Eos Energy Enterprises, Inc. Q3 FY2025 earnings call

• Operating Highlights: Commercial pipeline and orders booking showed growth, with MOUs converting to orders. Announced a strategic agreement with Talen Energy. New building in Pittsburgh and software hub in downtown Pittsburgh were unveiled, aiming for an optimized factory and leveraging local brain power. • Market Analysis: Emphasized the importance of energy storage in the energy super cycle, with Eos' technology offering advantages like high round-trip efficiency (mid-80s to low 90s), wide operating range, non-flammability, and low degradation. • Operations: - Safety: Reduced safety incidents by 84% from Q2 to Q3 and year-to-date are 41% better than industry average. - Quality: Decreased battery defects by 45% from Q2 to Q3, with further improvement expected with full automation of bipolar production. - Cost: Focused on supply base optimization and process improvement to reduce costs. - Production Output: Positioned to ship 3 times the volume of Q3 in Q4 by increasing capacity utilization and ramping additional shifts. - Capacity Expansion: New building with line 2 installation expected in spring 2026, aiming for higher efficiency and lower material handling costs.

In the third quarter, Eos achieved record quarterly revenue of $30.5 million, doubling the revenue from the second quarter. Revenue was supported by shipments to 5 different customers. Gross margins improved sequentially over the past four quarters. The commercial pipeline ended the quarter at $22.6 billion, a net increase of 21% quarter-over-quarter, representing about 91 gigawatt hours of potential projects. Backlog ended the quarter at $644 million with 2.5 gigawatt hours of storage, not including nearly 1 gigawatt hour in new orders booked since the end of the quarter.

• Reiterated 2025 revenue guidance, with Q4 off to a strong start having booked over $220 million in new orders. • Expect to reach positive contribution margins in the fourth quarter and positive gross margin by exiting Q1 2026. • Pipeline ended the quarter at $22.6 billion, showing a 21% quarter-over-quarter increase, with strong activity in data centers and various regions, indicating consistent revenue growth going forward.

• A short report was issued last week with allegations deemed without merit. Received support from entities such as the Department of Energy, California Energy Commission, customers, large institutional investors, and retail investors.

Q: Can you provide an update on the timeline around Factory 2 outside TA?

A: John Mahaz responded that building and automation partners can deliver a line every 90 days, and work can be done simultaneously.

Q: As the company navigates a capital-intensive scale-up phase, how are you balancing the need for fresh funding with the imperative to avoid excessive shareholder dilution?

A: Nathan Kroeker stated he is committed to delivering orders and capital in the most cost-effective way possible for the company.

Q: What is the long-term vision? And how do you plan to surpass or match the competition?

A: Joe Mastrangelo mentioned positioning to add capacity in a 90-day rhythm, winning orders, and focusing on making the product easy to work with in the field.

Q: How do you think about the revenue trajectory going into 2026?

A: Joseph Mastrangelo and Nathan Kroeker discussed ramping up capacity, pipeline growth, and consistent revenue growth over time.

Q: How are you thinking about the ramp of further lines and financing?

A: Joseph Mastrangelo and John Mahaz talked about reducing cycle time for line up and running, using existing and operational capital, and being opportunistic for growth capital if needed.

Q: Talked about ASP dynamics and customer concentration.

A: Nathan Kroeker and Joseph Mastrangelo explained that Q2 was an anomaly with a single strategic customer, Q3 revenue reverted to a normal run rate with multiple customers, and ASP is improving as the portfolio matures.

Q: About margins and cost structure.

A: John Mahaz discussed cost levers like supply chain improvement, COGS reduction per unit, and step function gains from process optimization.