Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the EOS Energy’s Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any backward noise. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the conference over to Liz Higley, Director of Investor Relations. Please go ahead.

Yeah. Good morning, everyone, and thanks for joining us for EOS's financial results and conference call for the second quarter 2024. On the call today, we have EOS CEO Joe Mastrangelo and CFO Nathan Kroeker. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements, including but not limited to, current expectations with respect to future results and outlook for our company, and statements regarding our ability to secure final approval of a loan from the Department of Energy LPO or our anticipated use of proceeds from any loan facility provided by the US Department of Energy, which are subject to certain risks, uncertainties, and assumptions. 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 any forward-looking statements made during this call to reflect events or circumstances after today, or to reflect new information or the occurrence of unanticipated events, except as required by law. The conference call will be available for replay via webcast through EOS Investor relations website at investors.eose.com. Joe and Nathan will walk you through the company highlights, financial results and business priorities before we proceed to Q&A. With that, I'll now turn the call over to EOS CEO Joe Mastrangelo.

Thanks Liz. Good morning, everyone. Thanks for joining us for our second quarter earnings call. Let's start off with our operational highlights page. Just a couple of things to give context around the numbers. Upper left-hand side of the page where we talk about our commercial pipeline. That $13.8 billion represents nearly a $500 million increase over last quarter, which continues to show the opportunity that we have to position EOS technology out in the marketplace. Nathan will walk through more on booked orders and order backlog in his section, but we continue to see traction and I'll go through some more details about what we've seen since the end of June to today, since announcing the closing of the service financing and how that's impacting this top line on the page. On the bottom, we've now gotten to 4 gigawatt hours of discharge energy, with the majority of that coming from out in the field we continue to see the potential of technology and the technology working and continuing to deliver performance for our customers. On the revenue side in Q2, revenue of $900,000 really impacted and driven by two things; one, planned, which was the implementation of the state-of-the-art line, which we knew we would slow down our production rate as we were bringing the line in place. When you really think about what the team did with the state-of-the-art line, they basically took what was an empty building at the beginning of the quarter and basically transformed it into our first automated state of the art production line in around 60 days. Tremendous performance there. The second piece, driving when you see where revenue is, was as we were going through and working with Cerberus, and I'll talk more about their investment thesis and the process that…

Thanks, Joe, and thanks everybody for joining us this morning. I will spend the rest of our time walking through our commercial pipeline, talk about how we've strengthened the balance sheet along with our second quarter performance, and then we will wrap up with an outlook for the balance of 2024. Moving into our commercial pipeline. We are excited to see increased activity and corresponding growth following the announcement we made with Cerberus in late June. As of June 30, our pipeline was nearly $14 billion, representing 52 gigawatt hours of storage, including a $1.4 billion in signed letters of intent, which are primarily waiting upon successful commercialization of first project deployment and customer financing. It should be noted that the commercial tailwinds we have seen following the strategic investment are just beginning to be reflected in these numbers, as there was only four days of the quarter remaining when we made the announcement. More specifically, the 960 megawatt hour letter of intent that we signed in July, will be included in our pipeline when we update it for the third quarter, and we expect that LOI to become a booked order upon closing of customer financing. As we've highlighted in prior quarters, we are now tracking to 2.2 gigawatt hours in late-stage approvals, which generally include projects awaiting financing, government grants or other shortlisted projects. The 4% increase in commercial pipeline quarter-over-quarter reflects the healthy churn of new projects moving in and through the pipeline as Joe discussed earlier. We feel very good about our total pipeline and we're seeing positive changes in the overall mix as we shift toward utility scale project opportunities with blue chip customers, and we continue to see positive movement towards grid scale deployment with several major utilities. Our backlog as the quarter end…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Chip Moore with Roth. Your line is open.

Good morning. Hey everybody. Thanks for taking the question. Congrats on the achievements this quarter. I wanted to ask about Cerberus. You talked about their network and playing bigger, just maybe talk about what they bring to commercial development, whether that's data center or other opportunities. And then you talked about exploring financing solutions to help drive customer adoption. Maybe just expand a bit upon that.

