Eguana Techs Inc Ord

Thank you for standing by. This is the conference operator. Welcome to the Iguana Technologies, Inc. Second Quarter 2023 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. The conference is being recorded. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. If you are participating by webcast, you can submit a question using the form in the lower section of the webcast frame. I would now like to turn the conference over to Justin Holland, CEO of Iguana Technologies. Please go ahead.

Thank you. Good afternoon and thank you for joining us for our quarter results and update call. On the call with me today, we also have Brent Harris, COO, Hansine Olberg, CFO, and Madison Duncan, our corporate controller. Before we begin, please note that certain remarks may constitute forward-looking statements. Although we believe these statements reflect our best judgment based on factors currently known to us, actual results may differ materially and adversely. Please refer to the company's filings on CDAR Plus for a more inclusive discussion of risk and more details relating to the uncertainty of forward-looking statements. Please also note that these statements are being made as of today, and we disclaim any obligation to update or revise them. All financial data is represented in Canadian dollars and on an unaudited consolidated basis, unless otherwise noted. We will talk about general market conditions and provide additional details on the strategic direction and positioning of the business. The company continued to see negative impact of elevated inventories within distribution channels in the quarter. Revenue of $2.1 million comes almost exclusively from energy storage sales in the United States and full system sales in Australia. Distribution inventory levels continue to remain high as installer sell-through continues to be impacted by the pace of change in consumer interest rates. The result has been a market slowdown nationally in the U.S. and we are seeing similar impacts with residential consumer sales for energy storage products in the Australian markets. Residential markets are now showing signs of growth, however, after the first half slowdown, which has resulted in increased sell-through and steadily increasing partner shipments for microinverters in both July and August. Aligned with increasing product shipments has been an increase in customer receivables in both frequency and amount, both trending in a positive direction. We do remain cautious on near-term growth, however, as our partners work through their own inventory positions. We do expect as well to see growth in the California market's balance of year as prior NEM 2.0 backlogs are addressed and NEM 3.0 installations become dominant in the state. NEM 3.0 includes a 75% reduction in export rates, which will incentivize consumers to purchase energy storage systems along with rooftop solar. It is anticipated under NEM 3.0 that adding a battery will also reduce consumer return on investment. Under prior programs, the addition of energy storage devices increased the consumer ROI times. So this is a significant change. What is also key for Iguana is our proprietary technology is in the software and hardware of the energy storage platform. We saw similar impacts in the German market 2016 to 2018, with dropping tariff rates, which drove the adoption of energy storage solutions. Gross margins remained impacted with low volumes, product mix, and pandemic cost-related materials. 2024 outlook on gross margin, however, is much better, with an estimated increase of 12% to 14%, coming from new key component price points, normalization of freight rates, and supply chain redistribution out of China. which reduces or removes a 25% import tariff on materials moving into the U.S. Blended product margins as a result are expected to climb to approximately 17% to 19% over the next 12 months. This, however, will be dependent on achieving sales volumes as planned. In Australia, we continue to see an increase in revenue with full turnkey system sales growth of 400%. We anticipate launching the infused microinverters into the Australian market in Q1 2024 as we continue building out the Australian product ecosystem. All FCAS services, including accuracy and reporting, have now been completed in Australia, and we anticipate near-term residential growth through virtual power plant incentives, which include a healthy consumer rebate program. and lowering hardware costs, the initial hardware costs for the consumers. Additionally, homeowners will see up to 80% reduction in energy bills, which is particularly important, as many parts of Australia have just gone through a significant jump in energy costs, with certain markets seeing increases of up to 60% in a one-time increase. Additionally, new home builder objectives are advancing, and we anticipate revenue from the channel later this year. Enduro sales in Europe, were previously halted as a result of manufacturing delays through battery module availability issues with one of our battery partners. Their capacity continues to be impacted from a prior multi-year module recall, which has impacted Iguana. As a result, the development team has integrated and certified additional battery supply options for the European products. Shipments of the new product commence in August, and we anticipate near-term growth in Europe balance of year as a result. Aligning with our objectives are increased utility engagements, the number of virtual power plant pilots being rolled out in our markets, and the number of DERMS providers the company is now working with. This is a significant change to the marketplace as utilities are now rebating direct to consumers to bring initial hardware investments down. Consumers, in turn, allow utilities to access their system from time to time. Software providers like Iguana Cloud aggregate these systems into fleets, which are integrated with DERMS partners for control alongside other devices. Our view has been that utilities struggle with the intermittency of renewables generation coming onto the power grid. Energy storage devices