructure fund, we expect to enable over $1 billion in CapEx spending for about $1.5 gigawatts of projects under development in the US, Australia, and Europe.
Speaker #7: The project portfolio is prioritized with a clear monetization strategy, supported by long-term off-take agreements with bankable partners, and/or in attractive merchant markets. Further, by leveraging Energy Vault's existing EPC capabilities as well as a host of other services we provide today to our third-party customers, we can unlock notable synergies across the business.
Speaker #7: Including larger volume commitments with suppliers, and et cetera. Adding incremental cash flows and liquidity to the parent company. As part of this strategy, outlined in our May 2024 analyst and estor day, we've officially placed both the Kalisuga Resiliency Center in California and the cross-trails project in Texas into service and have also completed the respective project financings.
Speaker #7: These two assets are expected to generate nearly $10 million in recurring annual EBITDA going forward. Further, and re the recently announced Stony Creek project serves as a major milestone, resulting in nearly $1.4 gigawatt hours of total capacity under management once that project is complete in 2027, with construction expected to commence in Q1 2026.
Speaker #7: Once operational, that project is expected to generate roughly $20 million in annual recurring EBITDA. Further accelerating our path to a $100 million in recurring EBITDA goal over the next three to four years.
Speaker #7: In conjunction with the close of the $300 million preferred equity investment, again subject to customary regulatory and closing conditions, Energy Vault intends host a virtual investor day to provide a comprehensive overview of the asset vault portfolio.
Speaker #7: Its project pipeline, financial projections, and accounting treatment surrounding the consolidated subsidiary. As well as the long-term strategic vision. additional details will be provided upon closing.
Speaker #7: With that, I'll hand the call back over to Rob.
Speaker #2: Thank ou. Michael, thank you. And, before I open up for questions, I, I again wanna thank all the loyees, of Energy Vault that have been working diligently, across the globe, progressing a lot of the things we've ussed today.
Speaker #2: And I, I think not a small milestone, for us in progressing now toward a commitment related to $300 million to take our project portfolio now forward, and really to highlight and emphasize, I think from an investor perspective, a very strong focus of the company now on executing those projects, which I think we've done a, a very good job of, across the world.
Speaker #2: So with that, operator, we'll turn it back to you, for any questions.
Speaker #8: Certainly. At this time, if you would like to ask a question, please press the star then one on your telephone keypad. You may withdraw your question at any time by pressing star then two.
Speaker #8: Again, it is star then one to register for a question. And we can take our first question from Justin Claire with Roth Capital Partners. Your line is open.
Speaker #9: I guess, thanks for taking the questions here. And, congratulations on the preferred, equity transaction. I guess I, I first wanted to start on, on the preferred, and just wanted to see if you'd be able to share any more details at this point on the return structure, what the preferred dividend yield might look like, or any milestones, that are tied to the, equity, participation in Energy Vault holdings or, you know, do we need to wait until, the, the conference call, you know, coming up for that?
Speaker #2: Yeah. Thanks, Justin. Yeah. We, we purposefully are scheduling this virtual call with investors, just post the close of that, where we're gonna be stepping through and walking through all that for, for regulatory, and compliance purposes, we aren't gonna get into that de detail right .
Speaker #2: but what we're oking forward to walking people through, all those things at the at the investor, call that we're gonna be hosting just, just after the close.
Speaker #10: Yeah. I think, I think one way to sort of think about it, and there's slide there's a slide in the deck, slide 14, that sort of talks about the broader portfolio.
Speaker #10: Obviously, these projects and their sort of intended levered IRs would, would adequately support any project financing and/or distributions, associated with the with the preferred equity.
Speaker #2: Yeah. Yeah. Justin, there's some od content in there where you can, you'll be able to, make some assumptions there based on the, the levered IRs that are included and, and assumptions in and around the financing.
Speaker #11: Okay. Got it. I, I guess, maybe at this point, you know, not specifically on the preferred equity, but, you had talked about, you know, a billion dollars of CapEx.
Speaker #11: Maybe you could speak to, you know, more broadly what the financing strategy there is in terms of, project-level debt versus, tax equity. versus the potential equity contribution from Energy Vault.
Speaker #2: Yeah. No. Certainly. so we would expect that much of the portfolio will be in the US. We haven't necessarily articulated what the split will be, but it'll be US-centric.
Speaker #2: and as result, you know, there will be pretty notable ITC-related benefits. We obviously now have, h, some comfort around recent guidance that was given, around those sort of storage ITCs.
Speaker #2: but the way I would ink about it, you know, on a, let's call it $100 million project, one could assume virtually half of that would be, covered through normal course project financing.
