Eos Energy Enterprises, Inc.

Good morning, and welcome to EOS Energy Enterprises' second quarter 2026 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. With that, I would like to turn the call over to Liz Higley, Head of Investor Relations. Thank you. You may begin.

Good morning and welcome to EO's second quarter 2026 conference call. Today I'm joined by EO CEO Joe Mastrangelo, COO John Mahaz, and CFO Alessandro Lagi. Today's call may include forward-looking statements, including our expectations regarding future results and the outlook for our company. These statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. For more information on these risks and uncertainties, please refer to our SEC filings. These forward-looking statements speak only as of today, and we undertake no obligation to update them except as required by law. Today's remarks will also include references to non-GAAP financial measures. A reconciliation of these measures to the most directly comparable U.S. GAAP measure is included in our earnings release. Non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. In addition, these measures may not be comparable to similarly titled measures used by other companies. This conference call will be available for replay via webcast through EOS's Investor Relations website at investors.eosb.com. Joe, John, and Alessandro 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. Good morning. Thanks, everyone, for joining us. This quarter comes down to three simple things. We ship more product than we have in any prior quarter, we grew our backlog, and we committed to consolidate our manufacturing footprint. A strategic decision that trades near-term revenue to lower our cost base as we exit 2026. Now let me walk through all three of these. We're tightening our 2026 revenue outlook range to $300 to $350 million. And this is a business decision, not an operating surprise. Let me address this change directly. We are accelerating the consolidation of operations into our modern Thornhill facility because of what it has begun to deliver. Line 1 will be down during the move and upgraded to the operational improvements we've implemented on Line 2. The volume it would have produced is the difference in the upper end of our guidance range. We are doing this so that 2027 is not only a volume growth year, but also a margin expansion year. John and Alessandro will take you through the operational and financial expression of the decision in a few moments. The low end of this range is roughly 2.5 times our 2025 revenue and more than 19 times 2024. We delivered just under $126 million in the first half, which already exceeds all of last year's revenue. Let's frame the range itself. While we are still finalizing the detailed schedule, the shape is very clear. The second half exceeds the first half. The fourth quarter is higher than the third. The bottom of the range takes roughly $50 million of second half growth. over the first half. That is just maintaining the run rate that we exited June with on revenue already secured through backlog and Frontier Power USA. The top end of the range is achievable, and it comes down to how quickly we scale Thornhill operations in a 24-7 production facility like we have today in Turtle Creek. We're planning for that, and we'll report against it every quarter. Moving to slide five, our second quarter operating highlights. We achieved record backlog, record revenue, record cube shipments, and a significant improvement in adjusted EBITDA margin. We're starting to see the operating leverage we've been talking about. As volume increases, fixed costs are spread across more cubes, and that's what drives margin improvement and closes the profitability gap. John and Alessandro will take you through the details behind those numbers and our path forward. But before they do, I'd like to spend a moment on fleet performance and cash. First, discharge energy. The number we're looking at at the page is up nearly a half a gigawatt hour since our last call. The fleet now cumulatively has discharged 6.5 gigawatt hours of energy and the Z3 fleet continues to perform operating at an average round trip efficiency of 78%. Let me be precise about that number because precision is what matters here. 78% is the average across a 20 120 state of charge window. It includes units running on Don OS and the units have not yet been upgraded to Don OS. So the performance of what we've developed, but we're continuing to count that performance of where we still have to improve to show the true number of what customers are experiencing out in the field. It's a fleet average under real duty cycles, not a laboratory result on a single unit. We're starting to scale here. We have more work to do, but there is a clear path to continue to improve performance. Turning to cash, we ended the quarter with $364 million in total cash. What's important is what sits behind that number. Our operational cash use this quarter closely matched our adjusted EBITDA loss. Cash on cash, there was very little gap between the P&L and cash flow. That burn rate needs to continue to come down and turn positive. And the initiatives that John and Alessandro will walk you through are designed to drive that improvement. Now let's move on to slide six. Let's focus on what wins our next order, reference hours. This page shows the hours the fleet has already delivered and the continued growth ahead with more than 200 additional megawatt hours expected to come online over the next six months based on current customer project schedules. Let's start on the top left of the page. The fleet has now run over 3.9 million cycles and discharged 6.5 gigawatt hours I talked about earlier. On G3 specifically, over 1.1 million cycles. We're moving towards one gigawatt hour of discharge energy. Every hour of cycling makes the next project easier to finance because customers can now evaluate a track record, not a promise. Roundtrip efficiency tells a more interesting story. Note how the performance range is narrowing. The bottom is rising towards the fleet average. That is variation coming out of the system, and reducing variation is what makes performance bankable. At the same time, the top of the range has crossed above 90%. In manufacturing terms, that is entitlement. It is what this technology delivers when everything runs designed. It is not a ceiling we hope to reach. It is a level the fleet has already demonstrated. And now our work is to deliver it consistently across every cycle, every cube in the field runs. The duration tile shows the range our systems are operating in the field. From two and a half hours to 14. One product, one SKU, dispatched, however the market needs it. The photo on the right is a project that was added into our backlog in November of 2024. I want to use it to show you how a pipeline opportunity becomes an asset operating in the field. The units were built and shipped by November 2025. They went on foundations in May of June of this year, and the project is expected to come online by year end. Ordered operations, roughly two years, and notice where the time went. The product was ready in 12 months. The second year was everything else, from site readiness to third-party equipment delivery outside of our scope. and the site construction schedule. That is one of the industry's key bottlenecks, and it's exactly why Frontier Power USA was built, to simplify the process and streamline the customer experience. The next