Good day, and thank you for standing by. Welcome to Pwns Energy fourth quarter, 2025, learnings conference call. At this time, all participants are in a listen-only mode. After this biggest presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advised when your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Chris Shelton, VP of Investillation and Sustainability. Please go ahead.

Good morning, and welcome to Fluence Energy's fourth quarter and full year 2025 earnings conference call. Before we begin, I want to share my excitement as our new investor relations officer. I look forward to engaging with our analyst and investor community. I would also like to recognize Lexington May, who has recently taken on a new role at Fluence. Lex has been instrumental in leading our investor relations program since our initial public offering, and its contributions have greatly benefited our company and its shareholders. Joining me on this morning's call are Julian Nabretta, our President and Chief Executive Officer, and Ahmed Pasha, our Chief Financial Officer. A copy of our earnings presentation, press release, and supplementary metric sheet covering financial results along with supporting statements and schedules, including reconciliations and disclosures regarding our non-GAAP financial measures, are posted on the Investor Relations section of our website at FluenceEnergy.com. During the course of this call, Fluence Management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon current expectations and certain assumptions that are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and more information regarding certain risks and uncertainties that could impact our future results. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Also, please note that the company undertakes no duty to update or revise forward-looking statements for new information. This call will also reference non-GAAP financial measures that we view as important in assessing the performance of our business. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is available in our earnings materials on the company's Investor Relations website. Following our prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak on this call, please limit yourself to one initial question and one follow-up. Thank you very much. I'll now turn the call over to Julian.

