Energy Vault Holdings, Inc.

Greetings, and welcome to Energy Vault's third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you should require any operator assistance during the conference, please press star zero on your telephone keypad. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Michael Beer, Chief Financial Officer. Thank you, Michael. You may begin.

Thank you. Hello and welcome to Energy Vault's third quarter 2024 Financial Results Conference call. As a reminder, Energy Vault's third quarter earnings press release and presentation are available now on our Investor website, and we'll be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations portion of our website. This call is now being recorded. If you object in any way, please disconnect now. Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risk and uncertainties. These forward-looking statements are only estimates that may differ materially from the actual future results, and they may vary due to a variety of factors. Please refer to our 10-Q filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the Safe Harbor Disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. Joining me on the call today is Robert Picconi, our Chair, Chairman, and Chief Executive Officer. At

this time, I'd like to hand the call over to Robert Picconi. Great. Thank you, Michael. And good afternoon

and morning and evening to everybody here on the call. Thanks for joining. I'm going to break precedent a little bit and start with how I normally finish my calls on our quarterly earnings, and that's starting with our people. And one word comes to mind, resiliency, not a new word or concept, working in the energy storage world for us, and generally, storage solutions and grid resiliency. But in this case, I would like to recognize it is a word that applies to our people here at Energy Vault. In the last 90 days in particular, we've seen tremendous change in volatility in the capital markets, in the geopolitical landscape, which continues to bring uncertainties, unprecedented energy demand to support what we see driven by data center expansion, and the resurgence of interest in any clean or fossil power to meet it. We've seen a lot of the news on SMRs, even Microsoft taking its interest in the 2-mile nuclear plant, a gap in power that clearly needs to be closed in terms of an economical solution for 24-7 dispatchable renewable energy. So it seems this future has arrived a little earlier than planned, and it will take the most resilience of all of us and companies and leadership and courage and the people that make up the foundation here of Energy Vault that I'm so proud to work alongside. We've just had the U.S. elections complete last week. Always can be polarizing in some cases, as we've seen in the last elections, but in particular around our national commitment to renewable energy and to clean power and meeting that rising power demand, which I believe in any outcome of the election will still support a healthy clean energy transition,

and it will prevail.

