Gauzy Ltd.

Good morning, and welcome to the Gowsy Limited third quarter 2024 earnings conference call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Dan Scott, Investor Relations. Thank you. Please begin.

Thank you, Operator, and thank you, everyone, for joining us today. Hosting the call today are Gowsy's CEO and co-founder, A.L. Peso. and CFO, Mayor Peleg. On this call, management will be making forward-looking statements, not historical facts, which are based on management's current expectations, beliefs, projections, and assumptions, many of which, by their nature, are inherently uncertain. These forward-looking statements, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key expectations, beliefs, Projections or assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.gauzy.com. We do not undertake any duty to update any forward-looking statements. This call contains time-sensitive information that is accurate only as of today, November 12, 2024. Except as required by law, Gauzy disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's third quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures. With that, let me turn the call over to Eyal.

Thank you very much, Dan, and good morning, everyone. Thank you for joining. This is our second quarterly earnings call as a public company following our June IPO, and I want to express my deepest appreciation to our exceptional team for their hard work, dedication, and continued professionalism, and to our investors for your strong support. Throughout 2024, we've achieved impressive growth driven by both exciting new commercial opportunities and the expansion of existing relationships with our loyal customer base. This strong performance reflects just the beginning of what our talented team can accomplish, and we remain focused on executing our strategic vision and delivering on our commitment. I'm going to focus my opening remarks today on three topics. First, the strong and growing demand across our four business divisions, along with some highlighted strategic new customers and contracts. Second, I'll give a high-level summary of how we performed in the third quarter and year to date, including actions we have taken to expand our production output to meet continued accelerating demand while maintaining our short-term goals to reach profitability. Finally, I'll discuss how we are positioned to deliver on our strong backlog while advancing our pipeline of innovation to achieve our positive outlook for the business in the fourth quarter and in 2025. Following that, I will turn it over to Gauzy's Chief Financial Officer, Meir Pedek, who will provide financial highlights from the third quarter as well as give details on our initial fourth quarter guidance. The third quarter was an important one for our company in many ways. One where we demonstrated the underlying strength and agility of our platform as we balanced accelerating demand with our focus on steadily improving profitability. Case in point was demand on our aeronautic division that outpaced our ability to deliver based on labor constraints and typical seasonality at our production facilities in Europe. Rather than rapidly adding new staff at a high cost that would require additional training and a much higher cost in the long term, we worked closely and diligently with our unions to add a second shift in France, a first for Gauzy. This support and partnership with our unions allows us to, one, more effectively manage our fixed labor costs, and two, efficiently and quickly ramp up production without sacrificing profitability. As that's a key point that speaks to how we operate and scale our business, we are adding products and technologies constantly, fueling, accelerating demand from our customers across our four business divisions, but we won't sacrifice profitability in the pursuit of of outsized growth. As you can see in our narrowing net losses, we're continuing on our trajectory of improving profitability as we stay laser focused on driving the business towards EBITDA positive, followed by operating cash flow and eventually pre-cash flow and net income. The growing demand we talk about is real and tangible. You can see it in some of the largest companies and brands in the world. They choose us not just for a single order, but for multi-year deliveries of key technologies that are fundamental for the products they make. In the third quarter, we announced new business with Ferrari, one of the most iconic auto OEMs and fourth largest by market cap in the world. Yutong, the largest bus manufacturer in the world, a major international airline, and one of the largest cruise ship manufacturers in the world. So now let me expand upon some of those and other key demand drivers across our four business divisions. In our safety tech division, Yutong, who I mentioned is the world's largest bus manufacturer, increased orders for Q3 by 250% compared to the previous year. You can see some of the impact of that order in our 68% revenue growth in the division year over year. This growing relationship with a major OEM positions us to expand our already market-leading global position on passenger buses as they expand installation of our smart vision data system on both single and double-decker models. That system is now installed on tens of thousands of buses in more than 80 cities worldwide. In this quarter alone, we