Thank you, Chris. I would like to send one welcome to our investors, analysts, and employees who are participating This morning, I will review the highlights of our Fiscal 25 results, the accelerating demand for energy storage, and how Fluence is positioned to lead in this growing market. I will also provide an update on our product roadmap, our domestic content strategy, and progress towards OBBBA compliance. Ahmed will then cover our financial results and 26 outlook, turning to slide four and our financial performance. First, I am pleased to report that during the fourth quarter, we signed more than $1.4 billion of orders, which represents a record level. This brings our current backlog to $5.3 billion, setting us up for renewed growth in 26 and beyond. Second, full-year revenue came in at approximately $2.3 billion, about $300 million below our expectations, mostly due to delays by our contract manufacturer in ramping up our newly commissioned Arizona Enclosure Manufacturing Facility. We have implemented corrective actions, production is improving, and we are confident in meeting delivery commitments and capturing the shortfall during fiscal 26. I will discuss these details further in a moment. Third, despite this revenue impact, we delivered a record of approximately 13.7 adjusted gross margin for the year and approximately 19.5 million of adjusted EBITDA, which was at the top end of our guidance range. These results were the product of good execution on projects and cost efficiency. Fourth, in terms of annual recurring revenue, or ARR, we ended Fiscal 26 with $148 million, slightly above our regional guidance of $145 million. And fifth and finally, we ended the quarter with approximately $1.3 billion in liquidity, which puts us in a strong financial position to fund our plans for growth. Please turn to slide 5 for details on our order intake and pipeline. Our record $1.4 billion of order intake during the fourth quarter included contributions across all our core markets. approximately half worth for projects located in Australia. For fiscal 26, we currently expect the U.S. market will be the largest contributor of order intake, as reflected by our pipeline as of year-end. Looking ahead, demand for energy storage solutions is accelerating worldwide, driven by both the rapid decline in capital costs of storage and surging demand for electricity for intermittent renewals, data centers, and industrial complexes. We have seen a significant increase in larger deals in our pipeline. That, as of September 30, includes 38 deals of at least one gigawatt hour, more than double the number from last year and nearly five times what we saw two years ago. Please turn to slide six. Earlier this month, we announced a landmark 4 gigawatt-hour project with LII, representing the largest battery project in European history. These projects will use our new smart stack product and play a key role in germany's energy transformation we are very pleased to welcome lia as a customer and look forward to supporting additional energy transformation projects across european markets please turn to slide seven for other emerging drivers supporting our pipeline growth we have seen significant pickup in demand from data center customers we are currently in discussions with data center projects representing over 30 gigawatt hours 80 percent of these engagements have originated since the end of the quarter Fluence is ready to lead in this emerging market segment with SmartStack industry-leading density, reliability, and safety, in addition to its lower cost of ownership. Another set of emerging opportunities is long-duration storage, which is driven by the need for six- to eight-hour duration batteries in markets with significant renewable penetration. such as Europe and California. Specifically, in Europe, regulatory schemes are in place to procure this capacity. Today, we have line of sight into 60 gigawatt hours of long-duration storage tenders. SmartStack is well-suited to compete in this segment due to its flexible architecture and a scalable design. please turn to slide 8 for an update on our team. To capture the opportunities I have just described, we have sharpened our focus on sales and flawless project execution. To that end, we are excited to welcome Jeff Munday as our new Chief Growth Officer. Jeff leads our global sales and marketing team He brings deep experience from Qualcomm, where he built their global enterprise and channel sales teams. Prior to that, Jeff spent 18 years leading sales teams at Apple. His expertise will help us expand the reach of Fluent's brand to new customers and industries, such as the tech sector. In addition, we have also expanded John Zajoransky's role as Chief Customer Success Office. As one of our company's founders and an industry pioneer, John will leverage our record of successful execution to further differentiate fluence from our competition. He will also maximize the value of our solutions for our customers with our digital and services offerings. We believe that these internal changes will streamline our customer experience and position us to win a larger portion of our pipeline. Please turn to slide 9 as I discuss our new SmartStack product. we are pleased with the market reception of smart stack in addition to its role in winning our liac deal this month we are deploying the first smart stack unit in a project site in taiwan we design smart stack with the objective of reducing total cost of ownership for our customers This means, in addition to a lower sales price, SmartStack offers lower costs to install and maintain the system over its useful life with top-of-the-line operational metrics. SmartStack is the only product available today that offers battery density of 7.5 MWh per unit, letting customers fit over 500 MWh of storage per acre. That means bigger projects, optimized sites, and better economics, all else equal. Additionally, SmartStack maintains all elements of fire safety and cybersecurity that have been historically a salient element of our offering. Finally, SmartStack is developed with a flexible system architecture that can adapt to customers' specifications. We expect this will be a key selling point for data centers as technology to reduce system latency evolves and SmartStack's kits can be upgraded with new equipment quickly on site we are engaged with many customers interested in smart start and expect it will represent a majority of our orders for this fiscal year please turn to slide 10 for an update on our domestic content strategy our domestic supply chain is a critical advantage for our business particularly given that we see the majority of our growth coming from the U.S. market. We have contracted with three key production facilities located in Tennessee, Utah, and Arizona. The Tennessee and Utah facilities produce our battery cells and modules, respectively, and they have successfully met production metrics in line with our expectations at the time of our last earnings call. The Arizona facility, which manufactures enclosures, has not met its production targets during this period. Without those enclosures, we were unable to deliver our completed products and recognize the corresponding revenue during the fourth quarter. The primary cause of the manufacturing delay has been the slower ramp in staffing the facility, especially for weekend shifts. We have been working with our contract manufacturer to execute a plan to improve staffing levels and further optimize the workflow. As of today, the production rate has improved and staffing levels have in great measure being met, which gives us confidence that the manufacturer will meet our desired target rate by the end of this calendar year. We expect to fulfill all of our customer delivery commitments over the course of 26 and book the associated 20 fixed-mix revenue. We will continue to work with our U.S. manufacturers to scale production and maintain our leadership position. We are committed to serving our U.S. customers with a competitive, domestically manufactured solution. Please turn to slide 11 for an update on our Prohibited Foreign Entity, or PFE, compliance strategy. A quick refresh. The One Big Beautiful Bill, or OBBBA, included regulations designed to restrict tax credit availability for products manufactured in the U.S., but supported by companies deemed to be PFEs. To that end, our strategy aims to meet our growing volume demand for domestic content from a diverse set of qualified suppliers. I am pleased to report significant progress. More specifically, this month we have secured a second supplier for domestic battery cells. This manufacturer is compliant with all OBBBA regulations and further the risk of future growth. Turning to our Tennessee facility, we continue to work actively with ASC to find a comprehensive solution to comply with PFE regulations. The three key pieces to achieve non-PFE status include transfer of ownership, IP, and material assistance. significant progress has been made in addressing all these three items the option of fluent purchasing the facility from asc remains under consideration as a possible solution we continue to view the incremental financing need of a potential transaction as being manageable within our available liquidity. Both parties are motivated and we continue to expect a constructive resolution in advance of the effective dates specified by the law. I will now turn the call over to Ahmed to discuss our financial results and fiscal 26 guidance.

