Eos Energy Enterprises Inc - Ordinary Shares - Class A Aktie

Good morning, everybody. Welcome to day 1 of the JPMorgan Natural Resources Conference. My name is Mark Strouse. I cover Clean Energy and Power Infrastructure at JPMorgan. Very happy to have Joe Mastrangelo, CEO of Eos. Joe, welcome.

Thank you. Good morning.

So I want to keep this as open as possible. So we will have mics going around. If anybody has a question, feel free to raise your hand. Joe, maybe just kind of assuming there are some people that are less initiated on the stock, just kind of give us an overview of what you're all about.

Yes. So Eos is a stationary energy storage company. We're 15 years old. We have an aqueous zinc bromine battery technology, so water-based battery that we have been developing over the past 10 years. We're in our third product iteration. We have over 6 gigawatt hours of energy that's been discharged out in the field. We are 90% U.S.-based supply chain with a factory based in Pittsburgh and a new manufacturing line coming online right now.

Great. Okay. Maybe can we start with manufacturing? Just give us an update on kind of your manufacturing processes, you ran into some issues at the end of last year. I think on the 1Q call, things did improve considerably. Kind of where does that stand today? And then kind of over the near to medium term, talk about robotics, talk about automation, how that's being utilized in your factories?

Yes. I think, Mark, the thing -- just take a step back on what the team has done. You focused on like product invention, but as part of a product invention, also invented a manufacturing process. I think the team -- like the approach that we had to this was develop the product, figure out how to make good parts because we are vertically integrated back into -- we bring raw materials in, we build all of our subassemblies and then manufacture the battery module and then manufacture the system itself to put out in the field.

We -- not only did we develop a new product, we developed a new manufacturing process, which went online 18 months ago. That process of bringing that online, we've gone through the learning curve that you would do in any new process. The thing that I always like to focus on is, in 2024, we had $15 million of revenue. In 2025, we had $115 million of revenue. Great performance, but lower than what we expected to perform at.

What we learned, and this is what we've built into as we think about the company moving forward in manufacturing is having the redundancies to be able to continue production. Like when you're a single SKU company, it gives you simplicity on the one hand, but at the same time, it increases your risk around what you're doing with that product. When you're a single SKU company with one manufacturing line, you're exposed to any hiccups that you have in your supply chain or in your production. And we had those challenges in the fourth quarter.

Fast forward to the first quarter and what the team was able to deliver, really stabilized production, stabilize the performance of the line. And it really -- it's really not just the line itself. So you have to realize that the way the company started, we wound up in Pittsburgh because we moved into a 120-year-old facility that was $7 a square foot. Trying to build a state-of-the-art line inside of infrastructure that is that old creates challenges to keep it up and running and sustainable as you start operating and learning what you need to do to be able to operate.

What we're doing now, what we announced a week ago was we've gone live on a new production line in our new facility in Thorn Hill outside of Pittsburgh, which puts us in a state-of-the-art building and takes all the learnings from Line 1 and incorporates them into Line 2. We're able to bring that Line on -- into production on schedule and are producing batteries today that when we brought Line 1 on -- it took us about 6 months to get to the level of production we are on day 5. So there's always going to be lessons learned. There's always going to be growth as you go through this. But what we're trying to do is bring the stability and the predictability that everyone expects from a company that's delivering industrial hardware.

Okay. Okay. That's great. All right. So you mentioned Thorn Hill, Line 1, Line 2, Line 3, Line 4, kind of can you talk about the cadence of kind of timing of those lines, but also kind of just a refresher just kind of the magnitude of each of those lines?

Yes. So start with like what drives a new manufacturing line is obviously orders volume, customer demand. And we're seeing demand, as you can -- as you've seen in the past week here, we're gaining traction out in the market and filling the factory. What we've done and what we've learned going from Line 1 to Line 2 is, if we place the advance orders for long lead items on our manufacturing line, we can implement a line in 6 months. So if you take a look at Thorn Hill, right, and that sounds great, but let's talk about reality and what the team has done.

If you look at Thorn Hill, we moved into the Thorn Hill facility at the beginning of this year. We not only got the building ready to put a line in, put everything that you need along from a power standpoint, from exhaust, tooling, air compression, everything you need to be able to put a factory inside of a building, we got that done and brought a line up in June of this year. So we do now going forward is you place long lead material with our automation suppliers. And then once they have that long lead material, we can give them a demand signal and bring a line and bring a line into operation in less than 6 months.

So John Mahaz and the team are positioning us to be able to do that. I think as you look at where we are and as we get through the Summer, we'll get Line 2 up and running. We'll continue to improve the performance of Line 1, and we'll look at Lines 3 and 4 as we look at the demand signals that we're seeing out in the market. And we are starting to see order -- opportunities convert into orders, which are filling the factory, which means we're going to have to start really thinking about placing the orders for that long lead material and positioning ourselves for incremental capacity as we grow.

Yes. Okay. All right. So Frontier Power, this is a new development this year. Just give an overview, what exactly is that? Why did you form it? What are some of the challenges that this is designed to solve?

Yes. So what we were seeing in the market, right? And I think a lot of the questions and things that we talk about as we're going through discussing the performance of the company was a pipeline that was growing and a customer base that was selecting our technology, right? The selection of the technology, although hard, started to become the easier discussion with customers. So you get to the point where the customer says, I have a project, I want to use Eos technology to be able to build out my project.

From there, you basically start another sales process, which is go out and get your financing, go out and start building your product. What we started to see from a sales -- utilization from how the -- what the sales force was working on, as you started getting 10 or 15 projects that have selected cc technology, we're spending a lot of time going out trying to secure financing. When you're doing that on an ad hoc or project-by-project basis, it becomes unfocused and you wind up where you're bouncing between different financial institutions.

We sat down -- this is probably back in the first quarter, we sat down and said, what can we do to accelerate the conversion of opportunities where customers have selected Eos? How do we accelerate that selection into assets out in the field and running? And we really sat down and said, let's look at companies that have side-by-side financing organizations alongside of it. And we came up with the idea of Frontier Power.

We came up with a way with Cerberus to -- who's our largest shareholder. We came up with Cerberus to fund that entity through them putting equity into Frontier Power and us putting equity in through a rights offering that we're in the process of launching here at the end of this month. And when we looked at that, we said, look, if we can get $300 million of equity into that entity and lever that 5:1, we now have close to $2 billion of capital to be able to go out and close projects. And what you've seen since we've announced that is you've seen the orders announcements and the pipeline flows coming in and turning opportunities into orders.

So we're excited about being able to do this. And I think from a shareholder standpoint, of which I am a shareholder of Eos, I look at this and say, before we were out shopping to different financial institutions to do financing, all that value creation was going to an entity outside of Eos. Today, the way we structure that is we do these transactions on an arm's length basis, but our Eos shareholders will be able to participate in the returns on those projects at 49%, which is the anticipated split of the equity as we look to the future.

Yes. Okay. I think the latest number is about 2 gigawatt hours of capacity reservations for Frontier. What do you define as a capacity reservation? And then how should we think about that converting into firm orders time line?

Yes. So one of the things that we looked at, and this gets back to the arm's length nature of Frontier and Eos was, you look at some of the opportunities we have coming down into the pipeline and converting into orders. So you have things like our relationship with Talen going into the PJM backstop auction. You have the relationship with Frontier U.K., which is a separate company from Frontier Power USA, who has a large bid into the U.K. Cap and Floor scheme.

And you started looking at the capacity we had and we said, look, we're not going to be able to give preferential slotting to Frontier Power USA just because there are an arm's length financing where we have equity. So we said -- when we looked at it, we said we should reserve capacity. And we looked at that and said, let's place a purchase order, let's put a deposit to reserve that 2 gigawatt hours of capacity where they have to give us demand signals where we deliver. And you look at in the 3 or 4 weeks since we founded Frontier Power USA, we've announced 480 megawatt hours of orders converting under that capacity agreement.

So we've already used up close to 25% of that capacity reservation agreement that we have with them that we'll continue to see projects and opportunities come into that. We think we can do more with Bimergen, which we announced an order with them a week ago. We think the relationship that Frontier Power announced with Stella gives us opportunities with their pipeline. And that's the beauty of really having Frontier Power and Eos side by side. It's about focusing our efforts. So the EOS team is focused on building and getting assets in operation out in the field and delivering that performance. And Frontier Power is out building relationships to look and secure pipeline for us to fill the factory and allow us to grow over time.

Okay. All right. So talking about pipeline, you named some specific customers. Just kind of generally, can you talk about kind of the mix of what you're seeing in your pipeline from utilities versus hyperscalers versus other customers?

Yes. So obviously, Mark, like the hyperscaler market is growing. The opportunity pipeline is expanding quickly. But the traditional and what I always like to say, and I've taken a little bit of criticism around talking about other things besides hyperscalers, there's a whole another market out there, right? I don't want to lose sight on what was traditional and was a big market before the hyperscalers came in. And when you look at stand-alone energy storage and energy storage plus, a generating asset, there's still a lot of demand out there, and there's still opportunities to grow.

At the same time, we see hyperscalers growing as an opportunity set. And we feel like our technology fits well into what their use cases are. When you look at like inference learning, that's the ultimate -- if you look at it, that's the ultimate variable demand signal that you get on the electric grid. And we've tested about an hour from here in our facility in Edison, New Jersey, some of the largest battery testing facilities in the United States. We run everyday cycles as if you're running an inference session using the demand curve for the CPUs that are used in data centers to prove out that the technology can handle it. And we've issued a white paper on it. We're pretty excited about that. We continue to work through this. But like the one thing I would tell everybody is, yes, I would love to be able to give a TikTok type answer on converting orders. This stuff takes time, and it's complicated, and we continue to work through that and prove out the technology.

Okay. All right. That's great. All right. So obviously, part of this is technology, part of it is geopolitics, too. Can you just talk about OBBB, FEOC are still being interpreted by the market. Just kind of what you're hearing from customers regarding kind of policy uncertainty? And is that just driving kind of incremental business towards your American-made product?

Yes. And I think you'll continue to see that. And I think -- I mean, look, part of it is politics, and that's the world that we live in. For us, this all started off as a simplification effort and ability to scale the business. Like when we -- I'm coming up on my 8-year anniversary with Eos. When I came in 8 years ago and the strategy at the time was build the battery in China, fill it with its electrolyte in the U.S., ship it to the customer. Where we were financially, we couldn't afford to do that.

And having done factories around the world in my career, you looked at the amount of effort that we had, and it was just somewhat easier to do it in the U.S. like it's easier to put a team in a rental car than it is to put a team on an airplane halfway around the world where you can't monitor your supplier performance. And what we found as we started doing that was a great U.S. supply chain that allowed us to build to 90% of our build material comes from the U.S.

That's turned into a strategic advantage as people look at supply chain simplification and having domestic content in the U.S. Now the beauty of this is the way that we design this is it's U.S. manufactured for U.S. demand. But if you look at the demand in the U.K. or in Europe, as that grows, we can take the American flag that's on an Eos Cube today and put the Union Jack on it or put the EU flag on it, localize the supply chain and create jobs.

The beauty of what we do is if you look at what we've done, and we've proven this in Pennsylvania as we've created close to 500 jobs, 500 good paying -- union paying manufacturing jobs. When you scale a facility at 8 gigawatt hours, you're talking about creating 1,000 jobs. That's jobs that are local, that's jobs that create a path to middle class for people. And from us as a company and as an investor base is it reduces our logistics costs because we're manufacturing where the demand is. So we have lower cost of shipping and lower cost to bring assets online.

Okay. All right. I wanted to go back to -- I think you talked about this a bit earlier, but the Talen JV that you have, can you just talk about the lead generation that you're seeing there, the types of customers and use cases that are emerging from that PJM pipeline and then kind of milestones that investors should be looking for to gauge progress?

Yes. Talen has been a great partnership for us. I think we've made each other smarter as companies. I think Talen brings the operator mindset, the existing assets that they have, the knowledge of how to bring capacity online. What we've looked at with them is both taking their existing power plants, adding energy storage to this. What I've always said like in a prior life, I led a large gas power systems business. So when you look at gas turbines and Talen is one of the largest gas turbine operators in PJM, when you look at a gas turbine, you don't want to be cycling your gas turbines day by day.

Like you don't want your gas turbine to look like an airplane taking off and landing as you vary the performance of that because it reduces -- it increases your service time, reduces part life. So what you can do is you can augment that with energy storage to operate at a more optimal and efficient level in the gas turbine. And we looked at that with Mac and the team at Talen and came up with what we bid into the recent PJM auction, which will transition into the backstop auction, but also are looking at new build opportunities, greenfield that would support hyperscaling opportunities in the PJM and specifically in Pennsylvania.

So there's a lot of work that we're doing together as a team, and we're excited. And I think Mac and his team are excited as well. And I think these are the type of partnerships that we like because although you kind of look at them as an IPP, it's an entrepreneurial IPP that's looking to do something different and create the use cases and the technology to be able to deliver the demand curve of the future.

Okay. Can you talk about kind of cost declines, cost per watt or -- watt hour declines? The 45x will start phasing out beginning in 2030. Kind of what does the outlook for this business look like 7 years from now without those credits?

Yes. I mean we've never planned -- we've always planned on the 45x as a bridge to becoming profitable. So we've never relied on that for being profitable. Now I always try like when you think about how we lead the business and with our new CFO coming in with his industrial background, like how we build the robust road map to profitability. So there's different components of that, right? So there's material cost. When you look at our bill of material, the team has done a great job driving out material cost on the battery module.

Then outside of that, you have the electronics and the software and the firmware to be able to operate the system. We launched a new software platform, which increased the cost of the system, but improved the performance and lowered the cost of ownership for the customer. So we made a trade-off in the short term. So we can continue to drive cost down on that. When you look at our bill of material inherently, it's a very inexpensive commodity-based bill of material. Then on top of that, you layer in material -- labor and overhead.

So what John Mahaz has done is he's taken the labor content down on a quarter-by-quarter basis. He's reduced the rework and the scrap that we've had, which then starts to get better leverage, which you see in our numbers when you look at our numbers. The next piece of this then becomes project building out in the field and project execution, which we have to get a lot more efficient on how we do that. We put those pieces together and have a road map to this, and this will be a profitable business in the future. We've talked about that. We've talked about where we want to land at the end of the year, and we got to continue working through that as we scale the company and work through rightsizing and optimizing the 2 factories.

But if you look at everything inside the company, it's a company that will generate a profit. There's a lot of work we have to do, and we have the team that can deliver those results.

Okay. Any questions? Maybe on that point. So kind of gross margin profitability in the second half of this year. Any update you want to make at the JPMorgan conference here?

No. No. I mean we're continuing to work to what we've always discussed. As I said, we're -- like I'm really excited about what we're seeing in the new line and the production coming off that line and the optionality it gives us as we go into the second half. We've got to continue to deliver and drive performance around what we have and get to the entitlement that we have for the company as far as profit goes.

Yes. You have talked about kind of customer site readiness that you can kind of push around revenue quarter-to-quarter. Can you just talk about how that is trending recently? I mean we've seen some EPCs talking about weather and whatnot, obviously, depending on where they are in the country. But just kind of what does that look like for Eos? And then any other just kind of broader issues that you're seeing as far as permitting or financing, anything like that?

Yes. So given the growth in the industry and the build that we're seeing, there's a lot of demand on the overall energy value chain. When you think about delivering power, delivering an energy storage system, we're a part of a broader system. I think as we look at that system, we think there's opportunities for us to take on additional scope to allow us to accelerate execution of those projects. But it's not just like the site readiness is a piece of this. There's a part of like you need all the components to arrive when they have to arrive. There's a timing -- as you brought up, there's a timing around financing, which we've tried to address with Frontier Power USA.

The agreement that Frontier Power USA has with Stella opens up the ability to do project execution. So what we're trying to do is derisk that process of bringing things online because what we've seen is as we plan revenue, like -- and I talked about this in our annual shareholder letter. Like as we plan capacity in the factory, we plan capacity around when the customer wants delivery, and that is going to have ebbs and flows depending on their ability to be able to execute and when they need the product.

So it's not just go out and sell and you have a 2-gigawatt hour line, we want to get to the day where we're there. We're not there yet, and we're tied to when the customers' demand signals are. We've got to work through that complexity. It's something that in my background of having worked in oil and gas, I've worked on some pretty complex projects. You just got to get your project execution where it needs to be to be able to deliver on time, not just yours, but working with the customer to be able to do that. And that, as I talked about earlier, that's also an area that's going to help us as we start looking at profitability for the company on a gross profit basis.

Okay. Sorry, do you mind waiting for the mic?

On the conference call, the last conference call, you talked about the improvements in efficiency. Can you just elaborate on that for us?

Yes. So what we -- obviously, the more you run, the more you run and the more you learn. And we've learned a lot of things around how our material flows about how we operate. When we brought online our bipolar manufacturing, which is a component inside of the battery module, we gained a lot of capacity and ability to get better throughput on the assets that we have. So a lot of what we're seeing is asset utilization. But when you look at, we've always talked about the line running at 10 seconds of battery module.

In the new facility, which kind of debottlenecks the layout that we have in our current factory, you go from the raw materials traveling over 2 miles from entry to shipment to customer to in the new facility, it goes 1,400 feet. So that level of efficiency drives down cost, it reduces material handling. And what we're seeing initially is that we can produce battery modules in under 9 seconds on the second line.

What I'm used to in -- given my background is you should be able to drive efficiency. And every company I've ever worked for, I was leading businesses with 100-year-old products that were getting 3% to 4% productivity every year. In a new product like ours, we should do better than that, and we should do better than that for a period of time. We just keep focused on every day getting a little bit better and using the lean mindset to improve performance.

Anybody else? Okay. I think we can wrap. Joe, thank you so much.

Thanks, Mark. Thanks for the time. Thanks, everyone.

Good morning, and welcome to Eos Energy Enterprises' First Quarter 2026 Conference Call. As a reminder, today's call is being recorded, and your participation implies consent to such recording. [Operator Instructions]

With that, I would like to turn the call over to Liz Higley, Head of Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to Eos' First Quarter 2026 Conference Call. Today, I'm joined by Eos' CEO, Joe Mastrangelo; COO, John Mahaz; and CCO and Interim CFO, Nathan Kroeker.

This call may include forward-looking statements, including, but not limited to, current expectations with respect to future results and outlook for our company. Should any of these risks materialize or should our assumptions prove to be incorrect, our actual results may differ materially from our expectations or 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 these 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.

Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to U.S. GAAP financial information, is provided in the press release. Non-GAAP information should be considered as supplemental and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.

This conference call will be available for replay via webcast through Eos' Investor Relations website at investors.eose.com. Joe, John and Nathan will walk you through our business outlook and financial results before we proceed to Q&A.

With that, I'll now turn the call over to Eos' CEO, Joe Mastrangelo.

Thanks, Liz, and good morning, everyone. We've got a lot to cover today, including Frontier Power USA, which we just announced. Before going into the quarter, I want to start with our current market dynamics. What we are announcing today is built for that.

America is rebuilding its industrial base. It is happening in semiconductors and defense, in critical minerals and advanced manufacturing. In the data centers that will power the next generation of AI, in every one of those things, every factory, every fab, every facility runs on electricity. Energy demand today is multifaceted. This is the largest reindustrialization effort the United States has undertaken in the last 75 years, and it is happening at exactly the moment when the global energy system is being rebuilt around new technologies, new fuels and new supply chains.

The grid we have was built for a different economy. The grid we need has to handle load that ramps faster, swings harder and concentrates in ways the system was never engineered to absorb. That is the opportunity in front of us. The timeline for adding new capacity does not match the speed at which advanced manufacturing, electrified industry and AI are being built.

The architecture must change, and that's where storage comes in, deploying long-duration dispatchable storage that brings capacity online quickly using existing infrastructure. That storage layer improves system reliability at the speed the market requires. That shift from waiting on transmission to building closer to demand load is one of the most consequential changes in the U.S. power market in a generation.

Layer on top of that the current policy environment, tariffs, FEOC rules under investment tax credit and Section 45X tax credits, along with the 2026 National Defense Authorization Act, all point in one direction. The energy infrastructure that powers the American reindustrialization needs to be and should be built in America. This is the market Eos was built to serve, long duration, American-made, manufactured at scale, designed to power the industries that will define the next 25 years.

An example of this is the work we are doing with Talen Energy. Talen has been at the leading edge in shaping how hyperscale power will get delivered in PJM. Earlier this month, Talen submitted more than 3 gigawatt-hours of new long-duration energy storage projects into the PJM Interconnection queue, capacity that can be powered by American-made batteries built in Pennsylvania.

Opportunities like this are one of many we are pursuing and why we are expanding our manufacturing footprint in the same Pennsylvania industrial corridor. John will walk through our plan to start initial production at our new Thorn Hill facility. But as we speak, the robots are moving, and we are debugging the line to start building non-production battery modules.

Now let's focus on our results. In the first quarter, we delivered $57 million in revenue, more than 5x the same quarter last year. Combined with the fourth quarter, we delivered $115 million across the last 2 quarters, more revenue than we delivered in all of 2025, doing what took a year in just 6 months. Underlying that, the operating signals are moving in the right direction. Cube output is up 17% sequentially. Gross loss improved by $10 million on that higher output. We finished the quarter with $472 million in cash.

Our first quarter was the shape of a company in build mode, and this was the expected cash profile that tied to our capacity expansion investments. We expect approximately $60 million of that Q1 cash to convert back onto the balance sheet with the expected next DOE loan drawdown, the PTC tax credit monetization and customer invoicing.