Strong, tough, robust, flexible, these are all synonyms for resiliency. As I was writing some of my thoughts and comments, it actually came up in the spell check as synonyms, but really these words represent the foundational core of my colleagues here at Energy Vault that I work with, and I'm humbled to support every day due to the impact that we can have and that we see, starting with our local communities that make up the global communities that our teams touch every day. I want to touch on a few examples from some recent travels on these themes and sticking with this theme of resiliency. I just spent the last few days, late last week, in the community of Calistoga, California, where what we call our CRC, our California Resiliency Center, has achieved mechanical completion and beginning soft commissioning activities of what's the largest hybrid green hydrogen energy storage system in the world. Craig Horn, who leads our Advanced Energy Storage Technology Group, was there to host me along with Irwin Tansu, who's our head of commissioning and has been, by the way, to all of our initial sites in the United States for the first gigawatt hour across three projects that we turned over in 2023 and brought up in unprecedented timeframes. These timeframes, I would say, not by accident, but through an approach we have taken due to the experience of our software development and team that experienced that, while new as a company at Energy Vault, brings people with 15 years plus experience in energy storage during its infancy and its growth, in particular the last five to seven years, also on a multi-technology battery storage integration experience. And the ability to turn up these systems quickly and efficiently, not by any luck, of course, but through cell-level monitoring, for example, to detect problems well before they're going to manifest themselves, even pre-building digital twins of the site design and environment, so no stone is left unturned as we go from mechanical completion to system turn-up. This planning enhances all of our execution in the field that our customers uniformly would speak to. Very happy other supporters to visit there, including interactions up in Calistoga with the local business owners and community advocates that are excited to have a sustainable solution to the noise and pollution from diesel generators that were a part of their past now, wheeled in every year for the fire season, for example, or to deal with what's called PSPS, or Public Safety Power Shutdown Events. But a healthy amount, too, of wait and see as I spend and interact in the local community. Is it safe? Will it be noisy? And that 150-foot long tank filled with green hydrogen. In the end, we're very excited, as is the local community there, to bring up this system to be the first of a kind in a microgrid, first of a kind for hydrogen energy storage and something that we'll be replicating. But it all starts here with the local communities and that impact. And I reflect in particular on the last 12 to 18 months. Reed Gardner in Nevada was a large coal plant, one of the largest polluters in the state of Nevada, and us delivering a 440 megawatt hour system there in a precedented time frame from four months from taking control of the site. With a hybrid system delivered with Wellhead Electric in California, the local Stanton Orange County Southern California residential community, where our 4-hour, 275-megawatt hour system allows the gas speaker plant to operate less frequently, reducing GHDs by up to 70 to 90 percent. Hal Dittmer, for those of you that might have heard the name, a real pioneer in the state of California and the community, 84 years old, I hope he doesn't mind me saying that, but would not put him past the age of 55 if you see him on the street. All about the impact here, and I would really be remiss with not spending a few minutes, therefore, on my recent visit to Australia and the team there regionally led by Lucas Sadler on the commercial side and McCann on the execution side. We've talked about the Australian market and have made a few announcements here in the last couple weeks. All of fairly large scale and the size and importance of that market, the coexistence of many of our strategic investors, including Korea's Inc., the largest non-ferrous metals producer in the world, and their wholly owned subsidiary, Arc Energy, BHP, one of the largest mining and iron ore companies in the world, just to name a few, all investing in their own clean energy transition. But I was most fascinated by the local government support from the meetings in Melbourne, for example, with the Victorian Energy Minister, Lily D'Ambrosia, head of the State Electricity Grid, or called the SEC, and the longest tenured energy minister in all the Australian states, a woman of great vision, great passion, focused on what needs to be achieved, and ever cognizant of the how things are accomplished as more important necessarily than the final result that's achieved. We look forward to large partnerships and projects built a tremendous pipeline well over the 5 gigawatt hour range now of projects that we'll be executing upon over the next 12 months and the coming years. While I was there, we announced the first of what we believe will be many project partnerships with Ross Warby and the team from Entervest, the first 1 gigawatt hour project at Stony Creek in New South Wales, for example. Excited about the potential given the development and the portfolio focus that we have is a core strategy and working earlier in the pipeline development with companies and people that bring the expertise to pinpoint the grid weak points and opportunities to support better grid resiliency. Anyway, it was a great week. Much of our core leadership team was there in person. We did a lot of planning for the coming years for the Australian market, including immediate investments and doubling the size of that team in the very near term and tripling the size of our investment in Australia over the next year given the opportunities we see in the projects that we have underway. Shifting a bit now to our results before turning it over to Michael who will go over some of the details of the financials. Just very encouraged by what we've seen in the last 3 to 4 months in the progress, starting with probably one of our most important criteria and indicators of the future, which is our revenue backlog, which grew by over 33% in the quarter. Supporting now as we look to the revenue ramp we have coming in 2025 plus. Australia, of course, will play an important part. Very happy to announce new projects in the United States. We recently announced the gridmatic offtake agreement of our Texas site, battery site that will be building, owning and operating. Fairly quick turnaround there as will be COD in the second quarter of 2025, but also announced for the first time here on this call a new project with Jupiter power. And always nice to be announcing additional projects with prior customers. I think a great example of building the faith and the confidence and trust of customers that have built projects with us that we've delivered to and feel very good about what the team has earned there in delivering for the first project and now a second project with Jupiter. I also feel great about our execution on our strategy to not only build and deploy these systems, but also to own and operate these storage assets. With the right development partnerships and the knowledge we have in designing, commissioning and maintaining these systems, that experience allows us to reduce the capital expenditure upfront through optimal design, allows us to reduce the operating expense it takes to operate these systems and to maintain them. And at the end of the day, to ensure the availability of these systems and the uptime to ensure we're meeting customer needs, we're meeting the grid needs and meeting the needs of our expectations of our investors on the returns on these investments, which of course bring long-term revenue streams at very attractive margins. From a revenue perspective, this was clearly a transitional quarter as we get into our Q4 ramp now underway as we've previously guided, but now coming in Q4. But maintain the strong gross margins as we were finishing projects, gross margins achieved at 40% plus and on a -to-date basis, 28%, which obviously bodes well for our finish for the year and our guidance of finishing the entire year at 15% to 20% unit economics and gross margins. Encourage to continue to see our op-ex reduce both on a -over-year basis, 13%, and 7% reduced on a -over-quarter basis. This reflects some of the changes we made in our technology and business model as we looked at our licensing models back at the first half of the year and the areas we're going to be investing in and therefore adjustments we made to our organization and the team supporting that strategy. Michael will talk more about some of the project financing that we announced and kicked off, working with Jeffries on some of our first wholly owned projects in the United States, specifically in California and also in Texas. And while this reduced our revenue in terms of turning over projects and recognized revenue on the year, we've been very clear since we announced at our investor analyst meetings in May of why that strategy is so fundamental to the intermediate to the long-term and the growth and the interests of our shareholders in our long-term operating model. We believe this model will have a lot of dividends for the shareholders, but in particular as we look into our planning as a company in the coming three to five years. We also have added more global assets for this new operating model, including what we are announcing in Australia and the development partnership we have with Intervest, but also we announced three months ago the 100 megawatts system in Italy at their largest coal plant in Sardinia, Carbon Suchus, where we'll be installing and have just installed the first EV0 gravity system there and are beginning commissioning and has a future for an integrated hybrid site with the coexistence of our gravity with batteries to deliver 100 megawatts of power to the local community. I'd be remiss if I didn't mention a few of our innovation milestones as well. I already discussed about the green hydrogen system in Calistoga and where that is and what's going to be the first of a kind and turned over here in the next two to three months, but also applying our gravity with what we announced with -Olems-Merrill and integrating gravity energy storage in the future of superstructures and in particular using our modular pumped hydro approach with gravity and integrating these in these structures where for the first time we'll be able to have a carbon payback in very short periods in the building sector. There's some very interesting statistics if you do study what creates most of our greenhouse gases. It may surprise you to know that almost 30 to 40 percent of the greenhouse gas emissions come from both the building and the operating of buildings. Because of that, we're very excited to work with Adam Semel and the team Bill Baker, Scott Duncan from -Olems-Merrill and the work they're doing jointly with our team and our gravity technology expertise combining that together and you'll be seeing more to come in the coming years as we look at the first projects for these superstructures across the world. I was also very excited to announce today as hopefully some of you have seen some of the performance data from our Rudong gravity energy storage system 25 megawatt, 100 megawatt hour in China and with performance measures as we previously guided in the 80 to 85 percent range on initial data on the round trip efficiency. This is massively significant I think the world and in particular in the long duration energy space, the first milestone achieved and one of the highest round trip efficiency measures in long duration energy storage in the world. Very excited what that means not only for China and the other four gigawatt hours plus of projects that have already been announced there in China alone but also what it means for some of the other regions where we've announced initial gravity projects and license agreements for example in the 16 states of South Africa and surrounding countries as well as in other regions of the world where we're beginning development in the Middle East and even right here in the United States starting with our Snyder development center. Very excited about what these initial performance measurements are telling us about the role that gravity can and will play as part of many solutions and technologies for the clean energy transition. Finally it was just announced last week and excited to recognize the team by what Time Magazine recognized as one of the best inventions in 2024 and really a tribute I'd like to mention Bill Gross who was really the founder of Energy Vault. I know myself and Andrea Padretti carry the titles of co-founder of the company but it really started with Bill Gross, his vision, his passion, his never give up attitude to look at different ways to solve unique problems in energy storage. Really appreciated the role that Bill has played both in my career in renewables as well as as a co-founder, as the founder and energy volunteer with our gravity energy storage technology. Really just a tremendous motivation for our entire team and I think these recognitions now that are coming as we begin to build out and people begin to see some of the gravity energy storage take form on the planet and the recognition from Time Magazine is a really tribute to him, Andrea Padretti and now others that are carrying that on in different places and from different companies. Jose Andrade for example who is the chair of all the civil engineering and structural studies at Caltech who's been working with Energy Vault now for many years and is actually the very beginning of the company and people like Bill Baker. Bill Baker from Skidmore and Smarrow is the chief architect of the Burj Khalifa building, currently the largest building in the world at over 800 meters tall. Really excited to work with Bill and his practicality as you look at structures and design and he's working pretty much full time now with Energy Vault as we look at building structures and optimizing design for different structures across the world. So a significant recognition to those individuals plus all the teams at Energy Vault that have been championing, developing our gravity energy storage technology, everything from the mechanical, the civil side, all the material science needed to avoid for example the production of all of these things have come together with the software that automates everything and makes it all cost effective and economical. A big call out to all those folks for this recognition. And finally before turning it back to Michael to go over some of the numbers, very happy to be reaffirming our annual guidance here as we've done all year. We're tightening up that range a bit as we get into obviously this quarter and now we're within six and a half weeks looking at the end of the year. So we see the shipments on their way that's going to tie to the revenue recognition. Of course a lot happening here in this last six weeks as we look at that but feel very good about reaffirming that range and nearing that a bit here as we look forward and look forward to a strong quarter of delivery that's both on our recognition of some of our range guidance that we had given previously but also in continuing to build our bookings cadence and building that revenue backlog as we look at a large revenue ramp into 2025 and beyond. And with that I'll turn it back over to Michael Beer.

