ELVA earnings call analysis

NASDAQ:ELVA Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Welcome to the Electrovia Q4 Year-End 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, John Gibson, CFO. You may begin. John Gibson | CFO: Thank you. Good afternoon, everyone, and thank you for joining today's call to discuss Electrovia's Q4 and full year 2025 financial results. Today's call has been hosted by Dr. Raj Dasgupta, CEO of Electrovia, or myself, John Gibson, CFO. Today, Electrovia issued a press release concerning its business highlights and financial results for the year ended September 30th, 2025. If you'd like to call for the release, you can access it on our website. If you want to view our financial statements, management discussion, and analysis, an annual information form, you can access those documents on the CEDARplus website at www.cedarplus.ca or on the SEC EDGAR website at sec.gov forward slash EDGAR. As with previous calls, our comments today are subject to the normal provisions related to forward-looking information. We will provide information relating to our current views regarding market trends, including their size and potential for growth, and our competitive position within our target markets. Although we believe that expectations reflected in such forward-looking statements are reasonable, they do obviously involve risk and uncertainties, and natural results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the company's press release announcing the Q4 fiscal 2025 results and the most recent annual information forum and management discussion and analysis under risks and uncertainties, as well as in other public disclosure documents filed with Canadian and U.S. security regulatory authorities. Also, please note that all numbers discussed on this call are in U.S. dollars and less otherwise noted. And now, I'd like to turn the call over to Raj. Dr. Raj Dasgupta | CEO: Thank you, John, and good evening, everyone. It is a pleasure to speak with you today as we review our fourth quarter and full fiscal 2025 results. Fiscal 2025 has been the most significant year in my tenure as CEO of Electrovia. It marked a clear financial and strategic inflection point for the company, characterized by strong, profitable growth, major balance sheet improvements, and continued execution of our long-term technology roadmap. Let me highlight a few key milestones. We grew revenue by over 40% year over year and achieved the first full year of profitability in ElectroVis history. This is a structural improvement driven by operational scale, product mix, and disciplined execution, not a one-time event. We further strengthened our financial firepower with a new $25 million facility from Bank of Montreal, replacing our former high-cost private lender. We closed a $51 million direct loan from EXIM under the Make More in America program and have begun drawing funds as we build out our Jamestown lithium-ion cell manufacturing facility. As a nice surprise, we were honored to receive EXIM's Deal of the Year Award. Last year's winner was Abeta Technologies, so we are in good company. We expanded our institutional investor base and improved liquidity with approximately $40 million in gross proceeds from two equity issuances over the last 12 months, which supports our long-term growth trajectory and positions us well as we continue scaling. Beyond these financial achievements, we made major strides in advancing our technology platform, entering new applications, and positioning Electrovia at the forefront of the lithium-ion battery industry. Surpassing $20 million in quarterly revenue is another important milestone, and notably we achieved this without straining our operational resources. This reinforces the scalability of our business model and supports our view that Electrovia is now entering a sustained period of profitable growth. Given the number of new investors who have joined the Electrovia story this year, I'd like to revisit our technology, vision, and roadmap. Electrovia is, at its core, a battery technology company. Our infinity lithium-ion battery platform delivers industry-leading longevity, safety, and increasingly high-performance attributes that are becoming essential across mission-critical applications. Earlier systems deployed at Walmart in 2018 have already outlasted the vehicles they power and continue operating. A respected U.S. sting lab recently informed us that our cells are tracking towards approximately 15,000 cycles, providing rare real-world evidence of multi-decade performance. On safety, our ceramic separator technology continues to maintain a perfect safety record. With lithium-ion-related recalls affecting electric vehicles, buses, consumer electronics, and energy storage installations worldwide, we believe our safety profile is a unique competitive advantage and one that is gaining increasing market visibility. As a subsequent event to the fiscal year in November, we completed a $28 million equity raise. Funds from this round are partially planned to be utilized to support our future technology roadmap, reinforcing that Electrify is not only scaling profitably today, but also actively investing in our future. Some aspects of our roadmap include rapid charging cell development project, including both cell and system level architecture, targeting sub five-minute charging capabilities for select applications, such as robotics and autonomous systems. Next generation separator technologies aimed at further improving safety, high temperature stability, as well as domestic manufacturing of this key technology. Solid state battery development, where we continue to make progress and expect to leverage our existing ceramic-focused intellectual property and know-how to provide a strong foundation. We are investing in our Electrify lab site to enable production of larger cells that can be sampled to potential strategic partners. These initiatives underscore that Electrify is executing a dual mandate, deliver profitable high-growth revenue today while advancing the technologies that will define the next decade of the lithium-ion battery industry. Turning to our commercial progress, our core material handling vertical continues to be a strong and durable foundation. We now have over 10,000 of this deployed globally, supporting 24-7 operations for some of the world's largest companies. This year, we deployed a record number of units with the largest drivers of demand being a few Fortune 500 and Fortune 100 companies, especially in the retail sector. Demand indications from our largest end customer's point to continued growth into fiscal 2026. With this foundation solidly in place and expanding at sustainable levels, we are scaling into multiple additional mission-critical verticals. The first is robotics. This is one of the most exciting long-term opportunities we have. Autonomous systems require exceptional longevity, reliability, and rapid charging, all areas where our technology excels. We have received initial orders and expect to scale deliveries beginning in the second quarter of fiscal 2026. Another vertical that we are bullish on is airport ground equipment, or GSE. We showcased our first GSE products in Las Vegas in September, and several units are now in trials with a major US airline. Safety and durability are key differentiators here, and we expect meaningful contributions in revenue beginning in 2026. In the long run, I expect stationary energy storage systems, or ESS, to become a key element of our business. Our Infinity ESS platform, launched at this super, is receiving strong early interest for applications such as data centers, backup power, and rapid charging infrastructure. Pilot deployments are expected in 2026 with commercial scale beginning in 2027. I believe we provide a solution that fits an underserved part of the strategic industry, namely solutions that provide high power density with reliable, safe performance, metrics that are critical for backup power and data centers especially. Importantly, domestic cell production from Jamestown will qualify for full U.S. investment tax credits, enhancing both the competitiveness of our product and potential margins for our offering. Defense applications are also a strategic target for Electrovia. We continue to see growing interest from defense customers, particularly in sea and land-based unmanned systems. We expect deeper collaboration with two global defense firms in the coming year with whom we have already had initial development work in progress. Finally, we are also targeting recurring revenue opportunities. We have historically highlighted the potential for recurring revenue through energy as a service model, software and telemetry platforms, aftermarket and maintenance contracts. As our install base grows and as we deploy systems into new verticals such as robotics, GSE, and energy storage, we expect recurring revenue to become a more meaningful contributor to the long-term profitability and cash flow stability of the company. Turning to Jamestown, construction is progressing well. The first components of the dry room arrived last week, with additional major infrastructure over the coming months. Jamestown is central to our strategy. It supports supply chain resilience, domestic content requirements, margin expansion, and qualification U.S. manufacturing incentives like 45X and investment tax credits. Before I hand it back to John, I want to reiterate that our approach to capital allocation remains disciplined and focused. We will continue investing in profitable growth opportunities in high-impact R&D that strengthens our technology leadership and in preserving a strong and flexible balance sheet. Our goal is long-term, sustainable value creation. With that, I'll now turn the call over to John for a detailed review of our financial results. John Gibson | CFO: Thanks, Raj. Electrify closed the year with their strongest quarter ever, tapping off a very successful year for the company. Fourth quarter performance improved significantly both year over year and sequentially to Q3. During a Q3 call, we mentioned that we were steadily strengthening the financial foundation to drive scalable and sustainable growth. We demonstrated in this quarter that we can further improve throughput and productivity while maintaining margins and managing cost, providing us the platform to build on our growth to date and expand into new market verticals. Revenue for the quarter ended September 30th, 2025 was 20.5 million compared to 11.6 million in the prior year. Revenue for the 12 months ended September 30th, 2025 was 63.8 million compared to 44.6 million in the prior year. Growth of 77% for the quarter and 43% for the full year. Gross margins for the quarter was 31%, an increase of 530 basis points over the prior year. Full year gross margin was 30.9% compared to 30.7% prior year. As is the case with previous quarters, the gross margin is primarily driven by product mix. And in a time of uncertainty around supply chains, increasing prices and tariffs, we kept costs under control and drove efficiency through increased production. This will continue to be a focus through 2026, especially as we expand into additional verticals. As we continue to increase our production volumes, we're able to push for better pricing from our key suppliers. And management believes the company is well positioned to maintain strong margins as we continue through 2026. Operating profit increased significantly for both quarter and full year. The operating profit for Q4 was 2.4 million