Energy Vault Holdings, Inc. Q2 FY2023 Earnings Call

Good morning and welcome to the Energy Vault Second Quarter 2023 Earnings Call. All participants are currently in listen-only mode. A brief question-and-answer session will follow the formal presentation. This conference is being recorded. It is now my pleasure to introduce your host, Laurence Alexander. Thank you. Please proceed, sir.

Thank you. Hello, and welcome to Energy Vault's second quarter 2023 earnings conference call. As a reminder, Energy Vault's second quarter earnings press release and presentation is now available on our investor website and we will be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations page of our website. This call is now being recorded. If you object in any way, please disconnect now. Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. We caution everyone to be guided in their analysis of Energy Vault by referring to our 10-Q filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures. Joining me on the call today is Robert Piconi, our Chairman and Chief Executive Officer; and Jan van Gaalen, our Chief Financial Officer. At this time, I'd like to hand the call over to Robert Piconi.

Great. Thank you, Laurence. I'd like to welcome everyone to our second quarter 2023 earnings call. I'll begin today by highlighting the quarter's main operational, commercial, and financial milestones as are more detailed in our earnings release that we announced this morning. First, our priority this year has been and remains our execution to customer commitments on our first projects. Following a 2022 year, which saw a significant number of new customer wins with some of the largest utilities and global IPPs, this year is about executing those contractual commitments and specifically commissioning and turning over into operation the first system on time, at or above technical performance, and profitably with strong unit economics. Our first results are coming in, and we did not disappoint. Second, and sticking to the theme of execution, deploying our gravity storage technology at scale with the new EVx system. As previously announced, earlier this month, the first 25 megawatt, 100 megawatt hours is in commissioning phases now, powered renewably by an adjacent wind farm, and will serve the state grid and local towns. Third, continued growth in our commercial activities where our near-term sales funnel continues to expand another 27% overall on a sequential quarter-over-quarter basis and with more global diversity in our customer base in Southeast Asia, for example, South Africa and Australia, as well as a recent conversion of a 400 megawatt hour project with Jupiter Power from the award category to the booking category in the U.S. as we build the backlog going into 2024. As a reminder, this result follows the prior Q4 2022 to Q1 2023 funnel growth of 40% or 11 gigawatt hours for a total of 21 gigawatt hour growth, representing a little over $7 billion in opportunity in the last six months alone. As a new and emerging high-growth company in an attractive and growing market segment, it is important to measure not only the overall size and growth of our funnels I just talked through, but also the velocity and conversion to final contract bookings of the funnel. This past quarter, we had double-digit percentage growth in both overall funnel size and bookings growth categories, including almost tripling the growth in progressing proposed projects from submitted proposals to being shortlisted, a category that now totals 7.6 gigawatt hours, which equates to over $2 billion in potential awards alone. Fourth, I'm happy to share continued expansion of our high-margin and expanding IP licensing segment of our business as we executed our first territory license for some specific state right here in the U.S. market for future project deployments and new applications of our gravity energy storage technology. These new agreements demonstrate the strength of our IP portfolio and continued innovation to expand applications of our gravity technology. These innovations include advances in structural engineering, material science, and software as well as construction automation, all of which contribute to lowering initial CapEx costs while improving overall economics on a levelized cost basis. And in the case of the U.S. market where we benefit from the IRA legislation incentives, we are seeing increasing interest for long-duration storage toward renewable-fed production of green hydrogen generally, as well as for attractive end markets like sustainable aviation fuel, for example. As our gravity energy technology is 100% local U.S. content in any event, we can maximize the various IRA incentives as a non-lithium energy storage medium and long-duration technology. Fifth, and very importantly, regarding the financial results in Q2, we continue to deliver on the planned revenue ramp, specifically, a triple-digit percentage growth in revenue sequentially from $11.7 million to approximately $40 million, while prudently managing our operating expense, cash, and expanding our surety capacity with partner Marshh as our project needs grow. While our revenue more than tripled on a quarter-over-quarter basis as projects progress this year, we achieved about 10% GAAP gross margins on battery system revenue recognition only, while holding our OpEx in check to roughly flat quarter-over-quarter resulting in quarterly improvements in adjusted EBITDA, which is a proxy for our cash generation. And final net income. We expect strong continued improvements sequentially in adjusted EBITDA and net income as we enter an admittedly steep cliff for the second half of 2023, where we expect to jump to triple-digit revenue as planned in the coming Q3 and Q4 quarters as we approach final commercial operation dates for U.S.