Speaker #2: you should assume anywhere between 30 to 40 million, 30 to 40 percent of that would be covered vis-à-vis the ITC mechanism. Obviously, there are sort of costs, in transferring those ITCs, but, but you could use a 30% type figure.
Speaker #2: And then of that remaining 20%, related to the, the equity contribution required, there would be some split between common equity and, and, a-and sort of the preferred element.
Speaker #2: So hopefully a direction that gives you a gives you a sense. And quite frankly, this is the same, you know, same sort of split that, that we had, for, say, the cross-trails project.
Speaker #2: And even that with, with Kalisuga. So, you know, having just gone through this process, constructing financing, making sure that we have a, really optimized capital stack, post-COD, it's, it's, you ow, it's, a playbook that we know well now.
Speaker #11: Got it. Okay.
Speaker #2: Yeah. That's the other thing 'll.
Speaker #11: That's pful. Mm-hmm.
Speaker #2: Yeah. Go ahead. One thing just to add in terms of the use of the fund, and this was mentioned in the announcement, is that the other purpose of the fund is to invest in DevEx or some of the earlier development phases you go through when you're getting projects through different phases, from the permitting phases, design approvals, and things.
Speaker #2: So that's the other use of the fund. And then it we also have flexibility, to take minority interests in projects, for example, where we're providing storage solutions, and to work a little more closely with our, our customers in that regard as partners.
Speaker #2: So, so it really is, gives us a lot of flexibility, I think, in how we look to grow, all pieces the business.
Speaker #11: Okay. Got it. that's, that's helpful. A-and then maybe if I could just sneak one more in here, and just looking at slide 14, where you have kind of the COD dates, for projects in the in pipeline here.
Speaker #11: It looks like, you know, close to a gigawatt of projects potentially in 2027 are planned for completion. So just wondering if you could share little bit more detail on where those are in the development, process.
Speaker #11: Like, have you secured permits? Has interconnection been secured? you know, are the contracts already or are the projects already contracted? any of these additional detail there would be helpful.
Speaker #2: Yeah. Yeah. Sure. I, I think just for some, some visibility, and we had, in, in the past, had also provided a, a chart online that showed actually some the projects and where they were actually in their development phases.
Speaker #2: So it should have had that online. But Stony Creek, of course, is one of the larger ones that we, we announced. And that the timelines, I ink, are included.
Speaker #2: And that announcement there in 2027. There's, and you can assume there's a few projects, more in Australia, that are progressing, you know, through, let's say, mid-development and some of them to later development stages here shortly this year.
Speaker #2: and also a few in the US. that are also in, I'd say, mid-development stages, there's, one to two in Europe as well that we're, that we're progressing.
Speaker #2: So there, I there, you ow, primarily, I'd say a lot of these projects are gonna be, four and in cases, some of them are eight-hour durations, which is, I think, getting a little more common in Australia, for example.
Speaker #2: I ink, I think the US and Europe are closer to more of the, the average of the four hours, and, and as I said, I think there, they're all set and they're from their development.
Speaker #2: And as we look , at funding and moving them through, we're looking at having a lot of them, come online in 2027.
Speaker #11: Okay. Great. thank you, Pat. I'll pass it on.
Speaker #8: And we can move next to Noel Parks with TUI Brothers. Your line is open.
Speaker #12: Hi. Congratulations on the deal. I totally understand that you want to be judicious in what you disclose at this point.
Speaker #12: but I was wondering if you could talk, in just the broadest terms about maybe what is then isn't implied in the exclusivity of the arrangement, with the, the new preferred financing.
Speaker #12: And, I mean, you, you ioned for ample, well, ally, sorry. That's a, that's a sort of a ate topic. But, just, yeah, curious, curious about that.
Speaker #2: Yeah. I'd say we have a we have a, a agreement that's been executed. It, it also includes exclusivity. At this stage, hence the, the reason we were comfortable, and also the, the partner was comfortable, making the announcement that we did.
Speaker #2: And as we said, you know, subject to, the customary types of, you know, procedural and closing conditions, here at this point. So, there, there's really not the, the, the exclusivity is just that in and around this, this specific, asset vault.
Speaker #2: And, and the preferred equity toward funding these projects. So that's the, let's say, the, the scope of the exclusivity.
Speaker #12: Great. Thanks. This is kind of exactly what I was, was wondering about, ether it, it, im-implied, similar relationship to, to other, other projects, or, or, you know, parent company, operations.
Speaker #12: And, I, was pretty excited to hear that the transaction was accomplished with an infrastructure fund. I feel like one question, I've certainly been asking over the, the quarters is what were the nature of the types of parties you've been talking to for, additional funding?
Speaker #12: And, I had been sort of wondering, how well or have been going on. So, I, I just wonder if you uld, again, talk just very generally about what was involved and sort of landing the plane, getting to this deal, and, just a rough idea of, of how long you'd, you'd been in, in talks or in the works with, this particular party.