operating as fleets resolve this for the utilities and allow them to have control over renewable generation by utilizing the energy from the fleet on an as-needed basis. In essence, utilities can time shift consumption through DERMS management and generation with energy storage fleets. Iguana has a key advantage with respect to utility signal response, accuracy, and measurement, as our advanced electronics platform was designed for energy storage. These keys, control response, measurement, and accuracy, were the development foundation of our platform, which is an industrial control system with a cascading control architecture that provide very rapid, accurate, and stable responses to changes in a range of remotely controlled set points. This is well beyond the capability as many of the simple switch mode controlled solar inverters that have been adapted for early energy storage solutions. Many of our peer companies have migrated solar technology in this format, where accuracy and measurement are far less critical. This creates a disadvantage in virtual power plant applications, as utilities need that accuracy and control to operate effectively, efficiently, and for billing and reporting purposes. Utilities will utilize energy storage fleets as grid assets, providing the ability to flex the grid for enhanced efficiency, reliability, and control. Utilities, much like the consumer side, will then pay for access to the energy storage fleet, which is delivered in the form of recurring monthly revenue for the system or fleet manager, in this case, the Iguana Cloud. This is good news for Iguana as we now control the hardware and software in a fully integrated ecosystem that delivers a three-pillar revenue stack, including both hardware and software revenue streams, or as we call it, the roof, the wall, and the cloud. Iguana's mission is to become a global leader in the deployment and adoption of distributed energy storage. Energy storage will be a critical component of the power grid transformation to a distributed architecture, which is necessary to support the broad electrification of the economy, which is also necessary to meet the demand of doubling electricity consumption over the next 20 to 30 years. Our combined product line approach with energy storage solutions and microinverters, along with the Iguana Cloud, provide a complete solution linking utilities and consumers and bringing renewable, responsive, additive energy to the power grid. At this point, I will turn the discussion over to Brent to talk a little bit about product development and operations.

Thanks, Justin, and thanks to everybody for joining us today. We remain focused on strategic initiatives in these three areas. First of all, product development. With the slower market activity, we focused on a number of development activities, including the following. Simplified energy storage installation processes with the completion of two new iguana hubs, 100 and 200 amp, which removed the need to install backup load panels during product installation. We modernized and expanded the iguana cloud platform by developing fleet control APIs and added features to the onsite energy management system used in the evolved energy storage product to enhance BPP capabilities. We completed UL 1741 SB certification of the redesigned 5 kilowatt PCS that integrates with these hubs to provide simplified whole home installations for installation partners. We completed our frequency control auxiliary services virtual power plant demonstration, including accuracy and reporting to utility partners Simply Energy to support the virtual power plant rollout there. and recertified our European Enduro with an additional battery module option and started shipments of that new product. For manufacturing efficiency and scale, our test capacity includes our state-of-the-art inverter functional test station, or IFT. Our current annual capacity of over 24,000 systems allows us to meet market demand forecasts for 12 months without any additional capital investment. We made positive progress this quarter on production test processes allowing for faster and more efficient testing of units before delivery. On business development and strategic sales, we added to our business development team members in the USA and Australia, and we've engaged with more DERMS providers, such as our recently announced partner, Virtual Peeker. These DERMS providers typically manage utility virtual power plant programs and are the conduit to recurring revenue streams for iguana. We began software integration with additional germs partners in several markets to pursue VPP opportunities spanning the U.S., Canadian, and Australian markets. The company continues to grow its trained installer network through Iguana University, Iguana's comprehensive partner training platform, which includes system design, sales, installation, and commissioning. The more boots on the ground, the deeper and broader our sales channels will be. It's the installer base that sells at the kitchen table. We pride ourselves on being a standard install unit that allows consistent ease of installation in a short time window, allowing installers to do more installs and earn more revenue per day. The installers influence not only buying decisions, but feature selection and consumer choice. We surpassed our 500-plus enrollment target at Iguana University and are driving toward $1,000 by the end of the calendar year. Unfortunately, the quarter did see a downward trend in financial results tied to the overall industry slowdown. We previously commented that we expect to see margin improvement from some supply chain optimization decisions, such as moving certain materials out of tariff countries. But at the lower revenue volumes, it will take longer to pull these savings through our financial results. The positive impact will likely not be seen until we get a further sell-through of higher average cost products, over the next four to six months. The overall negative macroeconomic factors that Justin outlined have also impacted our Q2 financial results, which Hansine will lead us through now.