delivered on a record number of buses in Australia, reflecting 100% growth year-over-year. Both of these are testaments to how our relationships with OEMs and regional transportation authorities are a driver of growth. Gauzy is still the only company in the world today covering complete cities with ADAS, no mirrors on public transportation. In the same division in September, we unveiled our next generation AI-powered Advanced Driver Assistance Systems, or ADAS, for commercial trucks, for trucks is among the first OEMs to select this exciting technology and has signed us for a minimum of 10 years of serial production on their trucks. Our smart vision aid us for trucks replaces traditional mirrors with high-definition cameras and displays that deliver real-time audiovisual alerts based on image analysis and predictive learning, increasing safety by eliminating blind spots and increasing ROI through fleet efficiencies. In our aeronautics division, we signed an agreement with a major international airline to provide cabin shading systems with our LCG or light control smart glass products for their business class cabins on both new and existing 737 MAX fleets. This is an important development as it represents penetration into the cabin shading market in commercial aircraft where we grow rapidly. As we discussed before, we have reached 95% market share globally in cockpit shading for commercial and private aircraft. And we announced during the quarter how we expect that to represent a minimum of $240 million in revenues in aggregate for Gauzy over the next 10 years. This win is an example of how we leverage our strong business relationships and presence with OEM to expand into additional applications that represent high volume. In our automotive division, we landed our largest auto contract to date. Earlier this year, we signed a nine-year contract to deliver our product into an average of 50,000 cars per year with a major European OEM. Activity to support this contract is ramping up right now, and we expect to realize first revenues from this contract in early 2025. Additionally, we announced recently that Ferrari has selected Gauzy as a strategic supplier to provide SPD smart glass technology for serial production for their new four-seater. This is the first time Ferrari has implemented smart glass technology on a mass production level for any of its designs, and we are proud to be part of this exciting offering for the next eight years committed. And in our architecture division, we had a number of new awards. First, a large cruise ship maker has selected Gauzy for their new terminal in Miami, Florida, which will host over 11,000 square feet of Gauzy PDLC to enable a transparent display facade. We also expect our technology to be implemented into current and future vessels of that manufacturer. Additionally, one of India's largest developers in the commercial sector has signed with Gauzy for multiple new buildings in the country. starting with over 5,000 square feet in a new establishment in the center of New Delhi. We have further orders in the pipeline to address the hospitality sector with this customer, and we are excited about the opportunities to come in this region. And finally, we revealed the first ever solar-powered LCG smart glass at GlassTech, supporting sustainability initiatives in built environments. We expect to commercialize this revolutionary offering in 2025 and capitalize on a growing market. Next, allow me to provide some high level thoughts on our performance in this quarter and year to date. We grew our total revenue 24.6% in the third quarter and 29.2% year to date versus the same period of 2023. Our third quarter strength was particularly impressive considering we were late on certain shipments that we now expect to ship in the fourth quarter. This was primarily in our aeronautics division as we work with our unions to add additional shifts to meet increasing demand. Importantly, the demand for our products was already there and just continues to accelerate. With the second shift now staffed, we are already shipping that backlog and are well positioned to fulfill increased demand into 2025 and beyond. As we shared in our pre-announcement, approximately four million US orders Scheduled for the third quarter will now ship in the current quarter, Q4. Our results for the quarter featured particular strength in safety tech and architecture. The increase in revenues was the primary driver of higher gross profit in the quarter. When you look at our performance on a trailing 12-month basis, our revenues is up an impressive 29.8%. A helpful reminder would be that in a typical year, our first quarter is our weakest. Our fourth quarter is our strongest by far, and the middle two quarters are typically similar largely due to vacation patterns in Europe. We have been very busy in the few months since our IPO. We have increased our labor output utilizing a second shift with the support of our unions. We have introduced new offerings like the next generation of our Ada Smart Vision for commercial trucks, and we continue winning key business. Our end markets are growing fast, our backlog is ramping, and our products are winning market share. The demand is there, the orders are there, and we are fully confident we will deliver on our goals. With that, I will turn it over to Meir for an update on Gauzy's financial results.