We ended Q1 with a $645 million backlog. That number increases meaningfully with the 2 gigawatt-hour Capacity Reservation Agreement we announced this morning with Frontier Power USA. That increase is not on a one-for-one basis with the reservation's gross value, as a portion of the agreement is expected to execute a project that is already reflected in backlog that will be financed by Frontier Power USA. The commercial pipeline we are addressing now stands at over 100 gigawatt-hours, and Nathan will walk you through the details later.

But first, there's one number I'd like to focus on. 55% of that pipeline is at 8-hour-plus duration. That is the market segment where Eos competes both on physics and on the economics. With that as a backdrop, there are three things I'd like to highlight. First, the demand is structural and is moving towards us. The Talen relationship is one expression of that. The shift in pipeline duration is the other. Customers are asking for flexible multi-hour storage paired with firm generation, siting where the grid can absorb it. That is exactly what we build.

Second, our execution is becoming more consistent, record output, sequential improvements in gross margin and adjusted EBITDA. The manufacturing line is converting our input dollars into output at a rate that's improving every quarter. We are not yet near our entitlement, but the progress is the trajectory you want to see from a company at this stage of scaling.

And lastly, I'm very excited to talk about Frontier USA. Let's move to the next slide. The single biggest barrier to long-duration storage adoption today is not technology, it's not demand. It is bankability. The technology is ready. The demand is structural. But for every project, it still has to stitch together the same 4 components, capital, insurance, project construction and an offtake agreement. Usually, this is done sequentially, one at a time.

On one side of this page, there's Eos' vertically integrated technology stack, the Z3 battery module, DawnOS advanced controls and Indensity system configuration. And the industrial service model that underpins all 3 is a differentiator, fast field service with predictable maintenance and overhaul capability borrowed from the aviation and traditional power industries.

We have engineered Indensity to hold nameplate performance across the full life of the asset. There's no more augmentation. Working as one from the cell to the system for the life of the project, we are the only American manufacturer at scale with this technology stack.

On the other side stands Frontier's project execution capability, project development, including site origination, permitting, interconnect and offtake, insurance-backed financing and asset operations across full system life. Standing behind all of it, an independent leadership team drawn from the operators and developers who built hundreds of deployments, closed gigawatts of project finance with the institutional discipline to execute this at scale. Frontier closes that gap by bringing those 2 stacks together into one platform. And in the middle, what do our customers actually get? They get accelerated deployment, guaranteed performance and a lower total cost of ownership.

This is an expected self-reinforcing growth engine. Cash flow generated by Frontier's operating projects is designed to be reinvested back into the platform, which will fund new project origination, accelerate Eos equipment deployment and compound the value of the integrated tech stack. Each project that's completed strengthens the next. DawnOS performance data sharpens our technology underwriting. Project returns, fund expansion and the operating track record build the basis for the next financing round. The equity recycles, debt capacity grows and the platform continues to scale.

Now let me walk you through how we plan to structure the capital on our next page. Frontier Power USA is expected to be capitalized in 3 layers, each addressing a distinct risk and a distinct cost of capital. The first layer is equity. Cerberus is contributing $100 million in institutional capital, paired with operating expertise that strengthens our governance, our underwriting and our access to the project finance market.

Eos is targeting a $150 million contribution funded through a pro rata rights offering, subject to traditional closing conditions. That structure is deliberate. We believe it allows our existing shareholders to participate in the upside of this platform directly through their ownership in Eos. You can see on the slide the structure of Frontier Power USA on day 1. That contribution includes an originated pipeline, an exclusive insurance offering, a structured debt financing path and an experienced management team. Every dollar of that accrues back to the platform.

The second layer, and this is the structural innovation, a technology performance insurance wrap written by Ariel Green at Lloyd's of London. Ariel Green wraps each project with a performance guarantee that converts what the market has historically treated as a technology risk into an insurance-rated obligation. That wrap is the unlock of this offering. Because of it, the third layer is senior project debt, targeting more than $1 billion and positioned to be marketed with investment-grade characteristics.

Equity from Cerberus and Eos, an insurance wrap from Ariel Green, senior debt with investment-grade characteristics, together, this 3-layer structure is designed to expand the availability of capital and accelerate the deployment of Eos solutions. That is the innovation. That is what compresses the project timelines. That is what closes the bankability gap.

Moving to the next page. Let me spend a moment on the rights offering. It's structured intentionally for the shareholders who have built this company alongside us. To fund our planned equity participation in Frontier, we intend to launch a pro rata rights offering targeting $150 million. The structure is designed to do one thing, let the Eos shareholders who have stayed with this company through the buildup of our technology, our manufacturing and our pipeline participate in what comes next.

In this rights offering, existing shareholders, including retail, would receive transferable subscription rights to participate on a pro rata basis. The rights are intended to be transferable to broaden access and preserve flexibility for shareholders. When we think about dilution, the framework is the following, shareholders who participate increase their ownership relative to the new share count, and those who choose not to participate experience some dilution.

If you look at the transition in aggregate at today's share price, with a full subscription, the overall impact is accretive for shareholders who would participate. We believe that's a very disciplined outcome, particularly given how the capital is being deployed, into assets [indiscernible] increase the long-term value per share.

We could have raised this capital from a single institutional sponsor, but chose not to. Shareholders who have backed this company through Z3, Indensity, from DawnOS and the Thorn Hill expansion should have the option to participate in what comes next. This is by design. Everything we've just talked about, the partners, the capital structure, the insurance wrap only works because the technology underneath it performs.

Now let's drill down a little further on that. We recently crossed 6 gigawatt-hours of discharge energy on Eos technology, spanning roughly 3.9 million cycles. That figure includes every electron our technology has discharged from our earliest deployments and now through Z3, which accounts for 0.5 gigawatt-hour of energy and over 1 million cycles.

The right side of the slide shows the architectural shift that sits behind these numbers. We moved from string-level battery management to modern module-level battery management under DawnOS. So what do I mean behind that? Before, a single performing module could pull down the performance of a string or 1/12 of a cube. Today, every module is now individually monitored, individually managed and individually dispatched.

The bottom left table is where the operational story turns into a commercial one, and it deserves a little bit more attention. Taking a specific site as an example, if you look on the left, you see performance before DawnOS. Average round-trip efficiency sat between 34% and 42% with standard deviations above 17 points. The fleet was capable of cycles above 70% on a balanced cycle and 30% on an unbalanced one.

I want to be precise about what changed because this is important. The energy was always there. The battery module design did not change. What changed was our ability to get the energy out of our systems efficiently. The variance you see in the Before column was driven by batteries becoming unbalanced, translating into lower string performance. Energy that was physically present in the batteries could not be discharged because the control architecture could not isolate and route around batteries discharging at different rates. This was not a chemistry limit, not a product limit. It was a limit in our control system.

DawnOS, paired with a module-level BMS, solved this challenge. The system now balances itself dynamically, maximizes discharge across every module in the system. This result is the After column, the average round-trip efficiency in the low- to mid-70s, with standard deviations now reduced to 5 to 8 points with a maximum performance of 88%.

There's 3 implications behind those numbers. First, on the installed base, DawnOS is being deployed across systems already in the field. It is the architecture that allows us to meet performance commitments consistently and at scale. This work carries a cost, and it is a manageable headwind that is more than outweighed by the performance improvement unlocked for our customers. The After column on this slide is what bankable Z3 performance look like, and it applies to the fleet, not just new shipments.

Second, our field fleet now shows a pattern that's worth discussing. Across every discharge band, 0 to 3 hours, 3 to 6 hours and 6-plus hours, the round-trip efficiency in an operating dispatch window holds in the high-70s on average and can push up into the 90s at its peak. It does not degrade as duration extends.

For other chemistries in the market, long duration is either a tax on efficiency, meaning it comes in lower, or a decrease in the product's useful life, which means faster augmentation. For Eos, it isn't. And the gap between average and peak at each duration band is the dispatch headroom, the efficiency that's already inside the asset waiting to be captured by the DawnOS architecture.

Third, the variance reduction is what makes that performance financeable. The gap between an average cycle and a max cycle compressed from roughly 30 points to around roughly 10. Project finance and tax equity counterparties underwrite to consistency, not to peaks. We are now delivering both, and we expect further improvements with increased DawnOS operating hours. As we learn, the system will get better.

Let me close with this. The market we are operating in today is the market this company was built for, American-made, long duration, bankable, deployable at scale. We have developed the technology and are scaling manufacturing and proving the product in the field. With Frontier Power USA, we are announcing the platform that we believe lets us deliver everything we have built to customers at the speed the market requires, at the scale that converts an industry tailwind into shareholder returns.

With that, I'll turn it over to John to walk through our operational performance.

Thanks, Joe, and it's great to be back with everyone. Today, I want to focus on where we are operationally and how that progress is positioning us for what's ahead. The teams in Turtle Creek and now at our new Thorn Hill facility have made tremendous progress advancing our operations. We're beginning to see the returns on the investments we've made over the last year to drive productivity. And importantly, we're doing more with less.

In Turtle Creek, we've achieved quarterly records across several key operating metrics and delivered meaningful improvement compared to the fourth quarter. Cube output increased 467% versus Q1 '25 and was up 17% sequentially from Q4. Direct labor per cube is down 47% year-over-year and 25% quarter-over-quarter. The year-over-year step reflects a 16% reduction in man hours per cube from bipolar automation. The sequential step reflects a 6% reduction as yield and efficiency improvements reduced overtime and temp labor.

This level of production translated into financial performance, with margins improving by approximately $10 million quarter-over-quarter as material costs came down and output scaled. This is the headline, and it is the clearest signal yet that the manufacturing system we have been building is beginning to deliver.

Two metrics moved against that trend this quarter, and I want to address both directly because they are deliberate. Material cost is up 4% year-over-year. That is the cost of transitioning from the prior BMS to DawnOS in the middle of last year. As Joe just discussed, we're seeing the results of the operability of the system, and we are working a program to simplify the design, reduce part count and optimize manufacturing. You can see it in the sequential number. Material cost is down 5% quarter-over-quarter as supplier optimization and design improvements take hold.

The trajectory is right, and the year-over-year line will follow. How we drive that trajectory matters. At the supplier level, we are running disciplined commercial performance through structured negotiations, clean sheet should-cost models and volume leverage. We are resetting legacy cost positions where needed and aligning pricing with market realities, building partnerships meant to hold up over time.

We are also pursuing new suppliers where it creates structural advantage, qualifying new suppliers in competitive locations, reducing single-source dependence and ensuring competition in every category of spend. At the material level, we are identifying alternate opportunities across resins, electronic components and metals, where form, fit and function can be maintained or improved at a lower cost point.

The second metric, manufacturing overhead per cube, is down 43% year-over-year and up 10% sequentially. We made that choice. We invested in equipment spares and maintenance capability to increase battery line uptime, which lets us run the factory with less labor and more output per shift. The 54% reduction in direct/indirect labor man hours per cube tells you the math is working. We will continue to invest in areas where that investment takes variable cost out of every cube that follows.

Now to Thorn Hill, because this is the program that scales what we have proven at Turtle Creek. Building readiness is complete. Line 2 power on is in process. Initial production is on track for the end of Q2, and we expect full production to occur in Q4.

Thorn Hill matters for 3 reasons. First, it is purpose-built around the lessons we have learned. Every automation step, every layout decision, every piece of equipment builds on the progress we have made at Turtle Creek. Spending time at Thorn Hill, I see the energy and pride of what the team is creating, a world-class operation that will deliver for our customers and shareholders.

Second, as we've been saying, the volume step changes the cost equation. As output ramps, fixed costs spread across more cubes, supplier pricing improves with committed volume and the labor and overhead efficiencies we are already showing on a per cube basis compound. Third, Thorn Hill positions us to compete on cost in a market that is moving fast. Our customers are sizing projects in gigawatt-hours, not megawatt-hours. And the asset base we are bringing online is what allows us to meet that demand at a price point that wins.

Stepping back, none of this is the result of a single quarter of effort. It is the output of an organization that has made lean methodology and continuous improvement the way we work, not a program we run. Every cube coming off the line is an opportunity to take cost out, take time out and put quality in. While we have made strides in all aspects of our operations, there remains plenty of additional opportunities to drive cost out. We have a comprehensive plan and actions to continue addressing these. That is our focus. That is how we are building this company, and that is how we drive towards gross margin profitability.

Thanks, everyone. With that, I'll turn it over to Nathan.

Thanks, John, and good morning, everybody. Starting on the commercial front, we ended the quarter with $645 million in backlog, representing 2.6 gigawatt-hours of storage after converting $57 million to revenue in the quarter. There have been two important updates since quarter end that will further increase these figures.

First, we entered a 2 gigawatt-hour firm capacity reservation agreement with Frontier Power USA to deliver several projects in its initial pipeline. As Joe talked about, one of the key components of any project is bankability, and we have several late-stage opportunities that are at the financing stage. Frontier USA provides an attractive alternative, allowing these customers to not just move forward, but to move forward at a lower cost of capital, giving our customers an advantage while generating returns for Frontier.

Second, we are expanding an existing project with a Southeast utility from 4 hours to 10 hours in duration, along with a full system upgrade to DawnOS. The customer chose to scale with Eos rather than diversify and to do so by adding additional capacity and duration. Both signals matter as more regions move toward longer-duration solutions to absorb load growth and data center demand.

Now turning to our pipeline. Total opportunities increased to $24 billion, representing 107 gigawatt-hours, which is up 3% sequentially and up 56% year-over-year. Average pricing in the pipeline reflects the project mix, with an increased percentage of large-scale Indensity deployments where unit economics improve with project size and where we remain competitive on a delivered cost basis.

Demand remains strong in both PJM and MISO. Working with Talen Energy, we are developing several large storage projects at their existing sites ahead of PJM's reliability backstop procurement process later this year, as Joe discussed earlier. In addition, we have a few customer projects that are progressing through permitting ahead of upcoming NYSERDA submissions. Each of these projects are progressing based on their standalone economics, with the bulk energy storage program as additional upside.

We continue to see increased engagement from utilities and utility-backed developers who are looking to own assets that support rising demand and grid reliability. At the same time, interest from hyperscalers in AI-driven projects continues to accelerate. These customers need reliable, dispatchable power and behind-the-meter solutions that respond in milliseconds to the duty cycles that AI inferencing imposes.

So what does that mean? Continuous rapid charging and discharging through deep erratic swings that are sustained over hours or even days. Eos is engineered for this profile. We have fully validated it at our Edison facility, from the Z3 module through a full Indensity core system using real data center load profiles. We've demonstrated consistent responses and stable performance across every transition.

That performance is why speed-to-power matters, and it is the foundation of our joint development agreement with TURBINE-X. Combining their access to additional gas-fired generation with our Indensity solution, we deliver fully integrated power systems for data centers and other applications. This agreement targets 2 gigawatt-hours of storage over the next several years, with initial deployments in 2027. TURBINE-X's newly announced Texas manufacturing facility strengthens that execution as projects move from development to deployment.

Now shifting to our financials. We delivered a strong first quarter, generating $57 million in revenue, up 445% year-over-year on more than 5.5x the production output of a year ago. In the last 2 quarters combined, we delivered $115 million in revenue, more than all of last year. Revenue was roughly flat quarter-over-quarter as project mix shifted with more cubes being delivered, while AC scope, including things like transformers and inverters, has decreased. We expected to recognize a few million dollars of AC scope and commissioning revenue in the first quarter, but customer site readiness delayed some of this revenue into future periods.

On the cost side, our automated manufacturing strategy is producing real gains across productivity, capacity, quality and unit cost. Gross loss for the quarter was $44.4 million, a 157 percentage point margin improvement year-over-year, driven by higher production volumes and continued product cost out. On a dollar basis, gross loss improved 18% sequentially as production volume increased 17%, reinforcing the trajectory in unit economics and operating leverage.

Excluding noncash stock-based compensation and depreciation and amortization, adjusted gross loss for the quarter was $39 million, a 133 percentage point margin improvement from the prior year. Operating expenses increased 23% year-over-year, reflecting targeted investments in supply chain, new product introduction and additional engineering talent to support scaling and product cost-out initiatives. About 17% of total OpEx was noncash-related.

We reported positive net income of $509 million. Due to our capital structure, net income is heavily impacted by changes in our share price and the noncash fair value accounting adjustments, primarily mark-to-market revaluations of our warrants and our derivatives. Adjusted EBITDA is the real operating measure to focus on here, where we ended the quarter with a loss of $68 million, a 294 percentage point margin improvement from the prior year. Now as we look to the rest of the year, we remain focused on disciplined growth and continued cost reductions.

Three quick things in closing. First, we are reaffirming our 2026 revenue outlook range of $300 million to $400 million. Second, our upcoming shareholder meeting is on June 3. Five proposals require shareholder support, and 1 carries a 67% approval threshold. Among the proposals is an increase in our authorized share count, which is required to support the Frontier investment. More broadly, maintaining an appropriate balance of authorized but unissued shares is standard corporate housekeeping and allows us to take advantage of strategic opportunities in the market. We are asking all shareholders to vote.

And finally, I am pleased to welcome Alessandro Lagi as Eos' incoming Chief Financial Officer. Alessandro brings deep public company finance leadership and track record of scaling industrial businesses through commercial inflection. He officially joins us in June, and his arrival allows me to return my full focus to commercial growth.

With that, thank you for your time today, and I'll pass it back to Joe.

Thanks, John. Thanks, Nathan. Thanks, everyone, for listening. I'm really excited to work again with Alessandro. We worked together earlier in our careers. I'm excited about his background in the energy industry and also very excited about his experience that he has in Johnson Controls across a multitude of global positions. I think Alessandro brings the right industrial background as a CFO to help us continue to scale the company.

I'd also like to take a moment just to thank Nathan for him holding down both seats here for an extended period of time and look forward to Nathan moving back over to focus exclusively on the commercial part of the business and continuing to grow Eos.

With that, we'll wrap up our prepared comments and turn it over to the operator for any questions. So let's open up for Q&A.

[Operator Instructions] Our first question comes from Mark Strouse with JPMorgan.

I just want to start with Frontier Power. Maybe can you talk -- I just want to make sure I'm thinking about this right. The initial investment from Eos and from Cerberus, can you talk about how many gigawatt-hours that would finance? And then to the extent that this does indeed grow, like you envision, can you just talk about kind of the capital stack for future projects, what the equity check would look like and what Eos' potential contributions to that equity check would be? Would you continue to participate? Or would the ownership percentage kind of dwindle down over time?

Mark, thanks. Look, I think the initial -- as we discussed, the initial capital cycle we're thinking about is leveraging that with debt. We're targeting around 5x leverage. That's why we have -- that's going to depend on where we come in on the rights offering. I think on the incremental questions of future investment and equity and where we go from there, look, the program is designed to recycle capital in from the returns on projects to continue to grow.

It's the classic flywheel that I talked about in my prepared comments. But I think it's a little bit too early to talk about what we would do as we're launching the platform, what we would do in the future here. So we'll take that as it comes, but we're very excited about being able to pull everything together because it's going to speed up discussions as we go through the pipeline and opportunities that we have and get to faster order closure.

Okay. Okay. And then just a quick kind of accounting follow-up, I guess. Given the 49% equity -- 49% stake, can you just talk about the rev rec? As you're delivering products, will you recognize that fully in the income statement? Is there any kind of below-the-line adjustments we should be thinking about?

Yes, I think this would be a typical equity investment. The revenue would come through the income statement just like it would if it was a direct sale to a third-party customer. The only difference would be we will break it out as a related party line up at the top of the income statement. But otherwise, you will see the full impact of the revenue in the income statement.

Yes, Mark, I think it's important just to note, it's arm's length. Frontier will have their own Board of Directors. They'll have their own management team, which we'll be announcing here shortly. I'm pretty excited about the people that we're talking to come in and run this.

But everything will be fully negotiated, as was the capacity reservation agreement for the 2 gigawatt-hours from a pricing standpoint, down payment and terms on that contract. It's all done as an independent company, independent third party. With our minority stake in that, obviously, the minority stake will be treated, from a Frontier standpoint, below the line.

Our next question comes from Martin Malloy with Johnson Rice & Company.

Congratulations on all the progress. My first question is on Frontier Power. Just wanted to try to maybe get a sense of customer conversations that you've had around this and how soon we should anticipate offtake agreements or project announcements utilizing the structure?

Look, I think this is -- as Joe talked about in his prepared remarks, we have a number of customer opportunities in our pipeline that are working on financing as one of the critical components of a successful project. This creates an attractive alternative for financing, a lower cost of capital, given the way we're structuring this.

So we're going to make the introductions to a number of customers. You see in the initial pipeline, there's a handful of projects that we're in active discussions on right now. I think there's a good chance we will be delivering on volume associated with some of those initial projects in 2026, but this really builds momentum going into 2027 and beyond as well.

And Marty, I think the big thing here I'd like to talk about is the advantage that it gives us. We were doing the lion's share of this work on a lot of the opportunities in the pipeline, but doing that transactionally on a project-by-project basis. And this now gives us a structured platform with the insurance wrap, raise the debt, get investment-grade characteristics, have an equity stake, allow our shareholders to participate in the returns on financing and really accelerate the conversation.

Because you're not going through the process of, let me apply, let me then pick my technology, then let me go through and understand my revenue stack, then let me go and get my financing, then let me go and do how I'm going to construct and build and go through that process to get to the first discharge cycle of the system. We think with this setup, we're going to be able to accelerate all that because we'll bring a pre-structured solution to customers as they come with projects for us to be able to sell our technology into.

