FREYR Battery, Inc.

Welcome to Frere Battery's second quarter 2024 earnings conference call. With me today on the call are Daniel Barcello, Chairman of Frere's Board of Directors, our co-founder, Chief Executive Officer and Board Director, Tom Einer-Jensen, and Evan Calio, our Chief Financial Officer. During today's call, management may make forward-looking statements about our business. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expectations. Most of these factors are outside Frayer's control and are difficult to predict. Additional information about risk factors that could materially affect our business are available in Frayer's S-1, an annual report on Form 10-K filed with the Securities and Exchange Commission, which are available on the investor relations section of our website. With that, I'll turn the call over to Daniel.

Thank you, Jeff, and welcome everyone to our Q2 24 earnings call. Since this is my first opportunity to address you as Frayer's Chairman of the Board, I'd like to spend a few moments highlighting the strengths of our outstanding management team and emphasizing our commitment to generate value for our shareholders, customers, partners, and employees around the world. Our collective goal as Frayer's Board of Directors is to establish a profitable business as soon as possible. As Tom and Evan will detail shortly, the industry and the capital markets are evolving rapidly and we must evolve with them. Our strategy has adapted to this challenging landscape and the recent appointments to our board and leadership team best positioned Frere to build on the progress we have made and to execute our strategy. Frere's board of directors now includes our co-founder, Tor Ivar Sleteman, Todd Cantor, the managing partner of Encompass Capital, David Manners, who has extensive experience in the U.S. government, Peter Maitreyi, a co-founder and energy industry expert, Jessica Strine, a seasoned institutional investor, CEO and industry advisor, and Dan Steingart, professor of chemical metallurgy at Columbia University and the chair of Frayer's Technical Advisory Board. We are fully aligned in support of Tom Jensen, our CEO, Evan Kelly, our CFO, and the rest of our leadership team, and we have the utmost confidence in their abilities to lead this organization on an accelerated path to profitability. Our focus for the remainder of 2024 is to advance our attractive business development opportunities. During his time as our executive chair, Tom continued to spearhead our global business development endeavors, so his return to the CEO role dovetails with Frere's top priorities. We're also delighted to have Evan Calio on our team as CFO. Evan brings deep global energy sector, capital formation, and deal-making expertise to Frere, having previously run businesses at BTIG and Morgan Stanley. as well as having served as an attorney for the U.S. Securities and Exchange Commission. Evan will be instrumental in our journey to create lasting shareholder value. Before I turn the call over to Tom, I'd like to thank you, our shareholders, for the continued support, which is reflected by the passing of resolutions at our IGM in June. We're excited about the opportunities ahead for Frere, particularly in the battery technology and energy storage space. And with that, I'll turn the call over to you, Tom.

Thank you, Daniel, and welcome everyone to our Q2 2024 earnings call, Friar's 13th earnings call since we went public, and my first earnings call since I came back into the CEO role. I'd like to start today's call on a personal note. As most of you know, I have been with Friar from the start, and I care deeply about our people, our investors, our customers, our partners, and our success. And although the capital markets have been chaotic lately, it is nothing we haven't seen before. You may recall that we raised the initial equity to go public on the New York Stock Exchange in early 2021 via virtual roadshows in the throes of the pandemic. I am delighted to be 65 days into my second tenure as CEO of REI. While I know we have still a lot of work to do and that confidence in us has been challenged, I want to firmly state that I would not have stepped back in if I did not see that we can deliver stellar results and groundbreaking developments similar in relative impact for us as a company as when we went public back in 2021. Back then, we had a conceptual ambition to become a battery company with a small team and a limited balance sheet. Now, we are one of the few companies globally to have proven that we can produce functional batteries using next-generation equipment on the 24M semi-solid platform. We have a global partnership and customer network. We have a cash position of more than $200 million with no debt on our balance sheet. We have strategic assets with which we can execute projects and unlock value. And we have an increasing number of highly promising opportunities to establish a deeply profitable business. We have globally leading partners across the entire battery value chain, including our Energy Transition Acceleration Coalition partners, with added interest and participation from energy majors, hyperscalers, and ultra-large tech caps who see the critical role and vast potential that the battery industry represents, both in terms of decarbonization, but also in terms of unlocking next-generation computational power in a sustainable manner. We know, however, that our investors are eager for concrete news, and we recognize that your trust and support must be earned by delivering. So if