Eos Energy Enterprises, Inc.

Good morning and welcome to EOS's fourth quarter and full year 2020 conference call. As a reminder, today's call is being recorded and your participation implies consent to such recording. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. With that, I would like to turn the call over to Ankit Hira with Investor Relations. Thank you, sir. Please begin.

Thank you. Good morning, everyone, and thank you for joining us for EOS's financial results conference call for the fourth quarter ended December 31st, 2020. On the call today, we have EOS CEO, Joe Mastrangelo, and CFO, Sagar Karata. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements related to the expected future results for our company, which are subject to certain risks and uncertainties and assumptions. Should any of these risks materialize or should our assumptions prove to be incorrect or actual results may differ materially from our projections or those implied by these forward-looking statements? The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC balance, including our most recent registration statement in Form S-1. Our remarks during today's discussion should be considered to incorporate this information by reference. Forward-looking statements represent our beliefs, and assumptions that only as of the date such statements are made. We undertake no obligation to update any forward-looking statements made during this call to reflect events or circumstances after today, or to reflect new information or the occurrence of unanticipated events, except as required by law. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information and the GAAP financial information, is provided in the press release. This conference call will be available for replay via webcast through EOS's Investor Relations website at investors.eos.com. Joe will begin with an overview of EOS. Saga will then take you through a review of the financials before we proceed to Q&A. With that, I'll now turn the call over to Joe.

Thanks, Akin, and thanks to everyone for joining us today on our first earning call as a public company after a successful business combination with B. Reilly Principal Merger Corp. 2 last November. The transaction was a critical step for us at EOS as it laid the groundwork for us to execute on our mission, and that is to accelerate the shift to clean energy with solutions that transform how the world stores and accesses power. Throughout everything we've all been challenged with in the recent months, everyone here at EOS continues to push forward on our green technology products and services that we believe turn conventional thinking on its head. As we said before, we're not just trying to get the job done or to just get more energy storage out into the market now. The team here is working to deliver storage solutions that do the job better to deliver safe, scalable, sustainable, and efficient storage solutions that are purpose-built for where the market is going in the future. If we go to the next slide, I think you see we had an impressive year in 2020, and it's a testament to the team's commitment. While SAGR will go through our financial details later in the call, there are a few numbers I'm particularly proud of that I'd like to highlight right off the bat. Our pipeline continues to grow and stands at above $3.5 billion of over 21 gigawatt hours of potential storage. The team has built a strong backlog with over $21 million in booked orders today, over 71 megawatt hours of storage. Coming out of the merger with BMRG, We now have over $120 million of cash on hand in the debt-free balance sheet, well-positioned to grow the company as we move forward. And part of that cash will be invested in growing our production capacity, which today stands at 280 megawatt hours, and will grow with an additional investment of $38 million here over the current year. We've achieved a successful milestone of passing all the tests required for UL9540A certification, and we're in the process of finishing all of our testing for UL 1973. These are important for us to be able to bring our solutions to indoor applications and, again, a great result by the entire team. We are now standing at over 200 colleagues here in EOS and this is just a great way for us to position the business for future growth as we grow the talent of our team. As I said, Sagar will have more on these later, but for now, Those of you who may be new to the EOS story, I'd like to take a little bit of time to talk about how we see the energy market and how we're uniquely positioning EOS for long-term growth. So if we flip to slide five, we see the market is in a moment of radical transformation. And on slide six, it's in a moment similar to what we've seen in other industries in the past. You know, when you think about it, we're standing at a moment in the energy industry where like the computer industry stood so many years before. When you think about it, if it were 30 years ago and I were to tell you that you would be carrying around the computing power of a mainframe in your pocket, many people would have doubted the ability to do that. But today, as all of us walk around with our smartphones, that's exactly what we're doing. So similar technological advances are fundamentally reshaping the dynamics of the energy markets. They're