-based storage projects while beginning some others. These coming quarters will represent our largest revenue quarters as a company and as a team, we've relished this opportunity to demonstrate to our customers and to our investors what we are capable of when it comes to profitably scaling this business for growth. As we demonstrated this past quarter with final testing of our first 69 megawatt, 275 megawatt hour system with Wellhead in California at performance levels that met or exceeded our formal contractual commitments. And in less than nine months from contract award, as well as our first field test of our new software and energy management system platform. All of these results represent strong leading indicators of how we expect to perform now in the second half of 2023. In the end, it comes down to the talent, experience, and dedication of the people at Energy Vault that are obsessed with delivering for our customers, which is the most important part of delivering on our mission of decarbonization and enabling a renewable world. The final proof, of course, is not only the numbers, but in the words of our customers. Hal Dittmer, the CEO and owner of Wellhead Electric, was quoted last month in the San Fernando Business Journal that was covering local renewable energy and storage projects. When asked about why he chose Energy Vault as a new company, he mentioned the industry network of people and their experience that we're working at Energy Vault and saying in the end, that I quote, there were supply chain issues across the board, but we chose Energy Vault as they were the only company that was able to promise and then deliver what was needed for the project. With that, I'll mention a few other highlights from the quarter before turning it over to our CFO, Jan Kees van Gaalen, who will review the details of the financial results, and then we'll open it up for questions. As noted above, our commercial outlook continues to remain robust with our near-term funnel growing by 27% during the quarter to about 48 gigawatt hours. Additionally, we grew bookings by $33 million related to the signing of a licensing and royalty agreement for our Gravity Energy storage technology with a new customer in the United States and a recent 400 megawatt hour contract booking with Jupiter Power as we build backlog for 2024 and 2025. I'm also encouraged by continued geographical expansion and customer diversity, with a recent award from a Southeast Asian sustainable energy company for two energy storage projects totaling 500 megawatt hours that we expect to be booked in the second half of 2023 as part of a broader framework to purchase a minimum of 27,000 megawatt hours of energy storage in total over the next three years alone. Moving into the latter half of this year, we aim to turn our growing commercial funnel into contracts that bolster our backlog for 2024 and 2025. We are focused on prioritizing contracts with high returns and favorable gross margins that meet our internal requirements. We'll continue enacting strict financial and pricing discipline in everything we do to generate value for the company and our shareholders over the long term while maintaining our competitive prowess. The proliferation of the energy storage industry and demand that was accelerated post-IRA gives us flexibility in the projects and contracts in which we sign to drive both revenue and gross margin expansion. We remain committed to selectively participating in only high-growth, high-margin commercial opportunities. Turning to China, last week, we proudly shared that Atlas Renewable and CNTY, China Tianying began commissioning the world's first commercial EVx located in Rudong, Jiangsu, and Shanghai, the 25 megawatt hour, 100 megawatt hour GESS system next to a wind farm and national grid interconnection will enhance China's energy grid using stored renewable energy. Commissioning started in June on its advanced electronics and the new ribbon-living system. By Q4, we expect the system to be fully grid interconnected. Building on the success of the EV1 Tower in Switzerland in 2020, there were 75% round trip efficiency that EVx’s enhanced designing for over 80%, positioning it at the forefront of energy storage efficiency. There's more on the horizon with over 2 gigawatt hours of EVx deployments planned in China. For example, in June, China Tianying agreed with Wallai County's government to construct another 100 megawatt hour Gravity Storage project in Hubei, aiming to bolster carbon goals and support regional data centers. This partnership underscores EVx's potential, promising high-margin returns for Energy Vault. We're eager to assist our partners in realizing more EVx initiatives in the future. Our commitment to global deployment of our gravity energy storage technologies remains unwavering as we executed our first gravity energy storage license and royalty agreement for the United States with the U.S.-based renewable developer for multiple named states. The license-only portion of the contract will generate revenue of $33 million, coupled with project royalty streams of 90% gross margin tied to all future project deployments within the named states. Importantly, this agreement allows for the developer to deploy the technology through a new application of the current EVx technology that enables lower initial CapEx and demonstrates the flexibility of the technology to be adapted to various land applications, pending customer-side availability. In discussing licensing and royalties, our model is central to commercializing our Gravity Energy storage technology and pivotal to our business strategy. This approach enables scalable high-margin returns with an expanding revenue stream from continuous high-margin royalty and service fees. The model lets us utilize data from diverse assets to refine this technology, boost commercial adoption and strengthen our market position. The model is also CapEx light and asset-light, which not only fosters bottom-line growth due to the high margin licensing and ongoing royalties but also amplifies shareholder value as we near positive cash flow. Importantly, it reduces external capital reliance, setting us apart in the energy storage solutions provider, especially in today's market. As we look at North America, we're dedicated to launching the inaugural EVx Gravity