Thanks, Brent. Good afternoon, everyone. I'm Hansine, and you haven't heard me on these calls before, so it's nice to be introduced virtually to the group. As a reminder on the financial side of the house, we changed our year-end last year, so it puts a slight wrinkle in the comparative periods. For clarity, we're comparing Q2 2023 with last year's Q3 2022, but both quarters are three and six months into June, so we're comparing apples to apples the traditional way. With respect to the income statement, the first thing that might stand out is an odd $2.1 million inventory write-down associated with an inventory theft. Truck shipments were diverted and product was stolen when we were moving inventory between internal locations. At the moment, the products were surplus components and had no impact on operations. And we followed all appropriate channels by reporting it to the third-party logistic carrier. who arranged the truck shipments to the police and to our insurance provider. We filed a full claim for insurance recovery and are working with our insurance broker. Although we have insurance, there's never a guarantee of how much or when they will actually pay. And so total proceeds are uncertain and no insurance recovery was accrued in the June 30th, 2023 financial statements. We have received partial proceeds in late August of 629,000 US, and that claim is still ongoing as we expect more proceeds, and so that's noted as a subsequent event, but these will be recognized in the quarter as the insurance claim is finalized. I'll note as well that multiple manufacturers were impacted along with Iguana with respect to various stolen truckloads. on a Friday that never showed up at the correct locations on a Monday. Q2 2023 revenue of $2.1 million is a slight decline from the comparative quarter of June 2022, where revenue was approximately $2.3 million. This is related to the macroeconomic factors in the industry and in general with respect to consumer spending, which has slowed the sell-through within renewable distribution networks. Generally, the rate of change related to consumer interest rates has quelled consumer spending, and in the industry, peer companies have also been impacted by this elevated inventory position within the distribution network. Management remains cautious in the near term, though, for some market growth, and we do anticipate that the second half of 2023 will be stronger, driven by the early success of our partner training programs in line with cyclical year-end demand, and with some current sell-through activity that we are seeing. The increased inventory movement from our partners is showing that there's some easing of these negative factors, which we may take in early 2024 to see a return to normal activities. Q2 2023 gross margin is eroded by these low levels of activity and was negligible. And comparative to the similar period in June 2022, management anticipates 4% to 6% margin growth in the coming quarters as a result of lower freight costs, battery reductions, and the removal of import tariffs. These increases in margins are expected to take effect as the old inventories are consumed. And overall, Justin has highlighted a number of these have been previously discussed, driving additional margin growth into 2024. Q2 2023 operating expenses were $4.3 million, up from $2.7 million in the comparative June 2022 quarter. This increase is largely due to higher expenses in product development. and in G&A and in sales and marketing. So across the business, we've been incurring some higher expenses, facilitating growth and new product initiatives. 35% of total operating expenses in the second quarter were product development. This portion is a large increase since June 2022. Brent highlighted a number of development initiatives that are ongoing. going and ones that we have completed. And so we've added headcount in those areas for software developments of the iguana cloud and the ESS systems development, US sales and after sales support, as well as development costs for compliance testing and product certifications to bring the product to market in all of our regions. Q2 2023 operating loss of $4.3 million is a large number, keeping in mind that it does have that inventory loss falling through the income statement. On the operating loss basis, I've mentioned the higher expenses in product development of approximately 0.8, higher expenses in sales, marketing, and business development of 0.2 million. and approximately $0.5 million in higher G&A expenses, again, supporting strategic growth objectives. Moving to the balance sheet, working capital at June 30, 2023 was $22.6 million, a decrease from December's year-end number of $33.7 million. This decrease relates to ongoing cash used in operations plus the inventory loss from the product theft. As of June 30th, 2023, our cash was $4.8 million and receivables were $18 million. We continue to recognize an allowance against the receivables based on our best estimates and in line with IFRS accounting for expected credit losses. Although collections from this large customer receivable are slow, we have been seeing collections subsequent to June 30th and we believe that the amounts are collectible and further payments will be forthcoming. Justin will now provide some details again on near-come outlook.