decentralizing and democratizing power production. Today, anyone, anywhere can produce or store power. At the same time, demand is going up as every aspect of everyday life now depends on the technology that brings power to life. It truly is a technical marvel every time we flip the light switch in our home. And we're also enabling the decarbonization. Renewables like solar and wind are becoming increasingly efficient and affordable. If you look at the next slide, on this slide you see some of the key factors that support what I said on the previous slide on decentralization, power being produced anywhere. You see a massive increase in microgrid installations, over 2x what they were in 2008. At the same time, we have over 2 million installed solar systems, which is equivalent to producing one year of demand for the state of California. On democratization, where we talk about power being produced by anyone, when you look at one in five homes in California is equipped with storage, we installed 11 gigawatt hours of energy storage globally last year, 2x what was done in 2019, just a year before. On the demand side, there's still 2x the U.S. population that lacks reliable power. And a 3% growth rate is equivalent of adding 13 New York cities to the demand curve for reliable power. And on decarbonization, this is really protecting the environment as we grow modern-day life. 64% of the world's electricity is still produced by non-renewables globally, which is 4x the production in the U.S., but the growth of renewables continues to grow astronomically, 90% worldwide, 2x what it was the year before. So when you take these four factors together and move forward to the next slide, what we now have is an opportunity, an opportunity that is a challenge at the same time where you look at how our system operates, you have two factors happening. What we talk about is waste. In a large part, this waste is driven by the fact that when we produce power is not exactly when we want to use power. So at times, there's power out there that's actually wasted, that doesn't go anywhere, that's not used. And then there's also scarcity, the flip side of having waste. You know, when power capacity is needed and it's not there for the user when you flip that light switch or plug in your phone to charge it. So if we go to the next slide on page nine, so as we talk about waste and scarcity, let's look at Texas and California. You know, think about this waste that I talked about, power that's produced and not used. The power that was produced that didn't get on the grid and didn't ultimately get used would supply enough demand for one year of power in Texas. The same time we all saw what happened a few weeks ago in Texas. Now, while storage would not have solved that problem, we also need to consider, because many times when we talk about excess power demand, we talk about it during warm weather. But you saw the impact of not being able to handle peak demand when there's cold weather. So we need to balance that. this ability to bring power and store it and shift it forward to win their scarcity. And you see that also in California. Last spring, there were 15 gigawatts of power that were turned off from renewables because there wasn't demand. That's more than the total storage capacity that was installed last year. And at the same time, as you roll forward into the summertime, there were more than 20 days of rolling blackouts because of the excess demand that was created in the summertime where we didn't have power available. So really what we're talking about as we talk about storage is thinking that supply with when the demand is there to give people power when they need it. Let's go back for a moment to our information technology metaphor. We see the energy market reaching a similar point in its evolution. If everyone everywhere can produce power, what gets produced that is not immediately needed must have somewhere to go. And then it needs to be accessible by everyone everywhere at a later time. Supply and demand have to be synchronized to maximize utilization and overall system efficiency. In the energy market, the linchpin of this synchronization is energy storage. If we flip to slide 11, I want to talk about the evolution of storage over the last 10 years and then how we look forward to the next 10 years. When you think about what we did in 2010, 2015, was bringing an existing technology in lithium ion that allows us to manage short-term spot peaks in supply and demand to shift power and discharge it over a one-hour time period. We then took that technology and were able to optimize it to stretch it from a one-hour duration, so one hour meaning the time that you can discharge energy from your storage system back into the grid to be used by consumers, we stretched that out to two hours. But what we're looking for as we look forward in the marketplace is four hours of discharge. The ability to time shift and capture the generating solar power as an example during the day and shift that so that we can use that into the evening and through the night. The market is starting to recognize this as renewables become a more meaningful part of generating capacity. We're at the early stages of what is expected to be a significant growth opportunity over the long term. If you just look at the next 10 