Eos Energy Enterprises, Inc.

Good day and thank you for standing by. Welcome to EOS Energy's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Liz Higley, Director of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us for EOS's financial results and conference call for the first quarter 2024. On the call today, we have EOS CEO Joe Mastrangelo and CFO Nathan Craker. 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, including but not limited to current expectations with respect to future results and outlook for our company and statements regarding our ability to secure final approval of a loan from the Department of Energy LPO or our anticipated use of proceeds from any loan facility provided by the U.S. Department of Energy, 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 expectation of those implied by these forward-looking statements. The risks and certainties that forward-looking statements are subject to are described in our SEC filings. Forward-looking statements represent our beliefs and assumptions only as the dates that 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. The conference call will be available for replay via webcast through EOS's investor relations website at investors.eose.com. Joe and Nathan 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 EOS CEO, Joe Mastrangelo.

Thanks, Liz. Welcome, everyone. Thanks for taking the time here this morning. Let's jump right into what I think is the biggest news of the session here today. Last week we successfully completed the factory acceptance test for the state-of-the-art Line 1 with our automation partner Acro Automation in Wisconsin. Really a tremendous achievement by the combined team of the two companies to get the FAT completed in the way that we got it completed. We got through final system debugging and integration in six weeks. The total cycle time on the line is a battery moving through stations around 12 seconds. We really have a couple of stations that we need to tune in. The majority of the stations are running at the 10-second target. We've got a clear line of sight to get to that 10-second cycle time. It's very impressive to watch the batteries go through the manufacturing process and see how far we've come and see the quality that's able to come off of the line. Now, when you take a look at that and now think about what's next, what's next? First equipment arriving. today in Turtle Creek to then start being installed in our factory here in Building 700, here where we've been manufacturing on the semi-automated line. Pretty exciting time here. The operators have been trained on the state-of-the-art line during FAT, and then our installation and commissioning is on plan per our schedule. Now, I think this is very important for us as a company in a couple of areas. One, we continue to execute to the plan that we laid out at our strategic outlook session in December. The second piece is getting through the FAT is a critical step as we think about customers wanting to see our ability to execute on large projects. And three, as we talked about, this is also SAT is a critical milestone as we continue to work with the Department of Energy on our loan program office conditional commitment. So really great job by the team to achieve the schedule. Great job to really start positioning now for SAT and truly ramp up production here as we go forward. If we switch to the next page and just talk about where we are running the business operationally versus the targets that we laid out in December. We talked about continuing to improve the performance of the Z3 module. Nathan will talk through in his section some of the cost out and work that we've done that we talked about in December. We cut in a new EOS Z3 inline cube, which improves the overall power density of the product out in the field. We also transitioned over to lower cost, higher energy density Z3 battery module. This will allow us to reduce overall product costs and manufacturing costs to bring the product to market. On our path to profitability, which is our overriding goal as you think about where we are in 2024, we've secured 55% of our direct material cost out target. A phenomenal job by the team to be able to do this. More importantly, I think, when you think about this in the context of the overall market, we believe that we're above 90% of US content while achieving that cost out. So once again, like one of our core tenants is to allow our customers to maximize their benefits under the investment tax credit of the IRA. Continuing to do that while driving down cost of our product is a testament to our belief that we can still build competitive products here in the United States. Field data, field operating data is the next critical component. We've shifted over 110 Z3 tubes to five different customers. We're beginning commissioning on three of those projects. I'll talk about them on a subsequent page, but that's going to be the critical next milestone when you think about where the Z3 evolves to is getting those assets up and running for customers out in the field. We have one of the three that are getting very close to start operating with the other two starting operations in early third quarter. Commercial momentum, you know, the big announcement, you know, of extending our MSA with Pine Gate Renewables, you know, very big, you know, recurring customer. Our largest installation is with Pine Gate, so a testament to our ability to execute out in the field. You know, we are working on 1.2 gigawatt hours of late stage opportunities to continue to convert into orders. I think, again, going back to the previous page, that conversion into orders really is going to start to see momentum as people can come and see the line and be able to look at a battery coming off the line every 10 seconds and be able to say that EOS is capable to deliver at scale. I think that's critical as we start to see projects getting bigger in size, people want to be able to see that you can deliver not just the small, bespoke, prove out a technical concept, but be a true scaled operating company, and that's the path that we're on as a team. We continue to improve our overall digital capability. We've taken a lot of the lessons learned from the Gen 2.3 product down the field and rolled that into the logic around our BMS. If you go back and look at what we said in December around state of health, state of charge, overall operating and optimizing performance for customers, using that data and applying it to the Z3 is just going to make those purchases that customers are making of the Z3 more valuable as they get out in the field and install. On a liquidity front, Nathan will walk through where we are on monetizing our production tax