Thanks, Antine. We estimate the balance of 2023 to be better than the second quarter and the first half with recent sales growth. However, the macroeconomic factors mentioned will still impact distribution channels, making it difficult to predict just how much better. We believe consumer buying patterns will normalize with stable interest rates, even at these higher levels, but remain cautious in the near term. Our approach to strategic integration with the VPP model will help to accelerate adoption and market penetration of our products. It is important to note that many of the hardware products, even in VPP environments, will still travel through distribution channels to installers, through to the homeowner. Therefore, we feel it's critical to continue accelerating our training outreach with these installers, which significantly reduces our customer acquisition costs. and increases our boots on the ground with trained and certified personnel selling directly to consumers. BPPs will drive energy storage momentum. When the utility suggests you should have an energy storage solution and your electricity pricing continues to increase with virtually no end in sight, we believe consumers will begin adding energy storage solutions, like iguana, to bring down their energy costs. This will be demonstrated in the storage to solar attachment rates or how often a storage system is installed alongside a residential solar system. The addition of microinverters also fits perfectly with the direction of the VPP strategy and our three-pillar revenue stack from the roof, the wall, and the cloud. The microinverter product line is inclusive of single, dual, and quad configurations, providing the most flexibility and faster installation times for the installer with enhanced reliability and cheaper power costs to the consumer. Fast installation times will definitely be a recurring theme for all energy storage companies, as we believe this to be the single most important feature to the installer base. Faster install time, more money for the installer. The good news is residential markets do appear to be opening up, as seen through increasing sales to installers and distributors. As noted, we believe the rate of change with respect to interest rates coupled with difficult consumer access to loans, slow distribution sell-through resulting in significant inventories within our channels, particularly in the U.S. market. Interest rate stabilization will change consumer patterns very quickly and at a time when they are receiving direct marketing from their utilities on how to bring costs down with the addition of renewable energy solutions. The better news is utilities will target through virtual power plant and energy storage fleet access energy storage systems that have a full suite of VPP capabilities, which the Iguana platforms do. Through our work in Australia in 2019, where the Iguana platform was installed and competed directly with approximately 10 other manufacturers for response time and accuracy in a VPP environment, we outperformed the competition. This was our expectation based on how the platform was developed. Our early thesis was a shift to a distributed grid would be required to achieve electrification driven by residential applications to relieve transmission and distribution congestion, which will be driven by the increased energy requirements on the power grid. Energy consumption will double in the coming years, which highlights the generation problem. However, the second and more challenging concern is transmission and distribution. And this is where residential energy storage goes under the spotlight by having storage at or near the point of energy consumption. We see this as the early tipping point for energy storage in the renewables marketplace. Up to this point, the primary focus within our industry has been with residential and commercial solar. We believe this utility shift will zero in on residential energy storage as it delivers key advantages as a power grid asset and delivers results to multiple stakeholders at the same time. It's also important to note that utilities have been working with energy storage solutions for about 10 years. From the iguana perspective, we implemented the first North American net zero community in Fontana, California in 2014. We utilized our energy storage platform with Hawaiian Electric in 2015 on the island of Molokai for grid stability and improved efficiency, and of course, the Simply Energy in Australia in 2019 to test a wide range of VPP features in a multi-system fleet format. Even with these early engagements with utilities in the industry, attachment rates for residential storage to solar have remained very low, and particularly low in North American markets. This is what we see changing right now, and what we believe will drive mass storage adoption and a significant increase to the attachment rates. Our near-term objectives, as Brent outlined, are coordinated to focus on installers through our training programs with product development geared to faster installation times, both on the roof and on the wall, or the microinverter and the energy storage system. Hence the two new hub developments. The installer base remains key for early success and will be built through the distribution channels. The two new hubs remove the requirement of backup panels which is how we speed up the installation time for our installation partners. Longer term, we believe utilities will drive consumers towards higher power products with larger capacities as they can service and manage the grid more effectively as additional power comes online. The development team has been actively working on future products to achieve these results in the form of cascading product blocks, or as we have previously noted, a tower format. Additionally, with the early completion of Iguana Cloud, we can now tie the