Thank you Julian and good morning everyone. Today I will review full year 2025 financial reserves in our liquidity position, followed by a discussion of our fiscal year 2026 guidance. Starting with slide 13, covering fiscal year 2025 performance. Over the course of the year, we generated revenue of around 2.3 billion dollars. As Julian mentioned, this figure falls short of our expectations by 300 million dollars largely due to a slower than anticipated ramp up at one of our contract manufacturing facilities in arizona while this shortfall was a challenge i want to highlight that our discipline execution and operational focus enabled us to deliver on our profitability and bottom line objectives regarding production most of our us-based contract manufacturing facilities have been operating at their targeted capacities including both cell and module manufacturing. However, the newly commissioned enclosure facility in Arizona faced some challenges primarily due to the longer lead time to attract and train the workforce necessary to drive productivity. This was the primary factor behind the lower than expected revenue in the quarter. Working in collaboration with our contractor, we have seen significant production improvements since September. The majority of personnel required to execute our plan have now been hired, and we are on track to achieve our targeted production levels. Our adjusted EBITDA for the year was $19.5 million, which came at the top end of our guidance range, even as revenue fell short of expectations. This outcome underscores our operational excellence and strong execution. Turning to slide 14, we achieved a record level of 13.7% adjusted gross margin for the year, above the top end of our expectations. In addition, our rolling 12-month adjusted gross margin is consistently at or above 13%. This reflects our strong focus on productivity and successfully leveraging our supply chain turning to slide 15 we also finished the year with a record of approximately 1.3 billion in liquidity up 300 million dollars compared to the end of fiscal 2024 this includes more than 700 million dollars in cash with the rest available through our credit facilities this strong position gives us confidence to make investments that will grow our business and strengthens fluency's reputation as a reliable partner. Looking ahead to fiscal 2026, we intend to invest about $200 million in our business. This includes approximately $100 million in our domestic supply chain and the rest in working capital to support 50% revenue growth. Turning to slide 16, today we are introducing our guidance for fiscal year 2026. We expect revenue in the range of $3.2 billion to $3.6 billion. We begin this year with 85% of our guidance midpoint already in our backlog. This strong coverage materially de-risks our FY26 revenue compared to the historical level of around 60%. We anticipate realizing one-third of this revenue in the first half of the year and the rest in the second half. We expect our adjusted gross margin to be between 11% and 13%. This range reflects a period of higher costs associated with the rollout of our GridStock Pro product, which will make up 70% of our 2026 revenue. We anticipate margin will improve over time as we continue to leverage our discipline execution and our growing scale. We expect operating expenses to grow at less than half of the pace of revenue, consistent with our guidance in prior years. This includes increased spending on sales, marketing, and R&D to support future revenue growth. For adjusted EBITDA, our guidance of $40 to $60 million reflects expected revenue, adjusted gross margin, and higher operating costs from planned investments in sales and product initiatives. With respect to ARR, we are initiating guidance of approximately $180 million by the end of fiscal 26, representing over a 20% year-over-year increase. In summary, with our strong liquidity, focused execution, and robust order book, we are well positioned to deliver on our plan. With that, I would like to turn the call back to Julian for his closing remarks.

Thanks, Simon. Before we take your questions, I would like to conclude with the following five takeaways. Market leadership. Demand for any storage is accelerating globally. Fluence is capitalizing on this environment, with notable wins such as the 4-gigawatt-hour project in Europe, and a rapidly growing pipeline of data-centered customers and other large-scale deals. Product Leadership. SmartStack is a key differentiator versus a competition. With increased density and a very competitive total cost of ownership, we expect SmartStack to drive a majority of future orders. Operational Execution. We have made significant progress to strengthen our domestic supply change advantage. We have addressed production issues at the Arizona facility, and all our domestic manufacturers are now on track to meet our expectations.

Compliance and readiness.

We have strengthened our ability to deliver PFE-compliant products to customers with the addition of a second domestic battery cell supplier. We continue to make progress towards OBBA compliance with our Tennessee Manufacturer and spec resolution ahead of regulatory deadlines. Looking forward, these achievements position us to maximize stakeholder value by consistently meeting our commitments to customers and shareholders, reinforcing our reputation as a trusted industry leader.

Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again. As a reminder, in order to accommodate all participants in the queue, please limit yourself to one question and one follow-up. Please stand by while we compile the queue and answer. Our first question coming from the lineup, George Giannarekis with Canaccord. The line is now open.

Hi, good morning, everyone, and thank you for taking my questions. Hey, George, good morning.

I'm just curious if you can share any thoughts on what you're seeing in the competitive environment any changes there in the U.S. and internationally thank you internationally not real change it's a very competitive market and the Chinese players continue to drive the competition in a way The U.S., the competitive market is changing. We see more and more customers that prefer to use U.S. or non-PFE manufacturers, even if they are not required to do it because the projects are safeguarded under the law or, you know, that provision. So I will say that, but it's an evolving matter that we see coming. So that's kind of today where I see the market.

Thank you. And maybe as a follow-up, Ahmed, I think I heard when you were talking about gross margin or margin guidance for 26 that you expect margins to improve over time. Were you referring to gross margins moving beyond the 11% to 13% range you got it for next year, say in 27 or 28? Thank you.

Hey, George. Yes, I think our goal is to continue to improve the chart that we have disclosed. I think our goal is to continue to show their chart going forward, to show the trajectory and the difference we are making. Our guidance, as you recall, was 10% to 15% in the past. I think we haven't changed that going forward, so our goal is to continue to improve that trend line.

Thank you.

Thanks, Josh.

Thank you. Our next question, coming from the line of Brian Lee with Goldman Sachs. Yolan is now open.

Hey, guys. Thanks for taking the questions. Kudos on the quarter here. I appreciate all the color, Julian, on the data center sizing. It sounds like that opportunity is coming to fruition here pretty quickly, given the timeline you expressed. But can you maybe help us a little bit understand, first, the sizing of the market? I guess if we take the 30 gigawatt hours of data center projects in the pipeline and leads, that's maybe, if we estimate, maybe $6 billion of the total $23 billion pipeline in that neighborhood. Is that kind of the way to think about it? And what do you think the overall TAM is and what Fluence's market share could ultimately end up looking like? Good question.

Let's start with the TAM. last quarter we talked about a time of around 8 billion so I think that which is clearly the reality is proven that the number is significantly higher a the market has still you know very very different numbers I say we have seen numbers of the 10 you know 10 times a billion or you know more than 10 times a billion you feel clear we have to I think wait a little bit more but clearly is a market that is expanding all the 30 gigas that we talked about as of september 30th only 20 percent of it one small portion were in our pipeline the rest were contacts that we started to to with customers since then you know and then at today if you ask me today this morning and roughly half of the 30 30 gigas are in pipeline the other the other half were working on it and you know what we're looking is like will they happen in the next two years where do we see our product is suitable to do what they want generally i think we're fine so what's a big change from you know telling you a quarter ago this is an eight billion dollar market requiring these very very complex capabilities to today i think there's a big change in terms of what we can do for what our technology and fluency in particular can do for data centers and I will say the way to think about it is that there are three needs one is what we call interconnection flexibility the ability to manage your the energy demand in a way that you can interconnect easier to the to the grid and you can manage and the distribution companies or the service provider can manage your demand to keep the day so that that is by itself i will say today the biggest driver people who want to connect quickly to the read grid and want to ensure that the data center meets the the availability of the grid and can give the assurances to the grid operator that they will not disrupt it and we can do that today with that's what work this There's no, there's no, we have no need to improvements in our technology stack to be able to do it. So, very great. The second one that is also in a rising need or rising need is backup power. Historically, we haven't played that game. But with our costs coming down as they are and our ability to, our density improvement, we can now provide backup power. And significantly reduce. I won't say eliminate, but significantly reduce the need for diesel generators. So that's the second need that we're seeing. We can accelerate the interconnection to the grid, and we can reduce some of the costs of the diesel generators by providing backup power. The third one is the one we have talked about in our last call, is power quality. This idea that we can, you know, we'll have to manage the variability of energy demand by AI data centers. That, if you ask me today, that hasn't been, the first thing is that there are other technologies that can address that. The second one is that it is a need that is not as big as we thought it was going to be. So it's probably that eight, you know, around that $8 billion number. and you know it is something that data centers when they looked at what they're doing their speed to power is a much more important element than this one because the other one they can manage in some other way we are committed to delivering the three products the interconnection flexibility to accelerate interconnection the backup power capabilities and these two that we can do today and we're very well positioned to do smart stack is the densest project in the world It is a project that, because of the POSA, the way we're designed, provides very good safety, better than, I would say, very, very good. And then, third, our cyber security, our total control on software, our ability to ensure that no one else can get in.

