Eos Energy Enterprises, Inc. (EOSE) Q1 2024 Earnings Call Transcript

Good morning, everyone, and thank you for joining us for Eos' financial results and conference call for the first quarter of 2024. On the call today, we have Eos' CEO, Joe Mastrangelo; and CFO, Nathan Kroeker. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements, including, but not limited to, current expectations with respect to future results and outlook for our company and statements regarding our ability to secure final approval of a loan from the Department of Energy LPO or our anticipated use of proceeds from any loan facility provided by the U.S. Department of Energy, which are subject to certain risks, uncertainties and assumptions. Should any of these risks materialize or should any of our assumptions prove to be incorrect, our actual results may differ materially from our expectations of those implied by these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to are described in our SEC filings. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update any forward-looking statements made during this call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events, except as required by law. The conference call will be available for replay via webcast through Eos' Investor Relations website at investors.eose.com. Joe and Nathan will walk you through the company highlights, financial results and business priorities before we proceed to Q&A. With that, I'll now turn the call over to Eos' CEO, Joe Mastrangelo.

Thanks, Liz. Welcome, everyone. Thank you for joining us this morning. Let's dive right into the significant news of the day. Last week, we successfully completed the factory acceptance test for our advanced Line 1 in collaboration with our automation partner, Acro Automation, located in Wisconsin. It was a remarkable accomplishment by both teams to finish the FAT as we did. We completed the final system debugging and integration in just six weeks. The total cycle time for the line allows a battery to move between stations in about 12 seconds. While we still need to fine-tune a few stations, most are operating at our target of 10 seconds, and we are on track to achieve that. Observing the batteries move through the manufacturing process and witnessing our progress and the quality produced has been truly impressive. Looking ahead, we're receiving our first equipment today at Turtle Creek, which will then be installed in our factory, Building 700, where we have been operating a semi-automated line. It's an exciting time; our operators were trained on the new line during the FAT, and our installation and commissioning are proceeding according to schedule. This is a crucial milestone for our company in several ways. First, we are executing the plan we set out in our strategic outlook session last December. Second, completing the FAT is vital as it shows our customers that we can handle large projects effectively. Third, the SAT is a key milestone as we work with the Department of Energy on our Loan Program Office conditional commitment. Kudos to the team for staying on schedule and laying the groundwork for SAT as we increase production moving forward. As we move to the next point, we discussed continuing to enhance the performance of the Z3 module. Nathan will detail some of the cost reductions we've achieved since December. We have introduced a new Eos Z3 inline cube, which boosts the overall power density of the product in the market. Additionally, we switched to a lower-cost, higher-energy-density Z3 battery module, allowing us to lower overall and manufacturing costs as we bring the product to market. In terms of profitability, we've already secured 55% of our target for direct material cost reductions, which is an outstanding achievement by the team. Critically, we are also achieving over 90% U.S. content in this cost reduction effort. A core principle of ours is enabling our customers to maximize benefits under the investment tax credit of the IRA while lowering product costs, affirming our belief in manufacturing competitive products in the U.S. Field operating data is the next vital area. We’ve shipped over 110 Z3 cubes to five different customers and are starting commissioning on three of those projects. I will discuss those in more detail on a following page, but this is a critical next step as we work on getting these assets operational for our customers in the field. One of the three is nearing operational status, while the other two are expected to start operations in early third quarter. Our commercial momentum includes the important announcement of extending our MSA with Pine Gate Renewables, a key recurring customer. Our largest installation is with Pine Gate, which highlights our execution capabilities in the field. We are currently working on 1.2 gigawatt hours of late-stage opportunities aimed at converting to orders. As previously mentioned, this conversion into orders will gain traction as people see the line in action and witness a battery coming off every 10 seconds, confirming that Eos can deliver at scale. This capability is crucial as projects grow