And then for a follow-up question, just wanted to ask about reaching adjusted gross profit margin positive. I believe previously, you said second half '26. And with the operational improvements that you cited, can you give us an update there and degree of confidence in reaching that?

Yes, Marty, I mean, we're still targeting gross margin -- adjusted gross margin positive later this year, really driven by a lot of the things that John talked about in his remarks. He's making great progress on cost out, both on materials, direct labor. And then as we get the Thorn Hill facility up and running, we continue to see improvements in indirect labor and overhead and throughput as well. So that's really the driver of it, and we believe we will achieve positive adjusted EBITDA before the end of this year.

Our next question comes from Julien Dumoulin-Smith with Jefferies.

This is Hannah Velásquez on for Julien. Congrats on the quarter and congrats on the Frontier Power announcement. Similar to my other peers, I had a question on that one. So just to give us a sense of the backlog impact, I realize the 2.6 gigawatt-hours that you announced is as of quarter end. But what would your backlog be if we included the Frontier Power addition? Is it as simple as adding the 2 gigawatt-hours? Or is it on a project-by-project basis? I'm really trying to get a sense of what 2Q could look like from a backlog expansion perspective.

Yes. Look, I think it's too early to give where the backlog is going to be because there's other things in motion. What we said was you don't do it on a one-for-one basis because there's a project in backlog that will probably be converted and financed through Frontier, as I said in my prepared remarks. But we're not prepared today to give a midpoint or a forecast on backlog at the end of the quarter.

Okay. And just as a follow-up question separately on ASPs. I know you talked a bit about the downward trend line being attributed to mix. But is a portion of that downward or that deflation related to the competitiveness of lithium iron phosphate? Any detail there would be helpful, especially to get a sense of where ASPs could trend longer term.

I think looking at the pipeline is the best indication of where we see longer-term trends, and it's really driven by larger-scale projects that we're currently quoting with Indensity Core and the associated efficiencies gained with those larger-scale projects. But I think the best view of longer-term ASPs from our perspective is what you see in the pipeline. I mean those are active projects that we're actively bidding on, and that's how we're looking at it.

Our next question comes from Patrick Ouellette with Stifel.

It's Pat on for Stephen Gengaro. You reiterated the initial production for the second line for the end of 2Q. Just curious if you could touch on any key steps between now and then whether that's yields, throughput, things like that? And then how you're thinking about the ramp of the second line through the second half of the year?

Yes. And before John jumps in and goes through where we are on that, what I would say is when we go for our weekly review of progress up there, the team is making phenomenal progress in bringing the lineup. And every week, it looks like a totally different facility from the week before. And in fact, this week, we had a candidate come in to interview for a position at Eos who was a customer. And they had been in Turtle Creek and the interview started off with, I'm really impressed by what I saw because I was here 2 years ago. When can I start?

And I think those are the types of things you like to hear where people have reference points. And I think John and the team have done a great job positioning us to be able to deliver. And you see it in the numbers, but I'll turn it over to John to talk through where he's at with the program of really implementing lean. Lean manufacturing is the way we work.

Yes. So the line is completely installed. We're powering up all sections and doing debug currently. So we're on track to basically start production in June.

Okay. And so with the second line coming online and the rollout of Frontier USA, is there a way you're thinking about production and deployment off the 2 lines together and how that gets allocated just, say, to existing backlog and to Frontier USA?

Yes. So I think, look, a little bit early to comment on that one. We've got a range in the revenue, and that ties to how the lines ramp. What we're being very careful of is how the lines ramp up before making a commitment and really seeing what's happening.

We feel really good about it, but we want to see where we're at. We have a lot of optionality that we're going through and looking at as far as running 2 lines and 2 facilities, running 1 line in 1 facility, potentially future consolidation into 1 facility. Those are things we're going to be working on here over the next couple of months, and we'll come back with news on that as we solidify our plans around what we're going to do.

And our next question comes from Jeff Osborne with TD Cowen.

Just two from my side. Nathan or Joe, I'm trying to understand, since you brought up project financing, that seems to be a big topic on the call. Can you just walk through what the historical challenges were around traditional project finance with traditional banks? And then what led you to the structure? I'm just trying to understand what those obstacles were and then if that's ever an avenue for future growth beyond the Frontier USA.

Jeff, we would continue. I wouldn't call it obstacles. What I would say is we're coming at this with a pre-engineered solution. So the same banks that we're talking about will be the same people that provide debt into Frontier Power. What we've structured around this is instead of -- think about this.

Instead of doing this on a transaction-by-transaction basis, we're doing it on a platform basis, where you have the debt there wrapped by the insurance. So rather than going in, understanding, talking to the bank, bringing in Ariel Green, we had all the elements there before, we're putting it in a structure now where we can offer it faster and in an offering that allows the customers to get to closing and start an NTP, notice to proceed, faster.

I think when you look at this, we're excited about where we are, because near term, the Frontier pipeline far exceeds any implied -- going back to the earlier question, any implied capital raise in the platform. We've got a pipeline of opportunities that allow us to move faster and bring in expertise to help us close the job, close projects. At the same time, it allows us on the Eos technical stack to really focus on running the company, executing, delivering, taking cost out, building and improving around our controls architecture and DawnOS and having alongside of us a financial team and financial experts that can help us accelerate those conversations with customers.

Got it. And then just switching gears. You mentioned the Southeast utility. I think there was a large project last summer in 2025 that went live earlier this year. Can you just walk through what's specifically involved to move an existing project that's already installed and producing electrons at a 4-hour pace, moving to 10 and then installing DawnOS? Is that a complete overhaul of the power electronics, but the battery array and systems themselves are in place and not changed? It's just unclear, what led to that change.

Yes. So Jeff, it depends. So there's a couple of things in the question. So I'll try to take them one by one. So a 4- to 10-hour system with Eos, there's nothing to change other than the way you operate the system. That's the beauty of the technology.

The upgrade to DawnOS, that's a change out of the software. Obviously, we need the new printed circuit boards installed on the equipment. And there are, depending on the generation of technology -- like we've talked about, we've evolved our BMS over time for the Z3. There's 3 configurations out there. Depending on what configuration you have, like configuration 1 and 2, you've got to change the wiring plus the boards. Configuration 3, it's boards, and you run the BMS.

We do this on a project-by-project basis, but the performance that it unlocks and delivers to the customer warrants us doing this. We ran a -- as an example, we ran a 1-hour cycle yesterday, 1 hour at 84% round-trip efficiency. That's the type of performance we want to deliver in the market, and it's going to open up new revenue stacks for our customers and also allow us to put more product out in the field.

Perfect. Very quickly, one last follow-up on Frontier. I think Bloom did something similar years ago with Southern Company and had challenges around field performance. Can you just acknowledge what the reliability requirements are as part of Frontier Power as it relates to how your units have been running the last year or so relative to the expectations of that financial structuring? Is there any material changes that need to play out as it relates to field reliability over time?

No, Jeff. None at all. And I think like -- we just got to be careful here. The technology -- the underlying technology in the batteries work. As I talked about in my prepared comments, this is unlocking the performance that were in the batteries with the software that we need.

Now what's interesting is we've brought some people in to work inside the company that have many years of experience owning and operating lithium-ion systems. And lithium-ion has the same thing that we're talking about. What our new project lead says is that she remembers moving lithium-ion battery packs around to balance. You don't need to do that with our system. So this is something that's there, and we think our software controls and unlocks performance that isn't there for other technologies.

And one of the challenges that we had in our first generation that we put on the Z3 is, for speed-to-market, we installed an underlying printed circuit board and a core BMS that was used in lithium-ion. It just doesn't match up and give us the level of granularity you need to maximize performance. So getting a system, Jeff, that can go from a 1-hour and 83% round-trip efficiency up to a 10-hour, 12-hour discharge that then gets up approaching the 90s, to be able to do that on one system, as far as we know, there aren't any other products out there that can do that.

You're talking about -- if you look at a flow battery, like a vanadium flow battery, very low footprint, power density. And what we do, 6.4 megawatt-hours, a vanadium battery probably does under 0.5 megawatt at 50% round-trip efficiency. We're in the mid-80s on regular cycle. So we like the performance that we have. We like what the team is developing, and we like having Frontier Power alongside of us to accelerate decisions.

And yes, as in any product, we're always going to work on improving the reliability. And what Frontier Power unlocks, Jeff, and kind of the thing for us that opened the door was, when you look at how we designed Indensity, right, you take this flexible battery module, this low -- ability to control each module with a controls platform, with Indensity, a light bulb went off, where -- I was sitting there talking to Jeff Bornstein, who's on our Board, and saying Indensity is like an aircraft engine. Indensity is like an aeroderivative gas turbine. We can swap out modules, as you have to, and maintain nameplate performance.

What we're going to change with energy storage with Indensity is we'll guarantee nameplate for the life of the project. There's no more talking about augmentation. It's running it like an industrial asset, like you see with a gas turbine, or with an aircraft engine that you don't do the service while it's on the wing of the plane. You swap it out and keep going. That's what we've designed, and we're excited to bring that to market.

Our next question comes from Ryan Pfingst with B. Riley Securities.

First, can you talk more broadly about the competitive landscape and maybe any additional color on what customers have been indicating in terms of duration preferences?

Look, I think consistent with what we've said historically, and we see it increasing as customers continue to need longer-duration solutions. Market fundamentals have shifted in many of the markets. You're seeing programs like the NYSERDA bulk storage procurement. You're seeing PJM come out with the reliability backstop, Ofgem's Cap and Floor program in the U.K. that we've talked about previously.

I mean markets are recognizing that they need longer duration for grid reliability as well as to service the demanding load profiles that the increase in data centers is having on the grid, and long duration is the perfect solution for that. Joe already talked about the ability to run 1-hour cycles, 12-hour cycles from the same asset.

When we look at the erratic use cases of the hyperscalers, being able to ramp up and ramp down within milliseconds and do that many, many times a day, I mean, it's an abusive use case, and our battery is specifically engineered to handle that. And we're very excited about the technology and how it's designed to handle that. All of that lends itself to increasing durations and flexible assets, which we've got in the Z3 technology.

And Ryan, what I would just add on top of Nathan's comments is to simplify conversations, we make it sound like you're running 1 cycle a day every day multiplied by day. And that's not how the grid works. That's not how these assets will be utilized.

I don't view -- Nathan used some words about like a harsh and -- that's just the way AI is going to work. An inference -- if we all go on our phone right now and type something into an AI engine, you're creating an inference session. You're creating a spike in power demand. You're going to have to do that in milliseconds. The product does that.

When you do a large learning on AI, you need power for long periods of time. We're the buffer in the asset that can do both of those things successfully. And the way Indensity is set up, we can do both of those things on the same installation. Why? Because DawnOS can be parsed out into different parts of the system. So you can run an inference system on one part of it and a large learning system or long duration on another part of it.

It's about flexibility and giving the grid the shock absorber it needs as the power demand changes over time. And it protects core fossil assets from that variability. It's not just about, hey, we're doing solar plus storage or wind plus storage. It's anything plus storage that gives you frequency regulation, and we've got a product that can do it that's proving itself every day out in the field that customers are coming to us. And with Frontier Power, we now have the ability to accelerate those conversations.

Appreciate that. And then maybe a follow-up on that last comment. It sounds like Frontier Power will be key for order conversion. Are there any other gating items that you feel like you've addressed with customers in recent months that should benefit order conversion this year?

Look, I think some of the biggest things that are going to help order conversion are going to be the need for power and doing things faster than we've ever done before. I think, again, showing the operating performance of the product out in the field and then taking use cases from customers and running those use cases and showing that we can meet those use cases, that gets you to those decisions that are going to convert orders.

We feel good about the pipeline we have, the relationships we're building. Nathan talked about TURBINE-X. I think it's great to be with somebody like TURBINE-X that comes at this market with the philosophy of bringing aeroderivative-type technologies to different load cases. And partnering with them -- because you've got to remember, this isn't just like you plug -- this isn't building a LEGO set, right? You don't just plug things together, and there's your power plant. You have a controls architecture underneath, you have a controls architecture on top of it.

And the reason why we're working with people like TURBINE-X, people like FlexGen, which we've already talked about, is we can align those controls beforehand and get to power faster. Getting to power faster is what the market and our customers need, and that's what we're building.

Thank you. This concludes the [ question-and-answer session ]. I would now like to turn it back to Joe Mastrangelo for closing remarks.

Well, thanks, everyone, for listening today, the questions. We look forward to continuing to build a great company. The one thing I'll tell you that won't change about Eos is dedication of this team to building a great company.

We're really excited, obviously, about the Frontier Power partnership that we're building. The ability for our shareholders to participate in that makes me very excited personally because they've stood by us through trials and tribulations. We'll continue to grow the company, continue to improve performance and continue to build something that we all can be proud of. So thanks again, everybody.

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

Good morning, and welcome to Eos Energy Enterprises' Full Year 2025 Conference Call. As a reminder, today's call is being recorded, and your participation implies consent to such recording. [Operator Instructions] With that, I would like to turn the call over to Liz Higley, Head of Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to Eos' Fourth Quarter and Full Year 2025 Conference Call. Today, I'm joined by Eos' CEO, Joe Mastrangelo; COO, John Mehas; CTO, Francis Richey; and CCO and Interim CFO, Nathan Kroeker. This call may include forward-looking statements, including, but not limited to, current expectations with respect to future results and our outlook for our company. Should any of these risks materialize or should our assumptions prove to be incorrect, our actual results may differ materially from our expectations or 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 these 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.

Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to U.S. GAAP financial information is provided in the press release. Non-GAAP information should be considered as supplemental and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same or as comparable to similar non-GAAP measures presented by other companies. This conference call will be available for replay via webcast through Eos' Investor Relations website at investors.eose.com.

Joe, John, Francis and Nathan will walk you through our business outlook and financial results before we proceed to Q&A. With that, I'll now turn the call over to Eos' CEO, Joe Mastrangelo.

Thanks, Liz. Good morning, everyone, and thanks for joining us. This quarter, we continue to operate in an energy environment defined by one clear trend, the acceleration of demand for power, combined with constrained grid flexibility and reliability. That creates opportunity for a company like Eos. What we've been talking about over the 5 years that we've been a public company is being able to bring a product that was flexible, reliable and can do multiple discharges in a day or long or short discharges with quick response times. That's exactly what the market is looking for.

And although data centers are in the headlines and data centers are changing the way that we think about our grid, and data centers are requiring us to make decisions on faster time horizons than we've ever done before in the energy sector, there are other demand drivers in the industry, things like electrification and transport and also electrification of heating and then the increased domestic production in the United States are creating higher load growth for a grid.

That fits in perfectly with our technology. We're moving to in energy storage is moving away from managing volatility to providing reliability. What you need is this buffer resource that allows you to keep the grid balanced but also allows you to adapt to quick changes in load growth. But a vision of a product and a vision of a company only goes so far, execution is what counts. And when you look at our quarter and our year, yes, we set records. Our volume was up. Our margins improved sequentially quarter-over-quarter and year-over-year. We had a great quarter as far as orders being booked, and Nathan will talk about how those orders fit into different use cases that are going to provide growth for the company in the future. But the bottom line is we missed our guidance, and that falls on me as the CEO of the company.

What John, Francis and Nathan and I will talk about today is building out the capabilities of our team, of our product and of how we bring that product to market and manufacture and install it to be able to provide reliable performance. And it's reliable performance not just to achieve guidance, which is important, but to achieve the operating requirements of our customer as the grid evolves and demand emerges. We think we have the product that meets those future needs. We've got to continue to build the company and continue to smooth out and deliver predictable performance for our shareholders and our customers. I think we have the team that is able to do that, and we'll show the initial results that are beginning to lay out how we can deliver reliably in the future.

When you think about on the bottom, yes, 7% -- 7x year-over-year growth on revenue, combined with our highest cash position that we've had in the company's history, along with closing the gap and moving towards profitability, we've removed the going concern language inside of our 10-K filing, which Nathan will talk about in a moment, which really allows us to really says we're operating the company strategically, which is important for the future.

At the same time, we launched Indensity, which Francis will give some more details on. But Indensity is really taking the product that we have and finding a way to package it that's easy to operate, easy to service, easy to manufacture and easy for customers to utilize multiple times in the day. It's not starting over, it's improving upon what we already have. At the same time, we're responsible to get our assets in the field up and running reliably, and Nathan and the projects team are doing just that.

As we look at the overall results, I'm proud of what we did and disappointed that we didn't meet the guidance, but we are going to work to make sure that, that doesn't happen again in the future.

Moving to the next page. Let's talk about how our installed base is expanding. Today, we cover 20% of the United States. We have 20 projects installed. The company continues to expand its footprint and continues to operate out in the field. Today, our Z3 product has discharged nearly 300 megawatt hours of power. Every cycle is a learning opportunity and every cycle is an opportunity for us to get better and to understand our customer requirements, and that's how we use it. At the same time, we do talk about concentration of revenue with a few large customers. But if you look at the lower right-hand side of this page, we had deliveries to 11 different customers, and we had revenue that came in from 18 different customers. The difference in that 7 is either commissioning and installation revenue or revenue from services on installed equipment that we did earlier.

When you look at this map, as we come in, in future quarters, we're going to add more states. We're going to target to get to 25% here over the next few months. And then at the same time, we're going to add in a map of Europe as we ship into Germany and wait for the cap and floor program to close in the U.K. We're excited about what the team is doing here. We want to give a picture of how we operate. We've talked about the operating hours out in the field in the past, and that's really where we learned, and that's where Indensity came from. These customers on this map giving us feedback to enable us to deliver a product that's going to meet the future needs of the industry while working with Nathan and John and the teams to make what we have out in the field more rugged to be able to operate flawlessly and to give customers the performance that they require.

Let's move to the next page and talk about some operational metrics. I want to start off in the upper left-hand side where we're looking at our quarterly revenue profile. If you go back to Q4 2024 and forward to Q2 of last year, you're looking at quarters that are basically growing 30%. That's basically taking our line, installing it, improving upon it and getting 30% throughput on the same asset base. Then you come into Q3 of 2025, where we started to bring bipolar manufacturing in, and you see a 2x step function from Q2 of '25 into Q2 -- Q3 of '25. Then we double it again, which is, again, bringing more of the bipolar manufacturing online. And by year-end, John will talk through that we achieved our 2-megawatt hour capacity coming out of the facility in Turtle Creek.

On an annualized basis, we're up 7x, and our capacity will support the demand that we see. What's important here as we think about capacity management and as John walks through this and I think about this, and you take what John is going to talk about and combine that with what Nathan is going to talk about commercially is you're not running the factory at full capacity at any one point in time. You're creating capacity to be able to create the opportunity for the company to grow and deliver and building in a buffer to be able to manage and weather through the blips that you're going to see in any factory. So anybody that's worked in an industrial process knows that nothing goes perfect and you got to plan for that. And that's what we're building here to get to the stable production that I talked about earlier.

We go to the bottom of the page, you're seeing a narrowing of the gap and improvement in margin. We're not at profitability yet, but we're on track. The company is structurally profitable. What we need to do now and what John will talk about is improve the efficiencies and the processes of how we operate the company. Thornhill and bringing our second line up and running is going to show us the full entitlement of how efficient we can be as a company. At the same time, you bring a lean mindset to what you do every day. That lean mindset tells you, I've got to get better in everything I do. There's waste in these numbers today. We know that.

We know we have to get better. And when you take all that in and start thinking about driving cost out of our product, taking and becoming more efficient in how we build it, getting out in the field because productivity and profitability go beyond the factory doors, becoming more efficient in how we operate in the field, and proving out and getting installations up and running faster than what we planned, that's how we deliver on profitability. And we have a clear line of sight on how to do that.

This is a profitable business when we execute to our capabilities, and that's what we're building right now. And density is a step function change in that, but Z3 Cube is a profitable product, and we will make that profitable. What Indensity does is it allows us to compete in a new way in the marketplace. It delivers better footprint density to customers. It allows us to build out capability faster. It makes it simpler to manufacture the product and Indensity gives us the ability to compete not only on price, but the ability to drive further cost out to deliver the profitability that we expect.

I'm excited about the work that John is doing and Francis is doing, and I'm really excited about what Nathan is seeing out in the marketplace. And I'll turn it over to John now to start that off and then hand it off to Francis and Nathan.

Thanks, Joe, and good morning, everyone. Great to be here with you all again this morning. Q4 was my first full quarter at Eos, and I'm going to speak candidly about where we are operationally. First, there's a real progress to acknowledge. We completed our subassembly automation, making our battery line fully automated. We closed 2025 with production records across all operations and delivered our fourth consecutive quarter of record revenue. 26 key suppliers supported this ramp to enable us to achieve our 2 gigawatt hour line capacity. That doesn't happen without a committed team doing a lot of things right. At the same time, we fell short of our operational targets, and that's on me. When we spoke last quarter, I felt confident in our ramp plan. We had strong early results and the excess capacity to deliver what we needed to hit our guidance.

Ultimately, 3 very fixable issues prevented us from delivering our commitments. First, we had one isolated supplier nonperformance that cost us a week of production. We addressed it directly, working closely with our supplier to quickly identify root causes and corrective actions. We implemented better controls internally and at our suppliers. That specific issue is behind us. Second, the ability for the automated bipolar production to hit quality targets took longer than expected. That drove rework and lost revenue. We improved tooling, reduced variation in the automation process and tightened material specifications to stabilize bipolar production. We have also added laser detection to give us better visibility and control of any process variation.