years, we're seeing a projection of a 31% compound annual growth rate from 20 gigawatt hours of global storage deployments to 740 gigawatt hours. This is what the team at EOS saw coming more than 10 years ago. And we focused on building our technology to match that need as the market evolved. If we move to slide 12, I'd like to just focus for a moment on what we as EOS, where our technology fits into the overall energy mix. The energy system always is going to require a mix of technologies. There's never going to be one technology or one size fits all. This is for a very simple thing of flipping a light switch once again. There's a very complex system behind that that enables that to occur. So what we have focused on is not doing the short duration. That's something that's better met with technologies like lithium ions. and not looking at discharge times of over 18 hours, which is a very important part of the market, but there's better technologies than what we bring to the market. What we look at is right down the middle, this three to 12 hour discharge segment, which is $160 billion market opportunity. So over the next 10 years, our team is going to take the knowledge that we've built up over the last 12 to truly help revolutionize how we provide power to the marketplace. On slide 13, what we like to call this is the dawn of the energy cloud. Again, thinking about the information technology metaphor, what we at EOS are trying to do is allow this radical transformation that I talked about on earlier slides. If we move forward to page 14, because you see this decentralization, democratization, the growth in demand, and decarbonizing, It means that the landscape that we're all used to dealing with is changing. It's becoming more complex, more competitive, more challenging, and I think more interesting. Traditional utilities and large-scale generators will continue to be key customers, but consumers will no longer be tethered to the old one-way market. We'll be working with a whole host of new entrants with different business models, industry experience, and operating scale. These are the microgrid operators that are out there. These are companies that are looking to make themselves more efficient by generating their own power and operating in an island mode. We believe that this shift is happening faster than what many may think. It's the fastest evolution I've seen in my 30-year career in the energy markets. If we flip forward to slide 15, we really start to see our customer conversations that we're having are starting to change. It's who we're talking to, what they're asking for, and how we tailor our solutions for the future of the market. It shaped how we've been thinking about the revenue streams that Sagar will talk about in more detail later. We're engaging much earlier with potential customers and opportunistically investing in what we believe are promising development concepts. We're financing whole renewables projects, particularly solar plus storage microgrids, And of course, in addition to traditional equipment leasing, direct cash sales and providing long-term service contracts to make sure that our products provide the reliability that our customers demand. So if you look at slide 16, the idea of an energy cloud landscape is also shaping the portfolio of both products and services we're continuing to optimize and build. Long-duration storage is at the heart, the core of our business. our proprietary battery technology. But increasingly, we'll be looking to expand into software and service offerings to accelerate adoption and optimize the use of our technology. Right now, I'd like to dig a bit deeper into our storage solution and why we think it's so well suited to this new energy market. Let's start on slide 17 with our battery. As I mentioned earlier, more than 10 years ago, the EOS team set out to create a three to 12 hour battery chemistry. The result of that effort is our proprietary Zenith technology inspired by industrial zinc plating baths, but protected by a portfolio of more than 200 patents. It stores energy through zinc deposits. With the chemistry solved, we turned our attention to the development of a scalable battery construction. Over the last three years, we've refined our design down to just three easily assembled components, an aqueous electrolyte, a bipolar electrode, and polymer frames made up of a handful of readily available materials, zinc, titanium, graphite, felt, plastic, and water. That's all, all in a simple sealed battery with no moving or external parts, a technology that's easy to scale. And if we look on page 18, We've been focused on putting the Zenith technology through its paces, not only in our lab, which is one of the largest in the country, but also out in the field with nine systems deployed across four continents. In total, Zenith batteries have discharged over 200 megawatt hours since 2016. We're also now in the final stages of getting product safety UL certification completed for UL 1973. which is the standard for safety for stationary storage applications, and UL9540A, the standard for safety for thermal runway, which represents harsh abuse testing and also ensures that our product is non-flammable. At the same time that we've been running these tests and getting the certifications, in our lab, we run the equipment harder