Hey, Chip. Good morning. How are you? As it relates to data centers, there's multiple avenues that we can go through. I mean, obviously, first off, Cerberus has a large real estate portfolio that we can leverage into that tie into data centers as far as customers that they may have the same time, just at a 60 plus billion-dollar company, they've got a lot of connections with a lot of different players in the marketplace that have opened up and made introductions for us as far as who we can talk to. And that's generating pipeline of opportunities and then around financing, not direct financing per se from servers themselves, but obviously in the network that they have with other financial players is bringing us in to discuss the portfolio of opportunities that we have and the opportunity for other financial players to finance projects that we have. So, it's really multifaceted when you think about the gateways that they bring to us. And as we've been going through here the first 30 days, we're working on all of those to see where those come out, along with continuing what we were doing before.

That’s helpful, Joe. And just curious in general, how customer tone has changed since you announced the deal. I guess particularly for those utility backed projects that take a bit longer and they're a little more cautious, what you're seeing there?

Yeah, I mean, Chip, when you look at utility backed projects, the ones that we're executing on, we continue to execute on. I think it brings a sense of somewhat surety of the company being able to deliver at the same time with newer projects that we might have been discussing. It now brings being able to say that you've secured financing to get to profitability now gives people the confidence that the project is going to be delivered where there was a question mark before. It's like what I said in my earlier remarks of what I tell the team. What's once a dream or a vision is now a reality of us executing to realizing our potential. I think customers like that versus a lot of the uncertainty that we had surrounding the company before we got the financing from servers.

Got a couple. If I could sneak one more in just on the milestones. Yeah. The biggest risks that you see there or how comfortable you are with those milestones, and then remind us, I think you have sort of two shots on goal, sort of getting to ultimate goals out in. I think it's April next year. Thank you.

Yeah. Obviously, we feel good about the milestones that we have. They're in line with the financial objectives that we laid out to begin with for the company, and we'll work through those to go through with the ultimate goal being of achieving the milestones in April. But we want to achieve all the milestones as we go through and we execute on the plan that we have, because that ties to the financial plan that we've had in the estimates that we've published to the market.

Thank you.

Our next question comes from the line of Martin Malloy with Johnson Rice. Your line is open.

Good morning. Congratulations on all the progress you're making. I wanted to ask about the ramp in production capacity to the 8 gigawatt hours. Could you maybe talk about some of the factors that would influence that? And now that you've got more confidence on the financing side, any update there in terms of the pace of ramping that potentially moving beyond the 8 gigawatt hours?

So, Martin, I think the one thing that doesn't change for EOS is just we'll expand capacity as we have the order book. And I think the way that we built the company was when you really look at closing orders and delivering projects, you know, you're talking about, you know, a 12 to 18 month timeline to be able to do that, where expanding capacity can be done in a lower amount of that time. Now, obviously, as we see the pipeline strengthening and orders getting close to getting close to closing, we will make a decision on adding the second, third, and fourth line as demand comes in, and that can obviously be accelerated as demand accelerates and then beyond the 8 gigawatt hours. I mean, we've always said, like, we've been relatively conservative on the market share that we thought EOS would be able to gain as we've grown. And we've always thought of being bigger than an 8 gigawatt hour manufacturer. So, we will go through and evaluate locations that would allow us to optimize logistics costs if we were to think about doing a factory number two. But the thing about the way the line is designed and the way the capacity costs are designed is that you don't need a massive, massive factory to gain economies of scale. Actually doing it in smaller chunks, closer to where the demand is, lowers your logistics costs and reduces the cycle time to bring, to bring projects online. So that's how we would think about that. We haven't really thought about, you know, factory two as of yet, but, you know, that would be the plan long-term as the company continues to grow, hopefully.

Okay. And then as a follow up question, just wanted to try to get your sense as to how important the domestic content is in the customer decision making process?

Martin, it's becoming very important. I mean, I'll let Nathan talk through that because he's been doing a lot of work on that.

