Eos Energy Enterprises, Inc.

Good morning, and welcome to the EOS Energy first quarter 2025 earnings conference call. I am Franz, and I'll be the operator assisting you today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, simply press star 1 on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Liz Higley, Vice President of Investors Relations. Please go ahead.

Good morning, everyone, and welcome to EOS's first quarter 2025 conference call. Today, I'm joined by EOS CEO Joe Mastrangelo, CCO Nathan Craker, and CFO Eric Javity. 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. Should any of these risks materialize or should our assumptions prove to be incorrect, our actual results may differ materially from our expectation or those implied by these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to are described in our SEC filings. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update these statements made during this call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events accepted 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 U.S. GAAP financial information, is provided in the press release. Non-GAAP information should be considered as supplemental and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with 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, Eric, and Nathan will walk you through our business outlook and financial results before we proceed to Q&A. With that, I'll now turn the call over to EOS CEO, Joe Mastrangelo.

Thanks, Liz, and welcome, everyone, to the OneQ earnings call. Thanks for the time this morning. Starting off on our classic operating highlights page, I'm not going to really spend a lot of time on the top half of the page, because I'll let Nathan talk about that and his new role as Chief Commercial Officer for the company. But I do want to spend some time talking around the activity inside of the pipeline and the orders booking. Critical in our 1-2 orders booking project in California, California, a large market for energy storage, one of those projects being at a military base, critical to have safety and an NDAA-compliant product, which EOS brings. Second, you saw two large MOUs showing that not only does our product bring benefits in the United States, but also brings to allied countries when you look at what we're doing in both the UK and also the ability in announcing the MOU for Puerto Rico, where we believe we can help the island with its grid instability and start delivering product as quickly as possible as they get their approvals. Next, I would say after the quarter, you know, we signed a microgrid project in Florida. Critical to talk about this for two reasons. One, it's at a school. You want the safest product next to our children, and EOS brings that safety. Second, it's with a large operator of energy storage and gives us another proof point with that operator of the benefits. CEOs can bring to the market. Shift down to the bottom of the page where I'd really like to spend the majority of my time talking about is what I believe is one of our strongest quarters operationally to date as a company. We deliver $10.5 million of revenue. We really saw the team step up and start to ramp in and overcome some of the supply chain challenges that we've had previously and get to really what is a good run rate. Give more details on that in a moment, but also like everyone to remember that we go direct to customers So we're exposed a little bit to the fits and starts when you have on permitting and site readiness and things. There's no dealer network in the middle of what we do. It's direct to customer. So we manage through that complexity, but the team has done a great job of getting the supply chain up and running. Shift to the lower right-hand side, very strong cash position for the company here as we exit 1Q. I think there's some key things underneath that I'd like to talk about. That cash position is reflected in A, the strategic partnership and investment from Cerberus, the execution and first draw on the DOE loan. But underneath those two factors, you're starting to see operational cash generation. I think there's two things I'd like to talk about from the balance sheet that highlight this. First one is if you look at our contract liabilities, they're up 80%. That up 80% is reflecting of customers giving us deposits on projects. and feeling secure with the strategic investment and the financing that we have in paying that cash up front and allowing us to start running the company from its operations. The second piece is I think when you look at our balance sheet, you'll see inventory and payables up in like amounts. Historically, you probably would have seen inventory up with payables being flat because a lot of times as we were receiving goods in the past, we're being asked to either prepay or pay on very quick terms. What the team has been able to do is extend those terms as we show financial stability and growth while at the same time get price to drive down cost and really drive the improvement that we're seeing in our gross margin profit. So that cash balance, very important, very strong, but underneath that, you're starting to see the seeds of an operating company that will perform. We go to the next page. When you look at what we're building is a stronger scaled EOS. I think when you look externally, I still always come back and remind myself that the demand for power is going to double by 2050 for multiple reasons and across the globe. So this is a critical industry, as critical as anything else that we do today. Giving safe, secure power to the world is as important as fresh air and clean water for the future. The second is, in order to do that, we need longer-duration energy storage. We're forecasting a very large... CAGR over the next 10 years for that long-duration energy storage, and EOS has a product that fits in that. At the same time, we're going through a period of global supply chain volatility. Tariffs are giving upward cost pressure into the industry and creating risk, which we think we can manage with the way that we've positioned ourselves, but also creates uncertainties as far as project timing. and how the market will evolve here in the near term. I don't think this is a long-term. I think this is a near-term challenge that we have to work our way through. How we thought about this, if you move to the middle of the page, 100% U.S. manufactured, and I'll talk about what that means as I give you an update on the automation of our factory here in Turtle Creek. High domestic content takes out complexity in your supply chain with a path to get to 100%. of U.S. content and a supply chain that's portable that you can bring to other regions and geographies as we grow, and really a technology that brings flexible operations, ability to deliver multiple revenue sources to customers, and ability to meet the demands of an ever-evolving, more complex