Speaker #12: I'm thinking of that as kind of a bit of a, to give a bit of a flavor for what subsequent types of deals might, you know, how they might transpire.
Speaker #2: Yeah. Well, well, look, I think 'll, I'll point, point to some things publicly we announced and said too. L-late last year, we actually made an announcement 'cause we had retained, Jeffries to, support us a bit in, in looking at this, the owned and operated segment.
Speaker #2: In the,
Speaker #2: in the energy ecosystem here around energy storage and, and, and really started to think about, I think, in earlier this slowly those discussions year, on, you know, starting to look going to market and, looking at the types of infrastructure players and partners that would fit what we're ing.
Speaker #2: We, we've obviously been in the middle of also delivering two projects. So I think that's something Noel that, folks were looking at is, as we were looking to close on projects that we had committed, like cross-trails in Texas, which actually we delivered bit early, and was up running, you know, 100% availability, for example, in July.
Speaker #2: it came up, you know, as planned end of May and, and into June. So everything performing well. So I ink, I think it's funds looked at us and knowing that we're, you know, getting in now to owning and operating, I think them seeing progress, on, on how we're executing those projects, that probably influenced some of the timing.
Speaker #2: Although I think it sort of coincided from when we started to really, seriously start to get into the market earlier this year and, and start to target, certain infrastructure funds that, that we thought would be interested in this and would be good partners with us.
Speaker #2: so I, I think some of that timing a bit coincided and, and the fact also we, we just had the Kalisuga ribbon cutting, of course, last week up in, up in Northern California.
Speaker #2: And that's for the PG&E system. And I think those, our ility to execute those and, by the way, progress project financing. So, you know, the diligence you get into, asset by asset when you get into those, so I ink, I, I ink, you know, folks seeing that we progress those, got them financed, closed on ITC agreements as well as Michael referenced, about some of that, cash that's coming in.
Speaker #2: I think all of those factors, while in parallel, us, you know, having the systems we had turned over on our itional business, all operating well, seeing the expansion in Australia, on the two construction projects that are now underway.
Speaker #2: So I think all of those factors, when into some of the timing here and, and the readiness, a-and I think the interest we had from, from multiple parties, to, to, look at working with us.
Speaker #2: A-and I'll, I'll highlight the last thing I'll say is, you know, what I said in my discussion in and around the, the deal announcement and what's behind it.
Speaker #2: as a part of all that diligence, people did, they, well, automatically wanna speak the customers that we've delivered or executed projects for. You know, how, how did we do through the process?
Speaker #2: How did we manage supply chain? You know, no project goes perfectly or even close. And some projects, there's problems you have to manage. we, we've had all the above.
Speaker #2: But how you manage those things in front of the customer, how you deliver, you know, how the systems are operating, now, a-all of that, all those factors, I think, were, were net positives as people, jumped in and did, it didn't the type of diligence that I mentioned in some of my opening remarks.
Speaker #2: So hopefully that's helpful to you.
Speaker #12: It, is indeed. Thanks a lot.
Speaker #2: Okay. Thank you.
Speaker #8: And we can move to our next questioner. It was Michael Renoff with Skoggin Capital. Your line is open.
Speaker #12: Hey, Rob. Congrats on the OIC announcement today. could you lain how the asset vault business relates to the current business and how, the 100 million of EBITDA on the asset vault, portfolio fits in?
Speaker #12: You mentioned, additional cash flow streams accruing to the holding company. can you just walk through that, for us in that, you know, the market cap is still well below, $300 million.
Speaker #12: You're talking about $100 million of EBITDA. you know, is this a do you think you're talking about the additional revenue and margins for you ys?
Speaker #2: Sure. Yeah. We were breaking up a little, but I think got the, the gist of it. And by way, it's a great question. And, and in the announcement, we, we, we did spend, I think, a few cents on it.
Speaker #2: But I-I'm glad you asked it cause I'll, I'll spend a little bit of time on it. the, the $100 million of EBITDA we mentioned specifically to the projects that are in development now, that this, that this $300 million is targeted at, a-a-at delivering, th-th-that's specific to asset vault and our owned and operated portfolio.
Speaker #2: So the first point is, as you've sort of asked or insinuated your question, that is a piece of Energy Vault's business. so that is and would be complementary to our, our energy storage solutions business, which are some of the projects we're ecuting today.
Speaker #2: in Australia, the one for Consumers Energy, for example, that we announced, that's starting deliveries in Q4. Where we're, you know, delivering, systems and, and doing the commissioning and then doing long-term service agreements.
Speaker #2: So, so the asset vault, that $100 million on, on this first set of projects that are getting funded, is in addition to what would continue to be our synergistic energy storage solutions business.