larger; customers need assurance that we can handle more than just small, bespoke developments but are also a fully operational company. We are improving our digital capabilities, applying lessons learned from the Gen 2.3 product in the field to the logic behind our BMS. We’ve reiterated our commitment to providing insights related to state of health, state of charge, and overall optimization for our customers, which will enhance the value of their investments with the Z3. On the liquidity front, Nathan will provide updates on how we're monetizing our production tax credits and bringing capital into the company. We continue to work towards fulfilling our DOE loan requirements and collaborating with the LPO to close the loan. We feel confident about our operational aspects and expect to bring in cash through project milestones as we collect payments for the 110 cubes already deployed in the field. If we proceed to the next page, we see our usual operating highlights: our commercial pipeline now exceeds $13 billion, representing 49 gigawatt hours of opportunities. Last quarter, we booked orders totaling $125 million, including the Pine Gate MSA extension. Our orders backlog currently stands at over $600 million, translating to 2.4 gigawatt hours. This is equivalent to two years of capacity for our advanced line. As Nathan will discuss further, we are already planning for the line to operate at 1.25 gigawatt hours and increase that to facilitate our business growth in response to our accelerating pipeline. Regarding discharge energy, this is one of the most significant milestones in this presentation. We have surpassed 3 gigawatt hours of discharge energy, with 2.6 gigawatt hours from customer sites. Our revenue reached $6.6 million, all from Z3 production. As you review this and consider our quarter-over-quarter performance, you can see our growing capability to manufacture at scale alongside the cost improvements we are implementing. Lastly, we ended the quarter with about $32 million in cash on hand, excluding restricted cash tied to our Atlas debt on the balance sheet. As we transition into discussing commercial opportunities and orders backlog, I would like to emphasize how much value our team is creating in the energy storage sector. On the left-hand side of the next page, you'll see the energy discharged from our systems, with the dark green line representing our field performance. We have discharged 1.4 gigawatt hours of energy in the first four months of 2024, and 400 megawatt hours over the past three weeks. This reflects our assets' operational capabilities and the effectiveness of our technology in the field, with continuous learning and performance improvements indicated by customer usage. Most of this energy is derived from the Gen 2.3. To clarify, of the 2.6 gigawatt hours from the field, 2.2 gigawatt hours are linked to Factory Acceptance Testing of cubes and containers prior to shipment, separate from the state-of-the-art Line 1 FAT for the Z3, which totaled approximately 0.2 gigawatt hours in the lab, coming to a total of 3 gigawatt hours. On the right side of the page, we illustrate our growth potential and capacity to manufacture at scale, highlighting the successful completion of the FAT for the advanced Line 1. The second proof point is the additional assets operating and discharging energy in the field, demonstrating our technology in action. The right side also shows Z3 units operating, with three projects currently installed, one of which is nearing commissioning completion and the other two expected to finish by early third quarter. This will start generating value reflected on the left side of the page. The contributions from Z3 will showcase our positioning for future growth. Moving to Page 8, we provide details about our current pipeline. You will observe significant activity in the pipeline this quarter. Lead generation is growing steadily, and while we report net numbers, we continue to build robust core lead generation that will feed into our commercial opportunity pipeline, including technical proposals, non-binding quotes, and LOI firm commitments. It's worth noting that LOI firm commitments decreased from the previous quarter due to the Pine Gate order signing and adjustments in project sizes that did not proceed despite existing commitments from customers. Regarding late-stage opportunities, we're currently reporting a potential of 1.2 gigawatt hours, which has shifted largely due to Pine Gate moving to booked orders and a single project lowering in size due to profitability evaluations, land availability, financing challenges, and power requirements. As noted, we remain focused on nurturing growth in our backlog, currently valued at $602 million and representing 2.4 gigawatt hours, a 13% increase from last quarter. We're progressing towards delivering proof points, concentrating on operational strategies to translate pipeline potential into booked orders and revenue generation, all while vigorously pursuing cost reductions for profitability. With that, I'll hand it over to Nathan to discuss our progress since the last earnings call.