page highlights how that strategy is translating into results. On page seven, the U.S. storage market is changing in ways that favors our technology. Load growth from data centers and electrification is pulling capacity needs forward faster than new generation can interconnect. and PJM, the grid operator for 65 million people and the largest power market in the country, prices have hit the ceiling in three consecutive capacity auctions. And the way the market now counts a resource towards capacity favors those that hold output through the system, full system need rather than the first two hours of it. Virginia has written the same logic into law this spring. The statute carves out 4.5 gigawatts for resources that run 10 hours or more. inside a total state storage target above 20 gigawatts. At the minimum duration, that carve-out alone is 45 gigawatt hours of energy. Buyers are no longer procuring just a storage system. They're procuring hours. Inside of this, we see four customer types. Energy providers and regulated utilities who generate revenue from assets. Energy consumers and assurance buyers who carry them as a cost of operations. The largest energy providers are independent power producers who need to deliver multi-hour and multi-cycles day after day because those capacity payments reward duration and energy margin rewards throughput. Utilities need assets that regulators will allow them to earn a return on over a 20-year life. Think about that for a moment. An energy provider, an IPP, uses that discharge window I talked about earlier and when we've always talked about the degradation of our product over time and having a 25 year life, helps utility with its regulator and its rate base. Then if you move over to the largest energy consumer, that's high speed computing where power is just the cost of goods sold. Think of a data center as a factory and think of energy storage or energy coming in as an input for them to produce. So storage is judged on delivered costs, how fast the site can energize and how reliably it will operate. The assurance segment is made up of defense or critical infrastructure customers where storage is priced against the cost of failure and the rapidness of being able to perform. Two book it as revenue, one books it as cost of goods sold, and one books it as insurance. All four by hours and all four screen for supply chain origin. We manufacture in Pennsylvania with a domestic supply chain. That is a commercial advantage today, not a future one that we're planning on. The pipeline on this slide is built from all four of these customer types, and the composition is where we are focused. I talked about backlog earlier, but what's important to note is that six customers placed orders this quarter, four new and two repeat. Our pipeline of 24.6 billion, nearly 112 gigawatt hours, is up 31% year over year. 51% of the pipeline is eight hours or longer. That is the duration band where our economics separate from incumbent technologies. 32% is data center related, which two years ago was a de minimis amount. Three commercial developments frame the second half. After the quarter closed, we were awarded a strategic partnership agreement under Golden Dome for America for the Golden Dome America program with the U.S. Department of War. During the quarter, we signed a 750 megawatt hour master supply agreement with KPAC covering Germany, Austria, and Switzerland. And Frontier Power USA holds a two gigawatt hour capacity reservation agreement Under that agreement, we are now seeing purchase orders convert into projects, beginning with the Biomirgin project and most recently with the $100 million purchase order we announced this morning for phase one of the Blanquilla project in ERCOT, originally developed by Stella Energy. I'll highlight the obvious. With nearly $25 billion of pipeline against an $807 million backlog, our job is conversion, not origination. Capital availability is one of the critical opportunity conversion factors. Two slides ago I mentioned we built something to improve it, and that now brings me to Frontier Power on the next slide. Frontier Power USA, it's working as we intended. We have started execution on our first project because our priority is to get more projects into the field, begin generating returns, and begin the operating references that help turn the investment flywheel of Frontier Power and deliver that pipeline conversion I was talking about a moment ago. We saw that strategy begin to play out in the second quarter. A pre-existing project that will ultimately be part of Frontier Power USA was executed prior to the closing of the joint venture using financing provided by a service affiliate. That project accounted for roughly 80% of second quarter revenue and demonstrates how this structure can help us get projects into the field sooner and build the reference hours that support future growth. Adding this project is an asset that we believe will deliver mid-teen returns and accrete the value of the joint venture in which we hold the minority interests. I'm putting that on the table first because I want you to understand it is a strategy rather than just a footnote. Our pipeline has historically experienced delays closing project financing, not technology acceptance. We saw qualified projects with real off-takes sitting unbuilt because developers could not close their capital stack. So we built the vehicle. Frontier Power USA supplies the capital, EOS supplies the technology, and we hold a minority interest in the entity. Walk the left side of the page, 263 million in gross proceeds initially raised, supporting an estimate $1 billion in project deployment. The funnel behind it, 16 gigawatt hours of opportunity pipeline, five gigawatt hours acquired, selected, or under active due diligence, and 1.8 gigawatt hours under construction are approaching full notice to proceed. First projects under this vehicle are expected to be online by the third quarter of 2027. That is the project journey I showed you two slides ago, running at platform scale with capital waiting for projects instead of projects searching for capital. Now in the middle of the page, because this is a long-term operating asset and it creates value in three ways, Frontier Power USA operates projects for recurring revenue, It can sell projects and recycle the capital of the new ones, and at scale, the platform itself becomes highly valuable. EOS participates in all three. We are the long-term service agreement counterparty across the install fleet with up to 25% to 30% of total capex over a 20-year life. We hold economic ownership in the platform, so we share in the recurring cash flows, the project sale proceeds, and any future monetization of the platform. and every project Frontier Power USA puts into operations adds reference hours to the installed base and to that chart I showed earlier, which will accelerate the next order and backlog growth and conversion of pipeline into orders, orders into assets operating in the field. HAPAC, the U.S. Department of War and the Customers in Place orders this quarter growing. Both engines are running and they compound as we execute our strategy and projects become operational. So we have a strong demand signal. We're building installed base operating hours as a capital partner that unlocks accelerated growth. Strong execution delivers profitable growth. And let me turn it over to the man responsible for all that, John, for an operations update.