consumer directly to the utility through hardware and software in a fully integrated ecosystem. Within this are more key advantages for the company as we transition to a distributed grid. By having control of the power electronics, we fully integrate internally developed software at multiple levels of the ecosystem from the cloud to the fleet and from the fleet to each individual hardware system. We operate in an environment that has constant regulatory change. Control over hardware and software simplifies development roadmaps and allows Iguana to keep our products on the cutting edge from cloud to device. To sum up, focus remains on the installer base and training, which remains ahead of schedule. New hubs in the 100 and 200 amp configuration gives the installers more options and simplifies installation processes. Speed of installation is a critical factor for the installer base, to increase their revenue, which builds the installer loyalty. Our power electronic solutions are now inclusive of microinverters on the roof and energy storage solutions on the wall, which are then managed into fleets through the Iguana Cloud, with each delivering their own revenue opportunities. The hardware sales path will remain through distribution, where with our partner DPC, we have been successful in contracting some of the largest distributors in the market. Utilities are engaging with the industry quickly and are rolling out virtual power plants in most jurisdictions. And this is a significant market change, as previously we had not seen the development of the virtual power plants, which had been expected by market analysts. Currently, we are active with over 20 utilities and half a dozen DERMS providers. The VPPs will drive mass adoption by bringing down the required initial investment from the consumer or the homeowner. Installed systems will be accessed by the utilities in the form of fleets, which will be managed through Iguana Cloud. Recurring revenue streams are generated through the cloud as it opens up fleet access to the utility. Our first full quarter post microinverta launch was December 2022, where we saw significant revenue growth. Starting in Q1 2023, We saw a broad-based market slowdown related to the macroeconomic factors impacting sell-through within distribution channels, keeping inventories elevated and slowing sell-through. We believe this situation is beginning to clear and expect second-half recovery within the industry and at a time when Iguana's position was significantly increased in trained installation partners, a much simplified installation process, and initial traction for recurring revenue and opportunities with utilities. At that, we'll open up for questions.

Thank you. For questions by phone, you may press star then one on your telephone keypad to join the queue. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your questions, please press star then two. If you're participating by webcast, you can submit a question in writing by using the form in the lower section of the webcast frame. While we wait for callers to join the queue, I'll pass the floor back over to Justin Holland to take us through some questions from the webcast. Please go ahead.

Thank you. One of the first questions we have is, why does Iguana Revenue always lag behind its peers? Very fair question. Our focus up until this point has been on energy storage. And our early thesis was that energy storage, from an attachment rate perspective, would see significant growth in 2018 to 2020. This is also the same prediction that many of the market analysts had. This did not materialize. However, is materializing now with the rollout of the VPPs. We analyzed this about 16 to 18 months ago and defined three revenue opportunities in the market, with the first revenue opportunity being the microinverters. That's the primary driver of revenue of many of our peers. We saw the initial increase with the first full quarter revenue going above $10 million for the first time in company history, followed by $6 million in the second quarter. However, that's when the market slowdown related to the economic factors we've discussed today hit the market. We do anticipate seeing those growth rates later this year and into 2024 now that we also have revenue coming from microinverters, additional revenues coming from the energy storage device, and, of course, the recurring revenues that we will see from the Iguana Cloud. So the primary reason we lag behind is we only had one piece of a three-piece revenue opportunity within the power grid transition. We rectified that. mid-summer last year. However, we're then hit with the slowdown in the marketplace. As noted, the good news is we see an easing of the slowdown, increased sell-through distribution to installer, which obviously works its way back up to blanket orders coming into iguana. Margins are still low. How confident is the team with the described increases? That's a great question. We're very confident in the margin increases for a couple of reasons. The compressed margins today, we know exactly what's compressing them. We know the incremental cost of freight through 2022. We know the incremental cost of component inventories through 2022. And for anyone that was following lithium markets, we saw a significant increase in our battery costs. When we consume those materials, we will see a 4% to 6% increase in our gross margins. That 4% to 6% increase in gross margins is prior to 2024 objectives. In 2024, we know through new pricing that we will see additional 12% to 14% coming in from the component side of the business, as well as additional freight-related margins. So we're quite confident in the 2024 objectives. gross margins because we've identified and already negotiated some of the pricing for components. And we know when the prior cost increases through the pandemic come off of the materials that