Thanks, Joe. Thanks, everybody, for joining us this morning. I will spend the rest of the time walking through where we are on our cost-out roadmap, along with our first quarter performance, and an outlook for the rest of 2024. Moving to Slide 10, I want to highlight two programs critical to our cost-out initiative that are part of the manufacturing cutover we undertook last month, as discussed back in December. If you look on the left, you see the new lower cost, higher energy density module designed with cost reduction and automation in mind. If you remember from our last call, Joe talked about increasing the surface area of the felt on the bipolars and replacing the terminal electrodes with conductive plastic. More felt surface area enhances energy retention, resulting in 15% more energy per module. Furthermore, you’ll see the differences in the lids on these two images. The design evolved to replace the titanium stud in the old model with a sealed-in tab using potting compound to enhance manufacturability and reduce costs on the automated line. These enhancements are key components of our cost-out roadmap, initiated back in December. Now, shifting to the inline cube, we are proud of the team that has taken a concept to reality within 4 months. This design was created to capitalize on the value propositions of our Z3 battery technology while integrating suggestions from customers that add value for our larger scale projects. The new inline cube offers significant benefits in terms of battery loading speed in our Turtle Creek facility. More importantly, it simplifies site setup and energy density, allowing the inline cubes to be placed directly next to each other. The design enhancements seen in these programs showcase the hard work and dedication of our talented team, particularly in R&D, which has been instrumental to our cost-out program. Our cube now features an energy density of up to 695 kilowatt-hours for longer duration applications, with further increases scheduled for Q4, pursuant to projects outlined by Francis in December. Moving to Slide 13, before addressing first quarter financial outcomes, I want to update our cash position as we continue making progress on securing long-term financing. We ended the quarter with $31.8 million in cash on the balance sheet, not including $14.5 million of restricted cash, primarily associated with our senior secured loan. We are intently focused on minimizing cash burn and optimizing working capital to support ongoing operations and strategic objectives. We decided to strategically scale back production volumes in the second quarter while prioritizing shipping new products from our automated line. Though unit economics from the new line are better due to improved labor and overhead absorption, we still anticipate negative contribution margins in the short term. However, we have a clear path to achieving positive unit margins as we ramp up over the next few months. Furthermore, we are implementing measures to enhance liquidity as we monetize tax credits and collect milestone payments from customers. On April 22, we finalized our first transaction to monetize production tax credits with Banyan Software. We executed the sale at a 10% discount relative to the credits' face value, aligning with expectations and resulting in $2.3 million cash infusion. Moving forward, we plan to take an accelerated approach to monetize these tax credits regularly to offset cash usage and bolster our balance sheet. In the first quarter, revenue stood at $6.6 million, flat from last quarter and down approximately 25% compared to the prior year, attributed to an 18% decline in unit volumes as we transition to Z3, along with a slightly lower average selling price. During the quarter, we delivered Z3 systems to 2 customers and completed our final shipment to a key customer owned by a large North American infrastructure fund in Orchard, Texas, outside of Houston. Cost of goods sold reached $28.2 million, a 5% increase year-over-year, despite a 28% rise in manufacturing volumes. While we saw a slight increase in COGS, benefits of the Z3 product are becoming evident, indicating higher manufacturing volumes this quarter compared to Q1 of 2023 when we were producing the Gen 2.3 product. The drop in gross margins resulted from specific project revenue recognition timing, coupled with the switch to Z3 cube manufacturing. On a quarter-over-quarter basis, we saw a 9% improvement in gross margins, backed by recent cost outs and improved manufacturability. We anticipate continued improvements once we transition to our new line. Operating expenses totaled $19.5 million for the quarter, a 3% decline relative to the previous year, driven by slight increases in payroll balanced against decreased R&D spend. Total operating expenses comprised $3.1 million in noncash items, which included stock-based compensation, depreciation, and amortization. Our operating loss reached $41.1 million for the quarter, compared to $38.3 million the prior year, primarily driven by reduced revenue. Excluding noncash items such as stock-based compensation, depreciation, amortization, and PP&E write-offs, the operating loss was $36.6 million. The net loss for the quarter stood at $46.7 million, representing a 35% improvement over the previous year. Now, let’s turn to Page 14, which highlights our plans for business growth as we scale capacity. We continue to believe in the capital efficiency of our operations, forecasting approximately $50 million in CapEx for over 2 gigawatt hours of production capacity, equating to less than $25 million per gigawatt hour. Based on original expectations, it takes about $30 million in CapEx to achieve 1.25 gigawatt hours of annualized capacity, which encompasses investment related to the Acro Automation line and necessary equipment for injection molding tooling. By March 31, we had spent a little over $21 million, with roughly $8 million remaining for the rest of 2024. These funds are projected to be expended over the next 3 quarters, driven by progress milestones. Additionally, we are meticulously evaluating investment priorities to ensure that each capital expenditure directly enhances operational efficiency and productivity. The bottom left of the page forecasts an additional $20 million expenditure, aligning with original estimates to expand capacity and enhance throughput of our first line, seeking to exceed 2 gigawatt hours of annualized capacity. We expect to allocate most of these costs in the latter half of this year and early 2025. This investment will involve automating the subassembly processes at both ends of the automated battery line and increasing injection molding tooling capacity to meet rising production volumes. Automating the subassembly process intends to improve operational efficiency, reduce labor costs, and decrease scrap. Currently, bipolar subassembly is among the more labor-intensive sections of our semi-automated manufacturing process, with teams manually cutting and pressing felt into the bipolar with a manually operated heat press. Automating this phase is anticipated to enhance labor efficiency by around 87%, substantially reducing direct labor costs. While we are aiming to expand capacity and automate certain processes, investment timing may adjust pending long-term funding acquisition. Finally, let's shift our attention to our 2024 outlook on the next slide. Regarding our revenue estimates for 2024, we continue to expect revenues between $60 million and $90 million, based on our current production plan and anticipated customer delivery schedules. This assumes we will operate a semi-automated manufacturing line through the second quarter before transitioning to production of battery modules on the new state-of-the-art manufacturing line. We realistic that our second quarter revenue may fall short of initial expectations as we adapt to the new, lower-cost battery module while scaling back production volumes to better optimize our cost roadmap and conserve capital. Aligning our cost roadmap with production volumes and paramount customer commitments continues to be a key priority. This decrease isn’t reflective of a decline in overall performance, but rather a strategic shift in periods aimed at achieving better unit economics through our automated line. We also envision positive contribution margin by the fourth quarter this year, defined as revenue minus direct labor and direct materials, which will include the benefits from production tax credits. The entire team is laser-focused on executing the cost-out program laid out in December through increased production and improved operating leverage, as well as direct material cost reductions that also enhance battery performance and energy density. We anticipate a total unit production cost reduction of approximately 76% in 2024 from the initial commercial launch, with further reductions slated for the onset of 2025. Once we achieve positive contribution margin in Q4, we plan to significantly boost production, enabling each unit produced to help cover fixed costs. We firmly believe this disciplined manufacturing approach will conserve capital while securing long-term funding, ultimately leading to positive contribution margins in Q4 this year. We are incredibly optimistic about the roadmap we’ve outlined and the entire team is dedicated to meeting these benchmarks as we serve both our customers and the broader stakeholder community. With that, let’s move on to questions.