compared to 0.7 million in the prior year. Operating for the 12 months end of September was 5.5 million, compared to just 0.7 million in the prior year, an increase of 685% year over year. The company generated a net profit of 2 million for Q4, a significant increase over the net loss of 0.1 million in the prior year. Furthermore, the company generated a net profit for the 12 months into September of 3.4 million, compared to a net loss of 1.5 million in the prior year. We were able to achieve our net profit during Q2 and Q3 of 2025, and maintaining that for the full year is a significant step forward for the company. We also achieved this feat with just under $1 million of a loss on the fair value calculation of a derivative liability, a non-recurring cost relating to warrants that were exercised during the year. Despite this, we ended the year with an earnings per share figure of $0.09. We believe we can continue this trend of profitability into fiscal 2026 and beyond. Our adjusted EBITDA was 3.4 million for Q4 2025 compared to 1.5 million in the prior year, an increase of 1.9 million or 126%. Adjusted EBITDA for the 12-month figure being 8.8 million for 2025 and 4.1 million for the prior year, an increase of 4.7 million or 115%. Adjusted EBITDA as a percentage of revenue was 16% for the quarter and 14% for the full year. The company generated positive cash flow from operating activities of 1.7 million after accounting for net changes in working capital. The company ended the fiscal year with positive net working capital of 38.5 million compared to 0.8 million in the prior year, a current ratio of 4.82 compared to 1.03. A significant improvement which demonstrates the continued improved financial and operating performance of the company and management is committed to continue this positive trend. At September 30th, Total debt was 20.7 million compared to 16.2 million in the prior year. This debt includes both working capital and the debt from the Exim facility. Working capital debt was 17.7 million at the end of the fiscal year, an increase of 1.4 million over the prior year. We had also drawn 4.4 million from the Exim loan as of September 30th. In addition to the cash on hand of 7 million at the end of September, the company had availability within its bank facility of over 7 million. Subsequent to the end of the quarter, the company raised gross proceeds of $28 million from an equity issuance. This cash inflow, coupled with the turning of accounts receivable, has put us in a position where we have a very high cash balance and the lowest debt balance in the company's recent history. As of today, we have available liquidity of over $40 million. We believe we have adequate liquidity to support our anticipated growth as we move into fiscal 2026. With respect to the Jamestown financing, we continue to draw down on the loan in Q1, and as of today, have now drawn over $15 million from this facility. We are currently in a period of no interest payments with EXIM, with those payments not starting until the end of March 2026, and principal payments starting at the end of March 2027. Looking forward to 2026, when we look at our backlog and front log, we see significant growth year over year within material handling. When looking at the new sales vertical, forecasting becomes more difficult as they are less mature in material handling. However, our conversations with these customers within the new verticals continue to advance, and we anticipate these to represent between 10% to 15% of revenue for fiscal 2026. Overall, we expect to exceed 30% growth in 2026, with revenue from material handling between 80% to 85% of that total, and a balance made up of the new verticals that are recurring revenue channels. That concludes the financial overview, and I turn the call over to Raj for concluding remarks. Dr. Raj Dasgupta | CEO: Thank you, John. In closing, I want to reiterate my sincere appreciation for the hard work, resilience, and dedication of the entire Electrovia team. Your efforts have made 2025 the most successful year in our history and, more importantly, laid the foundations for even more success in the years ahead. I'm confident that we are well positioned to build on the momentum that we had in 2025 as we head into 2026 and continue advancing our strategic objectives. That concludes our remarks this evening. John and I would now be pleased to hold a question and answer session. Operator | Conference Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line in question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment. The first question comes from Eric Stein with Craig Hallam. Please proceed. Eric Stein | Analyst, Craig-Hallum Capital Group: Hi, Roger, John. Hey, Eric. Hey, Eric. So you did mention expecting in fiscal 26 the 10% to 15% from new verticals, but just curious, you know, as you think about those verticals, I don't know if it's ranking them or just, you know, some more color. Are there ones that you view as potentially being a little bit more near-term, could mean upside, you know, kind of from how you've set things right now, and then conversely, you know, on the other side, is there an area which maybe isn't as far along as and potentially doesn't have the impact that you think it might. Dr. Raj Dasgupta | CEO: Yeah, you know, as John mentioned, these are all new verticals, so the maturity level is not the same as it is in the material handling space. I've said for robotics, we have two key customers who have provided us with, I would say, fairly reliable forecasting systems. So I'm pretty optimistic that robotics, after material handling, will be the second largest revenue driver. After robotics, we also have a pretty good line of sight on the defense side. One of the two partners we're working with is giving us some level of visibility for 2026. The airport ground equipment, we have our products being trialed by a major U.S. airline. We're optimistic that airline is going to select our product, but that is more like a binary yay or nay type situation, which would either be a multimillion-dollar revenue source in 2026 or a very small revenue source in 2026. That's harder to predict. But that 10% to 15% that John mentioned, you know, from our perspective, sounds about right. Eric Stein | Analyst, Craig-Hallum Capital Group: Okay. Thanks for that, Culler. And then when thinking about fiscal 26, I know you called out, you know, that part of that factors in the Patilford deferred orders. And as I think about what you've seen in the past, I mean, that has been something you've dealt with in material handling. I mean, should we assume that what you're talking about there is material handling? And if there were a surprise, is it fair to say that that's mostly upside or all upside, given that you are, you know, factoring the potential that that happens? Dr. Raj Dasgupta | CEO: Yeah, I'd say we're being pretty conservative here on what we're, you know, and that's what we should do. The surprises would... Lighting on the upside, correct. Eric Stein | Analyst, Craig-Hallum Capital Group: Okay. All right, maybe last thing for me, just energy storage. I know you just launched the product. You said that there was a positive reception to it. I believe you've got three customers that you're in discussions with, and maybe one further than the others. But maybe how the pipeline is shaping up beyond those three customers, given that that would be targeted to an end market, where you've clearly got a pretty deep list of material handling customers. Dr. Raj Dasgupta | CEO: So, Eric, great question. So when we started developing this product, it was with some of our existing material handling customers in mind. They fired about it, and then that was what drove us to develop the product in the first place. What's happened since, you know, those customers still have strong interests, and we are planning – We're in initial discussions on projects with some of those names. Beyond that, though, we've seen quite a bit of interest since we announced the product. And what we've done with the product is we've focused our efforts on areas where the competition is somewhat lacking. So if you look at the energy storage space in general for lithium ion batteries, most of the systems have been designed for let's say for our energy storage which is they're doing a good job of it we and that's a I'd say a highly commoditized end of the market the demand that we're seeing for backup power they require short durations of high power and from an energy storage source so our Technology is actually ideal for high power. We can deliver high power and short bursts reliably and safely, and so we've designed our product to do that, and that's gaining quite a bit of interest across the board. All that said, you know, 2026 energy storage is just proving the product, getting the product certified, and enabling us to scale it in 2027. Most definitely, energy storage could be a huge, huge place for the company. Eric Stein | Analyst, Craig-Hallum Capital Group: Got it. Thank you. Operator | Conference Operator: The next question comes from Colin Rush with Oppenheimer. Please proceed. Colin Rush | Analyst, Oppenheimer & Co.: Thanks so much. Just following up on Eric's question, in terms of the ESS applications, appreciate the the ability to have, you know, faster pulse charging. But are you looking at applications inside data centers, warehouses? You know, just can you give us a sense of where you're seeing these things ultimately located? Dr. Raj Dasgupta | CEO: Yeah, so we've had some discussions with partners looking at data centers specifically, and the idea there is that, you know, 30-minute backup. That's really what seems to be the sweet spot. Whether they're located inside the buildings or outside them, at this point, it's too hard to say. But one of the key selling points is the safety, right? The fact that our systems have this technology, have such a good record in use, are used inside buildings already, right? So a typical warehouse... at one of these Fortune 100 companies that we are supporting might have five, six megawatt hours of batteries operating inside buildings and performing flawlessly over and over and over again. And so that kind of performance gives these types of potential customers comfort in the technology. Colin Rush | Analyst, Oppenheimer & Co.: That's incredibly useful. So then just moving to the robotics market and the charge time that you guys offer, you know, it sounds like you're competing with, you know, supercapacitors or ultracapacitors in some regards. Could you just talk about the competitive landscape, you know, of other batteries in that space and how long the design cycles ultimately end up looking like as you work with some of these companies that are merging with New Form Factors? Dr. Raj Dasgupta | CEO: Yeah, great question, Colin. So there's the product we already have, right? The product we already have is a relatively fast-charging battery system, and it's going into robots, right? Then there's the product that we're developing, and that's the super fast-charging, you know, sub-five-minute type solution, and that would go head-to-head with supercapacitors or certain sort of niche lithium-ion chemistries. and we think we can do it with our technology, does require a bit of investment, which we're making, both at the cell level and the system level. But it seems like in our initial discussions with a couple, you know, major robot partners, that that is a direction that they are looking for, and I think we can