Thank you Rob. As you noted the company currently maintains a revenue backlog of $350 million which increased 33% from the figure reported during our two-queue earnings results reflecting an equipment contract with Jupiter for another 200 megawatt hour battery energy storage project and a 10-year off-take agreement with Gridmatic for the 57 megawatt 114 megawatt hour CrossTrails battery energy storage project in Snyder Texas. The latter of which will remain on balance sheet as part of our build own and operate strategy. As part of this strategy discussed during our investor and analyst day back in May management expects to retain ownership of approximately $100 million in cash generative storage assets such as CrossTrails and the Calistoga Resiliency Center rather than generate legacy EPC and equipment related revenue through the one-time sale of those projects this year. While this went back near-term revenue in exchange for long-term value creation for our shareholders we are encouraged by the pace of this transition over the past two quarters. With construction of two battery storage projects in Texas and Nevada now complete and new projects ramping in the fourth quarter the company reported minimal project revenue in three-queue and down notably year over year with software and services contributing about $1.2 million in the period. As noted previously we continue to expect revenue this year to be back and loaded due mainly to the timing of equipment deliveries for a new project in Texas and in support of the ASIN projects in Australia. Excluding the projects on our balance we expect full year revenue to be at the lower end of the guidance range with upside associated with the timing of revenue recognition from existing and potential license agreements within our gravity business in southern Africa and Brazil respectively. Our gross margin was 40.3 percent for the first for the third quarter up from 4.2 percent a year ago reflecting favorable revenue mix largely associated with software and services albeit on significantly lower base of revenue. Through nine months of the year gross margin is tracking at 28.3 percent above the guided range of 15 to 25 percent for the full year 2024. However given the anticipated back and loaded mix of business in 4q from equipment deliveries for a battery project in Texas we expect the the full year gross margin to normalize towards the low end of the guidance range pending the timing of revenue recognition from high margin license agreements within our gravity business. Now on the adjusted OPEX and EVITA. During the third quarter our adjusted operating expense was 15.2 million dollars which improved 13 percent year over year and 7 sequentially quarter over quarter reflecting the organizational realignment in the first half of 2024. 3q adjusted EVITA was negative 14.7 million which improved 5 percent quarter over quarter but weakened versus the year ago due to the timing of project completion and lower overall gross profit in the period. Other key non-cash items added back in q3 were 10.2 million dollars for stock based compensation expense 1.9 million dollar provision for credit losses 800,000 for a change in the fair value of a derivative asset conversion option and 1.4 million in net interest income. Management continues to expect adjusted EVITA within the range of negative 45 million and 60 million for the full year. On cash and project financing as of September 30th 2024 the company had 78 million dollars in cash cash equivalents and restricted cash versus 113 million in total on June 30th. Restricted cash increased to 26 million associated with a letter of credit for a project that has since received final completion. Our primary uses of cash are cash operating expenses and working capital needs associated with equipment purchases for our energy storage projects and expenditures for those projects we have chosen to own and operate which will likely be largely offset by anticipated project finance and monetization of tax credits. Year to date use from use of cash from investing activities increased to 48.3 million mainly from construction and progress associated with our build own and operate strategy. Management still expects our year in cash balance to be within the range of 75 to 125 million dollars depending upon the timing of those project financings and the company maintains bonding capacity in excess of 1 billion dollars to facilitate additional growth for projects both in the US and in Australia. With the project financing for Calistoga and Cross Trails now underway with Jefferies we expect to bring 60 to 80 million dollars in cash back onto the balance sheet once completed including monetization of tax credits. We expect to return 30 million dollars from the Calistoga project anticipated to close by year end meanwhile we expect to return another 40 million dollars from the Cross Trails project over the next two quarters. The company continues to execute on the build own and operate strategy and has identified a strong development pipeline for storage asset ownership and infrastructure projects in the US and Australia totaling over 30 gigawatt hours. We also see a host of advantages and synergies across our legacy business as we leverage our project management expertise solutions based approach and diversified storage product portfolio. While inherently more capital intensive than the EPC business these accretive own and operated projects enhance earnings visibility and our margin profile. Once completed we expect these projects to deliver unlevered double digit IRRs and project EBITDA margins in the 70 to 80 percent range underpinned by long term off take agreements. We then look to optimize the capital structure of each project depending on the nature of the off take agreement available tax credits and use of projects announced. With that