Congrats on the progress here with the Factory Acceptance Testing. I just wanted to get a sense, what are the areas we're still working on to hit 10-second cycle times? If you could walk through some of those areas that are a little slow in the line today, and then maybe discuss the operational and/or financial steps needed with site acceptance testing in order to close the DOE facility as we see it today.

On the line cycle time, there are two stations on what I would call the back end of the line that we need to work on speeding up the production of those individual stations. In terms of complexity, they are not highly complex; it's a matter of working through the control logic and controlling how we pulse the batteries through the different stations. I believe the team has a path on that. We'll continue to push this forward. With any production line, we will never stop improving and enhancing efficiency; ten seconds is not the end but merely the starting point for productivity improvements. I'm particularly proud of the line's front end running at 10 seconds on every station; that's been an incredible amount of work done by Eos, Acro, and Rockwell Automation. Watching this in action is impressive. From an SAT standpoint, we're standing on the shop floor in Building 700, and the first truck has arrived, unloading the first equipment onto the line as we speak. As the line gets rebuilt in our factory, we are running SAT to ensure a successful test. We're confident in our schedule given our extensive planning around disassembly and logistics for delivery. On the floor, the team has been preparing the area for electrolyte tank installations for throughputs. We're excited to stay on track for completion by the end of Q2. Regarding other matters, while we haven't discussed other closing conditions for the loan, we are optimistic about progressing towards a successful close after SAT.

That's great. And then on the incremental $20 million CapEx to expand Line 1 capacity to 2 gigawatt hours, would that be funded potentially upfront by the DOE, like I think you've talked about for future lines, or would that be back-end like we've observed for the initial 1.2 gigawatt hours? And I'm curious, do we need that subassembly automation to hit positive contribution margins later this year or not?

To clarify, that's not tied to the positive contribution margins we have set for the year as a company; the funding for the loan isn't contingent upon that expenditure. When discussing LPO's purpose, it's essentially a bridge to bankability, applicable to all LPO loans with similar reimbursement mechanisms. You would need to invest that cost, after which you would be reimbursed for 80% of capital spent to execute that work.