Energy storage solution in Snyder, Texas, marking our first commercial demonstration here in North America. Leveraging cutting-edge technology and research insights, we aim for cost efficiency to foster widespread adoption globally. The Snyder facility stands as evidence for our potential clients now and in the future where we will implement our latest structural engineering, material science, and software innovations focused on lowering both initial CapEx and thus levelized costs over time. We anticipate an uptick in opportunities to expand the EVx platform in North America, our strategic partner and customer DG Fuels, recently welcomed two Japanese investors and a third, securing $30 million in equity. Given this financing and their DOE loan progress, DG Fuels announced they plan to initiate construction of their $4.2 billion sustainable aviation fuel facility in Louisiana in the first half of 2024. This follows recent public announcements of offtake agreements made by Air France, KLM, Royal Dutch Airlines, and Delta Air Lines, as well as another large energy trading partner that will purchase 100% of the production of the Louisiana facility. We're enthusiastic about DG Fuel strides and remain committed to supporting Mike Darcy and his team for fulfillment of their sustainable aviation fuel endeavors. I'd like to touch a little bit on our multi-day and ultra-long-duration storage announcement with Pacific Gas and Electric as an update. Our technology agnostic approach paired with top-tier partners is showcased in our hybrid energy and green storage project with Pacific Gas and Electric. Importantly, in Q2, we received both the California PUC approval as well as the local Calistoga municipal approvals to take the project forward at full speed for PG&E and the residents of Calistoga. In the first half of this year, we procured the hydrogen storage tank and fuel cells for the system from industry leaders Chart Industry and Plug Power. Chart is supplying an 80,000-gallon liquid hydrogen storage tank, ensuring 48 hours of supply, while Plug provides 8 megawatts of fuel cells, making it one of the largest hydrogen fuel cell projects in the United States and one of the earliest to COD as planned for Q2 2024. We chose these partners for their unparalleled industry solutions, allowing design flexibility to optimally serve our clients. Central to integrating these technologies is Energy Vault's proprietary software platform highlighting our unique technology-agnostic stance. We anticipate site mobilization and construction efforts on the PG&E project to begin in the fourth quarter this year and remain on schedule for project completion by mid-2024. Before handing it over to Jan Kees for a detailed walk-through of our financial performance, I'd like to hit on a few highlights. Our revenue for the second quarter reflected continued construction progress and execution across our battery project in the United States under a build commission and transfer model. As such, we recognized the revenue associated with that progress of $39.7 million, while continuing to post gross margins of nearly 10% on pure battery project execution. Achievement of this gross margin underscores our commitment to profitability and our differentiated approach that helps to deliver attractive margins. We anticipate the gross margin on our BESS project deployments will continue to be financially accretive as we pursue strategic investments and opportunities that enhance our offering and execution capabilities. Last quarter, we disclosed our investment in KORE Power, a U.S. manufacturer of battery cells and modules to build supply continuity on a prioritized basis for the domestic U.S. content for Energy Vault's U.S. customers, supporting our short-duration battery and even hybrid energy storage solutions on a preferred economic basis. Since that time, KORE received a conditional commitment for an $850 million loan from the Department of Energy Loan Program Office to help finance the construction of KORE Power’s advanced battery cell manufacturing facility in Buckeye, Arizona. This facility will be capable of producing an estimated 6 gigawatt hours of battery cell storage capacity annually. And as an early investor, we will benefit significantly from this access to domestically produced content and take advantage of the IRA legislation, which improves the economics for all stakeholders, including KORE Power, our customers, and ourselves. This access to domestic content and supply has allowed us to sign a long-term partnership with Jupiter Power to supply 10 gigawatt hours of domestic U.S. content battery modules for their projects over the next two to five years. Project developers are looking for local supply to support U.S. manufacturing efforts but also need to be competitive from a cost standpoint that allows them to be competitive. We feel very good that this investment will allow us to be positioned in the market to be the preferred partner for utilities, IPPs, and renewable developers in the United States. Regarding our guidance and given the progress we have made to date and the visibility on our projects and a high level of confidence in our ability to deliver the projects to our customers on time and on budget, we are thus reaffirming our full-year financial guidance, including revenue, gross margins, and adjusted EBITDA. In summary, we're poised to grow and become a prominent player in the energy storage market with our diverse solutions. Our current foundation supports faster and more profitable growth in the market as our financial and operational performance shows. I'm excited about progressing and supporting the outstanding talent and team here at Energy Vault, which in the end is what sets us apart. While we have made significant industry strides in the last 18 months in delivering our first revenue as a new public company, our best is yet to come as we enter the second half of 2023 and our largest revenue quarters and customer deliveries ahead of us. With that, now I'll hand it over to Jan Kees for a detailed financial update.