I'll hand the call back over to Rob.

Great thank you Michael. I think one last thing I'll just emphasize there that that you just went through we've gotten some questions from investors asking to understand a bit how some of the own and operate projects will work and how the working capital flows how the returns work and Michael just walked through that but just to highlight these are projects and things as we look at building projects as well and understanding the dynamics of the capex and the op-ex for them the returns on these projects that are our criteria for investing them have been and will be and continue to be in this low double digit unlevered operating range. The EBITDA margins as they go forward then especially with as you add project financing as we announced with Jeffries just a few weeks back something that is very attractive we believe for creating these long-term revenue predictable streams for our investors and also as we leverage our expertise and this is the other I think fundamental point with the experience we have in our team and designing and optimizing and you can read that as reducing the capex associated with getting these projects built. We built a I think a strong reputation on the execution side as you've seen since the very beginning of our company we've always maintained positive unit economics positive growth margins that's not something that's common in our industry for those of you that follow energy storage and I think was one of the surprises as we came out and started to execute projects so that is a strength that we will continue to leverage with the expertise with our team and then as it comes to the commissioning of these projects bringing them up the experience in the way we've developed and designed our software platform Shaheen Fakhar who leads our EMS software development with his team brings a lot of experience by the way across industry not only from some energy storage but also from the aerospace industry and things that we do to ensure that when we do get to the field we do not have surprises. I mentioned earlier on about creating digital twins in our own operating environment our cell level technology for monitoring systems so important when it comes to safety and dealing with lithium ion as a fundamental technology and things our customers have come to appreciate and as we look at and as we have brought up the our systems on our first projects done it very very quickly rapidly from mechanical completion to the uptick here as we look to manage and get to pull COD on these battery projects it's something that we see as an opportunity and uniquely positioned to leverage whether that be positioning doing that work for some of our customer sets where we deliver some of our product innovation or other projects where we will invest and own and operate over time. With that again I want to thank all the people at Energy Vault and thank all of our investors and all of our partners that have supported our company and as we've executed here just the last few years and with that I'd like to turn it back to the operator for questions.