Congrats on factory acceptance as well. Joe, you did well addressing the last question. Could you expand on what you learned during this process, and would you say that site acceptance was fairly derisked considering the points you mentioned regarding installation planning?

Yes, we learned a lot through this process. The Acro team worked excellently with us, we continually ran tests and conducted after-action reports. We iteratively improved material movement and the individual stations' performance. What we learned is the consistency of the automated production process; witnessing cycle time reductions was exciting. Initially, individual cycle times could exceed 20 seconds. It's a training marathon where the more you run, the sharper you get. We've learned a lot concerning component quality and feeding the lines. I'm excited about the next phase of the installation, where we continue to implement our detailed daily plan for successful integration. We feel confident since our line operators were involved in the FAT and familiar with the system. There's significant teamwork from Acro on site overseeing operations and logistics for the line rebuilding.

That’s great; that was helpful context. Regarding liquidity, you mentioned PTC monetization; do you have insights on milestone cash payments or anything else regarding liquidity?

On the PTC front, getting the first deal done was significant. The market remains relatively new, but we now have a reliable counterparty interested in our tax credits, streamlining our legal documentation should expedite future transactions. Our plan is to monetize credits quickly each quarter moving forward, as feasible. Concerning liquidity, we remain focused on SAT completion by quarter-end while fulfilling financing conditions, and managing cash flows effectively as we meet necessary customer delivery dates, along with collecting milestone payments and customer deposits. Balancing these aspects of short-term cash management while ensuring project execution is essential as we aim for long-term funding security.

Just one last on that $20 million for enhancing capacity to reach 2 gigawatt hours with the automated bipolar subassembly process; does that imply it's not contingent on the DOE loan?

The DOE loan is indeed not contingent on this; that represents a subsequent event, like Lines 2 or 3, for which we would initially spend the capital, apply for reimbursement, and then receive it. Once the first reimbursement is completed, those funds recycle within our mechanism to support subsequent costs and reimbursement efforts.

So congratulations on getting the line operational. Any modifications to our strategies for Lines 2, 3, and 4, and did I interpret correctly that our backlog should occupy the majority of Line 1's capacity for 1 to 2 years?

Yes, if we hold steady with Line 1, you're correct, James. Looking to market trends, we see a consistent rise towards larger projects with extended duration energy storage and heightened demand for domestically produced technologies for energy security. Eos meets these criteria, and as we pursue our expansion strategies, the aim is to grow with corresponding backlog. The feedback we received through the line with Acro emphasizes our capability to modify lines relatively quickly; we will only expand capacity when we have the orders to support that growth. Our strategy avoids capacity chasing orders and prioritizes capital investment in alignment with firm orders.

To commission Line 2, would you require it to be entirely sold out or half sold out? What data point would you need before committing to it?

We typically assess outlook on a rolling basis 6 to 18 months ahead. Aiming for a 50% order profile is prudent as it allows us to absorb capacity and maintain profitability across the line. If we hit that 50% threshold, we can handle capacity while ensuring breakeven on a contribution margin basis. As we analyze order opportunities over the next year, convincing ourselves of the requisite proportion allows us to responsibly increase capacity strategically. Efficient capital utilization combined with positive growth sustains effective delivery for the company.

I wanted to revisit the DOE situation. I had the impression that site acceptance testing was the main hurdle before the initial draw, and it may be reasonable to expect that to conclude by the end of Q2. Can you clarify if any other closing points are material hurdles, and are you still comfortable projecting an initial draw by the end of Q2?

The site acceptance test is scheduled for completion by the end of the second quarter. That's a critical pathway into the DOE process. We’ll submit our eligible expenses for review, after which they should complete a 30-day turnaround. There are other smaller conditions, but our focus is on SAT as the primary requirement. Now, I anticipate closing funding soon after that.

They will play a part in the SAT process as they have throughout, though I won't commit to the cycle times of an external entity. However, we are confident in demonstrating that the line operates at the performance metrics set in the loan agreement. Following SAT, we must navigate the cost reimbursement process.

Congratulations on the progress made, particularly regarding cost reduction initiatives. I'd like to ask about customer interactions from the past few months. Are you noticing any alterations in expectations from utility companies for demand, particularly in relation to data centers seeking reliable power more rapidly?