Third, our battery line downtime ran well above industry norms, the design intent of the line and our internal forecast. Best-in-class operations and our expectation is to run at roughly 10% equipment downtime. That's my expectation, and that's the expectation of our automation partners. As we push utilization higher throughout the year and ran the line for more hours, we were closer to the mid-30% range. Working closely with our automation partners, we addressed issues with our robotics, hardware, controls, maintenance schedules and spare parts. We have also improved our technical capability and strengthened our team to improve time to resolution.

Downtime has improved significantly in Q1. This is a controllable lever, and we have a path to world-class performance. None of these were demand issues, none were structural. This was a significant ramp of first-generation automation designs. While the magnitude of the issues was unanticipated by me, the resulting learnings, actions and execution are my responsibility.

Look, since I've been brought in, a major focus for me has been identifying single points of failure in the system. This was first-generation automation that was being run at high volumes for the first time. In some cases, you don't fully see those weaknesses until you stress the operation. We've now done that. It has allowed us to identify and address gaps in our automation, organization and operating system. We are systematically hardening the process to make sure these failures do not occur in the future. The results of our efforts have driven higher quality, repeatable and predictable operations in early Q1.

The biggest structural risk today is a lack of redundancy. If our primary line goes down, production stops. That changes with Line 2. And as I said on the last call, we're making design changes in that line to further improve our performance. Line 2 is progressing well and is preparing for factory acceptance testing in Wisconsin. We've intentionally built redundancy into critical stations. Once operational, eliminates our single largest point of failure and gives us flexibility that we simply don't have today.

We're also addressing efficiency. As I've mentioned before, today, materials travel across 3 floors and 2 buildings, over 2 miles from start to finish. That's not a cost-efficient design. With Line 2 and the Thornhill expansion, we're redesigning the layout around single-piece flow, significantly reducing material handling and complexity. As we work to achieve the entitlement for the line output, we have uncovered inefficiencies that result in longer end-to-end production times and higher labor costs to achieve that goal. We are fixing those challenges, and that will allow us to operate at a higher efficiency with a lower cost structure. We expect equipment to begin arriving in Q2 with fully automated production targeted in Q4.

Let me close with this. 2025 was a year of heavy automation implementation, capacity expansion and rapid change. Day 1 is never perfect. My job is to turn new capability into repeatable, disciplined operations. We've identified the gaps. We've addressed the root causes, and we're building the redundancy and process rigor required to scale reliably from here. I'm confident in the path forward and confident in the team's ability to execute it.

Let me turn this over to someone who's helped me get up to speed quickly, our CTO, Francis Richey.

Thanks, John. It's great to be joining the call today. I'm the Chief Technology Officer, and I've been with Eos for 11 years. I started at Eos when we were a 15-person company, and it's been a rewarding journey with an incredible team of scientists and engineers, developing the chemistry, battery, system and software over multiple product iterations. I'm a chemical engineer by training, and my passion is scaling and optimizing technology to build profitable products, particularly products utilizing electrochemistry.

Throughout my time at Eos, the market environment has evolved significantly, and Eos has evolved along with the market. We started with an aqueous zinc-based battery. As our technology continued to advance, we found more efficient ways to configure our systems and implement better power electronics to control performance, most recently with the Eos Z3 Cube.

Early customers simply wanted to buy a DC system of batteries, which they would integrate into larger AC systems. Now many want a full system where Eos provides batteries, software, controls, AC integration and site design, a complete project that can be easily installed and operated. Many of these storage solutions also require installation in an urban or suburban environment.

For more than 2 years, we've operated Z3 systems in the field and tested them even longer in our Edison test facility, learning how these systems operate in extreme environments. We've operated in very cold climates and also in hot desert environments with high winds that create sand and dust that can impact system operation. Look, the field is the ultimate proving ground, and this has helped us to improve system resilience and reliability as well as our software and controls, which led to the launch of DawnOS. DawnOS enables customers to manage and optimize system performance with individual battery monitoring and control to provide improved operability.

This is then where Indensity comes in. This is a product that we've codeveloped with our customers as we discuss their operating requirements and run load profiles in our Edison test facility. The same chemistry, same battery, same software and controls, different packaging and better performance. We're entering a new phase of growth and opportunity, one that differentiates Eos from any other commercially available battery energy storage solution. When we talk about Indensity as a differentiated product, we focus on 3 key elements: serviceability, cost and site energy density. The Indensity core significantly improves ease of serviceability. We took a page from the aviation industry and thought of an Indensity core like an aircraft engine that won't require on-wing service. Instead of disconnecting the entire system to service one piece of it, Indensity is designed for quick disconnect so that individual units can be safely serviced using a simple forklift, avoiding disruption of the entire system and allowing for uninterrupted operations.

This is an industry-wide advantage of our solution as we can now service each 133-kilowat-thour Indensity core without needing a crane, whereas competitors usually require a crane and the loss of multiple megawatt hours of energy during service or site-wide power augmentation. The modular core design allows units to be stacked vertically as many as 12 units high, significantly improving site energy density and allowing us to serve customers in areas incumbent technology simply can't access, such as in densely populated space-constrained locations where safety is often a key element in decision-making. This new solution allows us to easily configure systems to customer energy and space requirements.

This is an exciting time, and I've had the opportunity to lead Eos' evolution from cell testing to battery manufacturing to now providing battery energy storage systems integrated with advanced controls and software. I couldn't be more excited about the future and how our product meets the needs of our customers. Thanks, everyone. With that, I'll turn it over to Nathan.

Thanks, Francis, and good morning, everybody. Let me start on the commercial front, where we had a very active fourth quarter. And I want to start by looking at the results.

We ended the quarter with just over $701 million in backlog, booking nearly 1.1 gigawatt hours across 8 customers and 9 individual projects, representing a 9% sequential increase. During the quarter, we secured more than $240 million in new orders with a healthy diversification across commercial and industrial, distributed generation and front-of-the-meter utility scale applications. Now let me give you some background on 3 of these orders that highlight the operating flexibility of our technology and how we can work across the energy value chain in different customer use cases.

First of all, we signed a 50-megawatt hour master supply agreement with a developer in the Midwest to deliver projects that are supported by Commonwealth Edison's Distributed Generation rebate program. This program provides a $250 per kilowatt hour incentive for new energy storage systems, and we have already executed the first purchase order under this agreement with delivery being scheduled for later this year.

Now moving on to the second one I want to highlight and just as important, we signed 2 initial projects for systems to be installed at hotels in Florida with a developer that has a robust pipeline of additional projects, and we expect additional projects to materialize over the next 12 to 18 months.

And the last one I want to highlight, we secured an order from a global power company that is a focused renewable and energy storage platform to deliver a Z3 system to be installed at a national lab for integration testing. And we are actively working on large-scale opportunities with this customer, so this is a very meaningful project to show the Z3 performance capabilities.

All 3 of these projects highlight how we are building long-term partnerships that will scale into larger, more meaningful growth opportunities in the future.

Now turning our attention to the broader pipeline. We ended the quarter with a commercial pipeline of $23.6 billion, representing approximately 99 gigawatt hours of opportunity, up 4% sequentially and 64% year-over-year. Hyperscaler and AI-related projects remain a primary growth driver as we see customers looking for firm dispatchable capacity and behind-the-meter load smoothing solutions.

Leads specific to data centers increased by 50% quarter-over-quarter, while our active data center pipeline grew by more than 40%. Many of these opportunities are specifically designed for the Indensity solution. As disclosed in our public filings, Eos has been submitted for a 300-megawatt 8-hour project in the Brooklyn Navy Yard under NYSERDA's Bulk Storage procurement program.

We also have another project that was submitted under the same Bulk Storage program in ConEd Zone K with the customer that I highlighted earlier that is testing our product at the National Lab. From an application perspective, we are also seeing more opportunities shift toward colocation with generation assets, including both natural gas and renewables. These applications typically require longer discharge durations. And as a result of this shift, we are now seeing 63% of our pipeline consisting of 8-hour or longer systems.

I want to highlight PJM for a moment, where we've seen recent capacity market reforms with sustained elevated clearing prices that are improving the economics for long-duration storage. This aligns very well with our framework agreement that we have in place with Talen.

In addition, Bimergen, a long-term partner that is publicly traded on the New York Stock Exchange, announced their technical selection of the Z3 system for the 400-megawatt hour Redbird project in ERCOT. Following this project, there is an additional 2 gigawatts of project development pipeline that spans ERCOT, PJM and MISO that we are currently working on.

Overall, we are seeing very strong near-term backlog growth, combined with sustained long-term pipeline expansion, both of which are positioning the company very well as demand for integrated long-duration storage solutions continues to accelerate.

Now shifting over to the financials. We have a lot to be proud of. And as Joe and John mentioned earlier, we are focused on the work ahead of us that will deliver profitable growth. Now let's step back and look at 2025. It was a year full of real operational progress. We exited the year having full automated battery module manufacturing. We've implemented continuous process improvements. We launched DawnOS, and we executed multiple product component cutovers, all while scaling production significantly. These foundational moves are now clearly translating into financial performance.

We delivered our fourth consecutive quarter of record revenue and an additional consecutive quarter of gross margin improvement as production volumes ramped and subassembly automation went into production. In the fourth quarter, we generated $58 million in revenue, nearly double Q3. We exceeded the combined revenue of the first 3 quarters of 2025 as well as all prior year revenue combined since the company went public. We delivered $114.2 million in full year revenue, more than 7x year-over-year growth.

As John highlighted earlier, subassembly automation represents a meaningful inflection point in our manufacturing strategy. It expands available capacity, it improves product consistency and quality, and it enhances labor productivity, ultimately lowering overall unit costs. While this is only beginning to contribute late in Q3, what we saw in Q4 reinforces our confidence in how this business scales. As volumes increase, we are seeing improved fixed cost absorption, driving continued margin improvement.

Gross loss for the year was $143.8 million, a 408 percentage point margin improvement year-over-year, driven by significantly higher production volumes and continued product cost out. This quarter, we introduced a new non-GAAP metric, adjusted gross profit. This excludes stock-based compensation and depreciation and amortization, and we believe this provides a clearer view of core operating performance and better aligns us with industry peers. And on that basis, adjusted gross loss for the year was $128.5 million. 2025 operating expenses came in at $115.4 million, up 26% year-over-year, reflecting the targeted investments to support scaling initiatives and further enhanced product solutions.

Throughout the year we've invested in engineering, launched DawnOS and Indensity, we closed multiple financing transactions, all while bringing in high-impact new talent into the organization. Of the $115 million in OpEx, $25 million or 22% was comprised of noncash items, primarily driven by stock-based compensation and depreciation and amortization. The net loss for the year was $969.6 million compared to $685.9 million in the prior year.

Importantly, these results included $746.8 million of noncash impacts related to the fair value accounting adjustments, refinancing and other nonoperating items. The largest driver of the loss was from the 135% year-over-year increase in our stock price, which resulted in mark-to-market revaluations of both the warrants and the derivatives. Now as our share price continues to move, this line item will continue to fluctuate, and it is not tied to company operations.

And with that, we finished 2025 with an adjusted EBITDA loss of $219.1 million, showing an 812-point margin improvement. While up year-over-year in absolute dollars, the margin improvement and the 632% revenue growth demonstrate improving unit economics and operating leverage as we continue to scale the business. These gains were driven primarily by the operational efficiencies from increased manufacturing capacity and from higher production volumes.

Now turning to cash. We ended the year with just under $625 million worth of cash on the balance sheet, the strongest cash position in the company's history. Over the course of the year, we were very intentional about strengthening our balance sheet, and that really culminated with the refinancing that we completed in November, where we retired 80% of our existing 2030 converts, we reduced our interest rate by 500 basis points, and we added $474 million in cash. And we were able to free up an additional $11.5 million in restricted cash.

Additionally, with the exercise of our public warrants, we also generated approximately $80 million in gross proceeds. And as a result of all these actions and our current company outlook, we have removed the going concern language that we have had in our filings in prior years. This is a significant milestone that reflects the strength of our cash position and the continued improvements in our underlying operations.

Now taken together, 2025 was a foundational year for the business. We expanded customer relationships. We advanced key partnerships. We've scaled our production. We've implemented automation. We've improved our margins, and we've launched both a new software and a product configuration that builds on our existing technology while addressing the evolving market needs.

While there's still a lot of work ahead of us, the foundation that we have built positions us well for continued growth, improved profitability and long-term value creation. And with that, I'm going to turn the call over to Joe.

Thanks, Nathan. Let me wrap up with our outlook on 2026 as we initiate guidance on revenue. You can see the progression of our guidance from 7x. If you take the midpoint of the guidance range in 2026, it's 3x what we did in 2025. We feel confident about the guidance that we're giving, given what John and Francis have talked about. And when you think about this guidance, think of it this way, the $300 million is coming from backlog. And the range to the $400 million is tied to some of the bigger projects that we talked about as they go through the normal approval processes with the grid operators where our customers will be installing projects. We're excited about the things that you see, the NYSERDA projects that Nathan talked about, working with Talen in PJM, things that we're seeing as far as states like Virginia, ERCOT growth, data center growth. We feel confident that we'll begin shipping Indensity as we get into the second half, later part of this year. And that's how we go from the $300 million to $400 million.

As we go through the year, we'll give updates on where we are against that progress. And when you also think about this, one other thing that we've never given official guidance on what we've talked about a few times in earnings, we talked about becoming gross margin positive in Q1. Unfortunately, with where we wound up in volume last year, our material costs pushed out into 1Q. That's going to delay our path to profitability as we get into 2026. But we feel very confident on the projects that Francis is bringing from a technology standpoint that John is driving from a productivity and cost out -- material cost-out standpoint and Nathan delivering better efficiency out in the field that we will be gross margin positive in the second half of 2026. And we feel very confident on the guide that we're giving on the range of $300 million to $400 million.

So with that, I want to thank everybody for listening today.

And now we'll go to the Q&A portion, where we'll start off with some of our questions that came in over the [ SAE ] tool from our retail shareholder base. Okay. First one, "As part of Project AMAZE's 8 gigawatt hour annual production targets, where does EOS expect to be at the end of 2026 for annualized manufacturing nameplate capacity?"

Right now, we're targeting 4 gigawatt hours. That's in line with the customer requirements that we have. We really want to bring -- position Thornhill for rapid expansion. As we think about how we want to do this, the goal here is to be able to bring capacity online within the window of customer demand. And that's what John is trying to do, but it's not just the capacity of the equipment that we're installing, it's other portions of the overall supply chain. I'll turn it over to John here to add some comments. But the target for the year is 4 gigawatt hours of nameplate capacity coming out of 2026. That matches with where we see our backlog. And then from there, we'll be able to add capacity as required. I don't know, John, if you have anything you want to add.

Yes. Over the last few months, we've developed multiple automation partners for automation equipment to shrink lead times. We've developed a national building partner that can deliver a building in a short period of time that's in line with our automation commitments from an implementation standpoint. And then we've worked with our suppliers to understand where their inflection points are, where they have to add additional capacity and what their time lines are so that I can stay out ahead of Nathan on from an order standpoint.

And I would just add at the end here before we go to the next question. Look, we're not out chasing volume. We're building capability. We're building capability to reliably deliver. When you flip the switch in your home, you want the lights to come on and we want to deliver a product that enables us to do that. So we're going to be very disciplined on how we do that for delivering for customers and also disciplined about how we think about our working capital and cash balances as we also expand.

If I move to the second question, "What recent operational metrics and achievements validate achieving your Q1 2026 positive gross margin target? How much of the margin expansion is dependent on the Indensity transition versus efficiency gains on the existing Z3 module automation line?"

I think we talked -- I talked about the first part of that question on the last page when we issued guidance. Look, we feel like underlying this is a structurally profitable business that needs to get better at how it executes day by day, and we have a very clear path on how we want to do that. And we've got the leaders and the capability from a team standpoint and the equipment to be able to do that. I think the pages that John talked about and the operational page I had in there shows that structural profitability, we need to just execute to get there. The Z3 Cube is a profitable product. The Indensity core is adding to provide better performance to customers, allowing us to manufacture faster and allowing us to compete on price point head-to-head with any technology out in the market.

I don't know, John, if you want to add anything to that as far as how you see profitability evolving?

Yes. If I look at it from a lean methodology, all aspects of our operations have waste and opportunity for improvement. So I look at -- I talked earlier about downtime. So reducing downtime and increasing fixed asset utilization and labor utilization. Talked about yields, so improving the yields and reducing scrap. If I look at materials, we've got several projects that are going to reduce material costs, but not only reduce material costs, but also reduce assembly time and manufacturing time. We continue to look at ways to increase run rates, look at ways to increase efficiency. And then as we get into Thornhill, we'll have an optimized cost perspective from a material handling standpoint.

We're literally going from 2 miles down to 1,000 feet. So if you consider all the material handling that goes into there, there's a significant opportunity to reduce cost in just that one item.

And I think just closing out, like John brings up a great point on Thornhill. Over time, we're going to want to consolidate the footprint into one location to capture all those synergies, and we'll be -- that will be part of the plan as we move forward and think about expanding.

With that, we'll wrap up with the SAE questions. And operator, we'll turn it over to our sell side for any Q&A.

[Operator Instructions] Our first question comes from the line of Stephen Gengaro of Stifel.

My first question is on the guidance and maybe 2 parts. One is you, a couple of months ago you had a pretty high expectation for the fourth quarter. And clearly you fell short. And now we're looking at a pretty big ramp in '26. How do you think about the components of guidance and sort of derisking the parameters you put out versus guidance historically?

Yes, Stephen, thanks for the question. First, you look at the range, as I talked about when we talked about the guidance in and of itself, we're looking at the improvements that John has implemented coming out of fourth quarter, looking at the backlog of orders that we have to get to the bottom end of the range, then looking at the opportunities that we're working on, the fact that we're bringing a new line in to give us the top end of the range. But we tried to really look at -- we tried to really look at how we can change our discipline as a company to not have happened what happened in 2025. The range is $100 million, the midpoint is $350 million.

What hasn't changed about the company is the demand that's out there for the product. We're trying to do in 2026 is better control our scale, get the manufacturing throughput quality and margin expansion that we need and really look at like where we think we can land without going for like a degree of difficulty that's a 10, but coming in with something that we can manage to over time.

Okay. Great. That's helpful. And then just -- I imagine this is correct, but when we think about the quarterly growth, I mean, I would imagine that 1Q would be above 4Q, but the low point and then escalate throughout the year. Is that a reasonable pattern?

Yes. Well, look, Stephen, so part of what we have coming in -- and we don't give quarterly guidance, but from a standpoint of coming into the year, we're coming off a high point. We're delivering to customer schedules. I think we'll be around the fourth quarter number as we look at like what we have to deliver to customers, and there's some -- there's also commissioning revenue in there as well and then from there sequentially grow.

Our next question comes from the line of Julien Dumoulin-Smith of Jefferies.

Quick question. Just going back to the comment about the $300 million to $400 million range. Can you guys comment a little bit about like what exactly those bigger projects that you're talking about are? Like which ones in particular seem particularly right, right, again, just to maybe track against the milestones this year and what would materialize? And also, if you can speak a little bit against, you've got a materially larger backlog in aggregate. What's the duration of that backlog when you think about it, just given that, call it, $300 million of it is burning off this year, if you will?

Yes, Julien, great question. Look, I think we go back on the material large stuff. Look, I think we all know the industry needs power, needs power quickly. But at the same time, we still operate in a framework where approvals and queues are long. So we're kind of hedging that. But like Nathan talked about 2 large projects in NYSERDA that when approved by NYSERDA as part of their Bulk Storage buy would go into delivery almost immediately. So like that's 2 of them in there.

We've talked about PJM and what we're doing with Talen. There's other projects that we have that we haven't discussed with large hyperscalers that could potentially come in. And then Nathan talked about what appears to be -- when you look on the surface, they look like small projects, but they're small projects with a big pipeline of opportunity that you deliver and grow and continue to deliver. And we just got to work through that. We'll keep everybody updated on that as we move forward from there.

Got it. And then just if I can follow up there. The defense space seems intriguing here. Can you comment about that end market and the opportunity you see there? What does the project look like in that space, size, duration? And just even elaborate a little bit more about what you guys were talking about a second ago in the timing of seeing some of that come to fruition. Again, how -- what does that look like?

So defense, like I think you start off with NDAA, right, which is how the Defense Department of War purchases. In the NDAA, they're being told to buy American products. And I think we have that American product. As we go through that, there's a lot of things we have to go through as far as working with different branches of the government to get approval. I think a big thing that helps accelerate us is the due diligence process that we went through with the Department of Energy to get our loan.

But like we're working through across all branches of the military to see what the needs are. And like what we're looking at is what do they need and they also have -- there's also large power growth that they have and how do we meet those needs and then we go through and show them how the product is. But also as you work with the military, there's things that we're doing to make sure that we hit all their requirements because we want to hit the ground running. But that's something that we'll continue to work on, and we are working on, and we do spend a significant amount of time down in Washington walking everyone through what the technology is capable of.

Got it. Excellent. And then lastly, if I could just ask, just given where you are coming out for '26, how do you think about the ramp of Line 3 and 4, right? So how do you think about when and the timing and scaling of that, right? Obviously, you got Line 1 and now Line 2 here. But 3, 4, it's more of a '27 question, right?

Yes. And I think, Julien, like this goes back to disciplined execution, right? It's a great question, right? So John is taking us into a new building. The new building changes the game from a throughput efficiency and cost. Turtle Creek is a fully functioning factory that's up at 2 gigawatt hours of production. It hit its nameplate capacity coming out of 2025. But if you have a lean mindset, you're constantly looking at how to get things better, how to improve on things. That goes with how you operate your manufacturing, but also how you implement capacity expansion. So what we've told John is come up with a plan that we can execute and implement lines within the window of when a customer orders to when they ship. So as things come in, we'll be able to do that.