fill that need. It's going to take a bit of time and effort, but we have the core fundamental technology to do it. Colin Rush | Analyst, Oppenheimer & Co.: Perfect. Thanks so much, guys. Operator | Conference Operator: The next question comes from Jeffrey Campbell with Seaport Research Partners. Please proceed. Jeffrey Campbell | Analyst, Seaport Research Partners: First of all, congratulations on the strong quarter. I noticed that when you talked about some of the technology development that you have done some work again with lithium phosphate, lithium iron phosphate. And I was just wondering, since it seems like it's back in play, what kind of applications are showing an appetite for that chemistry? Dr. Raj Dasgupta | CEO: I mean, we developed this. We announced it, you know, about a year ago. And so it is one, you know, we've gone and certified it, et cetera. One thing we've tried to do is avoid Chinese supply chains where possible, and our LFP product is going to utilize cathode chemistry coming from non-Chinese sources. What that ends up meaning is the cost of it is, somewhat comparable to our existing NMC product. And so there are certain niche applications which may want it. I don't necessarily at this point see it being a huge product for us. But that could change, you know. Having it is important. Fundamentally, the Electrovia technology is agnostic to chemistry. So we can apply our Infinity technology to NMC, LFP, various anode chemistries. The outcome is enhancement on safety, enhancement on longevity. Jeffrey Campbell | Analyst, Seaport Research Partners: Thank you. I wanted to ask how the Energy as a Service initiative is progressing, and in particular, is it starting to bring the Infinity battery to a different type of customer? Dr. Raj Dasgupta | CEO: Yeah, it's progressing. We're working with... at least one third-party logistics company in marketing that product. And now that we're able to support it better, I expect it to gain traction in 2026. Jeffrey Campbell | Analyst, Seaport Research Partners: And my last question is, you mentioned that you're doing work with the robotic OEMs in both the U.S. and Japan. I just wonder, are their requirements generally the same, or are there any significant differences between these two markets? Dr. Raj Dasgupta | CEO: The robots, they're all different, but there's no geographic driver for a difference. Operator | Conference Operator: The next question comes from Theo Jinzubu with Raymond James. Theo, please proceed. Theo Jinzubu | Analyst, Raymond James: Great. Thanks, John and Raj, for your time today, and congrats on a good quarter of the year. Just as a quick follow-up on the rapid charging for the robotics, are there any upcoming major milestones you're looking to achieve or expectations you can speak of or shed some color on? Dr. Raj Dasgupta | CEO: We're going to – you'll hear it from us. So there's development work ongoing currently, both the cell level and the system level. We're also looking at filing some IP in the area, but – You know, it doesn't happen immediately. Theo Jinzubu | Analyst, Raymond James: Right. Okay. Understood. Thanks for that. And just on the $40 million in equipment orders, and I appreciate, John, I think you said it was $15 million. I was reading down from the exit loan. Will all these orders be funded over the next few quarters, or will some of that slip into 2027? John Gibson | CFO: There will be probably a small portion. You know, we'll hold back. a small portion of the payments just for final financing. So that may slip into 2027 fiscal year. But, you know, the majority of the cash will be drawn in 2026. Great. Okay. Thanks for that. Theo Jinzubu | Analyst, Raymond James: And then maybe just another one for me. You guided to about a greater than 30% revenue growth for fiscal 26 and about $105 million in backlog. I was just curious on what percentage of that backlog is tied to firm orders versus pipelines, if you can disclose that, and what other key bottlenecks that could defer revenue to 27? John Gibson | CFO: So when we look at our guidance, we kind of look at overall, you know, all the total backlog to date, our run rate, our conversations with our customers and where we see, you know, other articles going, then we'll, you know, we, We take that number and we discount it quite significantly to take into account any push-outs, any delays, customer change in the mind. And then you've got the uncertainty of the different verticals we're going into as well. So when it comes to guiding to percentage growth, it really is a difficult task with these different verticals and the potential upside there. is almost like closing your eyes and throwing a dartboard. It's difficult to put a number to it. But, you know, our backlog's healthy. Frontlog is looking really good, and the conversations with the customers are, you know, we're getting new customers coming and speaking to us every single day, so. Dr. Raj Dasgupta | CEO: Yeah, the other part is in the material handling space especially, right, the orders come often in the last minute, right? So our actual firm orders come in the last minute, but we're given, I'd say, very high confidence forecasting well before that. And so that provides us the framework. Actual order might come, you know, a couple weeks before it's meant to ship, right? Theo Jinzubu | Analyst, Raymond James: Okay, great. Yeah, understood. Thanks for that. Yeah, that's all I had. I appreciate the time today. Thank you. Operator | Conference Operator: Up next is Craig Irwin with Roth Capital Partners. Please proceed. Andrew | Analyst, Roth Capital Partners: Hey, guys. It's Andrew on for Craig, and thanks for taking my questions. A lot of my questions have been answered, but just one quick one for me. Last quarter you called out you started a second shift in Mississauga. As we get closer to Jamestown commencing operations, how should we just think of the transition of capacity, you know, from one to the other? Will you keep the second shift in Mississauga? And how quickly do you think we'll get Jamestown up and running? Dr. Raj Dasgupta | CEO: So, the second shift, so what we do in Mississauga is we make battery systems. Primarily, we're also making some battery modules. Jamestown is going to make battery systems, battery modules, and cells, right? So they're somewhat apples and oranges. I don't anticipate us slowing down in Mississauga as Jamestown ramps up. So, you know, Jamestown is going to ramp up in all three areas. The cell portion is the most complex, most cap-intensive, and that's where most of the investment from XM is going in. but there's also a substantial amount for battery modules, and we're planning to make a much larger variety of battery modules in Jamestown. Battery systems will also be manufactured there, and so it's not a zero-sum game at all. John Gibson | CFO: Yeah, we'll be looking to level load from a capacity standpoint as well. We don't want to be running significant overtime up in Canada if there's capacity available in Jamestown. So it's about looking to be as efficient as possible with our available capacity and basically, you know, determining what's best to be manufactured for. Operator | Conference Operator: Okay. Our next question comes from Amit Dial with HC Wainwright. Please proceed. Amit Dial | Analyst, HC Wainwright: Hi, guys. Thank you for taking my question. I just have one, actually. Most of my questions have been asked. You know, with now that balance sheet is strengthened pretty significantly, you have, you know, various lines of credit and funding to ramp capacity in Jamestown. So your working capital needs, your CapEx needs, you know, all are sort of, you know, in good shape. Do you think it would be safe for us to assume that the company is going to be more aggressive with sales and business development efforts maybe compared to, say, a year ago. Dr. Raj Dasgupta | CEO: So, you know, again, in 2026, I think we know what's going to happen. In 2027, we have significantly increased capacity. So what we're focused on is setting ourselves up to a position where we're rapidly filling up the plant in Jamestown. So, for instance, energy storage is a good example. 2026, we prove out the product. We might do a couple pilots. Revenue generation is not a priority for energy storage in 2026. Certifications most definitely are. But 2027, we think it can be a home-run product, right? So that's our objective. Now, the other objective we have is to make very high-quality battery systems. There have been, you know, there have been competitors out there who may launch products prematurely and they get recalled. I mean, just recently I read One, probably the largest electric bus manufacturer in North America is recalling every single bus they've made because, you know, batteries have problems. We want to make sure our batteries work perfectly before they get into customer hands, and we've done a great job of doing that over the years, and that's number one focus. Amit Dial | Analyst, HC Wainwright: And on the energy storage side, Raj, Are you thinking you will take market share from sort of, you know, some of the existing folks, or are these new opportunities that you will be participating in? Dr. Raj Dasgupta | CEO: You know, we're going after non-commoditized parts of the energy storage space, right? Our mandate is to sell, you know, our infinity product. We have 30% margins. We're focused on opportunities which can do that or exceed that and whether I don't know whether that's taking away from our competition is really filling a specific demand in the market for what we provide okay that's all I have guys thank you we have reached the end of the question and answer session and I will now turn the call over to management for closing remarks Well, that concludes our call and thank you for listening. We look forward to speaking with you all again after we report our first quarter 2026 results. Have a wonderful evening. Operator | Conference Operator: This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation. jsPDF 3.0.3 D:20260606090121-00'00'