So the power quality is something we're working on with our inverter manufacturers.

We'll get it resolved quickly, but it is still, you know, it's still a working product. But we thought that was going to be a gating item. The backup power is going to be a gating item for us to serve this market. That's no longer the case. You know, it is, I would say, it's a cherry on the top. If you can deliver the last two, and this one is great, but, you know, it's not a gating item. So, great market, multiples of what we told you in terms of what we do. and we are we all need to do a major technology and my last point we you know I can't we don't have a clear view today this is just sorry how much we can capture what I will say we are very well positioned to do it safety density you know some of our competitors are claiming density which is 20 25 percent less than what we can do so that tells you we can do we can do very very well and And we are, you know, we have, we hire Jeff. Jeff comes with knowing how to serve this market. He's been, you know, one of the instructions, go and get this done. And this is not only happening in the U.S. It's a global phenomenon. We have, you know, our pipeline. It's mostly U.S. today, but we're starting to see pipeline coming both out of Australia and Europe. Sorry for the long answer, but we're excited about this opportunity.

Yeah, no, I can definitely sense that. I appreciate all the color. Maybe just one more question on that topic. From a P&L timing and impact perspective, can you give us a sense of the conversion timeline for this data center pipeline, and is any of it embedded in your revenue guide for fiscal 26? And maybe just lastly, margins relative to core margins.

Are these going to be higher margin, just given the customer subset you're dealing with? curious on the impact on margin as well thank you guys okay i'll say that of the 30 gigas half are 26 order intake half of our 27 give or take you know and most likely projects that will be you know will convert to new order and take later in the year no revenue for 26 we have to see how much revenue for 2017 is unclear in terms of margin you know hey this is a new segment i don't want talk about it publicly but what i will say is that we can provide a lot of value to our customers a lot of us we can deliver our products quickly give them the confidence on our security the best density and we are you know and so we are we are very confident that we can create a lot of value to our customers that that's why we're concentrating thank you our next question coming from the lineup Dylan Nasano with OOF Research.

Your line is now open.

Hey, good morning, everyone. Thanks for taking my question. I just wanted to go back to the Q4 kind of underperformance versus the guide. I know that in the previous quarter, manufacturing delays kind of came up, but it sounded like maybe those were resolved and you were operating on schedule again. So I just want to check, you know, what kind of change between the last call and now. And, like, are these incremental kind of problems that popped up? And anything you can give us just to kind of boost confidence going into the quarter that, you know, these are kind of resolved at this point?

So we have, you know, St. Zeland, and, you know, clearly we're disappointed with what happened. No, I mean, first thing, but I don't want to sound apologetic to what I'm telling you. So what do we have? We have our suppliers in the U.S., many, but let's say the three main suppliers. Out of the three main suppliers, two are doing great. I'll say even more, the two that have the more complex process are doing very well. So we're very happy ahead of schedule, doing wonderful, no problem. We have a less complex process, which is enclosure manufacturing. When we met last quarter, we had a plan that was going to be able to, was going to allow the delivery of our revenue for the year, but that it required a major staffing process that I think we underestimated the ability to staff that facility. And I think that today that we have done two things. We have clearly gone out and continued staffing and preparing people. And we're essentially done in terms of staffing. There's still some people, but it is essentially done. And we have made some changes in the way we are, you know, with our contract manufacturer to ensure that we need to facilitate the manufacturing process. That's the right word. And I think the two combinations, having staffed the place, and we're talking about a significant number of people. This is roughly 500, 600 people that we needed for that facility to work with three chiefs and all of that. We were essentially fully staffed, and with the changes in operations, we are meeting our numbers. I think we are, we expect to do, we were doing at the end of last quarter, you know one and a half a closure per day we're already at five and we we are ramping up and i don't know that we will be able to meet our numbers very well so the we are very confident today unfortunately we did not meet what we do we could not deliver on the revenue we are disappointed but we learned very quickly and my our operational manufacturing team is very very good and they have put in place their correct measures to this yeah yeah the only thing i would add is I think that from our perspective, as Julian said, you know, yes, because of the labor shortage, we were roughly one and a half container per day.