What John has done in his time -- not only did he increase output 80% in the fourth quarter, if you look at quarter-over-quarter sequential manufacturing output, he also went in and revamped our automation partnerships, got us in with Tier 1 automation providers, broke up how we were doing the different pieces of that and positioned those suppliers to be able to come up with a framework agreement approach with them where we can put a signal into them and they can deliver faster than what we're doing on Line 2 today.

Line 2 today, part of what's happening there is it's a new building. And there's a lot of work that we got to go through, and we want to make sure that we get that right and we get that ramp right and the transition and balancing between the 2 facilities.

Our next question comes from the line of Mark Strouse of JPMorgan.

Just curious if you can comment on the competitive environment that you're seeing recently. Obviously, you guys are making good progress with your backlog, but there's one of your publicly listed peers that's traditionally in lithium-ion, they have really been talking up their long-duration pipeline in the last couple of quarters. There was a very large project, long-duration project up in Minnesota that just recently got announced. Just kind of broadly speaking, I know those are completely different technologies in both of those cases, but just kind of broadly speaking about the competitive environment would be great.

Mark, I think, first off, it points to what we're showing in our backlog about longer duration discharges coming to fruition. I think it's great to have other companies that are doing it because it just goes to show that what we've been talking about for 5 years, the market is now there. I've said this many times, like there's many different use cases, and I always draw the correlation of energy storage is going to look like gas turbine technology over time. You have different types of gas turbines that do different things with different efficiency points. So I think what was announced in Minnesota, delivery in 2028 is a great example of people looking for longer duration energy storage, longer than what we do.

At the same time, Nathan showed like our pipeline is up by -- above 40% for longer duration. And we -- and it has now become 40% of our pipeline, sorry, I misspoke, but like it's becoming more and more. And I think like established players, there's a market out there for that product. I think we've come up with the work that Francis has done and the team, we've come up with a solution that delivers in that 4- to 16-hour spot, which is going to be very important.

And look, we've been running load profiles here in our test facility in Edison, New Jersey using the load profiles of data centers. And our technology matches up great with that. So we're encouraged by that, but there's a lot of demand out there, and I think it's great. There's other players. It's going to be a competitive marketplace, and I think we have a product that competes.

Our next question comes from the line of Craig Shere of Tuohy Brothers Investment Research.

So first, can you opine on the potential margin deltas, gross margin deltas between U.S. and international orders? Does American Made help in any way internationally to the degree some trading partners want to right-size trade balances on a national level? And can you give some color on the time line for that foreign power company national lab testing and the level of prospective order flow should they deem you're having the most optimal solution?

Yes, Craig, just a couple of things inside of that. Like I think where we're seeing interest in our product internationally has less to do with politics and more to do with performance. I think people are looking at what the product delivers and less about trade balances. I think having a product where we go through and talk about the intrinsic value of it is what's attracting our customers, whether that's domestic or international. I think we're starting to plant seeds starting off in Germany. And obviously, we have a big pipeline of opportunity in the U.K. that Nathan talked about.

Just on your last point here, like the customer that Nathan talked about is a global utility that's doing testing in the United States at a lab that is tied to a project for the NYSERDA program. So like we're going through that -- and by the way, that testing is great. Like we love doing that because it gives us data to show people about how the product performs and put this through its paces. And that's where doing stuff like this, that's what brings out Indensity and improved performance on the product that we have out in the field.

And would one assume that international sales are going to be slightly lower gross margin?

No, I wouldn't assume that.

Okay. And my last question, and I apologize if my quick math is incorrect, but it looks like you burned through maybe $65.75 million in operating cash flow before working capital changes in the quarter. Thoughts about tempering that bleed as you move into positive gross margin in the second half of '26.

Yes. Look, look, our goal, as Nathan talked about, like we've capitalized the company. We are focused on being good stewards of that capital. I think as you look at that, one of the reasons why we removed the going concern for the company this quarter is that we see a trajectory to be able to manage the company strategically and for the long term. And then obviously, like there was a ramp into a build plan that then levelizes, but then we'll ramp again. So we manage through that. But like as we look at where the company is, we have cash to be able to grow it over the long term.

Our next question comes from the line of Jeff Osborne of TD Cowen.

Just a couple of quick ones. I think last quarter you mentioned that the yield on the bipolar line that started, I believe, in July was 98%. I was wondering what the fabrication yields were in the fourth quarter.

Go ahead. Yes, John, take that one.

So the bipolar yields in the

[Audio Gap]

growing from there. So we're basically within January hitting the target. We've reduced that significantly, and we'll continue to do so. And we did not anticipate that with the automation. The goal for that automation is 97% first pass yield, and we're well on our way there.

Perfect. And then can you just touch on -- spend a few seconds on what sort of field performance has been, safety, reliability, commissioning schedules relative to expectations?

We're not hearing a response. [Technical Difficulty]

Yes, sorry about that. Don't know what happened.

Okay. Jeff, did you want to repeat your question in case they did not hear that.

Yes, sure thing. I was asking about, can you just spend a few seconds on sort of field reliability for units that have been shipped over the past 6 to 9 months, what commissioning cadence has been, safety issues, installation timing, et cetera, just as we think about that trend over the past 6 months or so as it relates to the guidance that you've given. I just want to understand what that lag is in reliability and uptime has been.

Yes. So Jeff, I don't know if you heard -- I don't know where we dropped off before. Look, we continue to go through and execute on the field, bringing a new product online, operating -- we were doing our operations meeting this morning and continue to see good cycles out in the field, as Francis talked about. We continue to learn on each cycle and incorporate those things back into the installed base from a commissioning cadence standpoint.

It's a mix and cadence of things where there's permitting challenges, there's bringing the site up to speed, there's getting our stuff up and running, there's integrating everything, and we work through that with the customer on a customer-by-customer basis. But if you go back to that page I showed, we shipped to 10 customers, recognized revenue on 18 customers, and that ties back to the commissioning that we have.

Got it. And just very quickly, are you capturing higher price as the duration use case extends out to 6, 8 hours and beyond? Or is pricing consistent with a sub-4 hour relative to longer duration?

Well, I mean, Jeff, I think it all depends on how you look at that. I think when you look at the value proposition of Eos and you look at our ASP in the backlog, the ASP in the backlog is higher than what you would expect for a shorter duration product. What we do is we sell on a levelized cost of storage basis, which is a little bit higher on the CapEx side, but a lot lower on the operating cost side, and that's what the customers evaluate to make their purchasing decision.

I am showing no further questions at this time. I would now like to turn it back to CEO, Joe Mastrangelo, for closing remarks.

Yes. Thanks, everyone. And again, thanks for the question and the continued engagement. A couple of points I want to close with. First, demand for long duration, domestically sourced energy storage is not a question. The grid is changing. The load growth is real, whether it's AI electrification, industrial reshoring, these are structural changes to the power grid in the United States, and they're not cyclical. The market is moving towards solutions that match what we bring to the market, and that's how we've positioned Eos for the long term.

Second, 2025 was building a foundation, strengthening our balance sheet, scaling manufacturing, standardizing our product architecture, improving operational cadence. We delivered great revenue growth. It reflects the progress that we've made. It's not linear yet, but it's directional and it's improving.

Third, 2026 is a year where we have to show disciplined execution. Our guidance reflects what we believe we control as we sit here today, and we'll keep everybody updated as we go through the year and where we wind up. I feel good about where the team is positioned. And as execution improves, predictability improves. So we know we've got -- that's what -- that's ultimately where we need to focus on, and that is where the team is focused on a day-to-day basis.

And then profitability for the company, look, it's a scaling equation. Automation how we move material, efficiency, bring a lean mindset, finding waste, eliminating waste, resetting it, going back and doing it again and again and again, you see the sequential improvement in margin that we need to continue until we become margin profitable, and that's the goal of the company for -- to deliver long-term value to both shareholders and customers.

Look, we strengthened our liquidity. It helps us operate the company more strategically. It gives us runway to be able to execute. Eos is an infrastructure business, right? Infrastructure businesses are built on discipline, consistency and operational trust, that's what we're building, and that's what we have to show and deliver. We appreciate the questions and the focus and really the attention to Eos across the board of all of our stakeholders. And we look forward to demonstrating this continued improvement in progress quarter-over-quarter as we build a great energy infrastructure company. Thanks for listening today.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

I think about energy pretty simply. Right now works really well on some places and not well at all and others and even where it does work, it's understrength. Demand keeps rising, expectations keep rising. The system wasn't built for today's reality. We built grids around predictability, around the idea that you could plan everything in advance. That's not the world we live in anymore. What worries me is that progress still depends on where you are, whether you're in the right place on the right part of the grid. It shouldn't work that way. Power shouldn't be the thing that slows us down. It shouldn't be the reason a city can't thrive or an industry can't move faster or data center capability can't grow.

To me, energy working everywhere means you don't have to think about it. That's where energy storage changes everything, not as a bolt-on or a backup, but as the foundation of how the system works. When storage is done right, variability stops being a problem. You could smooth it, shape it, dispatch it. And once energy stops being constrained, a lot of other things open up. You can build where it makes sense. You can scale without hesitation. You can move faster without breaking things. That's the future that everyone at Eos is focused on. It's not flashy, it's not hypothetical, just energy that shows up, does it's job and lets everything else move forward because when energy works everywhere it's stops being the limit and that changes everything that comes next.

[Presentation]

Trying to build what comes next with yesterday's tools only gets you so far. At some point, you have to step back and ask a basic question. If you were designing an energy system for today, one that actually reflects how the world works now. Where would you start? We decided to start at the smallest level from the electron up. That led us back to zinc chemistry. We refined it, we hardened it and we built the Z3 module, safe by design, durable by nature and flexible enough to scale without breaking. The hardware alone isn't enough anymore. So we built intelligence right into the system. Eos DawnOS is our controls and analytic platform. It gives every module the ability to sense what's happening, respond in real time and adapt as conditions change. Every step we took, every decision we made, all pointed in the same direction, EOS Indensity.

Indensity is a gigawatt energy storage architecture, designed for the reality we're in, not one we used to plan for. It's built with what we at EOS call spatial intelligence. Spatial intelligence, using space intelligently. So it fits alongside real places, real people and real infrastructure. It scales, it flexes. It's safe and it's dense, dense enough to move past the limits of what we've been dealing with. We're delivering roughly 4x the energy of most other incumbent systems, targeting a gigawatt hour per acre, bringing high-density storage in places where it simply wasn't possible before. At the center of it all is the Eos Indensity Core, a completely redesigned modular building block for how power gets built from here on out.

And now let me bring out someone who's put a decade worth of ideas into Indensity, Eos' Chief Technology Officer, Francis Richey. Francis?

Thanks, John. As the energy storage industry has pushed for higher and higher energy density inside standard 20-foot shipping containers, an unsurprising set of practical challenges has followed, exceeding weight limits during transport, safety concerns when so much energy is concentrated in a very small space, real serviceability issues when modules become so large and are packed so tightly that access becomes difficult.

Rather than accepting those trade-offs, we stepped back and took a fundamentally different approach. We chose to design smaller to build units that would be lighter weight, easier to service and with improved safety. That design philosophy led us to the Eos Indensity Core. Each Indensity Core is a compact, fully integrated energy storage unit, a single string of our Z3 battery modules combined with our DawnOS advanced controls and software. Power control is built into every single unit as is onboard cooling. It's outdoor rated, self-contained and designed for simple, straightforward installation. Simple to place with a forklift, easy to service, fast to connect into an electrical system, and it can be stacked vertically, which ultimately enabled our Eos Indensity solution to deliver much higher site level energy density than traditional systems, roughly 4x more per acre.

Indensity changes how we think about space. It transforms tight footprints and vertical real estate into usable energy capacity. Every configuration maximizes what a site can deliver while giving customers control over how their site is designed based on how much energy they need. In rural settings, the Indensity Core can be configured 3 high, enabling EOS Indensity systems to reach roughly 250-megawatt hours per acre. In more constrained suburban environments, configuring 6 high enables about 500 megawatt hours per acre.

And in dense urban environments where land is a premium and storage is essential, the system can scale up to 12 high, achieving roughly 1 gigawatt hour per acre. The process is straightforward. A simple steel superstructure is assembled first and Indensity cores are slotted into place, allowing scale without complexity. Indensity is built around flexibility in real-world operation. The Z3 battery and DawnOS control system allow customers to charge and discharge from 4 to 16 hours and beyond. The system supports both partial and multiple cycles per day as well as responds to grid power demands in as little as 5 milliseconds, all while taking advantage of inherently long cycle life, low capacity fade that static aqueous zinc-halide batteries are well known for.

Indensity powers through the toughest operational requirements. It allows for a large temperature window with minimal auxiliary load and no calendar degradation. The system is happy, idling at 0 volts and 0% state of charge indefinitely without the need for cooling, heating or maintaining a minimal voltage or state of charge during these idle periods. Safety is a foundational piece to Indensity. It is not an add-on. The Z3 battery chemistry uses a nonflammable aqueous electrolyte.

Eos Indensity core operates at the sound level of a quiet conversation, uses built-in cooling fans and its major components are recyclable. At scale, Indensity continues to prioritize safety. No exposed metal, all electrical connections and circuit boards are protected, and there's generous spacing between modules to support airflow turnover as well as cooling. Protective controls are handled by DawnOS, our state-of-the-art battery management system designed specifically for Eos chemistry. Each module can be isolated down to 40 volts and each Indensity Core can be isolated independently using a DC-DC converter. Taken together, these features allow Indensity systems to operate safely and sit alongside high-value infrastructure and within dense urban environments.

This isn't the vision of one or the idea of another. This is a team of professionals that have been working on energy storage for a long time, more than 15 years. And during that time, we've learned where the limits really are and which ones don't actually need to exist. We've pushed those boundaries, tested assumptions, Indensity is what comes out of that work. It's a system built to grow to adapt as conditions change to respond to demand before it becomes a problem, not just for one application or one place but wherever energy actually has to perform. This isn't storage for storage sake. It's energy that keeps up, energy that supports bigger ideas, tougher missions, and faster progress without asking for compromises. The system where energy isn't the thing holding you back, it's the thing that propels you forward. And that's what Indensity is about, not a promise, not a vision, something real, something ready, something limits.

Hello, and welcome to the Eos Energy Third Quarter 2025 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions] Thank you.

Now, I would like to turn the call over to Liz Higley, Vice President of Investor Relations. You may begin.

Good morning, everyone, and welcome to Eos' third quarter 2025 conference call. Today, I'm joined by Eos' CEO, Joe Mastrangelo; COO, John Mahaz; and CCO and Interim CFO, Nathan Kroeker.

This call, including Q&A, may include forward-looking statements, including, but not limited to, current expectations with respect to future results and outlook for our company. Should any of these risks materialize or should our assumptions prove to be incorrect, our actual results may differ materially from our expectations or 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 these 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.

Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to U.S. GAAP financial information is provided in the press release.

Non-GAAP information should be considered as supplemental and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies. This conference call will be available for replay via webcast through Eos' Investor Relations website at investors.eose.com.

Joe, John and Nathan will walk you through our business outlook and financial results before we proceed to Q&A.

With that, I'll now turn the call over to Eos CEO, Joe Mastrangelo.

Thanks, Liz, and welcome, everyone, to our third quarter earnings meeting. I'd like to start off on our classic page, our operating highlights. I really want to talk about -- Nathan and John will dive into the numbers here a little bit, but I want to spend a moment on the commercial pipeline and the orders booking and the recent announcements that we made to just talk about the team that's been at work here. Nathan moved over to be our Chief Commercial Officer back in the spring, and you're starting to see the results of both him and Justin Vagnozzi, who's been here for almost 2 years. You're seeing the pipeline going up. You're seeing MOUs and getting on the same side of the table with the customer transferring into orders, and you're seeing those orders go into backlog and then ultimately out the door shipping.

At the same time that, we've won a couple of orders here after the quarter closed, we signed a very important strategic agreement with Talen Energy that, I'll talk about a little bit further, how we're thinking about this on the subsequent page in the deck.

Around revenue, look, John has been here with us for 60 days, and he's going to go through the details of what he found and what he's done in those first 60 days. But we've had a team on the field here for the last year. Jason Greggs, Josh Payne, Jessica Troiano have been doing a fantastic job helping us position the supply chain, help us position cost to get to profitability and really position us to scale this business.

You've seen our best quarter-to-date on revenue in the history of the company. It's a phenomenal performance by the team in the third quarter. And more John will talk about how we started off fourth quarter, which really leads us to reiterate guidance, which I'll talk about at the end of the presentation.

On the cash side, you saw that we hit our last cash milestone around customer cash. And again, this is attributable to 2 hats that Nathan wears, being the Chief Commercial Officer, working on both the order side and the project side along with being the CFO, we brought in $43 million of customer cash here already in the fourth quarter. The business is becoming more stable and being positioned to scale as we move forward. It's an exciting time to think about what the future holds.

And I want to move to the next page to talk about some of the announcements that we made a few weeks ago. Look, I know when we talk about our new building, people are going to ask why now? Why didn't you do this to begin with. And I just want to take a moment to talk about where we were and how we wound up where we are.

We started off in Turtle Creek in 2019. We took a building that was very low cost and we expanded into a footprint with our landlord. That footprint, as we expanded, is not optimized. This new building gives us an optimized footprint to build a world-class factory to take cycle times down to drive cost down and to get this product where it should be as a market leader, both on performance and cost. I'm excited about what we're going to be doing in our new factory as we get into next year and how John is positioning us to expand capacity to meet demand.

On our new software hub in downtown Pittsburgh, it's an honor for us to be part of the revitalization of downtown Pittsburgh. It's an honor for us to be sitting here and thinking about coming to Pittsburgh, because we knew we could build things and now tapping into the brain power and the ecosystem to make how we're building things even smarter.

Being able to recruit, when you look at the work that we've done and Michelle Buczkowski coming in as our Chief People Officer last year. When you look at our company, our turnover rates are in line with high-growth start-up companies. And we brought in a lot of talent to make this company better over the last 24 months and particularly in the last 12 months.

I'm excited to be moving into the new building. You can see a rendering of what the building will look like. We're not taking the whole building. We're taking 3 floors, but it will be branded as an Eos Building. And we look forward to the day where all of our shareholders will be able to watch a Pirate's game or a Sealers game and see that Eos logo in the skyline. It's very humbling to think about where we've come from but it's also very exciting to think about where we're going.

So, if we go to the next page, I want to talk about the market itself. So, I want to take a second here to talk about what we're trying to do as a country and as an industry and ultimately globally to truly scale into the power requirements that we need to future growth and future economic growth around the world. We're in the third energy super cycle of my career. What I'm hoping for in this energy super cycle is not that we just do the same things we've always done of adding capacity in big chunks and then looking to see if we've met demand. I think we can do this smarter.

I think energy storage makes this expansion even better. I've said this before, our systems don't care if you put a brown electron in from traditional power generation or a green electron in from renewables. They take electrons and store them for when they're needed. So, what does that mean? Well, let me just talk about -- put for a second, go back to my old life before Eos and talk about traditional power generation. Traditional power generation, it's installed for peaks. You build capacity for a peak once a year that may happen. The capacity factors of how that generation works are in the 33% to 65% range. That means the assets are sitting idle more than they're probably actually running.

So what does energy storage do? For every 5% that you can increase the capacity factor of a gas turbine of steam-fired coal plant of a nuclear facility or pumped hydro storage, every 5% increase in capacity factor is like powering 50 million homes. What does that mean? Let me put that in context. That's powering for 1 year, California, Texas, New York, Pennsylvania and Illinois. We need power, we need energy storage and we need energy storage now, and that's what we're positioning this company to deliver.

At the same time, if you look at renewables, let's say you say, renewables, inefficient, they have intermittency. But just take the installed base of the renewables we have now. Don't add anything to it. Let's imagine that we don't add any more wind or solar to the power infrastructure. Just putting energy storage systems on that existing installed base. So what's curtailment mean? Curtailment means that the wind is blowing or the sun is shining and there's no demand for those electrons.

Adding energy storage at those points in time, you can add 10 gigawatt hours of BESS and power 750,000 homes for a year. That would be like powering Philadelphia for the year. Don't add any additional capacity, put energy storage alongside of it, make our energy infrastructure more efficient and make it available to consumers and industries when it's required.

When you think about what all that trials and tribulations and variances and how things work on the upfront generation side, that has an impact on how we deliver the electrons to the end user. We have a lot of congestion on our grid, congestion, think of it as a traffic jam. Energy storage on both ends of that traffic jam on the source and the use allows you to decongest and reduce cost in the overall system.

Take what we have, make it more efficient, make it lower cost, deliver the electrons when they're needed and generate those electrons as efficiently as they possibly can. Now we're talking about this super cycle being driven by AI and the build-out of hyperscalers. And yes, they're creating new demand in the system. But at the same time, we have to deliver that demand at a cost-effective way so that consumers don't see their energy prices go up.

The way you do that is with energy storage. And what's our value proposition as Eos? And I'm going to talk about Eos. We need all types of energy storage, but let me specifically talk about what we bring as Eos. If you go with a traditional cube solution that we've been putting out in the market with 1 acre, you can deliver 100-megawatt hours of cubes. If you take that same 1 acre and do an in-building solution, because of the way of our architecture of our product and how it operates, you can deliver a gigawatt hour in 1 acre. That's 4 times what is out in the market today. That's being able to take bulk storage available today, bring it to the market, get that running and get what we have operating more efficiently and deliver more electrons when they're needed. So, we can win the race of AI.