NASDAQ:ELVA Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: It is now my pleasure to turn the floor over to your host, John Gibson, Chief Financial Officer at Electrovia. Sir, the floor is yours. John Gibson | Chief Financial Officer: Thank you. John Gibson | Chief Financial Officer: Good afternoon, everyone, and thank you for joining today's call to discuss Electrovia's Q3 2025 financial results. Today's call is being hosted by Dr. Raj Dasgupta, CEO of Electrovia, and myself, John Gibson, CFO. Today, Electrovia issued a press release concerning its business highlights, and financial results for the three- and nine-month period ending June 30, 2025. If you would like a copy of the release, you can access it on our website. If you want to view our financial statements and management discussion and analysis, you can access those documents on the CEDARplus website at www.cedarplus.ca or on the SEC EDGAR website at sec.gov forward slash EDGAR. As with previous calls, our comments today are subject to the normal provisions relating to forward-looking information. We will provide information relating to our current views regarding market trends, including their size and potential for growth, and our competitive position within our target markets. Although we believe that the expectations reflected in such forward-looking statements are reasonable, they do obviously involve risks and uncertainties, and actual results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the company's press release announcing the Q3 fiscal 2025 results and the most recent annual information forum and management discussion and analysis under risks and uncertainties, as well as in other public disclosure documents filed with the Canadian and American security regulatory authorities. Also, please note that all numbers discussed on this call are in US dollars, unless otherwise noted. And now, I'd like to turn the call over to Raj. Dr. Raj Dasgupta | Chief Executive Officer: Thank you, John, and good evening, everyone. It is a pleasure to address you today as we discuss our Q3 fiscal year 2025 quarter. The quarter marked another period of strong momentum for Electrovia as we continue to deliver significant growth in revenue and profitability while advancing our industry-leading Infinity technology into an expanded range of applications. We achieved a second consecutive quarterly profit with a revenue growing 67% year over year to over $17 million. Importantly, our adjusted EBITDA was strong at nearly $3 million and about 17% of revenue. We believe we can continue this growth trajectory into the current quarter and beyond as we leverage continuing demand growth from our core material handling sector and as we start seeing the contribution from other developing verticals. Operationally, we continue to see strong momentum from our OEM partners and leading end customers in the material handling sector. During the quarter, we secured more than $21 million worth of orders, bringing total orders to over $65 million in the nine months ending June 30th, 2025. This steady order flow is backed by a much larger pipeline of projects, primarily with a number of major Fortune 500 and Fortune 100 end customers, along with our OEM partners. To address increasing demand, we initiated a second shift at our Mississauga facilities in June and began some assembly operations at our Jamestown facility in May. These adjustments are expected to help us meet growing demand for our existing core battery systems, but also support the launch of new products for other sectors. Electrovise's advanced lithium-ion battery technology is fundamental to our success. It offers industry-leading cycle life, outstanding safety, and competitive energy and power density. This provides a significant advantage for mission-critical applications or those demanding superior safety and performance. We believe this is gaining increasing recognition in the industry, particularly as sectors valuing such performance, including e-commerce, robotics, and defense, are poised for rapid growth. We are particularly focused on the robotics sector. Robots and autonomous vehicles are designed for continuous, nonstop operation, independent of human operators, which is critical to their overall value. Given that these devices often operate indoors and in large numbers, safety and reliability are also paramount. This sector is experiencing rapid growth fueled by advancements in AI technologies and the expansion of e-commerce and is poised for further acceleration. We believe our technology is well-suited to this market, and we have the right product available at the right time. Currently, we have established partnerships with three impressive OEM partners in this space, and we are actively pursuing additional business development opportunities with a number of exciting prospects in our pipeline. We recently announced our entry into the airport ground equipment sector, a development that has been in progress for some time. This sector leverages system design similar to those we've successfully implemented in the material handling space. The timing is also ideal as major airlines are actively seeking to reduce their carbon footprint in their ground operations. Our Infinity lithium-ion battery technology offers the essential reliability and safety required by this mission-critical industry. We're also excited to showcase several of our products at the upcoming GSE Expo this September. Some of the largest battery systems that we are developing are for Class 8 trucks. This is a sector that has struggled to be electrified, in part, in my opinion, due to battery technology not being ready for the task. Cycle counts are high, along with energy, power, and safety requirements. These are factors that make it difficult, particularly for standard automotive battery technologies to be used. We partnered recently with Janus Electric based in Australia to develop some custom high voltage battery systems for the U.S. and Australian markets with our first delivery scheduled in 2026. Our partnership with Sumitomo Corporation has been responsible for multiple high profile OEM wins in the construction and earth moving equipment space. We are making shipments to our OEMs in Japan this quarter. These are customized battery modules that are being manufactured on an updated automated line in Mississauga. With our proven performance and technological edge, coupled with our investments in domestic manufacturing, we have identified the defense sector as a high-value growth opportunity. We are actively expanding our collaboration with a global defense contractor, showcasing our superior safety and cycle life in emission-critical vehicle application. Our strategy includes a more aggressive pursuit of this sector bolstered by our upcoming U.S.-based manufacturing capabilities. We are also working towards launching some specialized energy storage products later this calendar year that have been designed to leverage our technological strengths and specifically target a growing demand for domestically produced, high-performance, and importantly safe energy storage products. Investments in data centers, AI infrastructure, and overall greater need for improved energy infrastructure is driving this demand, and we believe we can provide our solutions while maintaining the strong margins which we have demonstrated in other verticals. Finally, we are also well underway to launching multiple recurring revenue stream products in fiscal year 2026. This includes energy services and software-based solutions. Given this, we anticipate separately itemizing these on our financial statements in fiscal year 2026. I'll now hand it over to John to review the financial results in more detail. John Gibson | Chief Financial Officer: Thanks, Rush. This quarter proved to be another wrecking, breaking quarter for the company. Q3 represents significant progress in both our financial results and operational capabilities. We are steadily strengthening the financial foundation required to drive scalable and sustainable growth. Revenue for the quarter ended June 30th, 2025 was $17.1 million compared to $10.3 million in the prior year. with revenue for the nine months ended June 30th, 2025 at 43.3 million compared to 33.1 million in the prior year. Year over year growth of 67% for the quarter and 31% year to date. We have now surpassed our breakeven point of 50 million, having recorded almost 55 million over the past 12 months. We continue to prove our ability to increase our run rate effectively and efficiently. As Raj mentioned, we've already received over 65 million in purchase orders in the nine months ending June 30th. With steady order intake and our enhanced working capital capabilities, we will continue to focus on efficient execution of orders. Gross margin for the quarter was 30.8%, a slight decrease from the prior year margin, driven primarily by product mix and some increase in cost of sales. Nine-month gross margins were 30.8% for 2025, and 32.4% for 2024. Similar to the prior quarter, the company had some marginal increased costs on certain components due to tariffs. We continue to increase our production efficiency and optimization to limit or remove the impact of these increased costs. With increased production volumes, we are able to push for better pricing with our key suppliers. Management believes the company is well positioned to maintain these strong margins throughout Q4 and into the next fiscal year. Operating profit increased significantly for both the quarter and year to date. Operating profit for Q3 2025 was 2 million compared to an operating loss of 0.6 million for Q3 2024. And for the nine months ended June, it was 33.2 million compared to just 19,000 in the prior year. Our adjusted EBITDA was 2.9 million for the quarter compared to 0.6 million in the prior year, with the nine-month figure being 5.4 million for 2025 and 2.6 million for the prior year. EBITDA as a percentage of revenue was 17% for the quarter and 12.6% for the nine months ended June. Q3 also represented our ninth consecutive quarter of positive adjusted EBITDA. The company generated a net profit of 0.9 million for Q3 2025, a significant increase from the net loss of 0.3 million in the prior year. Furthermore, the company generated a net profit for the nine months ending June of 1.3 million compared to a net loss of £1.4 million in the prior year. We have now had two consecutive quarters with a net profit, which management believes is a true inflection point for the company and reaffirms a message that we can achieve continued profitability. Further revenue growth, which we have line of sight of for the rest of the fiscal year, will further contribute to increased overall profitability. The company generated profit at positive cash flow provided by operating activities of 5.4 million and negative changes in working capital of 13.2 million. The movement in net changes in working capital is purely an invoice timing issue at the end of the quarter. To date, we have received a significant portion of this accounts receivable balance. The company ended Q3 2025 with positive net working capital of 31.8 million compared to negative net working capital of 0.4 million for the prior year. significant increase and this demonstrates the continued improved financial and operational performance of the company and management is committed to continue this positive trend. At June 30, 2025, total debt was $18.8 million compared to $18.4 million in the prior year. In addition to cash on hand, the company had availability within its bank facility of over $6 million. Subsequent to the end of the quarter, the execution of warrants provided a cash inflow of $3.2 million for the company. Management continues to manage cash conservatively and through the recent financings we have seen a reduction in the cash interest costs for both quarter and the nine months ended June. We believe we have adequate liquidity to support our anticipated growth for the remainder of the fiscal year and into 2026. With respect to the Jamestown financing, we expect to receive the first draw from the Exim facility in the coming days. In order to take full advantage of the payment terms of EXIM, we have funded the early smaller payments ourselves, waiting until the first round of large payments to make the first draw. Under the credit agreement, we are able to recover all payments made relating to the project, so any payments made to suppliers will come back to us. Furthermore, with the interest-only payment portion starting six months after the first draw, by doing this, we have pushed the start of interest payments into 2026 and the start of principal payments into 2027. That concludes the financial overview. I'm going to turn the call over to Raj for concluding remarks. Dr. Raj Dasgupta | Chief Executive Officer: Thank you, John. Our foremost priority and most significant historical investment is the expansion of our manufacturing capabilities in Jamestown, New York. We are actively