Thank you sir at this time we will be conducting the question and answer session if you would like to ask a question please press the star key followed by one on your telephone keypad a confirmation tone will indicate that your line is in the queue you may press star two to remove a question from the queue for participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys one moment please while we poll for

questions

and the first question comes in the line of Justin Claire with Roth capital partners please proceed with your question.

Hi good afternoon.

Hey

Justin.

Hey so first I just wanted to ask the different ownership opportunities that you're looking at here and wanted to see if you could share how much capacity could you potentially be looking to add to your balance sheets in 2025 or 2026 just trying to think of the volume and then also the capital that would be needed in the future to finance these projects and how you're thinking about the funding sources.

Sure thanks Justin so as we announced previously there with Jefferies we're in the market and raising the funds associated with the attractive project opportunities I think one of the things we see operating well in the market is the availability of capital for attractive and good returning high RRR projects so we do not see really any shortages of capital there and also attractive attractively priced capital given the market environment we see and I would not restrict that only to the US market. I mentioned Australia a bit and from our perspective I think we've mentioned just some of the you know multi gigawatt hour and in particular in Australia with some of the pipeline there and the types of projects we're looking at there that are all quite large we've announced a few that are in the multi hundreds including the last one we announced which is a full gigawatt hour so we don't see a shortage of opportunities to get capital deployed we built a reputation here over the last two years in particular to be able to execute well positive unit economics and get projects turned over that are all operating well for our customers today and that is attracting a lot of investor interest and you know would to answer the latter part of your question you know we don't really limit our thinking there for attractive projects in the way we've already been able to scale the company so looking at things in the hundreds of millions of dollar range in terms of putting capital to work and especially given if you look at our cap table and some of the strategic investors on it we've got a lot of different sources and a lot of investors that are very interested in working with us on getting capital deployed given the experience that we bring to the table

okay

got it

and then just a just a follow-up curious you know given that you could own projects or you could essentially deliver the batteries into the e p c for a project and recognize revenue essentially immediately wondering how you're thinking about the different approaches and how that might affect the outlook for 2025 and the and the targets that you've provided at this point

sure by the way it's a great question in all cases we're looking at of course the commitments that we made that came out of our first investor and analyst meeting why we're happy to be reaffirming and tightening a bit that guidance here as we look at this year but as we think about next year and the guidance that we've given and given the backlog that we've announced that has grown quarter over quarter and the opportunities that we see you know we'll be making decisions essentially in what's going to be in the best long-term interest of the company and our customers and our shareholders and we did that this year and i know i think from an analyst perspective you know some folks were a little surprised that we you know had a year where we took our revenue down to a 50 to 100 million range as we did this year but a lot of that was forgoing some immediate revenue we could have had at say i don't know 10 12 percent gross margin in return for you know nice lower double digit unlevered irrs and long-term streams and ebitda streams that would be anywhere in the 60 to 75 range with the right project financing so i would say to answer your question in terms of the guidance for next year we're going to be cognizant of the commitments that we made we take those things very seriously and we'll make decisions on whether we decide to build and turn over projects to customers or decide to keep them on our balance sheet by the way always cognizant also of ensuring we're going to be turning cash appropriately so that you know may result in scenarios where we may decide to turn cash and deliver projects or otherwise given the access to capital that we have holding them for the long term

okay great thank you

and the next question comes from the line of alex schiebelhofer with stifle please proceed with your

question thanks everyone and thanks for taking uh my question here so i just want to focus in a little bit on the 24 guidance here you know naturally um the quarterly revenue progression could be a little lumpy here but i was just wondering if you could provide us like a little benchmark with uh you know what what you expect to hit in the fourth quarter what you feel the confident will and just some of the timing on the projects that you have pending

sir um yeah we this was formally in our announcement i think there in the specific guidance um and michael referenced this as well but we're tightening up the range a bit i think we said to the to the mid mid to lower into that range is based on how we see shipment coming in and revenue recognition in what we see today so we feel very good on that lower into the range and then you know pending how things get delivered and installed and given the revenue recognition rules we'll see how much you know closer to that to that mid part of that range we feel like what we can hit you know i wouldn't rule out you know other things and good things that can happen in the quarters as they did in our 2022 year where we had about 80 million additional revenue come in just through um you know shipments that we were able to expedite so it remains a bit of a dynamic side but feel very good on the visibility we have into getting into that low end of the range and then and then you know depending on how other the operational items and the shipping items go we'll determine where we get in that into that mid part or upper part of that that uh that guidance frame got