At the same time, our round trip efficiency, I'm going to show you data on the next page. Our round trip efficiency is in the mid-80s to the low 90s, but that's across a very wide operating range. There's no other technology that can deliver that type of performance over that wide of an operating range. Not only do you have to sit there and say, do a 12-hour continuous cycle or 16-hour continuous cycle.

You want to do a 4-hour cycle than a 5-hour cycle later in the day, our technology will do that and deliver that same round-trip efficiency independent of what the ambient temperature is. So, we have a wide operating range, ability to go across multiple temperatures and we can respond to fluctuations in demand. So, think about this 5 milliseconds. I can't even -- that's faster than snapping your fingers.

So, if demand changes or excess capacity comes on, our system responds 5 times faster than what the grid requires. It's leading in the industry in that area. At the same time, our system will run for 25 years, and you don't need to add extra capacity in there because we have very low degradation.

And then our auxiliary loads. A lot of the times when you hear things about high round trip efficiency of other technologies, they don't tell you about the power they need to keep them cool or to keep them safe. We use 1% to 2%. So, when we talk our high 80s to low 90s, low 90 round trip efficiency, we're talking about that in the terms of including the offloads. That's a net number that goes on to the grid. And they're non-flammable. And we'll -- and I've talked about this before and talk about this again.

Yes, if you overcharge our battery more than 200%, you run the risk of the electrolyte heating up and having steam come out of the battery. That steam is nontoxic. We tested it as this has happened. It happens. It's happened. It's a safety feature of our battery. It's what makes it non-flammable. And we've been able to operate through those incidents, basically replace batteries, keep the system in place and start operating again.

Now, let's go to the next page and talk about operations, Z3 field performance as of the end of October. This is really, really encouraging with Francis Richey and the team in Edison, these guys have been with Eos for nearly 10 years. They've developed a product that is a killer product out in the marketplace. I'm proud to see these initial results of how we're operating.

If you look at the bottom left-hand side, you can see the average performance of the 4 sites that are operating. And if you look at the right-hand side, you can see the top performance of how they're operating. But what I'd like to point out to you is look at that wide temperature range. Normally, like if you're an engineer and you're a technologist listening to this, you know thermodynamics. You get to extreme temperatures, performance usually drops off. But look at our performance against those fluctuations in temperature. It's relatively flat. More to come on the performance of this product. We are very encouraged about what we're seeing and feel like this product meets all the demands I talked about on the prior page.

Now, let's go to my last page here before I turn it over to John, our improved operating performance. Look, you see the performance and the increase in revenue quarter-over-quarter-over-quarter. This is all about taking production bottlenecks out, eliminating single points of failure in manufacturing, bringing someone in with John's experience is only going to make this better with time. We were able to double our revenue number from second quarter into third quarter.

And going into fourth quarter, we feel really confident on what we're seeing in the first 40 days of the quarter as far as how we're going to be able to execute for the rest of this year and going forward. But on the right-hand side, what's most important for everyone here on the phone is our ability to generate returns on that volume. And if you look at those lines, those lines are rapidly approaching breakeven and ultimately profitability. And what's most important is you see the gap between our gross margin and our adjusted EBITDA margin closing. That's because we've always talked about the ability to scale this business on a low-cost base and deliver profitability.

I'm excited about where we are. We still have a lot of work left to do. We have a great product. There's going to be more to come. We're really excited. John and Nathan will walk through both operations, commercial and financial. But this was a really good quarter delivered by a team that's wired to win and wants to be the best in the industry.

And with that, I'll turn it over to John to walk through operations.

Thanks, Joe, and good morning, everyone. Really excited to be here today to talk to you about Eos. It's been just over 60 days since I joined Eos. And as an operations leader, there's truly no better time to join a company than when it is set up for large-scale growth.

Before diving into what the team has accomplished and what we're focused on going forward, I just want to briefly introduce myself. I bring more than 35 years of experience leading large-scale, high-quality, efficient and cost-effective operations around the world. I worked for organizations that are recognized for world-class execution. And I not only know what world-class looks like, I have also built and led teams to deliver it. My experience has taught me how to drive operational excellence, building systems that are efficient, repeatable and cost effective at scale. Those lessons translate directly into what we're doing here at Eos.

What's impressed me most about Eos is the simplicity and scalability of the product, a single product SKU and a highly automated manufacturing process tailored around it. The team has done the hard work, improving the process, tightening the supply chain and hitting cycle time milestones that demonstrate this technology can scale.

As we move into the next phase of growth, my focus is on driving consistency and repeatability, creating a global playbook that allows us to replicate this model wherever our customers need long-duration energy storage. We see meaningful opportunities to take cost out of every aspect of the product, not just materials, but labor efficiency and overhead, as Joe has discussed many times on prior calls. Through process optimization, automation, layout design and lean principles, we'll be able to increase revenue per head, square foot and CapEx.

But before I get into what's next, I want to acknowledge the environment I walked into. The foundation of any company is its people, and it's clear that we have at Eos is a team that's hungry to win. I inherited an operations team that's intelligent, experienced and driven to take care of their employees, delight their customers and deliver for their shareholders, a culture of teamwork, winning the day and continuous improvement, a design team that has built an exceptional product and continues to work closely with the operations to enhance quality, efficiency and cost.

So, let's take a look at what the team has accomplished in the 2 months I have been here, focusing on 5 key areas: safety, quality, cost, output and capacity expansion. Safety is our top priority. We reduced safety incidents by 84% from Q2 to Q3 and year-to-date are 41% better than industry average.

In September, we did 4 times the production volumes that we did in August with 0 lost time safety incidents. My goal is clear. I'm entrusted to keep our people safe and send them home to their families each and every day. Quality. We have made significant progress and decreased battery defects by 45% from Q2 to Q3.

Bipolars account for about 70% of the total battery defects. And with a complete cutover from manual to 100% automated bipolar production at the beginning of Q4, we expect to drive that down by another 63%. With cost, we have a single product to focus on. What does that mean? I'll give you a couple of examples.

One, we have 5 buyers. The activity level on cost has not changed, whether we buy for 1 line, 10 lines or 50 lines. The organization is already scaled in all key areas for growth. Two, our supply base consists of 9 key suppliers making up 80% of our bill of material. To date, we have never done a large buy-in buy with our suppliers because of uncertainty around capacity installation and production ramp. We are now in the position to do so.

We hosted these suppliers in Turtle Creek a few weeks ago, where we reviewed our capacity forecast and opportunity pipeline. As they ramp their production, they will have the ability to get more efficient and realize cost absorption. With that as the backdrop, we expect to achieve further cost out in sync with the volume increases. With this and other cost initiatives, we expect to exit Q1 gross margin positive.

Moving to production output. We're now positioned to deliver a significant step change in Q4. In Q3, our automated battery line operated at 15% capacity utilization of its full 2 gigawatt potential, limited by subassembly bipolar equipment availability.

In Q4, we expect to ship 3 times the volume we did in Q3. We'll accomplish this by increasing capacity utilization by 167%, ramping additional shifts along with having all 8 bipolar cells in full production. My team is laser-focused on hitting the output to achieve our revenue guidance and we're set up to do just that.

In October alone, we've already shipped 179% more tubes than we did in the first month of Q3. And in just the first 4 days of November, the team has already shipped 83% of August total volume. Let me say that again. What took us a month to accomplish just 3 months ago will now take us only 6 days.

Now, looking ahead, our next big step comes with the new building and the installation of line 2 expected in spring of 2026. What excites me here is how we'll be able to utilize the layout and the opportunities we have to be even more efficient. The space is designed for single-piece flow, enabling lower cost and higher throughput.

Let me give you an example of what I mean by this. Today, we're moving product across 3 floors and 2 buildings and from start to finish, which translates to materials traveling 2.1 miles. There are significant material handling costs associated with this.

In the new building, we expect this cost to decrease by 86% as we will have a one floor single piece flow in our end-to-end operation. This not only improves cost but gives us the ability to increase throughput. You've heard us talk about having a battery come off the line every 10 seconds. What we're focusing on now is reducing that time even further. With changes to line 2 design, we should be able to further reduce cycle time. Once validated, we will then go back and retrofit line 1. We will continue to implement enhancements to the automation equipment to reduce cycle time.

Finally, we're preparing to scale by diversifying our operations' supply base. With multiple partners in place, we're positioned to have our suppliers build the line every 90 days if needed. That flexibility gives us the ability to stay ahead of demand and deliver for our customers when I get the green light from Nathan.

With that, I want to thank everyone for their time, and I'll let Nathan talk through the commercial highlights.

Thanks, John. It's been great working with you and having you as part of the Eos team.

Look, I've been looking forward to being on the call with you today and sharing what's been going on commercially. It's been an exciting few weeks since John has joined us and you can feel the momentum building across the organization. Let's start with the commercial front where we've made significant progress since we last updated you.

Just last week, we announced our first purchase order with Frontier Power, a 228-megawatt hour deal supporting several long-duration storage demonstrations across multiple markets. This first order is the initial movement of Frontier MOU volumes from pipeline into backlog. This PO is very strategic as it is for deployments ahead of Frontier's U.K. Cap-and-Floor projects. That means we're getting systems in the ground early and showing the market what our technology can do ahead of the Cap-and-Floor projects as we continue to support Frontier on their submissions.

To put the Cap-and-Floor program in perspective, there were a total of 177 projects submitted by various developers but only 77 advanced to round 2, and every single one of the 16 projects that Frontier submitted using our technology moved forward. That means Eos is represented in over 20% of the projects that made it to round 2.

We have nearly 11 gigawatt hours in the second phase, more than double what was anticipated when we signed the MOU with Frontier earlier this year. That's a powerful endorsement of our technology and our ability to deliver at scale. And just to remind everyone, under Cap-and-Floor rules, projects must deliver at least 8 hours of discharge, which plays directly to our strengths in long-duration storage.

We recently announced a 750-megawatt hour supply contract or MSA with MN8 Energy, one of the largest independent renewable energy operators in the U.S. We began our relationship with MN8 in 2023. Earlier this year, we announced an MOU where our 2 companies were working together to develop an opportunity pipeline. That MOU has now transitioned from pipeline into backlog as an order for 750 megawatt hours. This illustrates how our commercial process works.

The first couple of 10-hour projects are expected to total 200-megawatt hours and uniquely pair solar with long-duration storage in support of hyperscaler offtake requirements. This is a strong signal that the market is shifting and that customers want not just long-duration storage, but an American-made solution to power data centers and industrial operations.

Zooming out for a moment, our commercial pipeline continues to grow as we ended the quarter at $22.6 billion, a net increase of 21% quarter-over-quarter, representing about 91 gigawatt hours of potential projects. And no surprise here, data centers are the fastest-growing part of the pipeline, now making up 22% of the volume. And perhaps even more encouraging, 64% of our pipeline volume is now at 6 hours or more in duration, validating what we’ve been saying, the world needs longer duration solutions.

Geographically, we're beginning to see a significant increase in activity in PJM and New York ISO, along with the existing growth we've previously highlighted in SPP and MISO. For example, the NYSERDA bulk storage RFP, which is similar to the U.K. Cap-and-Floor mechanism, requires that 20% of the procurement be 8-hour systems and 20% be in Zone J, which includes Manhattan. This is exciting for us as this aligns exceptionally well with our technology and our ability to be deployed in populated areas.

With the rising demand from data centers and electrification, customers are focused on speed to power, high-density energy delivery and derisking supply chains with U.S.-made technology, all areas where Eos is uniquely positioned to deliver.

Finally, on backlog, we ended the quarter at $644 million with 2.5 gigawatt hours of storage, not including nearly 1 gigawatt hour in new orders that we've booked since the end of the quarter. This is down slightly quarter-over-quarter as we continue converting backlog into revenue on shipments.

During the quarter, we delivered over $30 million in revenue while adding an initial order for behind-the-meter storage for a large client in Germany. While Q3 may appear slower on paper, Q4 is already off to a strong start with more than $220 million in new orders booked and significant forward momentum on several large pipeline opportunities. We've built strong partnerships with leaders like Frontier and MN8 and we continue working on additional opportunities to support the large and growing hyperscaler demand for reliable power.

Moving to our financials. We again delivered record quarterly revenue as production volumes continued to ramp with gross margins improving sequentially for the past 4 quarters. We're really encouraged by our progress and remain confident in our ability to scale, now that subassembly automation is nearing completion and delivering increased manufacturing capacity and quality, as John highlighted earlier.

Revenue for the quarter was $30.5 million, double what we reported in Q2, supported by shipments to 5 different customers. To put that in perspective, we nearly doubled our 2024 revenue in the third quarter, showing how quickly production is accelerating in Turtle Creek as our automation efforts take hold.

Average selling price was also higher and more in line with our expectations going forward. You'll recall that in Q2, 50% of our production volume was delivered to a single strategic customer at a lower ASP, which was a drag on revenue for that quarter.

I'd like to highlight that, as Joe mentioned earlier, this system has begun cycling and running in the field at some of the highest RTEs we've ever seen.

Gross loss for the quarter was $33.9 million, just slightly more than last quarter as revenue doubled on increased volume, driving a 92-point improvement in gross margin and demonstrating the scalability of our operations as we ramp. We're continuing to see steady quarter-over-quarter margin improvements and remain on track to reach positive contribution margin in the fourth quarter and positive gross margin as we exit the first quarter of 2026, as John previously said.

Building on the improvements in gross margin, operating expenses for the quarter totaled $27.3 million, an improvement of $5.6 million from Q2 and 4% better than prior year. 20% of this quarter's OpEx reflects noncash items such as stock-based compensation. We ended the quarter with a net loss of $641.1 million, which was primarily driven by noncash fair value adjustments of approximately $569 million related to warrants and derivatives on our balance sheet.

And to be clear, this is not an operating loss. The adjustments are largely driven by a 122% increase in our stock price quarter-over-quarter and the corresponding mark-to-market revaluation. These stock price fluctuations can and will continue to drive volatility below the line but they have no impact on our operating results or our cash position.

Adjusted EBITDA loss was $52.7 million compared to $51.6 million in Q2. Importantly, net margin improved by 166 basis points, reinforcing that the efficiency gains we're achieving in production are scaling across the business. The continued increase in production volumes that both John and Joe talked about should be moving us to positive contribution margins in the fourth quarter. After that important milestone, we'll start closing the gap on EBITDA margins and continue moving toward profitability.

Turning to the balance sheet. We ended the third quarter with $126.8 million in total cash. A couple of things on cash post quarter close. First, you heard Joe talk about the customer receipts we received in October. Second, we just completed another sale of our production tax credits, monetizing $11.8 million of 45X credits that were generated in the first few quarters of this year.

Consistent with prior transactions, we realized $0.90 on the dollar on this sale. And lastly, we've seen an increasing number of exercises in both our public and private warrants as all warrants are now in the money. The last day to trade these public warrants is November 17.

Just as importantly, we've completed the final Cerberus milestone tied to customer cash receipts under our term loan. This means that we've achieved all 16 milestones, with no additional equity, preferred stock or warrants being issued to Cerberus, and I want to thank all of the Eos employees for making this happen.

With that, I want to thank everyone for joining us this morning, and I'll now turn it over to Joe before heading into Q&A.

Thanks, Nathan. Before we move into Q&A, I'd like to reiterate guidance to the low end of our range. Nathan and the commercial team have positioned us with the backlog that allows us to deliver, and you've heard from John and the impact he's making on improving our operations performance that are keeping us on track to earn between $150 million and $160 million in revenue for the total year. I also feel compelled to make a few comments about the short report that was issued about Eos last week. When the report surfaced last Thursday, I was in a meeting in New York with the CEO of a large independent power producer, the North American CEO of a large energy storage operator and the CEO of one of Eos' largest financial investors. We were discussing a strategy to meet America's accelerating power demands with a mix of generating technologies combined with Eos Z3 systems.

While I was finishing up the meeting, our team quickly mobilized to review what's being said about our company. We take these issues very seriously and immediately engaged our outside SEC counsel and our external auditors in this review. We are certain that the allegations in the short report are without any merit. Short reports are a fact of life these days, but the silver lining is that I am humbled by the support we received over the prior week from the Department of Energy to the California Energy Commission, to the Edison Fire Department, our customers, large institutional investors and our vast retail investor base.

I'm proud to say that, I work at Eos. We're a team of 750 people who are building a great company. And collectively, we own 11% of the company's equity. When I got back to Turtle Creek, I found a galvanized team with a singular focus to finish what we started and prove that great and innovative products can still be designed and manufactured in the United States. We are a team that is wired to win.

With that, let's start by taking a few questions submitted online. I'll turn it over to Liz. Thanks.

Thanks, Joe. So, moving to a few of the questions we've received online with the first question being, can you provide an update on the time line around Factory 2 outside TA? And if Project AMAZE will need to be completed before Factory 2 lines go live?

Thanks for the question. As we discussed earlier in my opening remarks, we now have building partners and automation partners that can deliver a line every 90 days. This work can all be done simultaneously going forward.

Thanks, John. Next question. As the company navigates a capital-intensive scale-up phase, how are you balancing the need for fresh funding with imperative to avoid excessive shareholder dilution? And what milestones might unlock access to lower cost capital?

Thanks, Liz. As you just heard John say, we're positioned to add manufacturing capacity to meet this growing demand. We're in an energy super cycle and it's my job to deliver the orders and the capital to support this growth. And I'm committed to doing this in the most cost-effective way possible for the company. All right.

Thanks, Nathan. I think the next one here is for Joe. What is the long-term vision? And how do you plan to surpass or match the competition?

Thanks, Liz. So, look, I mean, you heard John talk about positioning us to be able to add capacity in a 90-day rhythm. That's great when you talk about being an energy super cycle. Nathan is out there with his 2 hats, winning the orders to fill the factory and securing the capital to drive growth. I'm just excited about the product that the team has delivered. I mean, we've got some things that we're working on that we're really excited about that will position us to be the energy storage product to help meet the needs of this energy super cycle.

We've got some work to do to continue to close the gap on profitability, and I feel really good about the playbook the team has to be able to do that. But at the same time, we've got to make this the easiest technology to work with out in the field, and that's why we're investing in a software hub here in Pittsburgh. And I think when you think about what we want to do is take a great technology, build it quickly and operate it easily out in the field. That's the simple strategy of this company and what everybody is executing on.

With that, we'll turn it back over to the operator and see if there's any questions from our sell-side analysts. Thanks.

[Operator Instructions] And your first question comes from the line of Julien Dumoulin-Smith with Jefferies.

Maybe just to kick things off here. I know you tweaked the '25 guide here. But if you think about like the quarter-over-quarter run rate and trajectory, I know you articulated this more in operational terms in your prepared remarks. But how would you think about as you exit '25 with that 4Q that's implied with your full year '25 guide, how do you think about that ramping into '26 here and what that trajectory suggests? If you just look at the 2Q, 3Q, 4Q trajectory on top line, I'm just really curious how you think about that revenue trajectory going into '26, and the ability for your commercial -- yes, go forward.

No, thanks for the question. So, in my prepared remarks, I talked about -- so Q3, we were at 15% capacity utilization. If we look at going forward, we'll exit Q4 running our complete asset base 24/7. So, you're looking at going from a 15% capacity utilization to 90-plus from a capacity utilization standpoint. So, a lot of work was done in Q3, installing capacity, training our workforce, training the additional shifts and all the costs associated with it. So, as you fast forward, all the ramping will be done. So, as we enter Q1 at the very start, we'll be at OEs higher than 90% and we'll be fully realizing and utilizing the capacity.

And then Julien, on the revenue side, and I'll let Nathan kind of add some comments there because that kind of falls into his 2 hats.

Yes. No, I mean, John did a good job of laying out what we're doing this year. I think as we look forward into 2026, we're seeing a tremendous amount of activity in our pipeline, right? Pipeline is up 21%. 22% of that now is data center activity. We talked about kind of the sales cycle and how these things mature over a period of months, even quarters. And we continue to see very strong activity in the pipeline as we move forward.

Good news is John's capacity expansion now can be moved in 3-month increments as the orders come in. And I think we're going to see new orders come in. We're going to add capacity to line up with those orders and I see consistent revenue growth over time. Yes.

And Julien, the only the thing I would add on the pipeline and order side, we've always been very conservative about what we do with our backlog and our orders pipeline. Nathan's got some things going on that are MOUs that we haven't been able to announce names yet, and he continues to work with Justin and the entire team to get some of these hyperscalers to go from an MOU to firm projects. And we really only want to talk about them when we close them and there's project names that we can talk about, like we do with Frontier.

And I'll make one more point. So, you think about the -- all the assets that we're installing, so we're learning as we go, right? So first bipolar line comes in, took us several weeks to get it up and running. 6 and 7 that we just got up, now we're talking days. The same thing will fast forward to when we launch line 2 in the spring. All those learnings, so we're able to shrink the ramp, shrink the time to get up to full capacity. So, everything we're doing now we're learning because it's -- so with the data, we're going to be able to aggressively move forward much quicker than we are right now.

Awesome. And guys, if I can take sort of the natural extension of that last question, how are you thinking about the ramp here, right? I mean it's pretty phenomenal what you've just achieved in the last 6 months here, as you just described. How do you think about the cadence of ramping further lines? And then also, related to that, how do you think about the financing side of that, right? So you've got the $43 million from Cerberus, you have the $24 million award.