Thanks, Rob. Good morning, everybody. For the second quarter of 2023, revenue was $39.7 million, primarily reflecting revenue earned from the progress and execution of our battery projects. As we progress through the year we will see a significant revenue inflection in the third and fourth quarter as we begin to recognize revenue from the Jupiter Power and NV Energy projects that are still scheduled for on-time completion in the third and fourth quarter of the year. We achieved a gross profit of $3.9 million, reflecting a gross margin of just under 10% driven by our differentiated approach to the battery energy storage market combined with a strong execution on our battery projects. Operating loss was $28.4 million, an improvement over the first quarter of 2023 of $32.9 million, driven by continued focus on operating expenses and business costs. Adjusted EBITDA for the quarter was negative $18 million, which was a slight improvement quarter-over-quarter. The key non-cash item that we added back was $10.1 million of stock-based compensation. The key non-cash items that we deducted was $2.3 million in interest income. We continue to anticipate adjusted EBITDA and operating expenses to stay within our guidance range as we remain acutely focused on managing costs. As of June 30, 2023, we had $165 million in cash, cash equivalents, and restricted cash, leaving us well positioned to continue our growth strategy and execute on our projects. As we mentioned before, the primary use of cash will be for cash operating expenses of between $20 million to $25 million per quarter, with any other fluctuations mostly resulting from working capital needs for equipment purchases for our battery storage projects, which will translate into revenue, gross margin, and cash in future quarters. Lastly, today, we are reiterating our full-year 2023 financial guidance. This includes revenue of $325 million to $425 million, gross margins of 10% to 15%, and adjusted EBITDA of negative $70 million to negative $50 million. Our forecast is supported by our strong contracted backlog activity, as well as our offering mix of energy storage projects and IP licensing agreements. We will continue to complement this with various consulting and construction services based on customer needs and demand. We will also maintain a disciplined approach to operating expenses. With that, I now turn the call back to Rob.