it appreciate the color there and then uh just kind of follow up you know naturally during your uh investor conference in may and as you've highlighted during the call today kind of building out that own and operate strategies kind of a hallmark of just trying to enshrine some of the quarterly progression and get a little bit more visibility i was just curious when we think about 25 how is that going to progress on a quarterly basis and just what what would you expect to kind of fall into that 2025 for the time frame versus slipping into maybe 26 or longer term

yeah yeah i'll give you a little color on that and obviously we aren't um we're going to be at our next quarterly for q4 as usual giving that full formal update to the to the 2025 guidance that we gave before but as you're building and operating projects is is it's just really math if you're signing long-term 10 to 15 year agreements obviously those are going to build over time and and the way we're going to start looking at that is is this quarterly run rate of evita that's going to be coming from those tolling agreements or those ppa agreements and if you look at those on a quarterly basis times four and annualize them um you know we want to be getting up to a you know an annualized rate of evita in the 50 75 100 million on a quarterly annualized basis you know here over the next 12 to 24 months and that's just on those project sets you know we're still going to be you know executing around you know supporting some of the gravity license build outs and the royalties that will be coming we gave some guidance on that and that is unique i think with us as an energy storage company that we have technology that we can actually monetize and long duration on licenses and royalties so that's exciting i think some of the things i mentioned around gravity and the partnerships that we've built and formed in some regions of the world where where gravity is going to play a role so we're excited to have that continue to evolve but we also have been innovating in new projects leveraging our expertise that that spans different technologies and and different technology domains leveraging our knowledge for example of civil and structural engineering and material science and using that to help optimize our battery projects not only for core straight execution but looking at new solutions to address energy density in a way that's been difficult to address before and in tight spaces and especially as we think about the data center build out and what's unique about that you know not all data centers are built out in the middle of the desert or in the middle of you know large landscapes there's a lot of places and places in the grid and where there are data centers and desires that data centers that are in areas where energy density and space is at a premium so thinking about our expertise we bring the table across various technologies bringing that creativity i think calistoga is a great example of an rfp that came out that didn't say give me a green hydrogen microgrid solution it said we need a backup that's not diesel generation for the city for two days in case of a psps event uniquely our team brought a solution together to sustainably design a system with green hydrogen hybrid with lithium ion to address the grid forming needs and build wall black start that's expertise we have focused on solving a customer problem and not focused on shoving a product down a customer's throat because we happen to make it i think that's unique to energy vault i think with our software experience we bring that expertise to the table and and i would say that that part of the business complementing what we're going to choose to own and operate is going to be quite formidable i think as a company and as an investment thesis for investors that are looking at really driving that innovation home with you know getting to a larger percentage of our revenue that's going to be predictable and recurring and high margin

excellent that's great color appreciate the uh taking my questions

here and i'll turn it back all right thanks alex

and the next question comes from the line of chris ellinghouse with cbert william shank please proceed with your question

hey good afternoon everybody um have you guys made any adjustments at all to the snider project in terms of capacity or your your your thoughts on you know capital costs or anything along those lines

all right there's been some adjustments on that that i would say initially as we announced that project with enel and working in cooperation with their r&d team they had a series of apps of us of what they wanted to see and our gravity energy storage technology we did end up buying that interconnect there that's what we announced in the the crosstales project chris so that's one of the sites that we're going to own and operate because we bought the land and that interconnect out there but we also did that in line with nl's request to not only look at our evx technology and get it demonstrated at full scale but also other applications of our gravity and that includes the the products we announced that our investor and analyst day so the evy which is our slope based technologies which you can apply to different landscapes and uh pre-existing slopes as well as we announced in our what we call our ev0 which is the modular pump hydro technology so that equipment for example for ev0 arrived at the site about a month ago in snider the evy is going to be the first technology actually up and running and we have customer visits planned and that'll all be up and running before the end of the year and then evx will be coming online just after evy in q1 so what we've built in snider now is a multi-asset multi-technology site that will also represent all of our latest innovations with our software capabilities so we put a one of our b vault battery systems there that is doing energy storage as well as that'll be charging those systems orchestrating the discharging and we'll be highlighting other capabilities of our software so that center we have essentially developed into more technologies on gravity than than just evx and that's been in collaboration with anel but in addition we're using that site more broadly to demonstrate a lot of other capabilities and then using that connect as well to build out one of the assets we're going to own and operate so very excited for that and in the next i mean essentially two to three months we'll be bringing some of those systems up and we'd be excited to to host you out at the site if you ever get into that area there it's about a four-hour drive outside of dallas there in snider