You've got unrestricted balance of $60 million. You've got an ability to tap DOE. How do you think about financing that against potentially what seems like an accelerated ramp on CapEx? I don't want to put words in your mouth when I say accelerated, but I'm curious on how you think about just teeing this all up and setting expectations.

I think, Julien, I -- let's kind of put the puzzle together there that you're laying out. We have a loan from the LPO from the Department of Energy that finances 4 lines, right? And we're going to line 2. What John is trying to do is like what we -- and what we have to do is reduce the cycle between starting and getting a line up and running so we start producing revenue off of that so that the capital requirements in effect, become operational versus financial. That being said, we're in a moment of time here where the industry and the world needs our product and we've got to be able to ramp into that as quickly as possible.

I've said many times, like we don't want underutilized capacity sitting around. But we're looking at all this. And what John has put together from the different automation suppliers that he now has and breaking this up into pieces and getting everybody focused on delivering to that goal, we'll be able to get that capacity online in 90 days, which is well within the cycle time of how Nathan is selling the product. So, part of it will be what we already have in place. Other things will be -- come from operations and deposits from customers as we close orders. And then we'll look to be opportunistic if need be for growth capital if we have to.

Awesome. Excellent. One last tweak here. You talked a lot about operational metrics improving, but it seems like the latest quarter ASPs went up materially. Again, you tell me if we're reading that right. And you also flagged, I think, in the Q here, a concentration with like 80-plus percent tied to a single customer. This is not the same customer as you guys have been concentrated to in the past, I presume. Can you talk to that just a little bit about the ASP dynamics and the customer maybe of late?

Yes. We talked about this a @little bit last quarter as well. So Q2, I think, was the anomaly because we had one strategic customer that was a drag on revenue in Q2. What we're seeing in Q3 was revenue rates reverting back to what we view as a more normal run rate. And then deliveries in the quarter, I mean, it was fiveindividual customers. They're not all equally weighted. But I would say the customer base that we delivered to in Q3 was representative of what customer base would look like going forward.

And Julien, I just want to add 2 points on top of what Nathan just said. ASP, like you could -- like I try not to pick individual contracts. We're managing a portfolio. Like any portfolio, highs, lows, but you got to get your average where it makes sense, and the average of the portfolio is up and it's up because people are seeing the value of the technology.

Now, on this strategic customer that we talked about last quarter, look, we're getting data from that system out in the field and it's on that page that we talked about and the data is phenomenal. So I look at that as kind of an investment in our future where we needed to get Z3 out in the field at scale and see it operate, and it's delivering on those results. So, it's a mix of all things. But the overall portfolio of the order book, ASP is higher than what it was.

Yes, absolutely. I'm very curious to see some of these strategic partners in their Analyst Days in coming weeks.

Your next question comes from the line of Stephen Gengaro with Stifel. Please.

So I think 2 things for me. One is just a follow up on the last question. I'm not sure how much you want to say, but you talked about sort of the average selling price kind of across the portfolio. Is that -- how does that look in the backlog and the recent awards that you're booking relative to kind of what you're realizing now?

Look, I mean, you can do the math on the backlog page, right? I mean we -- you can see total dollars and total gigawatt hours and how that's trended over time. And it stayed pretty consistent over time. I mean, we're not seeing long term -- long term, I think, the revenue rates that we've realized and expect to realize going forward are going to be pretty consistent.

When you get larger orders, we're working with customers and say, okay, what is our cost curve doing, what can we do from a large volume buy perspective. You saw the chart we showed on Page 8, I think it was, where you see margins improving over time. You see net margins improving over time as we continue to scale the business. But we think we're going to turn the corner here and get to positive contribution margin into this quarter, positive gross margin exiting Q1 on a path to profitable positive EBITDA after that.

And Steve, what I would add on top of that, look, part of my job is handing out the targets to people and the orders that were recently closed are well within the ASP portfolio target that Nathan has as CCO.

That's helpful, because I couldn't do the math on the post-quarter announcement, but that's fine.

And remember, -- we're talking about, Stephen, that's post quarter close that happened after the quarter, after 3Q. So that will be out in 4Q.

Yes. The other one I had is -- it's around the margins, but it's around the cost side. When we think about the progression of margin and some of your bigger costs that go into making the product. How should we -- like what are the necessary levers that get you to gross margin positive? Is it the supply chain improving? Is it the COGS coming down per unit? Is it just scale? Like are there -- is there color you can give us around how to think about the cost structure? That's the biggest -- as you've been successful with the ramp and the backlog growth, that's the biggest question we get from investors pretty consistently is, what does this look like at scale from a profitability perspective? So, I'm curious if you could give some incremental color.

So, from a cost perspective, I already talked about the asset utilization. The same thing is true here is with our suppliers. So, they've had to put a lot of assets in place to be able to support this ramp. So, as we ramp, they're ramping. So, they're seeing cost optimization, they're seeing cost absorption, which will translate in cost reduction from a parts situation.

Then you kind of look at labor costs. So, a lot of what we're focused on right now is taking cost out and making things more efficient. So, I'll give you one example. We were focused on our gate and with that, we were looking at travel time, material, the way they're presented. Basically, all aspects of that operation came in on 1 weekend, completely changed the way we were doing that operation. And the 5 days prior to what we did versus the 5 days ahead, we doubled the output. So, the work we're doing is not having incremental gains, it's having step function gains. So, we talked about labor, you talked about utilization. Again, we'll be at 100% utilization coming out of Q4. So you're going to get match the asset. Then it's about taking cycle times out.

So, if I can -- we've got a heavy automated process. So, if I can take 10 seconds down to 9.8 seconds, down to 9.6 seconds, and that work is absolutely doable. Again, you keep moving it forward. The one thing I like about being here is where I came from, I had thousands of different products. So, the focus would shift every day. Now -- come in every day and focus on the one product. So, this journey never ends. There -- we will continue to look at all of our cost buckets and continue to put projects together that will close those out.

We, right now, just in taking material cost out, forget cost savings and what we're asking from the vendor, we've got 61 different projects that we're doing right now to take the amount of parts that we have out, to take the cost out, 61 projects, and all of those projects will be closed before we exit Q2. So that's the way I kind of think about it.

And there are no further questions at this time. I will now turn the call back over to Joe Mastrangelo, CEO, for closing remarks.

Thank you. Thanks, everyone, for listening. Look, one thing I want to talk about here in the closing is like the project that Nathan and Justin closed with Frontier Power, because this kind of lays out another strategic puzzle piece for us as we grow the company.

Look, we met Frontier back in January. Nathan and Justin met them at a trade show in the U.K. We developed a relationship, signed an MOU, got a project pipeline. And every week, we meet with Cerberus, and we go through where we are in cash, where we are financially, how are we doing in performance. And we look at Frontier not as a transaction, but as a platform. Cerberus financed Frontier because we view this as experienced operational leadership in the industry that can help us build a platform to expand out in Europe. We're excited about how that's going to look as we move forward and really look forward to partnering with the team at Frontier.

At the same time, we're looking at what John is doing operationally, and you heard a really -- it's fun working with him. It's great having him on the team and seeing what he's been able to deliver and the whole team underneath him. We just have to keep growing, keep focused and knowing that the industry needs our product. We got to continue executing and we got to keep making this simpler and easier to do business with. We look forward to keeping everyone updated on the progress. I want to thank everyone for listening today. Thanks a lot. Talk to you soon.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, and welcome to Eos Energy Enterprises' Second Quarter 2025 Conference Call. As a reminder, today's call is being recorded, and your participation implies consent to such recording. [Operator Instructions]

With that, I would like to turn the call over to Liz Higley, Head of Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to Eos' Second Quarter 2025 Conference Call. Today, I'm joined by Eos CEO, Joseph Mastrangelo; and CCO and Interim CFO, Nathan Kroeker.

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. Should any of these risks materialize or should our assumptions prove to be incorrect, our actual results may differ materially from our expectations or those implied by these forward-looking statements. The risks, 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 these 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.

Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to U.S. GAAP financial information, is provided in the press release. Non-GAAP information should be considered as supplemental and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.

This 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 our business outlook and financial results before we proceed to Q&A.

With that, I'll now turn the call over to Eos CEO, Joseph Mastrangelo.

Thanks, Liz. Welcome, everyone, to the 2Q earnings call. I want to start off with our operating highlights page. Nathan will walk through the details of the numbers on the page. I want to talk about a couple of themes. Last month, I was able to attend the Pennsylvania Energy and Innovation Summit hosted by Senator McCormick and attended by the President. It was a great 2 days that we had here. What it proved to me is that energy is at the forefront of everything that we want to do as a country to grow the country, and Eos plays a very important role in how we position the United States for its energy future.

A modern grid is going to require bulk stationary storage. It eases congestion. The easiest way to think about congestion is when there's too many electrons trying to get onto the grid and there's not enough electrons getting off the grid. So we are able to take those park them in our system and put them back on to better match supply and demand curves in the market. And one of the most important things I've learned through my 35-year career in the energy industry is every electron counts and any efficiency you can bring to the system makes the system more robust and also allows you to avoid costly new investments and make what you have produce better. And that's what curtailment is about. Curtailment is when you take existing generating assets and stop them from operating because you can't put them on the grid.

Again, an Eos solution, stand-alone energy storage, Nathan will talk about how 50% of what's in our pipeline today is stand-alone energy storage, allows you to keep running those assets, put the electrons in a parking lot, if you will, and then put them back on the grid. So think of the grid like a highway when there's a lot of traffic and you can't get on that on-ramp, park in your Eos energy storage system. And when there's -- when it frees up and one of the exit ramps wants power, we'll put it back on that highway and get it delivered cost-effectively to the people that use it.

The other piece that I would say on the Summit is really, you saw the strength of the company being in Pittsburgh. I think what you see is this ecosystem of technology, ability to manufacture the infrastructure around universities, which allows us -- which is allowing us to build a great company. What you saw in Q2, I'll get into some more details, is we had record revenue, 122% higher quarter-over-quarter shipments, great performance by the operating team here. I'll go into some details in a couple of pages, but like really proud of our ability to scale the enterprise. And when you think about that 122% increased shipments, it was with the same processes and labor that we had in the first quarter. So the team is finding ways to do things better, bringing efficiency into our operations every day, and getting better output and throughput over the assets that we have.

And we are continuing to scale operations. I will talk about the ramp in bringing on subassemblies, which unlocks the full capacity of our first state-of-the-art manufacturing line. And at the same time, we announced signing and ordering our second line as we start to position the company for the growth that we see flowing through the pipeline. What I would say before we move to the next page is as it comes to the pipeline and orders backlog, things are moving, the operating dials and the steps that we work through with customers to get to an order are progressing. There was a little bit of a pause here as the OBB was approved. I think we're seeing now an acceleration. That acceleration was no more evident than what we saw here in Pittsburgh back at Senator McCormick's Energy and Innovation Summit.

So I think Nathan will walk through the progress that he's making, but we see projects evolving. We see big hyperscalers and developers coming to Eos because of the things we've been working on for the last 7 years of developing an American supply chain, coming up with a cost-effective, reliable, and safe solution. So if we move to the next page, I want to talk about that solution for a second. So our systems are built for resiliency. We've talked about the leadership team that we have in this company and my background. I spent half of my career in the oil and gas industry and the other half in traditional fossil generation. So what you learn being in those industries is the fact that the grid requires robust solutions that can survive the harshest environments and the things that you don't plan for.

So that all starts on the left-hand side of the page at our Edison proving ground, where we test our technology beyond the operating conditions that you see out in the field. What we've been doing over the past months is testing the Z3, and we've increased our ability to get energy out of the product by 40% from the product launch, and have a very clear road map of how we get better energy efficiency out of the product, and also developing the software. So when you look at our financials and see the line on R&D, what we're spending on that R&D money is making this product that we have better and putting the software over the top of it so that it gives the operability that our customers demand.

In the middle piece is we do abuse testing on this product. We had an event at our Edison facility where we had an overcharge on a cube that we were testing. That overcharge on the cube resulted in smoldering of plastic inside of the cube. Not wasting a crisis, we took over 1,000 air quality measurements while that was happening. We wanted to be able to get the data to show customers that when you do have a problem, and problems will always happen, that this is a safe, nontoxic product to put into your neighborhood or onto your job location. And we found no hazardous readings in any of the measurements that we took. These 1,000 measurements were taken all across Edison. We never closed operations at our facility in Edison, New Jersey, and we worked with the local fire department to use water to bring the -- to get the smoldering to stop. And that water was tested at the end. We collected all that water, put it in the tank, tested it, and found that that water was as clean as it was when it went on to the cube.

So proved out the thought. That's why we have the proving ground. That's why we run the testing, and that's why we look to make a product that can stand up to the harshest conditions that the industry can bring.

On the third column, you may have heard about a cube winding up on the highway as we were delivering it to a customer, but you probably didn't hear about it because nothing actually happened. The picture you see is the cube sitting on the highway. There was an accident as accidents will happen. In 1 hour, that cube was picked up, delivered, and we were able to extract battery modules out of that cube, bring them back to Edison, and run them, and they performed as if they were new modules. So once again, proving that we have a durable solution that's safe and also, at the end of all this, recyclable. That incident that we had on the left-hand side of the page, everything that was inside the cube was extracted and recycled using normal recycling methods to prove once again that Eos has a full life cycle to be able to deliver for customers.

On the far right, we -- is one of our Z3 installations. We've been running the product out in the field, and happy to report that we are consistently delivering between 87% to 89% round-trip efficiency on sub-4-hour discharge cycles. We've always talked about Eos being a longer duration technology, but what we're learning with the Z3 and what we're learning with the software that we're developing is that we can extract better performance out of the technology. So as we look and we see these shorter cycles that we've been running for this customer, we're seeing round-trip efficiency that's on par with any other technology in the market. When you hear higher efficiencies coming from other technologies, you have to net out the cost of running HVAC on the parasitic loads, which we don't have. And you wind up where like as we talk, and Nathan and the team are out selling, you hear that, that 89 -- we topped out at 89.5% round trip efficiency on a 4-hour discharge cycle. That efficiency is in line with what everybody else is doing.

So we really look at this and say, if you want something that's America's battery made in the U.S.A. with the U.S. supply chain that's had extensive testing and operating out in the field, we've abuse tested it and learned that it's safe for the environment. We then have looked at it and said that if we do have an accident, nothing will happen, you clean it up, and you keep moving on. And when you operate this technology, that flexibility gives you better performance than what you see from other technologies. It's a compelling value proposition that we're out-selling to customers every day, and that's why you see the pipeline growing the way it is. And that's why you see things like our partner in the U.K. bidding twice the amount of our MOU into the cap and floor scheme in the U.K. because they know that this technology is built to last and has the resiliency that the industry requires.

Now if we move to the next page, I do want to talk about -- we talk quarterly results here, but I want to take a step back and really thinking of a company that you're building for the long term and 13-week increments, sometimes you lose the actual trends that are happening in the business. So what we did on this page was really take the second half of last year and compare it to the first half of this year. So you could see 3x revenue growth, 4x factory shipments. Nathan will talk about why you have the disconnect there in revenue versus shipments. We did ship what I would call a very important strategic project that was at a lower price point. If you put that -- if you put in the average price that we have in our backlog on those shipments, our sales would have topped out over $20 million for the quarter. But the project that we're installing is very important for us to prove out the technology and to show that the things I talked about at the prior page work out in the field with a blue-chip operator.

If you look at gross margins, we've talked about get more volume over the asset base that we have, and the margins will come. You can see that clearly as the team gets more throughput through the factory that gross margins are improving. We're going to be transitioning to CM positive cubes here as we get into the fourth quarter and targeting gross margin positive in the first quarter of next year. It's pretty exciting for us. We built in advance a facility that can handle 2 gigawatt hours of production. And as we bring online our subassembly automation, we're starting to -- we'll start to approach that as we get to year-end, and you'll see the company delivering the gross margins that are positive for the product that we put out in the field.

And our adjusted EBITDA, actually, when you look at that, that improvement is not just in line with the gross margin improvement. It's actually better than gross margin because we're getting leverage over the investment that we're making in our base cost. We've done some scaling in different areas to be able to manage the business -- that scaling will stand the test of time, particularly when you think about functions like finance and legal and other things that you need to run a public company.

As we bring in the operating systems to be able to run the company, we'll have a team that's worked through the growing pains of scaling the company, and it's going to make us more efficient when we're at scale. But the most important thing that we're doing is we're making investments in core functions that allow the business to operate better, things like the sales team to get out and grow the backlog, other things like bringing in engineering resources to help us be more efficient on the factory floor, to take cost out of the product. Those are the things that we're investing in when you look at that operating cost that we have in the model. And we're getting 2x operating leverage when you think about what we're doing on the EBITDA -- adjusted EBITDA versus gross margins.

So we're going to continue to ramp the business, and I want to move to the next page and just walk through quickly how we're doing on that ramp. You see some pictures of the new subassembly of the new subassembly first station that's been installed. We will have 2 of those stations up and running and producing with the target of having all stations up and running as we get into the fourth quarter. That speeds up the production of this product, but not only speeds up cycle times. So one thing is to get more throughput, but the second thing is we're getting better quality off of this equipment. As we were building things on the semi-automated line, you bring in human variation. We take that variation out. What we're seeing on the parts that are coming off that line is a higher process capability than what we had before and a 64% improvement in the overall part flatness.

Part flatness is important because that gets performance out of the battery because you get consistency in how we operate. We're seeing a 3 -- almost more than 3% improvement in energy efficiency just by getting that consistency in the parts coming off the line. It's something we've been very thoughtful about as we brought it online because you don't want to introduce a bunch of parts that don't achieve the quality goals and wind up having a lot of scrap and rework, but we're very happy with how the equipment is performing, and we're ramping up that production as we go through, and we'll keep everybody updated as we go through the summer here to bringing that online and getting to full capacity and delivering on our revenue range for 2025.

With that, I'll turn it over to Nathan to walk through a couple of pages and then come back on Q&A. Thanks for listening.

Thanks, Joe, and good morning, everyone. Echoing what Joe said, we're gaining momentum in the second quarter with a lot more to look forward to in the back half of the year. First, I wanted to touch on the One Big Beautiful Bill Act and its impact to Eos and the broader long-duration energy storage market as we see it. At a high level, the bill was extremely positive for us. It completely preserves the Section 45X production tax credits with full stackability and transferability through 2029. Just to remind you, we can generate over $90 million on each one of our manufacturing lines annually when we run them at capacity. This is a direct result of all of the hard work that we've done over the past 7 years to localize our supply chain and build an American manufacturing company.

Continued stackability means we qualify for the full $45 per kilowatt hour for our batteries as well as the 10% credit for the electrode active materials. Ongoing transferability means that we can continue to monetize these credits as they are generated. The good news is that we're seeing higher bids on larger volumes of credits, which means we should get smaller discounts than the 10% we've done on initial transactions. We have generated $14.3 million in credits since they came into effect, of which we've collected $6.3 million in cash to date, and we expect to sell first half 2025 credits later this year.

Now shifting our focus to our customers on the ITC side of the page. While customers with wind and solar projects saw eligibility dates pulled forward compared to prior legislation, energy storage was explicitly excluded from these changes. We'll cover pipeline in more detail later, but I want to highlight that with most of our renewable coupled projects scheduled to come online in the next 30 months, we have not seen a meaningful impact from this change to date. Additionally, the FIAC language in the bill is yet another tailwind as it creates new demand for our American-made product as we source, manufacture, and procure more than 90% of our materials domestically.

Overall, we view the bill's passage as an important referendum on the need for American-made energy storage systems to meet the country's growing demand for energy.

Moving to our commercial pipeline. Since our last update, we've continued to see important advancements across our commercial business. An emerging theme is the increasing scale and sophistication of opportunities, particularly with large counterparties. Q2 marked a strong growth period. We ended the quarter with opportunities valued at $18.8 billion, representing 77 gigawatt hours, a 37% year-over-year increase and a 21% improvement quarter-over-quarter as we added $3.2 billion.

Notably, we saw a 15% quarter-over-quarter increase in 8-plus hour projects, validating what we have been saying for the past few quarters, market fundamentals are changing, and there is growing demand for longer duration solutions. While many of our early projects were co-located with generation, 50% of our pipeline now consists of stand-alone storage projects, reinforcing the need for storage on existing electricity grid infrastructure. As Joe mentioned earlier, the market is increasingly leveraging battery technology to maximize grid efficiency, which includes stand-alone storage near highly congested load zones where wholesale prices are more volatile and energy arbitrage is a real opportunity regardless of the generation source.

One of the more exciting developments we are seeing for our flexible technology is the rapid emergence of data centers. They are one of the fastest-growing opportunities in front of us, representing over 20% of our pipeline today. Now how you really need to think about this is in 2 main ways. The first is direct demand from developers, building fully integrated data center campuses. These projects combine multiple generation sources with our storage solutions to deliver reliable power. This approach reduces the time to power and can serve as a bridge to interconnection, accelerating revenue generation, reducing peak demand charges, and derisking the long-term reliance on traditional grid infrastructure.

The second is indirect demand, where developers are building generation plus storage projects in utility regions serving data centers. In this case, data center operators are supporting the addition of incremental capacity to the grid to offset their energy consumption, reducing their total energy costs and maximizing renewable credit capture. Last quarter, we announced a 750-megawatt-hour MOU with a developer, which is a very good example of an indirect project. We have advanced this initiative and are currently finalizing contract terms for our first 10-hour project supporting a well-known hyperscaler in the PJM service territory. We've also made significant progress on several other MOUs discussed last quarter.