collaborating with our strategic equipment suppliers and contractors alongside developing our internal expertise and team to guarantee the project's seamless executions. We're confident that cell production in Jamestown will commence by mid-next year, as originally scheduled. Importantly, the recent One Big Beautiful Bill Act continued the 45x production tax credits, which our Jamestown output will be eligible for. This will help provide additional capital, which we did not take into account in the EXIM financing. Concurrently, we have been establishing robust supply chains particularly those based in North America, to cater to the needs of more sensitive customers, especially within the defense sector. Years ago, we proactively avoided Chinese supply chains for this initiative, encompassing both materials and equipment. This foresight will safeguard us from future disruptions and aligns us with the requirements of many of our strategic customers. Electro-biased technology continues to lead the industry in safety and cycle life in particular. We are continuously enhancing this technology, as evidenced by our recent UL2580 certifications for higher capacity battery systems, which demonstrate incremental increases in energy density. Furthermore, we are actively developing a next generation ceramic separator for our Infinity battery products. This innovation will offer several improvements, including enhanced thermal stability, reduced cost, and decreased thickness. Our strategy involves increasing the domestic content of this crucial technology and ultimately scaling its production at our own facilities. We're collaborating with a domestic supplier of high-purity alumina, which possesses exceptional properties, to achieve this goal. The Electrovia Labs team continues its primary mission on its solid-state battery development. positive small cell results, we are investing in dry room facilities and additional equipment at our Mississauga labs. This expansion will enable the production of larger cells for sampling to potential customers. In closing, this quarter marked a significant milestone in our journey to becoming a leader in lithium ion batteries for heavy duty and mission critical applications. Our technology stands out, clearly demonstrating the essential attributes of cycle life and safety, which are increasingly vital in a rapidly growing automated industry. Coupled with our consistently strong financial results, we're clearly progressing towards our goals. That concludes our remarks this evening. John and I would now be pleased to hold a question and answer session. Operator | Conference Operator: Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Daniel Magner from Raymond James. Your line is live. Daniel Magner | Analyst, Raymond James: afternoon gents and congrats on the quarter thanks Daniel thanks just obviously a lot of success in the quarter expanding into new verticals with a number of announcements how do you how do you think about the change in or a potential change in the revenue makeup in 26 as a result or these a longer term 26 is going to represent a Dr. Raj Dasgupta | Chief Executive Officer: These other verticals are going to be a significant contributor to revenue in fiscal 26. It's hard to predict exactly what percentage of revenue they're going to make, but for instance, on the robotic vertical, significant shipments will start at least one of our OEM customers starting next quarter. And that space... Battery systems are generally quite similar to each other, so we can launch products more quickly. And so I think that sector is going to grow nicely. Airport ground equipment is another one which I think can generate revenue rather quickly as well, given that the product is basically ready to go. We're going to be shipping first units within a within the next week or two. So that product line is good to go as well. On construction, with the construction OEMs in Japan, we've already been shipping, and this is sort of at the pre-production level. So fiscal 2026, that should scale a little bit. So when you take all these into account, they start adding up. Daniel Magner | Analyst, Raymond James: Yeah. And I guess in terms of customer types with these new verticals, obviously on the material handling side, discussions with Fortune 100 companies, is it a similar makeup of the type of new customers that you're having these discussions with? Dr. Raj Dasgupta | Chief Executive Officer: For the most part, they're the OEMs themselves. And That's what we're focusing on. For instance, robotics is the OEMs that we're talking to mostly in terms of, and same thing with the other sectors, especially, you know, of course, defense would be like that. So it's a little bit different than the material handling space where we have direct relations with some of those major end customers. The exception to that is on the energy storage side of things. where some of those same customers are the ones who have expressed interest in our energy storage products. So we will sell those same end customers. We're selling batteries for their material handling vehicles. We may sell those same customers energy storage solutions. Daniel Magner | Analyst, Raymond James: Got it. Well, thanks for that, and then I'll jump back into the queue. Operator | Conference Operator: Thank you. Your next question is coming from Eric Stein from Craig Hallam. Your line is live. Eric Stein | Analyst, Craig Hallam: Hi, Raj. Hi, John. Eric. Hey. So maybe just sticking with energy storage, I noticed that you did not call that out just in your written release, but clearly a huge opportunity, especially since it is with many of your material handling customers. I mean, the fact that you did not include it Should we view that one as a little bit further out? Maybe remind us of the timing of the contribution there. I mean, I would think it's safe to say that that vertical might be the largest of any of your emerging verticals. Dr. Raj Dasgupta | Chief Executive Officer: Yeah, we'll be making a separate launch of that product fairly soon. So that's why we haven't put it in. as a separate item in our press release. But it's a product line where our engineering team has been working on for some time. We want to make sure the specifications, everything is perfect before we launch it. Eric Stein | Analyst, Craig Hallam: Got it. I mean, I would think that your customers have given you some indications about demand levels or deployments at some of the same locations that you are deploying your material handling solutions? Dr. Raj Dasgupta | Chief Executive Officer: They most certainly have. So we will make deployments in calendar year 2026. With this, so we will make shipments next year. Okay. So it's a sector which is obviously very, very large, growing very quickly. We want to maintain our value there. You know, we're providing a battery solution, which is much safer, longer lasting than what you can find from competitors. And thus, we want to be able to secure strong margins, which is in that space, it's a more commoditized space in general. So we're going to be an outlier there. But we already have the strong relationships with some of those very large corporations which are investing significant sums in this area. Eric Stein | Analyst, Craig Hallam: All right. Thanks for that. Maybe just on the capacity addition in Mississauga, and then you combine that with Jamestown, maybe with those two steps where you're capacity stands, and then just thinking longer term, I mean, is the eventual goal to just move everything on the manufacturing side to Jamestown, Mississauga, more of an engineering facility, or how should we think about that? Dr. Raj Dasgupta | Chief Executive Officer: Yeah, so first of all, we've added a second shift here in Mississauga, and we've started some and growing operations in Jamestown. That is to meet, if you We're taking a fair bit more orders than we're shipping, and so we need to catch up on that. So we're scaling things. That second shift is likely going to be a permanent piece, and Jamestown is only going to continue to increase its contribution. So that's what we're doing on the capacity front in the very near term. In terms of the longer term vision that we have, Mississauga is clearly engineering development is its main priority, but we will leverage its system manufacturing as well because it's well optimized to do that. If you think about these verticals which are launching products into, a lot of them are new types of battery systems and it makes sense to utilize Jamestown more for those verticals as opposed to the Mississauga site, which is well optimized to provide battery systems for the material handling space. Eric Stein | Analyst, Craig Hallam: Okay. Last one for me, just curious. I mean, obviously great order momentum here throughout the fiscal year. I mean, is that, I would assume that that has continued in Q4? Dr. Raj Dasgupta | Chief Executive Officer: It certainly has. So we haven't seen any, it's order intakes are are continuing to be rapid, especially with some of our key end customers, which are generally very large corporations. And so they've continued to provide us good order flow. And we're also seeing them provide us some sort of – give us more guidance to what's going to happen over the next year to 24 months. So we are very, very confident in this space as it stands. It gives us confidence with these investments we're making in Jamestown, et cetera. Eric Stein | Analyst, Craig Hallam: Okay, thank you. Operator | Conference Operator: Thank you. Your next question is coming from Craig Irwin from Roth Capital Partners. Your line is live. Craig Irwin | Analyst, Roth Capital Partners: Good evening, and thanks for taking my questions. So, Raj, a lot of investors are asking us about your participation in the robotics market, and we've been pointing them to your very early work with... the e-commerce guys, I guess one in particular that's a little bit of a pioneer here. Can you maybe help us understand the breadth of applications that you're looking at in robotics? There is some enthusiasm out there for certain applications that could really explode and see tremendous adoption over the next couple of years. For example, the Tesla humanoid, the supply chain is talking about 30 million units. which would be incredible. Can you maybe give us color on whether or not you're touching some of these applications that could see some very rapid growth over the next five to ten years? And the customers you're working with, I know many of them are iterative and they work from sort of lower risk to higher risk opportunities. Can you maybe talk about how you would see this evolve? Dr. Raj Dasgupta | Chief Executive Officer: Yeah, it's very dynamic, Craig. But what's common to all these robots is they need to wirelessly charge. They need batteries which can do many charges in a day because they operate. To make a robot worthwhile, it has to do a lot of work. So they will have to do multiple cycles in a day, and they need that battery to be very safe so they don't damage this very expensive robot. piece of equipment. And so we meet those requirements. And we're already in a number of, again, the sector is growing very quickly. It's still sort of the early stages. Most of the robots that we're in right now, I would say, are moving goods inside warehouses and factory floors. But we're seeing some which are in surveillance. One which is a defense type of application. We don't really have a clear idea what it is. And my, you know, the battery