okay great that's helpful do you have any insight that you can provide on the unannounced australian 200-hour when that when that might be public

um chris i'm sorry there was some breakup in the line i'm getting some feedback here i don't know if it's on my end but would you mind repeating the question i heard about australia and projects but i didn't get specifically the color you wanted can you repeat

the question 200 megawatt hour project do you have a an insight into when that might be publicly announced

um yeah sure we're expecting that announcement this quarter so i was just there in australia and met with some of the principles of that project but we expect that to be announced this this quarter okay

um you know as far as financing goes going forward you're you're working on project financing and monetization of credits at the moment is that what you foresee for the foreseeable future as the the paradigm or do you see adding other things to the toolkit as well

yeah i'd say it's a great question so we'll be continuing to do what i'll call is more standard project financing mechanisms it's as i mentioned earlier those models are quite well proven attractive including there's a very liquid market on the tax equity and the itc side so i think referenced some of that already and in what he just walked through but we are also as announced working with jeffries on on other mechanisms in order so you know we're going to be creating abilities for us to be able to execute multiple projects that we see and not only the us you know australia we mentioned the pipeline that we're working on there which is is quite large so it's this is not going to be the case we're going forward like it happened this past year where we're financing this off of our own balance sheet as we did the first two projects and then putting the cash back as we mentioned we've obviously having no debt we we've had the flexibility to make the choices to go ahead and invest off of our balance sheet and while in parallel we are getting the project financing done but i would say going forward strategically we're going to be working i think in a little more thoughtful mode of creating ways and non-dilutive ways okay non-dilutive ways for us to look at having sources of capital that may include partners for example and you know that may include strategic partners meaning people that have invested in the company whether you know pre-ipo or post

okay that's great you guys seem to gloss over the december 11th 12th date i was kind of curious if you had any other details for that and since you bring up snider are you thinking about doing some kind of event at snider next year

yeah by the way it's a great comment and question we did not mean to for sure for sure to gloss over i was going to finish with some of that but we are we're excited about the event there in calistoga and hosting folks so there'll be more about that you know we we chose there in calistoga given the uniqueness of the microgrid the the i think the the passion and the i don't know another word how to say it if the local community the excitement they have to have the system online but we're choosing a time prior to the full hot commissioning so actually it'll allow us to interact in and around the site there where we're in a soft commissioning mode so it will going to be able to get a little closer to everything there at the site so i think that just that really fit given that's going to be a first of a kind and first of a kind online and the first ultra long duration meaning multi-day sustainable storage type of project of its kind and to your to your point on snider absolutely i think as we get some of the other and the full set of it'll be three different technologies between ebx eby and the modular pumped hydro up and running in the next two to three months combined with the software that's going to be orchestrating that including the coexistence of the generation tv in this case with multiple storage technologies we will absolutely be planning something there and i appreciate the proactive push and idea set there we have announced not announced that yet but i guess you're announcing that for us now and we'll make sure it's on our our action lens here for the for the coming quarter and next

thank you and

the next question comes from the line of no parks with two e brothers please proceed with your question

hi good afternoon um had a battery storage question and a gravity storage question so um you did mention applying your your expertise to look at achieving greater energy density and i was thinking about technology improvements in general on the battery storage side and what would such advances say also something that could increase battery life what would those do to project economics over time i'm thinking if you have longer contracts over time as you replace modules and so forth maybe be able to upgrade them what would what might that look like in terms of an impact here

look i think first of all we are looking at and we'll be announcing some very innovative things relative to new ways to achieve very high or ultra high density relative to integrating for example structural options with our civil structural material science expertise combined with what i'll say broadly battery energy storage so think about that as any container based energy storage that may be short duration you know lfp type it might be you know longer duration types of storage and and with focus on on low cost which we've had a lot of experience and in that optimization and for example reducing volume of concrete through eliminating rebar and steel and the structural design of concrete and replacing it with fiber reinforcements for example that has benefits in safety you know for example and looking at the impact if temperatures heat up and the impact of materials and so that's the second aspect around ensuring we're looking at safety and working with the right constituents there as we design new systems that's you know again fundamental and and foremost no and and i'll go back to what i mentioned with tala silga and and other ways we approach customers we think about solving the customer problem okay so if you look at areas in in higher density cities for example or even on just the outskirts where that energy density is at a premium and where you could have a you know a like fit to function technology that historically has not been able to achieve those energy densities and thinking about how we think about building and using structures to do that these are things that are actively on our mind that customers are interested in we're collaborating with a few customers with some new solutions there and it's you know we're not ready to announce those yet we as you know when we announce things we announce them with customers okay you haven't seen you know necessarily product announcements from us that aren't accompanied by some customer with it and you can accept that to be the case here i'm sorry there's some feedback on the line hopefully you could hear me but in any event so that's what we're thinking about there on energy density i will also tell you that you know generally with what's happening in the battery world and and pricing we've seen at least 50 drops over the last year in in fundamental you know lfp batteries and and other technologies that are attempting to get to market and and scale potentially you know looking at longer duration but generally you know we're not going to be someone that drives that innovation curve meaning that there's plenty of people out there much bigger than us that are going to be focusing on that you know you you can consider some of that you know commodity technology that's about volume and getting priced down we're going to be focused on a lot of the surround the value add that wrapper the ability to to not only manage what's happening in and around those systems with safety reliability available guaranteeing availability of power but but also something that's going to move up that stack for broader asset management and even getting the higher level software functions in in bidding for example and optimization around bidding platforms as we've built our software team the last few years and the in the expertise so that's that area we're going to be playing in and some of it you know will include some of our own product and innovation like you asked about which is around how do we achieve better energy density so more to more to come there i i wish i could say more i'm excited to but we're going to have to wait just a little bit on that