Great. Thank you, Jan Kees. Before getting to questions, I want to again thank the entire team here at Energy Vault for their intense focus on delivering and executing for our customers and thus our shareholders. I also want to continue to thank our investors and partners who continue to support our growth and mission of decarbonization. I'm happy about our continued progress on developing and deploying our disruptive energy storage solutions that are solving a multitude of problems for customers as they embark on their own clean energy journey. With that, operator, we are now ready for questions.

Thank you, everyone. We will now begin the question-and-answer session. The first question comes from Joe Osha at Guggenheim Partners. Please proceed.

Hello. Good morning, everyone.

Hi, Joe. How are you?

Just fine. Thank you. A couple of questions for me. First, I want to drill down a bit on this KORE Power relationship. Is the idea that you're going to buy sales from them and then work with someone else in the contract side to make packs, or are you going to make packs? Or is KORE going to make packs for you? I just want to make sure I understand the logistics of this arrangement. Thank you. And then I do have one other question.

Sure, Joe. To clarify, we are not entering the battery manufacturing business and will not be handling any integration ourselves. We were an early investor in KORE during their initial equity raise, and we've seen them achieve conditional approval for their DOE loan. This means we are both an early investor and a prioritized customer, so for supply continuity, they will provide us with the integrated battery modules without us needing to perform any final system integration. Additionally, due to our investor relationship with them, we also receive other financial benefits.

Okay. Thank you. But it's – All right. That's helpful. Moving to the Gravity side, you're continuing to make progress, commissioning Rudong. So I have two questions. First, given the insights you've gleaned so far, do you have some sense as to what a target might be in terms of cost, say, cost per kilowatt hour as you start to put up additional systems? Is that a number you can share?

We built the first system there completely locally in China, so we sourced everything from there, Joe. So we do have indications on what the first system unit cost is going to be. In addition, they did not implement 100% of all of our cost reduction roadmap, for example, with the fixed frame solution that we have using fiber reinforced concrete. Some of those things are going to be implemented first in the U.S. So we have initial indications from local Chinese manufacturing and local Chinese construction costs there. We're also expanding our supply chain team including not only China but India, ensuring now in the U.S. that we're going to have access to 100% local content for the construction of the entire system here. We're expecting to lower the power component of that cost and further lower some of the energy components of the cost through the lower cost of the fixed frame that we're going to implement in Texas.

That's very helpful. Thank you. Could you provide an idea of when you expect to start the project in Texas and an initial target for when that system might begin operations?

Sure. Yes. We broke ground actually last year. So we broke ground at the officially at the end of third quarter in September last year with pilings in the ground and have worked getting the foundation in place into the front end of this year. So we expect to have that system in the second half of 2024 to be essentially starting all of our commissioning activities. So I would say in about a year, 12 to 15 months from now, we expect to be beginning commissioning activity on the system in Texas.

Okay. Thank you very much.

Thanks.

Thank you. The next question we have comes from Thomas Boyes from TD Cowen. Please go ahead.

Thanks for taking my questions. It's great to see the licensing agreement in the U.S. Could you provide more details about where these additional systems might be located? You mentioned multi-state operations, but I was hoping to get a clearer idea of whether they will be on the West Coast, in the Northeast, or another region.

Yes. The first parts of this agreement for the states will be in the western part of the United States. So that's what I'm, I guess I'll share at this point. So it'll be Western U.S.

Great. And then does that specifically domestically, does that kind of impact the way you think about your go-to-market strategy? Are you still looking to kind of build and sell projects longer term, or was this one customer because of their kind of novel application of the Gravity storage technology more of a one-off?

By the way, great question. So first of all, we absolutely will be building these directly ourselves, in particular, in North America for sure. This is a specific application and architecture of the Gravity Energy storage technology that this specific developer has been talking to many customers about developing and implementing. So we did a specific license agreement with them and essentially we'll begin those implementations in the western part of the U.S. So it is not necessarily a reflection that all Gravity will be licensed. In some parts of the world, as we've seen, for example, with China, we announced Egypt, Greece, and Cyprus. And for some aspects of the technology, the license model fits really well, because we're obviously not in the construction business ourselves. Obviously, we'll manage EPC relationships and manage the build of the projects. And this is essentially a larger construction project with electronics integration, power integration, and software, which tends to be a very logical frame for those types of license agreements. For investors, they're fantastic, because we not only benefit from 90 plus gross margins on the license portion alone, but then there's the follow-on royalty streams that, as we've publicly announced before, are done at about 5%. And those are streams that will be at 90% plus gross margins as well. We're not taking execution risk in that case, and I think from a business model perspective, it allows us to monetize our technology and our IP, especially for certain applications or iterations or new architectures in a way that garners that profit and even have that profit a bit more risk-free, let’s say, as others can focus on getting the technology built out.