is the same whether it goes into one or the other. So humanoid type robots in the future would definitely not rule it out. The typical battery that's going into these types of applications is roughly about two to five kilowatt hours. That's sort of what we're speccing. For us, they're relatively small. but the number of them could be very large, and that's what we're anticipating. So we're sort of standardizing the product to some degree, and it's getting a good reception in the market. We have a pipeline of partners we're talking to who are looking to test this technology we have, and we'll see how that goes. But we're very bullish on the space in general. It's a very good fit for us, both from a technological standpoint and on the product side, we're good to go. And so the initial partners we have, there's two in the United States, one of them is in Japan, and then there's a few guys that could come soon. Craig Irwin | Analyst, Roth Capital Partners: Excellent, excellent. The other market, sort of the other end of the spectrum, Eric asked the question about energy storage, but rail... You know, electric locomotives take huge batteries if they're going to be battery-powered for a couple miles, and you did have some projects that were in development. Can you maybe update us on where those stand? You know, I know there's often shifting customer priorities, but, you know, do you still expect to maybe make some deliveries there, and is there opportunity for customer projects to commercialize? Dr. Raj Dasgupta | Chief Executive Officer: Yeah, rail is one where it's very sensitive to government incentives. And so we did have a partner there, but I think they had some government money which disappeared. So I see it as an interesting opportunity. It works well with our battery technology in the end of the day. Hybridized rail is probably an area that is more realistic and one where we're in discussions with one company partner there. We'll see how it goes. I think I'm more bullish, you know, it's the same battery end of the day whether it goes into a rail vehicle or a different type of vehicle. The Class A trucks is probably a better place. Craig Irwin | Analyst, Roth Capital Partners: That's a beautiful segue to my last question. Over the last many years, you've been generally cautious about electric vehicles, electric trucks, conservative in the amount of R&D dollars that you specifically applied to developing products for this market. This call, you're really calling that out just now and multiple times in prepared remarks and answers to other questions. What do you think about the approach of the OEMs now that are doing electric trucks You know, it seems that if they're coming to Electra Viya, they're willing to pay for performance and that they understand they need that performance. Has something fundamentally changed in this market that, you know, makes it more attractive for you? While I guess equity investors often look at this as maybe out of focus right now, given challenges of many of the companies that raise money as SPAC mergers. Dr. Raj Dasgupta | Chief Executive Officer: Yeah, you know, I would, we're cautiously optimistic about the space. I think the reason we got pulled in is precisely because of the failures of our, some of our competitors in the space, right? So you cannot, what we're finding is those who have applied standard automotive batteries, scaled them up to much larger capacities and put them in these types of vehicles have run into problems, whether they be safety or performance. and that's really put a black mark on electrified Class A vehicles. What we provide is a battery which can be safe in larger sizes, which can handle very high duty cycles, and that's what this market needs. So I believe that there will be a market for electrified trucks Class A trucks, most certainly it's not going to be the majority of the market. But I believe our technology, again, it's the right fit for the space. We'll see how it goes. We're not putting all our eggs in this basket for certain. The development we've done for this space is really leveraging the development we already have been doing for a defense customer, which is also large vehicles and trucks. And so, that's what we're utilizing for the space. Craig Irwin | Analyst, Roth Capital Partners: Great. Well, congratulations on another positive profitable quarter. So, great progress. Amit Dayal | Analyst, HC Wainwright: Thanks, Craig. Operator | Conference Operator: Thank you. Your next question is coming from Amit Dayal from HC Wainwright. Your line is live. Amit Dayal | Analyst, HC Wainwright: Thank you. Good afternoon, everyone. Congrats on another solid quarter. With regards to the guidance, Raj, you're maintaining at $60 million in revenues for this fiscal year. That's implying roughly sort of a flat quarter in Q4. But, you know, just the color on the call seems to be, you know, more optimistic. Just wondering, you know, is there a reason for you to be a little conservative? Dr. Raj Dasgupta | Chief Executive Officer: We're going to beat that guidance. We thought about revising it and didn't necessarily see the great urgency to do so. But this quarter, Q4 fiscal year 25, will be a growth quarter over fiscal year Q3. Amit Dayal | Analyst, HC Wainwright: Understood. Okay, that's good to hear. And then, you know, just on the same lines, you know, now that you are potentially going to see contribution from, you know, many new verticals next year, and as long as, you know, this material handling business stays at, you know, this year's level and even growing a little bit from here, I mean, what kind of growth should we be looking for? You have the balance sheet now. You have the production facility. You can really step on the gas. So I'm just trying to see if there is any color you can provide for how growth next year could look for you guys. Dr. Raj Dasgupta | Chief Executive Officer: We're still evaluating that, Amit. It's changing so it can change on a dime, right? What we're anticipating is our core sector, the material handling space, we'll see year-over-year growth. It's the other sectors where that growth rate is still unclear because they're just a little less mature for us. So I think by the end of the year, by the end of the calendar year, we'll have better clarity on how that's shaping up. But what we can tell you is we're going to continue growing. We're going to continue outperforming what we're doing continuously. Amit Dayal | Analyst, HC Wainwright: Understood. Is this potentially beginning in the next fiscal year or a little bit later? Just trying to understand. you know, how these products are going to be sold. Are these attached to the battery systems you are selling to customers or separately? You know, just trying to get a sense of, you know, what the profile of this sort of recurring revenue segment will look like. Dr. Raj Dasgupta | Chief Executive Officer: Okay, so on recurring revenue, there's really two main parts to it that we're targeting. One is services associated with energy management. So we're rolling, we already have data analytics, which we have some Fortune 100 companies buying that from us, that service, and that's a relatively inexpensive service we provide. What we're launching in the fall will be an AI-driven demand response system, which will allow customers and customers to save on electricity without seeing any reduction in performance. And that's a service we anticipate being able to generate meaningful continuous recurring revenue. So that's one product which we'll be launching. The other more complicated one probably is our energy services product, which is one we're working towards and one which will be directed more to some of these end customers which want to treat the battery as an energy service, right? So they would prefer to pay, instead of looking at a CapEx, they would look to utilize our technology as an OpEx. And given the strength of our technology, that's something that in the long run is very beneficial. Because when you sell one, Electrovia sells a battery for a warehouse application, for instance, the battery performance is so good, it takes a long time to get a repeat business. And that's something we're looking to leverage here with this. Amit Dayal | Analyst, HC Wainwright: So for this battery as a service model, Will those batteries be on your balance sheet then for the duration of those contracts? Dr. Raj Dasgupta | Chief Executive Officer: Potentially. That's something that still might be a special purpose vehicle with a third party investor where we take part in the benefit but not necessarily have it all on our shoulders there. It's something that's still being looked at. So it hasn't been finalized. What I can tell you is the profitability of this is much, much greater. John Gibson | Chief Financial Officer: Thank you for that. Yeah, that's all I have, guys. I will step back. Thank you. Thank you. Operator | Conference Operator: Your next question is coming from Jeffrey Campbell from Seaport Research. Your line is live. Jeffrey Campbell | Analyst, Seaport Research: First of all, congratulations on a very strong quarter and appreciate the encouraging guidance for the fourth quarter as well. I wanted to start with the Janus partnership. This appears to be a swappable battery approach, if I read it correctly. It was first pioneered in Israel years ago, and then it seems to be really gaining steam in China. So if I'm correct, do you see this swappable approach working in Australia? And you also mentioned in your remarks that there's an eye to the U.S. market with this as well. I was wondering, would that be a similar effort and maybe gear towards long haul trucking, or could this be something that would take advantage of distribution with any of your material handling relationship customers in the U.S.? Dr. Raj Dasgupta | Chief Executive Officer: So, you know, Janus has this approach of swapping the batteries, and this enables them to serve their customer needs where they're going long distances, they need power immediately, and I think it's If you want to do that, you need a battery which can handle very, very high utilization rates, which ours is a perfect fit. You also need batteries which are, of course, safer because you're doing a lot of movement. And so that's what we're supporting them with. I don't really have a strong opinion whether swapping is good or not. I don't really have a strong opinion on the application. Jeffrey Campbell | Analyst, Seaport Research: Well, then just let me ask again, what did you mean when you said that you're working with them, but you're also in Australia and the U.S. market? Dr. Raj Dasgupta | Chief Executive Officer: So they already have a large number of customers in Australia, and they have customers in California, and so that's what we do. So when we deploy batteries, it will be for both markets. Jeffrey Campbell | Analyst, Seaport Research: Okay. That's helpful. Thank you. Give me a second here. Can you provide an update on your leasing business? That seems to be the one that was most poised to participate in the long-term trend of lead-acid battery replacement with infinity batteries last time we discussed it. Dr. Raj Dasgupta | Chief Executive Officer: Yeah, that's leasing from our OEM partner. So they have taken, they're taking advantage of the performance of our batteries by providing a higher residual value on the leasing. So while, you know, if you're a Fortune 100 company, you're typically not leasing these batteries. But for mid-sized to large