you take one message from today's call, it's that our revamped board and management team, 65 days into working together, are acutely focused on execution. And this is what I'm doing together with our excellent team in a constantly changing and dynamic environment. Since my return to the CEO role, I have begun to sense a familiar feeling from our formative days. I'm hearing many of the same messages from existing and emerging partners, and I see real momentum behind the scenes. The key distinction is that Ferry is no longer merely a company with a vision to produce batteries. We have now proven to industry leaders that we possess the technical and operational acumen to justify a seat at the table, and we are capitalizing on that privilege. I am energized about the opportunity to serve as Ferry's CEO once again, and I'm excited about the road ahead. Turning now to slide number four, we are leading with our conclusion by summarizing our value proposition to investors. As we saw in this morning's press release, our singular focus is to build a profitable business that generates first revenue and EBITDA as soon as next year. We intend to achieve this by unlocking value from our real assets, which include GigaArctic, GigaAmerica, the CQP, our land position in Finland, and our technology licensees. With publicly traded battery startups deeply out of favor, our equity currently trades below cash, so there is meaningful hidden value to generate from our assets. In the current financing and battery cell pricing environments, adaptability is key to success. As such, we have refocused our business development efforts on projects that are the quickest to market. The downstream model impact opportunities we are advancing are financeable because of their relatively modest capital intensity, and they offer highly attractive economic returns. We are finalizing commercial agreements and technical solutions with top-tier partners, and we will be announcing specifics on economics and timelines as soon as we are ready with value-accretive deals. We are mindful of the challenges the battery industry is facing, and we prioritize solid, value-creative deals over speed, but we are now very close to the initial finishing line, so we'll ask for a bit more patience until we can announce specifics, but our plans include commissioning and startup of production, revenue and EBITDA generation during 2025. Our strong balance sheet is another source of strength for Friar. Although external project-level equity and debt are available for bankable projects today, our significant cash balance and debt-free balance sheet give us the flexibility to be patient while we prioritize capital formation that is tied to specific projects. And to provide additional flexibility, we're implementing additional measures that will extend Friar's runway to approximately 36 months without assuming the addition of any new sources of funding. We're obviously also pursuing various sources of non-dilutive funding linked to our increasing product portfolio, but we take nothing for granted and seek to control what we can while pursuing additional opportunities to augment our ability to grow further. Turning to our third point, for all the capital equipment intensity of the battery industry, it's human capital in the form of technical and operational talent that is the primary source of value creation and competitive differentiation. With our recent successes at the CQP, on the 24M platform, we have demonstrated to our current and prospective partners that Freire has world-class people who know how to find solutions to highly complex technical issues. Under the leadership of our newly appointed chief operating officer, Mike Brose, our chief technology officer, Andreas Benson, and our EVP of project execution, Einar Kilde, we have developed deep subject matter expertise for a variety of battery value chain solutions, which continues to drive new opportunities. And finally, if we lift ourselves out of the tyranny of the moment in these volatile capital markets environments, Freyr's story is still tied to secular growth trends that should ultimately resonate with investors. Battery solutions will increasingly be recognized as the key enabler of the energy transition, highlighted by the need to provide reliable, affordable, clean, dispatchable energy as the global power grids grow more reliant upon intermittent renewables amidst surge in global electricity demand. Freyr is increasingly at the forefront of this energy revolution. Turning now to slide five. Let me update you on the pillars of our Friar 2.0 strategy that we have alluded to in previous calls. We are accelerating our conventional technology strategy, and we expect to lead with downstream projects focused on module and pack production. This approach is grounded in market fundamentals as follows. The economics of module and pack projects benefit from the surplus of battery cell capacity while finalizing end-user applications with local content requirements and battery management systems. Financing is available for these projects because they are far less capital intensive than battery cell gigafactories. Fred has already been working on downstream technology configurations to support cell production, so we can channel that momentum to manufacture purpose-built storage solutions for our customers, and the construction lead times for module and pack facilities are much shorter, enabling us to accelerate our path to market, also given that we have building and infrastructure assets inside the