Eos Energy Enterprises, Inc.

Greetings. Welcome to the EOS Energy Enterprises Inc. Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Laura Ellis, VP of Investor Relations. Thank you. You may begin.

Thank you. Good morning, everyone, and thank you for joining us for EOS's Financial Results Conference Call for the third quarter ending September 30th, 2021. 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, uncertainties, and assumptions. Should any of these risks materialize or should our assumptions prove to be incorrect, our 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 filings. Our remarks during today's discussion should be considered to incorporate this information by reference. Forward-looking statements represent our beliefs and assumptions 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 to the GAAP financial information is provided in the press release. Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with U.S. GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies. This conference call will be available for replay via webcast through EOS's Investor Relations website at investors.eose.com. Joe and Sagar will walk you through the company highlights, financial results, and business priorities before we proceed to Q&A. With that, I'll now turn the call over to Joe.

Thanks, Laura, and thanks, everyone, for joining us today for the third quarter operating results of EOS Energy Storage. It's another quarter of great accomplishments for the team, starting off with a page we use every quarter. The technology, we continue to discharge energy and run operating cycles and prove out not only the robustness but also the operating flexibility of what we bring to market. We've announced this morning the largest order in the company's history. We're at booked orders of over a half a gigawatt with a backlog now at $150 million. We're very excited about the project that we've announced with Blue Ridge and Pine Gate. It's an exciting opportunity for us, but also the follow-on order from Duke and a new order from Amoresco. Our opportunity pipeline continues to be robust with over 22 gigawatt hours. What we're seeing as we look in the market is continued growth On the opportunity front, we're navigating a little choppiness and also some uncertainty on when orders will close, but we continue to see customers coming to us to want to understand how our technology can deliver on their needs. The factory and the team in Turtle Creek had a very strong quarter. I'll go through some of the improvements that we've made in the operation. We're standing at $3.4 million of sales, of shipments year-to-date, and we have $144 million of cash at hand to continue delivering to execute on our operating strategy. Overall, a solid performance by the team in continuing to position the company for future growth. So if we move to slide four, just overall the environment, like many other companies, we are going through the headwinds of what's happening on the supply chain, both on the labor, material, and logistics side. When you look at where we are and how that's impacting us, we're running our factory at two shifts versus three shifts. We continue to hire and want to build out over time, but we have been experiencing some labor shortages, but I've been able to manage through that. At the same time, you know, one of our biggest items that we manage through is the actual container that we use for our system. You know, we've come up and now have three sources of supply for that and are managing through the logistical ability to be able to receive those containers in our factories to ship them to customers. We still have the same challenges on the semiconductor side of having availability, but given the ramp and the planning that we've been able to do, we should be able to manage through that as we go through the rest of the year. And on the inflation side, The biggest thing that we're managing through is just on the resin that we use for our battery module itself is just managing that overall equation and how we hit our cost curves moving forward. And then I talked about on the previous page, there's certainty around the growth in the market. There's uncertainty around the timing of that. And we see that from the upfront opportunity through the sales process all the way through to the startup of our equipment out in the field. And the team, we continue to manage our way through that and that really when you take these three together you know what it really requires is leadership team as we manage the company tightly as we go through and and solve our issues that come up on a day-to-day basis on the tailwind side you know continue to see strong demand for storage you know the market is going to grow BNEF that continues to forecast over the near term a 23 percent CAGR the market as you start to see it now is starting to shift to needing flexible duration discharge. So, you know, moving from a static two-hour, four-hour to systems that can do anything from two to upwards to 15 hours. And, you know, our technology fits the bill there. And I think you're going to see, you know, a new technology mix as we come in and the market grows and evolves for the future. And I think another big one for us I talked about on the previous page is that we continue to improve our operational capability. You know, we have a higher output coming out of the factory. We have better yields And I'll show you some of the data on how we're getting consistent battery and system performance as we ship out into the field. So really a lot of work and a lot of focus from the team on this aspect and results starting to show through here as we look at what we did in the third quarter. On the next page, page five, here's what we're talking about for where we are versus our business priorities for the year. As I mentioned before, we booked our largest order in company history in October. We are starting to build up a blue chip portfolio of customers that we're working with. I talked about the names earlier, but we like what we see. We also like the work that we're doing with some major power developers and utilities as we go through their qualification process and making a lot of progress as we move forward for future growth for the company as we move forward. On the revenue side, we're on track. We're managing the risks that we talked about to our $5 million revenue target. Our second half revenue is six times what we did in the first half of this year, and we'll continue to grow over time as we continue to de-bottleneck our factory and add capacity. And on the capacity adding, we will scale our manufacturing capacity by year-end next year to 800 megawatt hours on our footprint in Turtle Creek in Pennsylvania. It's a $35 million planned investment, and we saw the announcement of us getting an equipment financing program deal to be able to manage our capital, but we like, and I'll walk through in more detail later on, we like our asset-light CapEx manufacturing model because it will allow us to grow as the market grows. On our next generation technology, we have a working prototype that's been on test. We've got first piece parts coming in and we'll start the manufacturability tests here over the next couple weeks. And we're planning our first half, our first shipments for the first commercial shipments for the product at the end of next year. You know, it's an exciting time. I'll go through some details as we wrap up the presentation around the NextGen product. We like the product that we have today and how that's performing. I'll show that as well. So, again, I think overall strong performance by the team, and I'll turn it over to Sagar now to walk us through the financials and upfront discussion around the commercial aspects of the business.