companies, They're often looking to lease, and because the residual value of our batteries is higher, that makes the leasing through the OEMs quite attractive. And so that leasing program with Toyota was launched really the start of this year. It's been very successful, and it's driving most of our orders for that brand. Jeffrey Campbell | Analyst, Seaport Research: And one of the reasons I wanted to ask about that is because it sounded like in your last remarks to admit that you're looking toward some kind of similar leasing program of your own. And I'm wondering if the leasing that you were talking about there at the end, would that be... to towards new customers with some sort of a new model, or would that even start to revert to OEMs, established OEMs that you have in the trail families? Dr. Raj Dasgupta | Chief Executive Officer: I don't think we would launch our own leasing program because that's something, you know, financial institutions, like the Toyota ones is Toyota Finance that's managing that. Leasing per se, no. Energy as a service, yes. It's a little bit more nuanced, and that's something we're more interested in. If a customer wants to lease, though, we do have good partnerships. We have one with Sumitomo Corporation where they're actively providing some customers with lease proposals. John Gibson | Chief Financial Officer: Okay. That's very helpful. Thank you. Thank you. Operator | Conference Operator: And once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from Oren Hirschman from AIGH. Your line is live. Hi. Congratulations again on the progress. Oren Hirschman | Analyst, AIGH: Just a couple of random questions. Just in terms of the, I know you've been asked this question a few different times, but I'll put a different spin on it. In terms of selling into the energy storage market, in terms of actual sales, you mentioned customer authority material handling. Have you actually sold anything to them, or do you have a first site? That's part A. And part B would be, you know, it's going to be a premium product, like you said. Does that mean it would be not residing, let's say, in a lithium battery farm for an energy application, but it would more likely be where there's more humans closer to a warehouse or something like that? Dr. Raj Dasgupta | Chief Executive Officer: Yeah, Oren, you're correct on both. So now in terms of the project specifically, we have three customers who want to have this product. They are waiting on us to provide them final specifications, pricing, and delivery schedules before they move forward or not. So the onus is on us. That will come with our launch, which will be fairly soon. Again, we just want to make sure it's all buttoned up before it gets launched. On the sites they're considering, yeah, it's not these very large utility scale type storage sites that we're targeting. It would be specifically, for instance, warehouses. where these warehouses typically have diesel gensets outside. A lot of them have solar on their roofs. So that would be one type of application. Another would be data centers. A lot of these companies are building data centers. And data centers are very expensive. You don't want to have any fire hazards nearby. So that's what we're seeing, the interest around that. Maybe a third area would be somewhat related to more government-based procurements too. Oren Hirschman | Analyst, AIGH: The data center would be a target or one of those first three is data center related? Dr. Raj Dasgupta | Chief Executive Officer: It may be. One of the three companies has a lot of data centers. Oren Hirschman | Analyst, AIGH: Okay. Meaning they realize the fire aspect of it in terms of the safety. That's why you can command a premium? Dr. Raj Dasgupta | Chief Executive Officer: We think so. Oren Hirschman | Analyst, AIGH: Yeah. Okay. Skipping back to the ceramic separator technology, is that to get a better gross margin? Is it going to improve the actual performance? What's the purpose of doing all of that? Dr. Raj Dasgupta | Chief Executive Officer: It's Tim. We have the technology. When you have a good technology, you always want to make it better. And so we also want to improve the margins of it. Right now, the cost of what we produce leverages a lot of contract manufacturing and is very expensive. By this focus here, we will improve the margins. Oren Hirschman | Analyst, AIGH: Is it something that's notable where it might make a 1% or 2% type of difference on your cogs or it's not that big? Dr. Raj Dasgupta | Chief Executive Officer: It'll make a difference. It's also a lot of it is strategic, right? If we have it in-house, if we're producing the alumina either with a partner or ourselves, that's very valuable. So one way of looking at it is we're more than just a battery company. We've become an advanced materials company in a way. And this is something that is, in the long run, very, very valuable. Oren Hirschman | Analyst, AIGH: Okay. And just skipping to the robotics that people have asked about, is that a business that's even a million or two today? And do you think it could be you know, bigger than that next year? Do you have any line of sight? Dr. Raj Dasgupta | Chief Executive Officer: Yeah, it's about like a million to two today, and we expect it to grow quickly. Oren Hirschman | Analyst, AIGH: Do you actually have line of sight into actual, you know, robotic ramps? And again, I assume these are not humanoids, right? We're talking about, you know, advanced warehouse type of robots? Dr. Raj Dasgupta | Chief Executive Officer: Yeah, these are advanced warehouse type robots. A few of them have given us projections. for next year. So we can see around. Oren Hirschman | Analyst, AIGH: Okay. And is this coming from, are they captive? Meaning, you know, is a big company that actually, you know, they own the warehouses or they're in the warehouses, it's actually also building the robots? Or is the robot builder totally separate from the ultimate end customer? Dr. Raj Dasgupta | Chief Executive Officer: We're hoping we can get that one you're describing. But no, these are, these are, OEM-built vehicles which are provided to other customers. Oren Hirschman | Analyst, AIGH: Okay. Are they big OEMs? Some of them are startups? Dr. Raj Dasgupta | Chief Executive Officer: No, all three of them are big OEMs, yeah. Oren Hirschman | Analyst, AIGH: Okay. And last question, and I can't resist, on the solid-state. You've got a lot on your plate right now. Any comments on the solid-state R&D? Dr. Raj Dasgupta | Chief Executive Officer: So the team at our last division has a product which is, I would say, ready to go. What's stopping us from getting it tested is they're producing it in sort of suboptimal conditions. And given that the performance looks good under those conditions, we decided let's invest some money, improve those facilities. and equipment and get some samples sent to potential customers. Oren Hirschman | Analyst, AIGH: I think the last – it's been a while since you've updated on charge and discharges and those kind of metrics. It wasn't anywhere close to – going back a year or two ago, it wasn't anywhere close to being ready commercially, although it was still a large number of charge-discharge. Have you made significant progress on that? Dr. Raj Dasgupta | Chief Executive Officer: We've made – So if you look at which applications are most interested in this type of battery, the number one would be aerospace and drones. And the cycle count isn't really what they're looking for. They're looking for, okay, they want to have a couple hundred cycles. We can do that. They want rate capability. They want performance, et cetera. So I think we have it. I think the the results we're getting point in the direction where we will meet those attributes, but we do have this suboptimal lab condition which needs to be upgraded to get those better results. Oren Hirschman | Analyst, AIGH: If I can just follow up and end on this question, I was going to ask you about the drone business in general. Obviously, time and flight and power consumption is critical for drones, and it's a big problem. They've got to come back, refuel. People are trying to do refueling in air, so to speak, recharging in air. So do you have any drone business today? And is this solid-state battery really the key to that drone business? Dr. Raj Dasgupta | Chief Executive Officer: If you look at some of our competitors, there's companies who have shown success with silicon anode-type mine cells. And we think ours could be a rival to that. It won't be silicon anode. It will be a lithium metal anode. So probably even higher energy densities. So that's what we're targeting. We haven't – we want to get it right before we – so we want to get the samples to the potential customers before we push it. Oren Hirschman | Analyst, AIGH: But there is no drone business today. That would be your entry into that business. No. Dr. Raj Dasgupta | Chief Executive Officer: Correct, yeah. Right now we don't have, other than robotics, which you can say is a land-based drone, but yeah, in terms of the flying drones, no, we have no business there right now. Oren Hirschman | Analyst, AIGH: Congratulations on so much progress. Dr. Raj Dasgupta | Chief Executive Officer: Thanks, Oren. Operator | Conference Operator: Thank you. That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation. jsPDF 3.0.3 D:20260606090122-00'00'

NASDAQ:ELVA Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Operator | Conference Operator: Thank you everyone and welcome to the Electrovia second quarter 2025 financial results. At this time all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host John Gibson Chief Financial Officer at Electrovia. Sir the floor is yours. Operator | Conference Operator: Thank you. John Gibson | Chief Financial Officer: Good afternoon everyone and thanks for joining today's call to discuss Electrovia Q2 2025 Financial Results Today's call has been hosted by Dr Raj Dasgupta, CEO of Electrovia, and myself, John Gibson, CFO. Today, Electrovia issued a press release concerning its business highlights and financial results for the three-month period ended March 31, 2025. If you would like a copy of the release, you can access it on our website. If you want to view our financial statements and management discussion and analysis, you you can access those documents on CEDARplus website at www.cedarplus.ca or on the SEC EDGAR website at sec.gov forward slash EDGAR. As with previous calls, our comments today are subject to the normal provisions relating to forward-looking information. We will provide information relating to our current views regarding market trends, including their size and potential for growth, and our competitive position within our target markets. Although we believe that the expectations reflected in such forward-looking statements are reasonable, they do obviously involve risks and uncertainties, and actual results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the company's press release announced in the Q3 fiscal 2035 results, and the most recent annual information forum and management discussion and analysis under risks and uncertainties. as well as another public disclosure document filed with Canadian security regulatory authorities. Also, please note that the numbers discussed on the call are in U.S. dollars unless otherwise noted. And now I'd like to turn the call over to Raj. Dr. Raj Dasgupta | Chief Executive Officer: Thank you, John, and good evening, everyone. It is a pleasure to address you today as we