Great. Yes. And if I could ask a quick follow-up, is there any exclusivity in that licensing agreement based on application, though probably not on geography? I just wanted to check.

Yes, we're not commenting on the details of the agreement just yet, and nor as you noticed there, we didn't name who the counterparty is, but we'll be giving some updates on that, I'd say, in the coming one to two quarters as that develops.

Perfect. I'll jump back in queue.

Thank you.

Thank you. The next question we have comes from Brian Dobson from Chardan Capital Markets. Please go ahead.

Hi. Thanks very much. So congratulations on the new licensing and royalty agreement in the United States. I guess, as you're looking out over the next year or two in the U.S. market, how do you see it developing in terms of long-duration energy storage? And would you characterize the DOE as a good partner in the development and promotion of that technology in terms of the programs that's devised to that end?

Sure. Let me take the first one on how we see long-duration developing. As I noted in some of my earnings comments, we are seeing with the IRA and with certain segments of the market, as we mentioned, around sustainable aviation fuel. There are factors and accelerators to long duration here in the United States. I think green hydrogen and the production of green hydrogen where essentially you can utilize solar and long-duration storage to power electrolyzers and electrolysis to make green hydrogen in a cost-effective way relative to the various incentives that are out there. So those types of things, we're seeing more inbound and more customer engagement and developer engagement around the application of long duration. You would have seen that one of our customers, DG Fuels, announced not only their progress on financing in their DOE progress but also an off-take agreement for a segment of the market that is tremendously underserved for sustainable aviation fuel. I think those types of segments for industrial applications or powering, eight to 12 hours of need, would that be overnight for 24/7 type of power needs or manufacturing, those things are going to push a long-duration demand, as well as just more renewables on the grid. We're already seeing moves in some markets, from two to four hours to four to six hours, so we're just beginning to see that here in the United States. Overall, I think the long-duration demand developed a little slower than what people have thought but I think we're beginning to see some encouraging signs for more projects in development. The second part of your question on the DOE, I definitely think that with the programs and the priorities that the administration has about getting capital deployed is definitely a help to the industry. I mean, I use the term, do you see them as a good partner? I absolutely see that there's a willingness and desire and even motivation to try to get the capital deployed for its intended purpose. We are participating in various parts of those programs, and all of that is going to be net helpful to us. We just saw from KORE Power's conditional approval with the DOE moving along for $850 million to build their facility in Arizona. Everything we're seeing tells us that there's a strong commitment there but not only commitment, but funds are flowing and companies are progressing through that process.

Yes. Excellent. Thanks very much for that color.

Thank you.

Thank you. The next question we have comes from Noel Parks from Tuohy Brothers. Please go ahead.

Hi. Good morning.

Hi, Noel. How are you doing?

Great. Thanks. Just a few things. As you look into the longer term of some of the projects that you have in queue or are working on negotiating. I just wonder if you could talk a little bit about the EPC vendor piece of that. I just wonder as you look further out, are there any issues as far as just availability, staffing availability, anything like that that gives you any concern as you look out beyond for the next couple of years in your planning?

Noel, it's a great question. And what I'd say is, initially as we entered and went into the second half of 2022 and the first half of this year, one of the adjustments we had to make is to be a little more directly involved in some of the management of the project from a construction perspective. And by that, I mean, as far as EPC goes, we're handling the engineering and playing a very active role in the procurement side because there are just a few major pieces of equipment between transformers and inverters. If it's short-duration, batteries, if it's longer duration, it’s the large motor. So we aren't talking about a massive amount of equipment to procure or things in high volume. Because of that, it lends itself for us to be a little bit more actively involved with minimal cost to manage some of those vendor relationships and roadmaps on the procurement side so we can get priority on what we need. That engagement we've had in the procurement side of EPC has helped us execute and deliver well. That's why if you look at our Q4 last year, we did $100 million quarter because we did very well in managing that execution side a little more hands on. We played a little more active role in this, which I think is where your question is going, than we intended on the construction side. The larger EPC companies we're seeing are very busy and have a lot on their plate and therefore, if you're looking at competitive pricing, we initially saw pricing that was above what we were planning and expecting. As a result of that, we chose to play a little more active role in being more directly involved with some of the management of the construction contractors themselves. I'd say on the shorter duration solution, it's easy to do that because you don't need massive EPC companies to build those projects out. You can use smaller localized construction companies. We found that to be a good way to get competitive solutions to the table, having multiple local companies that either the customer are familiar with or we would have direct relationships with. One of them we were able to reuse on a second project that's just about to get started. To net all that out, we're managing and prioritizing our resources to ensure we have not only the most competitive solutions but also priority from the local players on schedule and the ability to meet our customer commitments. If you look at our results and what we've guided here, even for the second half of the year, we've got two huge quarters coming. We've got two large triple-digit million quarters. So we've been very careful about the selection of our partners and working with our customers and expect to execute well.