Speaker #2: So that's number one. I, I think the other question you asked, a-as I understood it, if I heard you right, is how does that relate back into Energy Vault?
Speaker #2: How does the asset vault business relate back in? And there's, th-there's incremental cash, and margin streams that do go back into the to the to the parent.
Speaker #2: And that's related to the fact that asset vault is gonna contract to Energy Vault. So Energy Vault will be building these projects and while there's a revenue elimination there because it becomes intercompany on the revenue side, there's obviously margins, associated with, you know, the building of the projects.
Speaker #2: So let's say the EPC agreement to go and build the project, there's margins associated with the long-term service agreements. That have to be y-you ow, done and put in place to be able to monitor these and, and, you know, those are nice, you ow, agreements too, 30 to 40 percent type of margins.
Speaker #2: On those. And then there's, there's a piece that's just related to the, the, the management, fee and expenses in and around the management of that portfolio that Energy Vault is doing.
Speaker #2: So those would be additional streams that, i-in addition to that, let's say, let's call it the asset vault EBITDA that would flow back into, and, a-and, and essentially bring additional cash flows, into Energy Vault.
Speaker #2: so there's a, a few different pieces there that, a-as you get a sense of, are all enhancing, the cash flow and the and the liquidity and, and streams at the at the parent co-level.
Speaker #2: Does that does that answer your estions?
Speaker #12: Yeah. No. That's, that's super helpful. a-and then just on Stony Creek, I, I saw the c the announcement on completing their, I know it was expected, but it's good to get it, formalized.
Speaker #12: that project's ger than the others. Could you just talk about the timeline to get that built and in operation? And then, what things you have going on in Australia?
Speaker #2: Sure. yeah. Stony Creek, i-i-is mentioned as our is gonna be our largest one in the portfolio now, going in. And that, i-in this close now, what we have going forward is, the next step and real large milestone is what's called the DA or the design approval.
Speaker #2: So and that essentially is focused on the final, land permitting process. There's always there's already been the environmental studies and reports, so all of the all of the major, items clearing out, I, I think any risks around, the site that we've chosen environmental aspects, any aspects related to, I think some of the other, i-indigenous, you know, requirements there and, and other management things we're gonna be, essentially, done into this DA approval, this final design approval.
Speaker #2: We expect that, sometime by the end of the year or into Q1. So it's gonna be, right in that range. and then from there, we're really at that, you know, concurrently while we're doing that, we'll be getting project financing.
Speaker #2: So in this next, le-let's call it, the next four to five months, while we're etting the D DA approval, we're gonna start a project financing process.
Speaker #2: Just to remind you and everybody, we have a it's called an Altessa long-term energy service agreement. There, issued through, a-AMO in the New South Wales government.
Speaker #2: So that, that we have that off-taker, that already. So that should give, I think, a very good confidence to, to all of us around the ability to get that asset financed.
Speaker #2: so that figure in a in some case, all of that comes together in Q1 next year. And then, it achieves what's called ready to build or RTB status.
Speaker #2: and, you know, we will have done the EPC contract back into Energy Vault with asset vault. Also in parallel, this next four to five months, so then we're really ready to, you ow, to hit construction, order, all key long lead items.
Speaker #2: And, and start building it through the year, essentially, of '26. Into what's expected to be, an early '27, essentially COD or, or operations of the project.
Speaker #12: Got it. Appreciate it. Thank you.
Speaker #2: Okay. Thank ou.
Speaker #8: And this does conclude the Q&A session of today's program. I'd now like to turn the program back over to Robert Piconi for any closing remarks.
Speaker #2: Okay. Robert, thank you. And, I na thank, again, everybody, who joined the call here. we, encourage everybody to go to the announcement, but also, we included, a deck, a presentation as usual that's on the website under the investor section.
Speaker #2: that includes some of details and, and to some of the questions here that hopefully will be useful to everyone. in closing, a-as you get the sense of, we're really excited.
Speaker #2: I think now as a company to, essentially have, have, access now as we're gonna get this, you know, what's just been announced this morning on the on the preferred equity to get that closed.
Speaker #2: and then be putting that capital to work toward our, development portfolio. And really, continuing to focus on, executing on that now with, without, you know, being involved in capital raise processes, et cetera.
Speaker #2: That's a, a very good position to be in. I think as a company, and I think from an investor perspective, you know, reduces tremendously a lot of the, the, the risk that people may have had in minds and, and we're expecting, you know, to see, a, a lot of the benefits come forward now as we as we start putting the capital to work.
Speaker #8: Thank you for your participation.
Speaker #2: Thank you, everyone. And have a good, evening and afternoon, wherever you may be. Thank you.