than it's ever going to be run out in the field to prove that it's a technology that can handle any environment. On slide 19, The Zenith has consistently delivered not just on our target three to 12 hour discharge goal, but also addresses other limitations of lithium ion technologies that we saw as impediments to mass adoption of storage technology. As I said at the beginning of this call, EOS is not about doing what's been done for the last 10 years. We're building what's needed for the future. The Zenith is safe. Our chemistry is inherently non-flammable and non-toxic, so it doesn't need a large HVAC system or fire suppression equipment around it. It's scalable. We don't use any precious or conflict metals or need clean rooms in manufacturing, so there are very few supply chain constraints. It's sustainable. It runs for more than 20 years or 6,000 cycles, charging and discharging. And at the end of use, it's fully, easily recyclable. Zenith is as clean as the clean energy we store. Efficient. It operates in extreme temperatures from as low as 4 degrees Fahrenheit, negative 4 degrees Fahrenheit, to as high as 122 degrees Fahrenheit. Our charge and discharge rates can be adapted to changing power needs, and we deliver a full 100% depth of discharge. Our round-trip efficiency is in the high 70s to low 80s percent. We're within three to five points of lithium-ion. when you net out all the losses that happen on the lithium ion system when they're running their HVAC and other systems that are required to keep it moving. I'd like to think of the Zenith batteries as the workhorse of energy storage. You don't have to think or worry about them. They just get whatever job you need done, perfect for the new types of customers and challenges we're facing. Oh, and this is key. All those benefits are safety, scalability, sustainability, and efficiency. They can add up to significant reductions in total cost of ownership. When you look at A 10-megawatt, 40-megawatt-hour system. Our cost of ownership is currently about 30% lower than lithium-ion, and we have a plan to drive costs out even further. On slide 20, we're building all this right here in the United States. For those of you who don't know me, I joined EOS in 2018 after a 25-year career at General Electric to help scale the manufacturing and commercialize our product. And one of our first decisions was to bring production back to the United States. Last year, we built our manufacturing joint venture in Pittsburgh with one of our main investors, Holtec. It's called High Power. We got the factory up and running in seven months, and we're scaling up production and shipping product right now. We integrated our supply chain so that 80% of our suppliers are within a two-hour car ride of our factory. We also went out and negotiated a volume tier pricing to help us scale the business as well as improve the quality and consistency of all of our raw materials to be able to meet the demanding conditions that the energy markets expect from suppliers. On slide 21, we're pretty excited about what we've done with our Zenith batteries. But at the end of the day, customers don't buy individual batteries. They buy energy storage systems. And this is just another area where our technology opens up unique opportunities to meet New market needs are simple battery design and the fact that we have no ancillary systems has allowed us to adopt a modular racking system design. Similar to what you might use for computer servers that we can configure to almost any customer use case. We can fit a basic basic open rack into any existing indoor environment like a building basement. We call that our stack. Or we could take two racks and fit them into our plug and play cube, a standard 10 by 20 outdoor rated shipping container. Or we can build out our hanger with a series of racks stacked too high to get maximum power density. A lot of the capacity in the same smallest footprint. Just to give a little more context of what that all means, if we did a hanger installation with the square footage of your average home improvement store, you'd be able to have a 100 megawatt, 400 megawatt hour system. enough to provide storage to a small town. And every system, of course, is fully integrated with our proprietary battery management system software, which allows multiple use cases for our customers to maximize the return on the investment they make in an EOS solution. On slide 22, so let's think back to that energy cloud, the dawn of a decentralized, democratized, decarbonized system with a wide variety of customers and needs, You could see how the Zenith batteries integrated with our proprietary software in our stacks, cubes, and hangers are positioned to meet the moment, to bring clean, long-duration energy storage under a building in a dense city, out in the remotest of locations, or in the center of a wildfire region. We think we've got the right technology and approach and the people to deliver. We started a year ago with one salesperson and 45 people, and we sit here today with 12 salespeople, and 200 people who all come into work every day to develop positively ingenious solutions to the world's energy storage challenges. With that, I'll turn it over to Sagar to talk about what everyone's been working on, the financial and commercial front. Over to you, Sagar.