energy ecosystem and power generation and electricity requirements. How do we position the company? When you look at what's happening, Nathan will go through how we're seeing the pipeline advancing. We have announced 5.4 gigawatt hours of MOUs in new geographies. scaling manufacturing. We'll go through and talk about where we are as far as bringing forward the facility that we have in Pittsburgh. And we continue to work on our accelerated expansion plan. And as we have meaningful updates, we'll provide those to you as they occur. And lastly is that differentiated performance that we talked about, which Nathan will highlight as he gives you a case study on how we think we're a great partner to help data centers achieve the goals that we need moving forward. If we go to the following page, we're reiterating our 2025 year guidance. When we look at this, we feel like we're solidly within the range of $150 to $190 million of revenue. That's 10x what we did last year. When you look at why we are reiterating that guidance, on the manufacturing side, we were 51% higher on our Q1 deliveries versus Q4 of 2024. And in fact, as we sit here today and talk to you this morning, what we've shipped to the field in 2025 exceeds what we've shipped in 2024. The team is really starting to get a strong foundation around how we execute and deliver to customers. Inside of all this, as we move forward, we will see some pricing variability as we start looking at the overall revenue numbers. Given the fact that I talked about this on the last call, there's some initial projects that were early on to build references, to build relationships with customers that are lower price points that we're seeing in the market today as we secure new revenue for the company. On the far right-hand side, what are the revenue triggers that allow us to get to that 150 to 190? We are staging our sub-assembly automation. I'll give you an update on that in a moment. The next piece of this is increasing the containerization capacity. Let me explain that for a second. We build our product from a raw material into a battery module. Battery modules go into a container. Containers are wired and software is installed, and that's installed out in the field. The first part where we focused a lot of our efforts on the automation of the process was that taking raw materials into components, components into batteries, and really getting that up and running. And that's why you're seeing the growth in our output. But when you take those batteries, think about assembling a truck on an automated line. We're now finding ways that we think we can automate that and make that faster and deliver higher quality. Now, that's going to mean a little bit higher capital costs as we start thinking about that as we're moving forward, but it still needs to be leading when you think about what it would cost to bring capacity online in the future. And then lastly, you're going to start seeing us generate more project and service revenue, so things that happen beyond the factory doors. Again, going back to what I said early on, we are a direct provider. to customer model, not a ship to dealer model. So you'll start seeing us generate revenue out in the field and revenue from service of the equipment that's out running. So we feel like with all the uncertainty, and we'll continue to manage that and keep everyone updated on that, but as we sit here today, we feel really comfortable about the guidance that we've given and what the team needs to work on. There's a lot of things and a lot of areas that we continue to manage, but I think with the team that we have inside the business, we feel confident in reiterating the guidance as we move forward. If we go to the next page, just quickly on delivering profitable growth, our goal is not to just be a high-growth company, but it's to be a profitable high-growth company. You can see the three main areas of delivering profits are around getting your direct material or cost of the product where you need to be. I talked about that earlier and what we're seeing as far as working with suppliers. We have many suppliers coming to us and wanting strategic relationships with us The team will keep working this, but we feel confident and comfortable where we are as far as the core components inside the product and the partners we have to deliver those. On the right-hand side of this page, I think we have to pause and talk about the scaling up operation that we're talking about. You don't scale a factory overnight. When you think about what we're seeing with tariffs and people talking about to bring manufacturing back to the U.S., you have to start building it, and then over time you get there. We've been at this for multiple years. What we know is you have to scale the facilities, scale your capabilities, scale your labor, train them, and then grow into this. We're seeing improvements from where we started with still room to grow as we continue to ramp into the second half. If we go to the next page, one of the most important parts of how we're doing this, and probably you'll hear in the background as I'm talking, this rhythmic banging. That rhythmic banging that you're hearing is the left-hand side of this page. That's batteries, parts being made. So this is all about automating the upfront, you know, raw materials come in, sub-assemblies get manufactured, they go into a battery, a battery gets assembled, the battery goes into the container. Well, you can see here before and after shots about how the team is making this better. On terminals, so think about a battery. A battery has two terminals, and a battery has 19 bi-polars. And we've sized all this to be able to get the delivery that we want off of the automated line that's been up and running with great yields. But you see not only does output go up, but labor rate comes down. And when that output goes up on the square footage that you have, your manufacturing overhead comes down. When that labor input goes down on the output that you're putting out, that middle column on the prior page goes down. So these are two critical components for us to grow into the space that we have and the capacity that we can achieve off of our automated lines. It's another one of these mesmerizing experiences for me when I go and look at this product working. The left-hand side is in the factory producing and making that banging noise that you hear. The right-hand side is at our supplier being factory acceptance tested to be shipped here. On the left-hand side, you install one of those. On the right-hand side, we install eight of those lines to get up to full capacity, and that's going to be happening over the next 60 to 90 days. We feel really good about the performance that we see and our ability to scale the business. And with that, I'll turn it over to Eric that will walk through the financial results in the first quarter. Thanks for listening.