Fast forward, we added 500 people. We are now running at five containers per day, which is in line with our expectations for the quarter. So we feel pretty good where we are, but equally importantly, I think we pulled our levers to deliver on our profitability commitments. As you saw, the margin and the EBITDA, we are in line with our top end of our range.

Got it. Thank you. I appreciate that. And then my follow-up, I just wanted to check on this new cell supplier.

Can you just give us any more color around how much incremental capacity this may get you any are you prepaying for any cells like similar to what you did with ASC and and yeah so mostly just just curious like does this get you net additional capacity to serve US market yeah I can take that question and Dylan yes I think this gives us enough capacity to serve our projected loads for the next couple of years so we feel pretty good what we have signed and and in terms of the deposits no no material deposit commitments I think it's just as we get the deliveries we make those payments

thank you our next question coming from the lineup Amitakar with BMO Capital Markets your line is not open hi good morning um thanks for taking my questions um I just wanted to kind of go back to kind of the implied EBITDA margin for uh for this year versus last year i mean it looks like the without margin is is down um and i know the gross margin is also kind of down sequentially but it looks like this the implied asps in your booking to actually help pretty significantly kind of quarter over quarter i was just wondering if you could kind of walk us through why um i guess the gross margin is

lower year-over-year versus uh kind of crawling 12 months thanks so so i think the asps your question is yes I think is down but no surprise I think ASPs are down roughly I think give or take 10 percent or so in terms of the gross margin I think we basically are pretty much in line I think the EBITDA margin as you ask you know is obviously there's an operating leverage you know because volume was less last year our overall revenue was 2.7 this is 2.3 so yes I think but The more important thing, frankly, from our perspective is as we grow the top line, we will benefit from the operating leverage and our goal is to continue to grow EBITDA. Obviously, that is what the shareholders care, you know, at the end of the day, top line is great, but at the end of the day, that should translate into the bottom line. And that's what we as a management team also are on the same page. So stay tuned, I think our goal is to continue to improve the top line and also the bottom line.

And then I know you kind of talked about a couple of kind of uses of liquidity for next year, but just in terms of kind of like the kind of the free cash flow expectations relative to that $50 million kind of EBITDA guidance at the midpoint. Any kind of kind of I guess guideposts there, please.

So, yes, I think the 50 million EBITDA, I talked about, you know, the working capital, roughly $100 million as our revenue is growing by from 2.3 to, you know, 3.4. So a billion dollars or so of additional, as you, if you recall, you know, we said in the past, you know, working capital needs are roughly 10% of our growth in revenue. So about $100 million of working capital needs. and then $100 million of investments in the domestic content, as I mentioned in my remarks. Beyond that, we don't have any material commitments. So I think next year, our goal is to be pre-cash flow positive as our revenue grows and our EBITDA grows. So I think that is the goal. But this year, $50 million is the EBITDA, but then we have working capital needs of $100 million. But I think more importantly, or equally importantly, is liquidity will remain very robust with this working capital use. So our goal is to continue to strengthen our balance sheet with growing cash and our credit facilities. So it feels pretty good where we're going to land at the end of the year. Thank you very much.

Thank you. Our next question, coming from the lineup, Jillian Dumoulin-Smith with Jeffries. Your line is now open.

Hey, good morning, team. Thank you guys very much. Nicely done this quarter. Just following up, Amit, a little bit about some of the margin commentary and just filtering that back in with AESC. Can you comment a little bit on how you think about margins being tethered to whatever happens with respect to your domestic supply, whether that's with AESC or incremental supply? Is that part of the commentary about margin improvement? And then related, can you just give a little bit more of a detailed update around AESC specifically? I know that you sort of, quote, unquote, procured a backup here, if you will, but how is that relationship evolving here? How would you frame out volumes from one side or the other side of that supply range right now at this point?