we're consuming. So we're quite confident in the increases. Where is the supply chain relative to component material risks? We did go through a lot of supply chain activities through the pandemic. We developed what we call the alternative parts program and brought into our supply chain dual access or dual supplier for many of our key or risk components. Currently, we don't see any material risks through supply chain and we see improving margins on the tariff reduction by moving parts of the supply chain out of China into non-tariff countries. So currently, the supply chain looks good. Material risks are very low, and we do see increasing margins as a result of the supply chain work that was done through 2022. Where is the product primarily shipping today? Currently, our key markets right now where we see most of the product going is Texas and the southeast states. Now, we do anticipate to see a change in that second half of the year as NEM 3.0 will drive sales activities in California, where we've recently increased our sales presence. We also expect Puerto Rico to show growth with the new hubs, and through VPP, we expect to see growth in Connecticut, Massachusetts, and Oregon. Both Australia and Europe should see second-half growth as well. with new certified products already shipping into Germany, as well as the growth we're seeing in full system sales already in Australia, which we expect to continue. Question, when is it realistic to see recurring revenue? Great question. We are mentioning that more and more these days. We expect to see recurring revenues this year. Just a caution, the statement, recurring revenues are device-specific. It's a monthly payment for access to that device. So the number of devices installed have a direct correlation to the amount of recurring revenue. So although we will see recurring revenue in 2023, it will be relatively light and directly related to the number of systems that are being installed in certain VPPs. Can you discuss the accounts receivable situation? So the accounts receivable, which is a large concentrated receivable today, was generated inside of about 100 days, at which point the market slowdown occurred and our partners' shipments were actually paused into distribution. It's a very strange situation in that we went from expediting product to satisfy distribution sales orders to having distribution sales orders pause. The good news is with the increase in sales activity that we're seeing right now, we have seen increasing payments from our customer in amount and frequency. We do expect to collect all of those monies, and we do expect to see the increase in payment frequency and amount continue on a go-forward basis. A question on Iguana University and how it reduces customer acquisition costs. Could we please explain? So the customer here for Iguana and DPC is the installer. And the installer sells to the consumer. The direct cost related to training installers goes directly to your customer acquisition cost. Because we've built the Iguana University platform and we can process hundreds of installers through the platform at the same time with no additional expense, over time with increasing installers in the program, we reduce our customer acquisition costs, which is a key metric for us going forward. As the more trained installers that we have, the more sales we will see and the increased revenue we will get. And we are now in a position to increase that installer base without driving more cost and dollars into the training platform. So that's exactly how it reduces the customer acquisition costs. Quick question here, what happened to the towers? The towers, we have multiple towers in the back of the shop operating right now. However, due to near-term revenue and the anticipation of the market opening back up, we prioritized the European product reintegration with the new battery, recertification, as well as the 100 and 200 amp hubs, because that would drive simpler installation for the installation partners, which then also drive near-term revenue. So from a product development perspective, we prioritized three developments ahead of tower certification and to drive near-term revenue opportunities. Discuss NEM 3.0 and if it brings opportunities for iguana. So net metering really is solar customers using the power grid as a battery. And utilities, as you can imagine, were not overly excited for that. What NEM 3.0 in California does is it takes 75% reduction in the solar export rates. When the homeowner with the solar system is no longer getting a one-to-one rate, it drives the adoption of energy storage. This is key for iguana. We're starting to see macros within the industry that will push the renewable sector towards energy storage, which is what we want to see happen in the marketplace. We saw a very similar situation in Germany with step-down tariffs, where they systematically reduced the amount of money being paid to the consumer, which significantly drove up energy storage adoption to the 70% to 80% range. To put that into perspective, in most of the regions in North America, we're still seeing attachment rates around 10%. So there's a long way to go. California is taking the lead with NEM 3.0. We do expect it to drive up energy storage attachment rates. And happening at the same time as virtual power plant rollouts, as we mentioned, we'll put the energy storage device in the spotlight, not the solar system, and that's where most of our IP sits. So it's becoming very exciting for us to see the shift in the marketplace and the utility engagement, which will all focus on energy storage, as opposed to rooftop residential solar. I think at that we've answered most of the questions, so I will thank everybody for joining today and turn the call back over to the operator.

This concludes today's conference call. Thank you for participating and have a pleasant day.