Yeah, I would say. Martin, good morning. I would say it depends on the customer and the use case. Everybody's focused on the domestic content and the bonus credit. I think where we really bring additional value is with our 91% domestic content tracking towards 100. You know that if a developer is putting solar and storage, you know, into a project and they're using us made steel, we have the ability for them to unlock bonus credits on the entire project. And there's real value there. That is a significant increase in the overall IRR for the project. So again, we'll work through with customers in terms of sizing every individual project and make sure they can capitalize on that value. So, I think it's customer by customer, but it's a key part of the discussion.

And I think, Martin, inside of that, it's not just. I would just add, like, it's not just the total number. You know, we sit above 90% on US content today. It's not just that total number that's important, it's the components within that and being NDAA compliant, because that's a guarantee around grid security and how your software works and all of your printed circuit boards and things that you have in your project. And I think that becomes also important as the company looks for a higher degree of energy independence in the future.

Thank you. I'll turn it back.

[Operator Instructions] We do have another one question coming in from Ryan Pfingst from B. Riley. Your line is open.

Hey, good morning, guys. Thanks for taking my questions. Can you just talk about potential risks to certain parts of the business or to the DOE loan if we do get a change in US administration?

Right. I really wouldn't know how to, how to answer that other than to say that. I think both, both sides of the aisle agree that US manufacturing is important. I think what we've laid out as far as the financing that we have in the partnership with Cerberus, that's financing that gets us to profitability and self-funding the business as we grow going forward. And I think that's what we're focused on. While also focusing on closing the DOE loan. I think around closing the DOE loan, it's important for everyone to realize that we had a major change in the capital structure of this company a little over 30 days ago, which have required us to go back and work through some of the, some of the terms and conditions on the loan. And we continue to work on that with the DOE LPO along with Cerberus. And you know, one of the things that we're really working on with them is the inter creditor agreement. Now that a new creditor has come in and we were able to retire the Atlas debt as part of the service financing. We meet regularly with the DOE and in fact, the team will be in Washington next week to continue that work. And we're confident that we'll be able to close that loan here in the future and we'll just continue to work on that while at the same time. I've always said, Ryan, that we've designed this business to utilize any kind of programs that are there, but not to be dependent upon that for our success. But I think what everyone agrees with is we want more manufacturing in the United States. We want energy security as we move forward. And we need energy storage whether you're using renewables or fossil fuel to power the future of the country, we're going to need energy storage. And EOS provides all three of those things. And that's what we just have to keep working on.

Yeah, makes sense. Thanks for that color. And I guess just one second one. Just curious what the mix looks like today for the current pipeline from a customer type perspective, between utilities, IPP's and smaller customers?

Yeah, I think it's consistent with how it's been in the past. We try to maintain a portfolio in the pipeline and in the backlog. No different from your personal investment allocation. Right. You want diversification there. Different types of customers move at different pace, have different motivators. We're very happy to have a combination of IPP's utility backed developers. You know, we've got smaller projects, commercial and industrial projects, micro grid applications. So, it's a good portfolio. We have never given a detailed breakdown of that, but I would say the overall mix is consistent with where it's been in the past, and we continue to focus our business development efforts across those various customer segments.

Great, thanks for all that and congrats on all the progress here.

There are no further questions at this time. Mr. Joe Mastrangelo, our CEO, I turn the call back over to you. Thank you, and thanks everyone for listening today. Again, a lot to be proud of in the second quarter. Focus moving forward growing the business, scaling the line, driving down costs as we get through the second half of the year, again, I'd like to congratulate everyone that works at EOS for all the hard work in what was a very uncertain environment. As we move forward now, we know what the path is to get to profitability, and that's delivering on the plan to unlock the financing to grow the company into what is a secular shift in the energy industry. And thank all of our customers who have the faith to place purchase orders with us and all of our shareholders for investing their money and working with us as we grow the company. We'll continue head down, focused on the goal and getting the hard work done. As I've said many times in my more than 30 year career, this is by far the hardest thing I've ever done, but also the most rewarding when you see progress. So, thanks everyone for listening, and we'll keep everyone updated, look forward to talking in September in our special shareholder meeting.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.