In terms of margins, in terms of AESC, I mean, any deal we might do with AESC will be accreted, so that's the way you need to think about it. So we, when and if it happens, we'll communicate what it means in terms of margins. And I think that Amit's point was more general. When you looked at our performance, at least since I got here, we got a company with negative margins of 4%. We're now, you know, on a rolling average of top-month average, we're now at 13.7%. So, you know, my point is we're all here. When I commit to continue showing that growing, that's kind of what we're doing. and we're finding ways to do it today and continue to work on it. That was more of that coming in that direction. In terms of ASC, what I would say is that we are, you know, meeting the OB3, OBDA compliance is a complex process. We have been able to make a lot of progress, and generally you can look at it from three areas. You need to meet the IP, and I think we have a solution that's done, and we we can the ip that in that for that production facility meets the criteria of obbba 3 obba will meet the cafeteria then we have the you know material assistance the need that the suppliers of the facility cannot come from fbfp suppliers we have a plan that will deliver that and then we have the orange and the ownership is the one where we are fill the baby we're making good progress we're committed to resolve it but we haven't you know we have not a we have not reached a final deal what we have always said we're not the only option in town so you know there are other ways that they can resolve this issue and you know if I'm not I don't wanna you know we clearly believe that we are the best option from my point of view but you know they can do something different so that and then you know on the new supplier i mean what it is is you know we're generally diversified suppliers as a rule of life so we're diversifying suppliers and the demand we see is very you know very big so we need to continue to to meet the growing demand so you know a philosophy of diversified suppliers and a and you know and and the growing and demand calls for the second supplier. So that's where we are. We see this as one of our competitive advantages. We are a first mover in this area, and we want to continue being the first mover. So that's a reason for our strategy.

So just to clarify that real quickly, basically your current plan and current margin expectations assume that you're served with AESC, and would it be improved or detrimental to shift the supply? if I heard you right or understand.

Yeah, and I will say the following. As I said, a potential deal with ASC will be accreted to the current numbers. That, you know, is the answer they can provide.

All right, you're already haircutting it. Okay, understood.

No, I'm not haircutting it. I haven't done the deal yet.

Okay, all right, got it. No, no, that's why I asked. Thank you, guys. I appreciate it.

Thank you.

Thank you. Our next question coming from the line of David Arcaro with Morgan Stanley. Helen is now open.

Thanks so much. Good morning. In terms of the data center pipeline, I was curious just to get what you're currently seeing. Is this bringing larger project sizes versus your current backlog? You know, is it more U.S. heavy in terms of region where you're seeing that demand and would be curious what kind of duration you might be exploring for those types of projects?

Yeah. I'll say that generally, you know, we talked during the call with one of the big drivers of the elasticity of demand, where you can see the elasticity of demand for our technology as price has come down has been how projects are getting bigger and we have today 38 projects that are one one giga one gigawatt hour or more i i don't think that the the the data centers are you know bigger naturally bigger they're in line with what we have when you look at it so much smaller some are bigger but generally in line in terms of a where geographically today you know i will say the my the majority come from the us and we have seen someone with the pipeline development in apac and you know europe is a little bit behind but you know so that's that we'll see what we will see this as a global market a so that's kind of our view in terms of duration use depends on the use case we see from a total to you know long duration storage both they all the whole nothing below to but that's that's where we are no okay got it that's helpful and then I was just curious about strong order intake in the quarter in this past quarter I was wondering if you could talk to what the uh whether there's a common driver there that you're seeing it doesn't seem to be data center growth just yet if i'm interpreting that correctly so uh what are you seeing in terms of what drove um yeah strong no yeah you know it was australia the big driver of the strong quarter in 2020 the strong order intake we have these deals in australia as you know that we were delayed in 2025 you know we signed them all and they all most of their care later in the year, so that's a big driver of it. But, you know, we see for 26 the U.S. being the big driver and, you know, a little bit of a change, and we'll see some, I expect to see some data center stuff happening in 26, so late in the year, most of that.

That all makes sense. Thank you so much.

Thank you. Our next question, coming from the line of Mark Strauss with JP Morgan, Yelena Snellman.

Yes, good morning. Thanks for taking our questions. I just wanted to go back to the second domestic content supplier. Ahmed, I think you said that your needs are met for the next couple of years, but I just wanted to clarify, is that capacity available today, or is there kind of a ramp period that we should be expecting?

No, I think the capacity is available, will be available in about the next 10, 11 months. But I think the capacity that we need to serve our load, as we discussed during the call, you know, we have about 85, 90% of our revenue in our backlog, and we have already secured the capacity for that. So we don't need this capacity, but we are now locking in additional capacity to basically secure our future business.

Okay. And then on the long-duration side, is SmartStack the only go-to-market solution that you have there? Are you potentially looking to partner up maybe being a systems integrator for some of the more emerging technologies that are out there?