company. The second pillar of our Friar 2.0 strategy is our emphasis on financial discipline and our strong balance sheet. In today's challenging financing environment, cash is king. Accordingly, we have built in flexibility in our operating model to adjust our cash burn rate to extend our runway to at least 36 months without raising any additional capital. In conjunction with this priority, we're also pursuing multiple options to generate value from our existing assets, including GigaArctic. Our commercial efforts are also in high gear. We are simultaneously evaluating potential inorganic opportunities while we mature the Friar 2.0 commercial pipeline of conventional technology projects. Our team is eager to share what we've been working on in the public domain, and as we move from confidential negotiations to formal commitments, we will communicate our progress accordingly to the market. While we focus on accelerating Frayer's path to commercialization in the near term, we remain committed to establishing a long-term competitive moat around our unique position with 24M's semi-solid technology. The technical milestones we have announced this year at the CQP have proven that we as a team can produce batteries on a novel technology platform, and those achievements are attracting attention from potential partners across the battery and adjacent industries. The battery industry's future rests on improving battery safety, increasing energy density, driving down raw material and conversion costs, and improving both electrochemical and electromechanical aspects of battery production. There are multiple additional opportunities around the 24M platform, which includes novel materials, LFP recycling options, improved cell designs, and much safer separator solutions, which we believe ultimately could be a material part of a differentiated next-generation tech stack at ultra-low costs with all safety aspects under control. We will, in a resource-sensible way, continue the work with current and new partners to develop competitive battery solutions based on the 24M platform, gradually test and include additional aspects of the 24M portfolio, and explore complementary avenues to leverage the digital assets we have developed in-house in Freyer and at the CQP. Turning to slide six, let's spend a few minutes panning out to assess the big picture opportunity for Freyer. The data from numerous sources continue to support our view that we are in the early stages of a structural and exponential growth trend for batteries, which are the key facilitator of the energy transition. In Freyr's core end markets, batteries are the solution for a structural dilemma across both the supply and demand spectrums for power. Furthermore, I want to underline that these secular growth trends are underpinned by learning curves, which will continue to drive down costs and accelerate deployment further. Traditional estimators and conventional energy analysts still struggle to take on board the momentum in the transition, as has been the case consistently for the last decades. In the end, however, these trends are driven by economics, and exponential growth will continue as we are in the early stages of the S-curves as depicted in these charts. While economics drive global growth, policy has a role to play for temporary localised deployment. Allocation of capital will gravitate to the markets which benefit from temporary incentives, like the Inflation Reduction Act, which is one of the reasons why Freyr re-domiciled to the US earlier this year and why we are accelerating our presence in the US energy transition. Power grids worldwide are becoming more reliant on intermittent renewable electricity sources through accelerating wind and in particular solar power generation deployment. These require battery backup in the form of battery energy storage system solutions to ensure dispatchable affordable supply. Irrespective of the source of power generation, however, and the notion that increasing intermittent power supply drives demand for batteries, low-cost battery solutions are very useful in supporting grid reliability, irrespective of the source of the power supply. Demand for electricity already fluctuates daily and seasonally with weather and during each day with peaks and troughs in usage patterns. Batteries used in storage applications enhance reliability, reduce costs, and support the ongoing deployment of new applications such as microgrids, electrified home heating, and the uptake of electric vehicles. As learning curves continue to improve performance, safety, and costs of batteries, everything that can be electrified will be electrified. Decentralized and decarbonized renewable energy-based microgrids coupled with renewable energy-based utility-scale solutions will increasingly be deployed, incentivized, and supported. Freire is one of few companies with fundamental exposure to this secular trend on both sides of the Atlantic, and we have pedigree partnerships in existing and next-generation battery technology solutions, providing a unique exposure for investors to ride this continuing and accelerating energy transition wave. And now, it is my great privilege to welcome Evan Kalio to our team as Freyer's Chief Financial Officer. Evan was instrumental in Freire's formation as a public company during his time at BTIG, so he knows our story. He understands our industry, and he has hit the ground running on several important initiatives during his first 65 days in his new role. Evan, you are heartily welcome to the team. Over to you.