credits and bringing in that capital to the company to allow us to keep operating. And we continue to work to achieve our DOE loan requirements and continue to work with the LPO to get to loan closing and feel really good about also the operational aspects of the business and being able to bring cash into the business through delivering on project milestones and being able to invoice and collect cash as we execute on those projects for those 110 cubes that we've already put out in the field. If we go to the next page, just our normal operating highlight page, commercial pipeline standing at above 13 billion, 49 gigawatt hours of opportunities. Booked orders, $125 million last quarter, which is the Pine Gate MSA extension. Our orders backlog now stands above 600 million. That's 2.4 gigawatt hours If you think about where we are on the initial introduction of the state-of-the-art line, that's two years of capacity of the state-of-the-art line. When you really think about some of the things Nathan will talk about when he gets in there, we've already started thinking about how do we take that state-of-the-art line, get it up and running at the 1.25 gigawatt hours that we've talked about, but then increase that to allow us to continue to grow the business as we see our pipeline accelerating. Discharge energy, this is probably one of the other biggest milestones that we have in the presentation. 3 gigawatt hours of discharge energy with 2.6 gigawatt hours of that coming in customer sites out in the field. Our revenue is 6.6 million, 100% of that coming from the Z3 production. I think what we see, and when you really look at this and look at it on the basis of quarter over quarter performance, you're really starting to see the aspect of being able to manufacture the product at scale and being able to see the cost work that we've been doing come through and when you look at our cost of goods sold. And lastly, cash on hand was around $32 million at the end of the quarter. It doesn't include restricted cash that we hold for our Atlas debt that we have on the balance sheet. Shifting as we move into the commercial opportunity pipeline and the orders backlog, if we go to page seven, I first want to start off with what I think is a really valuable page from the value that the team is creating around EOS in the energy storage field. The left-hand side of the page shows the discharge energy coming off of our systems, that dark green line, our energy discharge down the field. When you just think about what we've done, we've discharged 1.4 gigawatt hours of energy in the first four months of 2024, and we've discharged 400 megawatt hours in the last three weeks. So when you really think about the assets being able to operate, the technology being able to work out in the field, We're learning every day. We're improving the performance every day. But you can see the durability and the flexibility of the product as customers use that on the field. That's mostly energy being generated off of Gen 2.3. I just want to be clear on when you look up on the top, 2.6 coming from the field, 2.2 gigawatt hours. It says FAT. I just want to be clear that that's factory acceptance testing of FAT. cubes and containers prior to being shipped from the factory, not associated with the factory acceptance testing that has been done on state-of-the-art line 1 for the Z3. And then there's around 0.2 gigawatt hours on the lab that totals up to 3 gigawatt hours. Now, on the right-hand side of the page, another important proof point when you think about Proof points in the market and showing EOS's ability to grow into the demand that we see on the field. First proof point we talked about today is the ability to be able to manufacture at scale. Big milestone in being able to deliver the factory acceptance testing on state-of-the-art line one. Second proof point is the left-hand side of this page which talks about assets operating discharging energy out in the field and showing that the technology works. The right-hand side of the page, I think, is the third important proof point, which is Z3 operating out in the field. You can see three projects that are currently installed out in the field, one of which completing its commissioning. The other two scheduled to complete their commissioning here in the beginning of the third quarter. That will then start generating and adding to that line on the left-hand side of the page, which will no longer just be Gen 2.3, but will become Gen 2.3 plus Z3 operating out in the field, which is another critical proof point in how we grow the company for the future. Which takes me to page 8, which is our current pipeline, our traditional pipeline page that we talk about. You'll see there's been a lot of flow in the pipeline during the quarter. Lead generation continues to grow. You have to realize we're showing net numbers. There's always ins and outs in every bucket, but we continue to to add really strong core lead generation, which will then go into this commercial opportunity pipeline, which is technical proposals, non-binding quotes, and LOI firm commitments. You see LOI firm commitments being down from prior quarter. A lot of that has to do with the signing of the Pine Gate order. There's also some changes in projects that we have as far as sizing of projects. and projects that didn't materialize even though we had a binding or an LOI and a firm commitment from our customers. Now inside of that we talked about late stage opportunities last quarter. That stands at 1.2 gigawatt hours. The change in that number is again PineGate moving over into the booked order side and then one project where the sizing of the project got smaller as the customer looked at their ability to generate profit off of a project and balancing the land available, the financing available, and the need for the power. So that takes that to 1.2 gigawatt hours. We continue to work across that portfolio to be able to continue to grow the right hand side of the page, which is that backlog, which stands at $602 million today with 2.4 gigawatt hours, up 13% from where we were last quarter. So continue to make progress here, continue to have to work through Putting the proof points on the board, the three important proof points that I think about operationally that lead to taking this pipeline page to booked orders, which eventually translates into revenue, having the line up and running, showing that the product works out in the field, and then ultimately for shareholders is working through the cost-out equation to get the company to profitability. With that, I'll turn over to Nathan, who will walk you through the progress that the team has made here since we last spoke for year-end earnings. Thanks.