Great. Thanks a lot. And that was touching on really what I was wondering about because I just heard anecdotally a number of large projects by companies at the stage of early commerciality administered some anecdotes of the EPC selection not being as robust as they had expected, plenty of bids from competitors, but when it came down to the detail, and in particular, the staffing, finding that we're really down to one candidate that worked. So that kind of behind the question.

Yes. I'll make just one comment on that, if I can. You're right on, we had that experience a year ago as we started thinking about things on a global basis and talking to some larger players, and it, between getting priority and pricing, that just wasn't going to work. Anytime you're implementing new technology as a smaller company, the bigger ones don't want to take risks, number one. And it does limit your options as an intercompany. That's one of the reasons we funded up heavily in our Series B with the commitment we had from SoftBank and then a large Series C. The reason we did that was to ensure we had capital to do some of these things ourselves, given it's a tough market when you're a young company trying to get the attention of larger firms. I think right now, we're in a little different position. I'd say we executed well in our first year and our execution is strong this year. I think we're actually seeing some players come and work with us that want to learn how we're innovating in civil and structural engineering and are willing to do that at their own cost. This reflects what we're doing around automation, constructability, material science, and advanced structural engineering that is not being done in the world generally, and others really want to learn about that and are willing to work with us. This is economically beneficial.

Terrific. And if I could just touch on one more thing. You did mention that the future shows Energy Vault solving a multitude of customer problems. I was wondering if there is a distinction between your utility customers looking, for example, to integrate with renewables at a large scale, and maybe industrial customers or others that are looking at your storage solutions more as, you mentioned data centers earlier in the call, as a microgrid type application where it's not so much about integration. It's about sort of the resiliency for their own operations. Are those essentially very similar discussions, I mean, no matter what the motivation or are there some meaningful differences?

Yes, it's different based on the customer set, and every customer set has their own applications. I'll give you a few examples. When we're dealing with utilities, most of them are solving for this two to four hour peak that takes place, hence the focus on short duration. However, some of those same utilities have coal plants that they are going to be shutting down. They have all that infrastructure sitting there, and they want to utilize renewable and put in longer-duration storage leveraging that existing infrastructure for the coal plants. The same utility that has that short-term need for peak shaving has long-term planning for shutting down their fossil fuel assets. Further, you've got utilities in certain parts of the world that need to provide solutions in the event of fires or earthquakes, which means multi-day storage applications. We brought green hydrogen to the table integrated with tanks, fuel cell, and a small amount of lithium ion for grid forming and black start to create a renewable solution that didn't exist. That’s just one segment. I would say for industrial segments, I mean, sustainable aviation fuel or green hydrogen, you see long duration required there, focusing on 8 to 12 hours of need for 24/7 type of power, or manufacturing. Our investor base includes large industrials looking at six to 12 hours of need using green hydrogen or powering themselves sustainably. It's a diverse market. We at Energy Vault are unique in that we're addressing short, long, and multi-day or ultra-long duration needs. No one else is doing that. The insights from customers solving multiple problems are invaluable, and we prioritize our R&D efforts to support them.

Terrific. Thanks a lot.

Thank you.

Thank you. Are there any further questions or not? We're all done.

There are no further questions registered. Okay. All right. Operator, thank you very much. I want to thank everyone for joining this call and listening in here. We look forward to continuing the dialogue here in another quarter and updating everyone on our progress. Thank you very much.

Thank you, sir. Ladies and gentlemen, that does conclude today's conference. Thank you for joining us. You may now disconnect your lines.