In April, we signed a 5 gigawatt-hour MOU with Frontier Power to deliver projects across the U.K. through submissions in Ofgem's cap and floor program. Frontier has now submitted over 10 gigawatt hours of storage projects utilizing Eos technology, more than double the original MOU, highlighting their strong confidence in our technology. And importantly, cap and floor requires eligible technologies to deliver a minimum of 8-hour discharge, which is a strong fit with our capabilities.

Additionally, we are actively co-developing a broader pipeline with Frontier, targeting data center growth in Europe and long-duration storage needs in the Asia Pacific region. We continue to expand our presence in Puerto Rico and have identified several other storage projects that we are pursuing on the island with a local developer. The list of projects should significantly increase the 400-megawatt hours currently under MOU.

Transitioning to backlog. We ended Q2 with a backlog of $672 million, representing 2.6 gigawatt hours of storage. During the quarter, we delivered over $15 million in revenue and booked 2 strategically important orders. The first was with a large regulated utility in the Southeast for a microgrid project supporting 2 schools in Florida. And the second was a repeat order with an existing customer for a renewable energy microgrid on California tribal land. As many of you know, the industry has been highly focused on the final outcome of the big beautiful bill over the first half of this year. We saw several months of customer uncertainty as customers were waiting to see what was going to happen with the final language.

With that uncertainty behind us, we feel really good about the increased activity we are seeing on a number of large projects, as customers are reaching out to us as they try to navigate these new requirements. This shift towards larger project opportunities means we work with more stakeholders. This includes developers, offtakers, project finance investors, lenders, technical experts, which sometimes increases time to order. While we saw a slight decrease in backlog from the prior quarter as a result of the things we've just talked about, there are strong demand signals ahead of us.

As we bring customers to the factory to give them an up-close view of our manufacturing expansion, share our latest Z3 field data, we have enhanced our ability to demonstrate that we can deliver. With the recent positive momentum, I'm confident that we'll be announcing some larger orders soon. Strategically, we're working to make Eos the preferred solution for grid resiliency and sustainability on a global scale. Along these lines, we've significantly enhanced our competitive positioning by teaming up with a major developer and engineering firm to design an indoor racking solution that takes advantage of our safety and nonflammability, enabling us to significantly reduce the spacing requirements of indoor systems. As a result, this configuration can achieve over 1 gigawatt hour per acre in site density, which is 3 to 4x greater than traditional industry layouts, making us more competitive in space-constrained environments. This is a big step forward in delivering high-density storage.

Turning to our financials for the quarter. Before getting into the numbers, a couple of key themes I want to highlight from last quarter. #1, revenue is up on greater volume. #2, delivered volumes outpaced revenue, driven by lower pricing on a single project. And #3, margins improved as we continue to get more volume through the factory, covering our fixed costs.

In Q2, we generated record quarterly revenue of $15.2 million, a 46% increase from Q1, accompanied by a 122% increase in shipments. This was the same amount of revenue we generated for the full year of 2024, demonstrating the continued scalability of our operations. As forecasted on our last call, Q2 revenue was impacted by lower selling price as 50% of the production volume was delivered to a single strategic customer. While this project affected near-term revenue and margins, we see it as a significant growth catalyst.

Look, for everybody to know, we've been working hand-in-hand with this customer to design a cube with simplified field installation and commissioning. Our first installation of this improved design saw truck-to-pad times of 25 minutes and cube-to-cube connection times of 30 minutes. And we have seen those metrics improve on each subsequent project. If you take a step back and think of this from a customer's perspective, we're able to reduce the time and cost associated with getting projects online out in the field.

Gross loss came in at $31 million, a 32-point margin improvement from the prior quarter. This improvement was largely supported by the increased production volumes we are getting through the factory. We spent $32.9 million on operating expenses. But when you exclude $5.4 million in isolated one-time items, operating expenses declined quarter-over-quarter.

While OpEx has increased year-over-year, approximately 28% of the increase stems largely from noncash items such as stock-based compensation. The balance of the increase was tied to strategic headcount as we build the muscle that we need to scale this business. We continue to invest in building our software capabilities to position ourselves as a leading software business and expand our sales force to support the significant growth that we see in front of us.

Net loss for the quarter was $222.9 million, but this includes noncash fair value adjustments tied to mark-to-market associated with the 35% increase in our stock price as of June 30. The mark-to-market adjustments will continue to create volatility below the line and is largely driven by changes in our stock price.

Adjusted EBITDA loss came in at $51.6 million, showing a 75-point margin increase driven by the improvements I've already discussed regarding volume, partially offset by lower selling prices. Although pricing on a single project weighed on Q2 results, we have clear visibility toward healthier unit economics as we, first of all, deliver projects more in line with our average backlog pricing; and secondly, continue to drive labor and overhead efficiencies with higher manufacturing throughput.

With these 2 improvements, we expect to achieve positive contribution margin in the fourth quarter of this year and achieve positive gross margin as we exit the first quarter of 2026. With $26 million in revenue booked for the first half of 2025, we see a clear path to our full-year revenue range of $150 million to $190 million. Look, we recognize this requires a significant increase in the second half, but we expect to see meaningful increases in our production capacity as subassembly automation fully comes online, as Joe has already discussed.

Now moving on to our capital structure. Since I joined the company in 2023, I have been working relentlessly on securing the capital needed to expand our manufacturing operations and get this business to profitability. This culminated with the execution of 2 highly successful transactions in the second quarter that lowered our cost of capital, simplified our balance sheet, and strengthened our cash position. In June, we raised $336 million with tremendous institutional participation on 2 offerings that were both oversubscribed.

Working together with our existing lenders, we were able to complete a highly effective transaction, and we've used the proceeds to, first of all, refinance a significant out-of-the-money convert that was coming due next June. You may have noticed that we've also received a $5 million rebate post-closing in accordance with the terms of the agreement. And secondly, to prepay $50 million on the Cerberus term loan, allowing us to reduce the interest rate from 15% to 7%, defer the financial covenants to March of 2027, and extend their lockup period by another year, further aligning long-term shareholder and strategic partner interests.

And finally, we've added $139 million of cash to our balance sheet, net of discounts and expenses, ending the quarter with $183 million in total cash. The overall transaction is expected to result in approximately $400 million in total interest savings over the terms of the company's debt. In addition to these transactions, we also made advancements in other areas of the cap stack. Post quarter end, we announced we received our second loan advance of $22.7 million from the Department of Energy. With this advance, we have drawn the maximum amount under the first tranche in connection with our first manufacturing line, and we expect to request an additional draw on the second tranche before year-end as we continue to expand our manufacturing capacity and build out Line 2.

And then yesterday, we also announced an amendment of our 26.5% convertible notes. The maturities on these notes have been extended to September 30, 2034, while the interest rate is reduced to 7% effective June of '26. The amended notes have redemption terms allowing for optional pro rata conversions, excluding the affiliated holders. And with this, we expect to redeem approximately 85% of these notes in the third quarter. The combination of strategic equity and debt refinancing, along with continued DOE support, has significantly strengthened our balance sheet to support the growing scale of domestic battery manufacturing. So for me personally, I feel like this is mission accomplished.

Before we move into Q&A, I'd like to revisit what we announced yesterday regarding our final cash performance milestone under the Cerberus term loan. Given Cerberus' confidence in the opportunities in front of us, along with the efficiencies we are seeing with project execution, they have granted us an additional no-penalty extension through October 31, 2025, allowing time to see this growth come to fruition.

With that, I want to thank everybody for joining us today, and I'll now turn the call over for questions.

Thanks, Nathan. Before we turn it over to our sell-side analysts for questions, I'd like to -- Nathan and I are going to answer the first -- the top 4 questions that came in through Say Technologies from our retail base. I'm going to start off with 2, and then Nathan will wrap up with 2, and then we'll go over to questions from sell side.

First question, when is Line 2 expected to be fully operational? Will this include the subassembly line? Yes, we're forecasting Line 2 coming online in the first half of next year. Line 2 will share some of the subassembly capacity that we have for Line 1, and then eventually, we'll add to that subassembly capacity as we ramp up capacity on Line 2. On what lessons from Line 1 are being applied to Line 2, and are those improvements resulting in meaningful changes to line design throughput or cost? We're planning on when we did Line 1, Line 1 is designed in the U because that's what fit into the building that we had.

As we look to Line 2, it will be a straight line where material will come in one side, raw materials will come in one side, and a cube will go out the back end of the other side. So we're really designing the Line 2 for total throughput and efficiency of the facility. As we think about what we've done, like we've learned a lot about operating Line 1 over the last year, and designs are being incorporated to get better quality, better reliability and availability of the line, and improved throughput.

So we have some things that we've learned about where we had some single-point areas that when we do maintenance, we have to slow the line down that we're going to put in backup capacity in specific stations. And at the same time, we're going to deliver the cost of that line in line with what we did on Line 1. So we're pretty happy with how we wound up there, given the environment that we're in from an inflationary standpoint and also from the changes that we're making. But what we're really excited about is doing this line in a straight line so that we get the full efficiencies and fewer material moves than what we're seeing right now in Turtle Creek.

Second question for me is in the Q4 2024 earnings call in March 2025, it was mentioned that 8 states were bidding for Factory 2.0. What is the current status of finalizing the site for Factory 2.0? We're still in negotiations with multiple states. We're not going to negotiate that in public. The response to people wanting to have a facility like Eos has been tremendous. We're working through to get the right facility with the right long-term landlord that we can partner with over time. And then as we get through those discussions with -- you got to remember like you're doing this not just on a state level, but on a county level and in some instances, the town or city level to really get the best positioned factory workforce cost for Eos and long-term partnership that we want to have. Not something that you do rushing through. We're happy with the progress that we're having, and we'll update people when we have news to share.

Thanks, and I'll turn it over to Nathan.

For the next question, last quarter, tax uncertainty was cited as delaying deals. Post BBB law, how have customer timelines or urgency shifted? And are there any major barriers still preventing deal commitments? Right. So we'll break that down one piece at a time. I think we spent quite a bit of time earlier in the call talking through the impacts of the big beautiful bill. Just to recap, I mean, I think we did see some delay as customers were working through the uncertainty before the final language was adopted. Now that we have the final language adopted, I think with some of the accelerated timelines around solar and renewable credits on the customer side, we are seeing some of those customers wanting to move very quickly to make sure that their projects get placed in service. So to the extent that we have co-located storage associated with those projects, that can accelerate things for us.

So overall, I think getting rid of some of that uncertainty is really, really good for the industry. Projects are starting to move forward, and we're very excited about that.

Second thing that we talk about is as we work through some of the larger deals, we're getting a lot of inbound calls from folks that say, "Hey, I was thinking of using a different technology," but because of the FIAC restrictions or some other challenge, they're reaching out to us asking if they can change their interconnection, change their permits and go with the non-lithium technology. We're working through some of those. As we talked about, those take time because there are always multiple stakeholders, and we've got to work through with all of the stakeholders. But as we bring customers in for factory tours, show them that we are scaling up the business, as Joe has talked about in detail, and then also walk them through some of the latest Z3 data that we're getting from field installations, as Joe highlighted, I think we're building a lot of confidence with these customers, and I'm confident that this is going to move these deals forward quickly.

And for our final question this morning, as Eos scales, how is it building a partner ecosystem across integrators, developers, and channels to support broader adoption? Look, we talked a lot about this in the commercial section earlier on the call, giving more details on some of the MOUs and the expanding relationships that we're seeing out in the marketplace. But I want to focus a little bit more here on the second half of the commercial process, which is getting projects fully commissioned, up and running out in the field. I think this is where we're really focusing on developing these strategic relationships, making sure that we find the right partners, whether those be integrators or other equipment suppliers, particularly in some of these project sites that have complex site integrations with multiple components to them, make sure that we've identified the preferred technology and the preferred partners, go through simulations before we agree to work with a certain technology, whether that's balance of plant equipment like inverters, EMS providers, working through some of those and make sure that we can go out to a customer with those partners and say, look, we've done projects with this technology in the past. We know it works and execute a flawless project for those customers going forward.

So I think as we think about strategic partnerships, it's as much on the commissioning and the projects out in the field as it is on sales channels. So with that, I think we're going to wrap up and take questions from the sell-side analysts.

[Operator Instructions] And I show our first question comes from the line of Stephen Gengaro from Stifel.

So 2 things for me. The first, you touched on a bit in the prepared remarks. But when we think about the bridge to the second half revenue, and you did a good job, I think, talking about production growth versus revenue growth in the second quarter, but that's clearly a topic that's come up pretty frequently. Can you add some color to how we sort of bridge the revenue? And I don't know if you'll go into this much detail, but I thought you guys were pretty clear about what the second quarter was going to look like, although I think some people may have been a bit higher than that. But could you -- if there's anything you could talk about in the third quarter, that would be helpful, too.

Thanks for the question. Yes, when you look 4Q to 1Q, 1Q to 2Q, if you look at the page that we had in there, where we tried to mute out the 13-week quarterly movements, we're doubling production quarter-over-quarter for the last 9 months. Double it again, double it again, and you're firmly in the middle of our guidance range. And that's what makes us feel like we'll get there. Now inside of that doubling, I think there's a couple of things that everybody has to realize is like we doubled that production with the same production processes, the same supply chain, and the same headcount.

And we've been talking about this for quite some time, that as you double production and get more throughput through the factory, you start to see margin rates improving. You see the margin rates improving. We're going to continue that trend as we get through the year. But I think that's really what we have to do is we have to just keep doing what we've been doing, which is a doubling effect of production out of the factory. Now what gets you from like, I think you can get intimidated by the bump up of saying, wow, doubling from where you are, is not going to be tough. And we've been doing it without the benefit of the automation of our subassemblies. And that is starting to produce and feed the line. As we look at the capacity of the line, the capacity of the line has always been limited by the flow of parts that have come from our semi-automated subassembly process.

I'm very encouraged by the results that we're seeing off of those subassemblies as we talked about. Parts are flatter, throughput is faster. That's resulting in better output out of the batteries that we build batteries and then test them before we -- to make sure everything works, and you start looking at that, you're saying, wow, better output battery, higher quality, higher throughput, run the line at its capacity. We've doubled, doubled, doubled, doubled and doubled again, and you're in guidance, and that's what we're shooting for.

And the other thing I wanted to ask about is when you talk about incremental production lines, and you addressed this, I think, on one of the questions from the retail side. But how do you balance -- and I know the opportunity pipeline looks very good, but how do you balance sort of order flow and visibility on order flow with expansion?

Yes. So Steve, we talked on this on the last call, and I think I want to reiterate this, like the customers that Nathan has talked about in his remarks come in and they like what they see, but they want to see more. So Line 2 is built with what we think is going to be happening here over the next few months, from the demand side that we're seeing as we move through our production capacity. What I said in the beginning was, I myself was very conservative on how we made those investments of wanting backlog in place.

But when you start looking at the size of the projects we're talking about, you've got to build it and have it ready to go when those projects come in. And that's why we started and placed the order for Line 2. And we're timing that -- like I know people will say, well, when is Line 2 coming in? You said before that it was going to be late this year. Now you're saying first half next year. It's all timed to when we think orders are going to come in and when we need the ramp. and how we utilize capital as effectively as we can, and that's when we need that capacity. And what we really want to do, I mean, you've personally been here to see the factory. It's inefficient because it's on multiple floors, getting everything running on a straight line reduces the material moves, reduces the overall cycle time from raw material in to cube out the door, and that's what gets us really excited about how we can ramp the business going forward.

And I show our next question comes from the line of Martin Malloy from Johnson Rice & Company.

Congratulations on all your accomplishments. I wanted to ask, you've got a significant improvement in the round-trip efficiency. It sounds like the lower cost and time to install. Is there any way to quantify the improvements that are going on in terms of an LCOE or IRR for the customer?

Yes. I mean I think those efficiency -- we're still working through that with customers on individual projects. But what we're seeing here between the reduced cost on the commissioning and the improvements in the performance, should translate into a couple of percentage points on IRR on a typical project. Every project is going to be different, but it's a meaningful difference in the amount of upfront CapEx, both from the installation side as well as the cost of the equipment. So I think that's going to translate into better economics for customers. And we'll provide more detail on that as we go forward and have more granularity on that.

Martin, one thing I just would put on top of Nathan's comments is like when we talk about anything that has to do, and I've seen this throughout my career, many different technologies, we try to simplify the way we talk about things to give people that headline, and it's only gotten worse as we start living in a society where we have 30-second attention spans at best. So we try to come up with headlines that make people understand. But the -- every project has its own calculus to it. And every project has its own operating and every project has its own cost curve, and we work through project by project. That's when we see and what we're seeing on the performance on the field, how we're driving down the cost curve of the product, how we're putting software on top of the battery itself to get better performance, that absolutely improves LCOS.

But there is no headline number that we can give somebody. There's no TikTok answer to this. It's a project-by-project basis that you work with customers to make sure that you give them an advantage. And by the way, I've said this many times, I'd love to say 100% of the time, Eos has the advantage over other technologies. We don't 100% of the time. So we prioritize around where we do and giving the customer the benefit of an asset that delivers them higher returns.

And just for my second question, I just wanted to ask about the second line and the ramp-up time. And you did share that the second line is going to share some of the assembly -- some of the subassembly automation. You've got multiple suppliers on the containerization side. Could you maybe talk a little bit about the time to ramp to that full 2 gigawatt hours of annual capacity with the second line?

So Marty, what we said was we're going to bring the line in. I would assume that we are going to have lessons learned from bringing in the subassemblies. As I said in the prepared comments, we're going to share subassemblies to start and then bring on from there. But it's also going to be dependent upon what we need to do and the capital we need to allocate for customer demand. So we'll update everybody on when that's going to happen, but it depends on when the orders come in. And as the orders come in, it may accelerate or we may slow it down depending on what's happening. So I don't have a very specific date, not going to give a date or commit to a date here, Marty, on the call, but we have a plan to be able to do this that it will ramp into production in the first half of next year.

And I show our next question comes from the line of Ryan Pfingst from B. Riley.

You gave good insight into what it will take on the Eos end to achieve guidance for the year. Wondering if there are items on the customer side or otherwise that are somewhat out of your control that we should be aware of that could impact second-half sales here.

Yes, Ryan, thanks. We talked about some of them on the call, right? I mean I think some of the uncertainty around the bill has been alleviated. There are some customers that are trying to accelerate. Other customers are trying to raise financing. So I think we're -- every -- again, like Joe said earlier, every customer, every project is different. We're working through them. We talked about a number of different large opportunities that we are working on that we're progressing that we've got confidence on. We just got to work through those project by project. I don't know that there's one single thing that's holding back orders at this point. I think we're delivering on everything that customers need, and they're working through their timelines and their financing in order to be able to place firm orders. So we're excited about what the future holds on that front.

And then service revenue increased to over $1 million in the second quarter. How should we be thinking about that piece of the business, maybe both near term and then longer term as installations scale?

Yes. Service revenue, if you think about it, it's really tied -- today, it's really tied to our commissioning efforts and balance of plant equipment. As we grow a portfolio of assets in the field, that will have more long-term service revenue coming from legacy projects, right? So that should grow as a percentage of the total revenue mix over time as we get a larger installed base out in the field.

And I show our next question comes from the line of Jeff Osborne from TD Cowen.

Just a couple of questions on my side. I might have missed this, but the strategic customer, was the majority of the revenue for that project attributed to 2Q? Or is that going to linger into the third quarter?

No, the majority of it was in Q2. We've talked about this on previous calls. If you think about our revenue recognition, a large portion of the revenue is recognized at the time of delivery. There's a portion related to final commissioning, but the vast majority of it occurs at the time of delivery, which is -- the shipments are behind us on that project. It's out in the field. It's a beautiful site to see all the cubes lined up and getting ready and going through hot commissioning to start operating. But from a shipment standpoint, we've delivered that project.

And then now that the capacity in Pittsburgh is ramped up or ramping, how do we think about the typical lag from order to delivery? Like, what are you quoting, Nathan, as it relates to that? And then how does that relay for investors thinking about the backlog?

So we work with the customer and their delivery windows. And customers, in some cases, have some flexibility, and we can deliver to a storage yard while they get their final site preparations ready. But we'll work together with the factory to figure out what capacity do we have, what's the delivery window for the customer, and how do we bring those bring those together. So every customer has got an agreed-upon delivery window at the time that we sign the order.

Is it fair to say that those are within--

From a quoting standpoint, I would also say like this is somewhat slot to the factory and selling seats on an airplane. And we work with customers. Going back to the earlier question around what's out of our control. I mean, the good thing with Eos is we're a single SKU company. We've designed the product so that we build to a single spec to meet the requirements of every customer, and we can move things around. So we have a lot of flexibility around that. And depending on customer needs, we can do trade-offs as we go.

I'm showing no further questions in the queue at this time. I'd like to turn the call back over to Joe for closing remarks.

Thanks, everyone. Thanks for listening. Thanks for the questions from both retail side and sell side. Again, when I -- if you take a look back over the past 9 months, operational team delivered doubling output in the factory over the prior 3 quarters, continue to double. We're solidly into our revenue guidance. That's the path forward for the company and what we're focused on.

I think Nathan has been clear on the movement as we move things through the pipeline and continue to work with customers to pull together the Alkami to get orders closed and then turn that into subsequent revenue. We'll keep everyone updated as we go through on the capacity expansion. And again, from an overall ability to deliver, excited about seeing good product come off the automated subassembly that's higher quality that delivers better performance, which we will continue to iterate our not only the physical product, but the software around the product to give people -- to give customers the performance that they need to power America's energy future. Thanks for listening, everyone.

Thank you. This concludes today's conference call. Thank you for attending. You may all disconnect.