SmartStack is what we're going to do, and we believe that it's very competitive, so it will be smart. Thank you.

Thank you. Our next question coming from the line of Kristin Cho with Barclays, Yelena Snaugin.

Good morning. Thank you for taking the questions. With respect to the data centers, you mentioned the three different ways that you can serve data centers, the interconnection, backup, and power quality. Would you be able to break down the opportunity set here and maybe rank it? Is half of the opportunity for power quality and backup is the smallest? And for duration, you mentioned two hours is the low end. I'm assuming that's for power quality. Is it similar for those who are interested in getting storage for interconnection purposes?

First point that I would like to highlight. So we have these three needs. What's wonderful about our technology? And now talking about battery storage, not necessarily ourselves. is that we can stack up these three needs with the same technology solution, you know? While the other technology solutions can do one or the other, but they cannot do what we do, which is facilitate interconnection, do back-to-power, and do quality, you know? And that makes the difference, you know? And I think that's what makes our solutions so attractive to our data centers. We have resolved three problems with one technology, you know? So that's very, very good. In terms of the two hours, this depends on the need of the customer, so I cannot really put out, can tell you this is what drives it, but generally you're right on the view that backup power and interconnection flexibility will tend to be longer duration, while power quality will tend to be shorter duration, but generally that's true. But, you know, I think you need to think about this differently. It's the ability to serve the three needs with the same infrastructure. That's what we're aiming for, because that's where I think that will make our technology the preferred technology solution to resolve, to address these problems.

Okay. And then if you are able to vertically integrate with AESC, how should we think about, you know what the mix will be between you know the AESC supply and the second supplier and with this second supplier is a contract for a set amount of time and then lastly for your international projects are you also diversifying your cell suppliers there we are we always diversified internationally we're just been diversified locally my view of this and I you know is that it is we convert any battery into a great technology solution that's what we do as

a company so about who the battery supplier is not as relevant you know shouldn't be as relevant dude my customer children care and my financial you know the investor children care what I what what the real value we bring is the ability to make any battery great, no matter what. So that was my answer to it. I don't know what the mix will be, but as I said, for my customers, it will be irrelevant from a product delivery and capabilities, what batteries I produce. But for you, doesn't it matter in that if you are using AESC and you're vertically integrated it's higher margin for you versus yeah you know i care about my customers that's what i do yeah we will we will we will figure out that part but you know the importance in service is the ability to success or the route to success immediately your customer needs you know that that's what drives a combo but you're right you know we might be able to get a capture if we were to be vertically integrated you know it will be more marginal one or the other but my really the way to win is meet the customer that's the way to win not you know if you try to optimize something else you get you you lose decide your

customer needs and that drives that drives profitability that drives margin that drive area thank you now next question coming from the line of Justin and Claire with Roth Capital and it's now open hey good morning thanks for the time here so I just wanted to follow up on the second source of the cell supply here. So I think you mentioned it'll be available in the next 10 to 11 months. So just at the beginning of the year, do you expect to depend on the source of cells from AESC for domestic U.S. projects until that second source is available? And then so I'm just trying to get at, you know, how important is it for you to resolve the challenges with the FIAC restrictions by early calendar 2026 in terms of, you know, thinking through the outlook for the year?

I mean, very, very important. That's what I will say. We have a plan and we've been working on it and it's very, very important to do it. So, that's what I can tell you. I mean, we'll get it done.

Okay. Good to hear. And then just a follow-up on the data center opportunity. Andy, was wondering, you know, are you seeing, you know, or could you talk about the ability to kind of successfully accelerate interconnection with storage being added to data centers? Is this being done today, or do you need the regulatory framework to change in order to support this use case? And then wondering, you know, what the timing of orders associated with that use case might be.

We haven't signed any of these contracts yet, so this is a work in progress, but we believe we have the ability to ensure that the data centers meet the interconnection restrictions that they have. So I'll say yes. I'll say you need a major regulatory change to just ensure that you meet whatever the grid is offering. Got it. Okay, thank you.

Thank you. Ladies and gentlemen, that's all the time we have for our Q&A session. I will now turn it back to Chris for any closing comments.

Thanks, Livia, and thanks to everyone for participating on today's call. We look forward to speaking with you again by first quarter results, if not before then. And please do, looking forward to meeting with everyone as your questions arise.

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