Yes, indeed, you can witness that in the growth of our opportunity pipeline over time. There have been several conversations with data centers; we believe we have an ideal solution for them. Data centers have two energy needs; emergency response, which we can't provide, and the operational energy they require, which we fit perfectly. We are engaging with multiple customers and opportunities while recognizing the growing recognition of increased power demand and long-duration energy storage as viable solutions addressing those needs.

Lastly, I wanted to inquire about the implications of the tariffs announced yesterday and how they might benefit Eos concerning your domestic content.

It is advantageous in terms of bringing manufacturing back to the U.S. and promoting investment in domestic industries, alongside enticing companies like Eos. The timing for energy storage coincides with our scaling plans as we progress through to 2026. The combination of the tariff implications, coupled with our strong U.S. content standing, means great advantages regarding the investment tax credits for our customers along with the significant benefit of energy security. We need multiple firms like Eos to address the increasing demand levels, as our company is being meticulously positioned for this growth period.

It's good to hear you're at 90% for domestic content. Is it possible to reach 100% eventually, or are there components you'll have difficulty insourcing long-term?

Achieving 100% is our objective. If we look at the main elements we control—the battery components, software, and BMS—we can achieve that level. Other ancillary components, like certain hardware, could remain challenging to source domestically. Our focus is on determining how close we can get to this goal. Priority has been placed on streamlining our supply chain to ensure quality control and building strong relationships with local suppliers.

Regarding the Line 1 expansion, will production need to pause for this work to be accomplished, or can it occur alongside ongoing operations?

Yes, it will be concurrent—feeding parts into the primary line. We've been conceptualizing and testing preliminary layouts, and we’ll initiate the complete automation of bipolar production as an input to the line rather than disrupting existing operations.

It should be noted that just a year ago, I witnessed your team using a T-shirt press for Z3 cell prototyping. To evolve to an automated production line in such a short span is genuinely commendable. Can you explain your decision to ramp up Line 1's capacity to 2 gigawatt hours rather than building a second line first? Additionally, can you share initial feedback from your automation partners regarding the subassembly process?

In terms of subassembly, we are confident regarding our capacity; we’ve accomplished some pilot efforts. We've automated the terminal manufacturing segment, which operates similarly. We believe that process automation will yield enhanced consistency of parts from the line. We've followed a standard model whereby we automate discrete production portions, ensuring we efficiently transition between stages. A focus on increased Line 1 capacity is based on the necessity for subassembly support prior to scaling to two lines. Our strategy prioritizes driving a cost-out initiative. We've seen significant improvements in bill of material costs, and there needs to be a focus on managing labor efficiency and capacity usage to transition the company into a position for positive cash flow as we approach 2025. The launch of Line 2 awaits a pivotal point—with capital generation and funding acquisition dictating our course.

From a capital efficiency perspective, the existing capacity increase is more prudent. The initial 1.25 gigawatt hours required $30 million, while an additional $20 million can effectively double capacity within our current setup, making it more efficient to enhance the first line as opposed to initiating a second line.

I have a couple of final questions concerning the cubes that have been or are being installed. Will the data produced by these installations primarily serve to spur additional orders from those customers, or will it be leveraged by Eos to attract additional customers?

Both; indeed, both outcomes are possible with the data produced. Customers receiving our cubes will advance their ordering patterns, while Eos will utilize the generated data to attract further clientele. We believe the insights from these installations will drive further engagement.

You previously stated that FAT was particularly important to potential customers. Did you have any prospective clients visit the Acro facility as part of their evaluation process?

Yes, certainly; we’ve had customers visit Acro. The point I was making is that many clients need assurance based on previous attempts that others have tried but failed. With our goal being the automation of production, we constantly face questions regarding our viability. Providing customers with the opportunity to witness the production process allows them to time individual stations themselves, confirming that the system can operate on the stated timelines. Demonstration serves to substantiate our capabilities. Recently, customers have noted the serious progression from initial concepting to active production. This has been critical for overcoming doubts. Thanks, everyone, for being on today's call. I really appreciate your time. I'm immensely proud of the team's accomplishments. Our goal is to take a detailed logistical plan and convert that into an operational line pushing batteries every 10 seconds while continuing to deliver products into the field and showcasing their value to markets. Every day presents challenges; these challenges are significant but also rewarding. I couldn't be prouder to work alongside a team genuinely committed to building a successful operation.

This concludes today's conference call. Thank you for participating, and you may now disconnect.