great thanks and then i was just thinking about rudong and you mentioned the the additional data that's becoming available and so forth and you know it's not a new project anymore since it's been been up and running so it maybe doesn't come up as as top of mind but with all the the experience now of having built the first gravity storage product out of project out there i just wonder if you have any thoughts at this point about how you know subsequent iterations might see better efficiency you know might see reduced timelines and so forth just wondering if there's anything that stands out for you that you know you can look forward to in in future uh china gravity storage product projects sure

well i don't know it's a great question and let me let me share a few things here because it's been a um a real learning there and as we license technology okay when you do that you're allowing a certain level of flexibility for that region or country to customize the technology to its own individual needs so for example in china while we've you know we licensed the core technology there um we had a lot of innovation that we licensed for example uh in and around fiber reinforced concrete which serves to take out some of the volume you would either have in pure cast in place um so we have a lot of innovation in the pre-casting for example that we've proven out in snider and in at our rnd site in switzerland in china they chose to go with cast in place because that's what they do that's how they've always done it that's how they do it very low cost for example um you know due to the cost of labor being so low there we had a lot of automation even in construction um that in some cases they chose to use labor because again it was cheaper and known so i think first of all to your it's a great question we the iterations of our gravity technology will look different dependent on how it's going to be customized locally and that's one of the beauties of gravity energy storage and the way we've designed it because in countries like china like india like for example in the region in south africa there where they can basically source 100 of all the where they want to maximize um you know their efficiency and performance and cost sticking with china for example too on a on an efficiency basis they made changes to the design just based on their own local safety standards and in some cases that involved increasing the weight of the cage that carries the block and therefore increasing the counterweight for example and all of these things um you know may have an impact on the scope of the let's say the full innovation design that that we did but all of that um doesn't have a large impact in terms of performance which is why i was very excited to share what i shared which even with those changes i just mentioned okay the the changes of increasing that safety factor a bit increasing the weight that that increases the thickness for example of this innovative ribbon system which they did choose to implement okay they they chose to implement the most innovative new ribbon lifting system but the the belt itself on that ribbon that's in steel because of the the the weight increase in the size that's thicker and therefore there's a slight impact around trip efficiency but you know the fact that they're achieving 82 83 from some of the initial data that we have there is unprecedented in any thermodynamic process any you know type of compressed air liquid air any other mechanical storage any pumped hydro it's it's the largest it's the most efficient data point in the world it's not looking my on okay and that's exciting and so just to close on your question we've learned a lot in in both core design but also the practicality of how it's built andrea pedretti our cto and our software team and chris wheezy who runs our our engineering and our labs group they were just in china the last 10 days that's where this data actually came out we had our partners hebling which is a engineering software engineering group out of switzerland there as well as a third party with us and really interesting i think their implementation and and how they're developing it and and will be different and customized i think by region and all of that i'll finish with all this experience is helping us think through how to apply these divine the designs and the innovations and civil and structural engineering working with for example bill baker from the skidmore owing's meryl and jose andrade who's from caltech that spends let's say a good chunk of his time with us from a from his research and pandemic side and has been with us so all of that innovation is what we're putting into where you started your your last question which is new innovations achieving energy density and we're excited about sharing more about that

in the future

and ladies and gentlemen at this time we have reached the end of the question and answer session and i would now i'd like to turn the floor back over to robert picconi for any closing comments

great well look i again want to thank everybody for their time and i'm sorry we didn't get to all the questions here but we'll be following up with folks as normal post the call we're excited hopefully as you get a sense of and in the progress we're making and and going in here to a definitely an exciting finish on the year but i i think more importantly seeing the execution our strategy for the long term and how that's getting built out and manifests itself i think in and now what you're seeing in a lot of the recent announcements and and more to come there and finally just to thank again all the all the people and employees at energy vault and their support and all of our investors partners and the customers that that keep us doing what we do so thank you everyone very much

and ladies and gentlemen that does conclude today's teleconference you may disconnect your lines at this time thank you for your participation