discuss our Q2 fiscal year 2025 quarter. This quarter marks another key milestone in Electrify's maturation, not only in terms of financial results and achieving profitability, but also in how we are positioning the company for scale, margin expansion, and long-term market leadership. With our eighth straight quarter of positive adjusted EBITDA, strong order momentum, and funding secured for Jamestown, we are laying the groundwork for the next phase of our profitable and sustainable growth. We're also seeing an early impact from our strategy to develop recurring revenue streams, including energy service programs and software-enabled battery insights, which we expect to constitute more meaningfully over time. I'll go through some of our key highlights and updates for the quarter that underline the strengths of our business and our trajectory for growth. During the quarter, we delivered strong financial performance with $15 million in revenue, which is up 40% year-over-year, maintaining over 30% growth margins. Most importantly, we crossed the inflection point to provide a net profit of over $800,000. During the quarter, we closed a $51 million direct loan from the Export-Import Bank of the United States, a pivotal step towards expanding our lithium-ion cell manufacturing in Jamestown, New York. This project was well received at the bank and received the Deal of the Year Award for the Make More in America initiative. In tandem with the EXIM facility, we also closed a $20 million working capital facility from the Bank of Montreal. This financing significantly reduces our cost of capital and improves our working capital availability. We've had a very strong order intake during the quarter, with over $25 million in new orders. This momentum has continued into the current quarter, and we have strong visibility and confidence of further growth into our next fiscal year. Outside of our material handling vertical, we have seen growing interest for multiple robotic applications for which we are actively developing products. We also continue to feel growing interest for our high-voltage battery products. During the quarter, we announced we received orders from a second global construction OEM through our partnership with Sumitomo Corporation Power Mobility. This order is for high-voltage battery systems for our leading Japanese headquarters construction equipment manufacturer. We remain on track for our cell production in Jamestown mid-next year. We've placed nearly all our key equipment purchases and have qualified the material vendors for all the input materials for our lithium-ion cells. Notably, we had the foresight years back to avoid Chinese supply chains for this venture, including both on the materials and equipment side. This is going to protect us from potential future disruptions and is also something that many of our strategic customers are looking for. To support flawless execution in Jamestown, we have also added some key members to our staff, including a senior battery engineer with over 20 years' experience, who has joined us from LG Chem and was also closely involved in the construction and commissioning of a recent North American gigafactory. Our lab division continues to make progress with regards to our solid-state battery efforts. Currently, we have top-scale cycling consistently, and we are now working to scale our processes with larger equipment and further process optimization. With that, I'd like to pass the call back to John Gibson, who will go into the financial results in more detail. John Gibson | Chief Financial Officer: Thanks, Raj. QC marks a strong step forward in both our financial performance and operational readiness. We continue to build the financial muscle needed to support scalable, profitable growth. Positive cash flow operations and a stronger working capital base give us further confidence in our ability to fund other key initiatives in the second half of the year. Revenue for the quarter ended March 31, 2025, was $15 million compared to $10.7 million in the prior year. Revenue for the six months ended March 31, was $26.2 million compared to $22.8 million in the prior year. The increase in year-over-year revenue was driven by the increased customer demand. Our working capital capabilities have also increased considerably over the past few months, which has enabled more efficient executions. Going forward, we expect to further take advantage of a strengthening financial position to effectively execute on orders. We continue to move closer to our great even point of 50 million and maintain our 2025 revenue guidance, with the ramp-up continuing in Q3. Close margin for the quarter was 31.1%, a slight decrease from the prior year margin, primarily due to product mix and the prior year having some high margin prototype backings. Six-month close margin was 30.9% for 2025, and 31.8 for 2024. Companies are experiencing some marginal increased costs on certain components due to recent tariffs. However, these have been offset by continued optimisation of our supply chain and internal production efficiencies leading to an overall minimum effect on our growth margins. We don't expect further significant fluctuations going forward. Given this, management believes the company is well prepared to maintain strong margins throughout 2025 and beyond. Operating profit increased significantly, significantly for both the quarter and the year to date. Operating profit for Q2 2025 was $1.4 million compared to $0.79 for the prior year, and the six-month figure was $1.2 million compared to $0.69 in the prior year. And this also includes approximately $340,000 of non-recurring expenses from Q1 2025. Our adjusted EBITDA was $2 million for the quarter compared to $1.5 million in the prior year, with the six-month figure being 2.6 million compared to 2 million in the prior year. We have now recorded eight consecutive quarters of positive adjusted EBITDA. This gives us a strong capability to continue our close plans and support operations going forward. The company generated a net profit of 0.8 million for Q3 2025, a significant increase from the net loss of 0.8 million in the prior year. Furthermore, the company generated a net profit for the six months ending March 31st of 0.4 million created a net loss of $1 million in the prior year. Management believes the financial performance this quarter represents a true inflection point in their profitability going forward. Any further revenue growth, which we have line of sight for for the rest of the fiscal year, will contribute to increased overall profitability. The company generated positive cash flow provided by operations of $3.2 million, and net negative changes in working capital was $7.9 million, compared to an overall positive cash flow from operations of $0.3 million in the prior year. The movement in net changes to working capital is purely a timing issue, as tariff uncertainty during the quarter meant the majority of invoicing happened towards the end of March. To date, we have received over two-thirds of the total accounts receivable balance in cash. The company ended Q3 2025 with positive net working capital of $26.2 million, compared to negative working capital of $0.2 million in the prior year. A significant increase, and this demonstrates the continued improved financial and operational performance of the company, and management is committed to continue this positive trend. At March 31st, 2025, total debt was $13.1 million compared to $18.4 million in the prior year. The company had availability within its bank facility of over $10 million. Management continues to manage cash conservatively. Through the recent financing, we reduced our overall finance costs and provided us with additional working capital headroom as we increased production in 2025. We believe we have adequate liquidity to support our anticipated growth for the remainder of fiscal year 2025. That concludes the financial overview. I'll now turn the call over to Raj for concluding remarks. Dr. Raj Dasgupta | Chief Executive Officer: Thank you, John. In closing, Q2 reflects the beginning of a new growth phase for Electrovia, one defined by consistent execution, profitability, and increased visibility into long-term scale. Our strategy to develop U.S.-based manufacturing coupled with supply chains that are primarily North American or from Japan and South Korea appears to be a prescient decision today. I believe this provides Electrovia an additional significant competitive advantage going forward. Electrovia has all the pieces in place to achieve our vision of becoming the leading lithium ion technology and manufacturing company for the heavy duty and mission critical applications. This includes our highly differentiated lithium ion battery technology, a talented team, strong financial partners, profitability in our base operations, and leading customers and partners. In closing, we remain on track to exceed our $60 million in revenue for fiscal 2025, and with Jamestown advancing, we're confident in our path to becoming a leading North American manufacturer for mission-critical battery applications. That concludes our remarks this evening. John and I would now be pleased to hold a question-and-answer session. Operator | Conference Operator: Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone after this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Thank you. Your first question is coming from Daniel Magner from Raymond James. Your line is live. Daniel Magner | Analyst, Raymond James: Hey, Raj. Hey, John. Congrats on a great quarter. Operator | Conference Operator: Thanks, Daniel. Daniel Magner | Analyst, Raymond James: Thank you. As it relates to the $25 million in new orders, are those all coming from the material handling segments, or are there different verticals that are in there? Dr. Raj Dasgupta | Chief Executive Officer: It's $25 million from just material handling, and on top of that is further orders from other sectors. So Carol Hanley still is the bulk of our business, and that's where most of the regular orders are coming from. Daniel Magner | Analyst, Raymond James: Got it. And I guess given what's happened in the U.S. and the new administration's policies, how has that impacted, I guess, the type and cadence of discussions you're having with customers? Dr. Raj Dasgupta | Chief Executive Officer: It's accelerating interest in our products. It's making us more competitive as well. We're a premium offering right now, and with uncertainty on pricing from some of our competitors, it's making us a more attractive option just from that. But also, what we're finding is customers are looking for long-term partners, and price is just one of those aspects, but we're able to provide that stability, especially with Jamestown coming online. Our financial position also helps with consistent and growing results. So I think all this is filtering into providing customers with added confidence to order more. So we're seeing quite a bit of that. We're also seeing interest from other sectors more so than we had previously, one being the energy storage space, where we're getting a strong pull. Of course, it takes a bit of time for us to get our products ready for that, but that's another area where we are well underway to launching systems for. Operator | Conference Operator: Okay. That's great, and congrats again. I'll jump back into you. Thank you. Your next question is coming from Eric Stein from Craig Hallam. Operator | Conference Operator: Your line is live. Eric Stein | Analyst, Craig Hallum: Hi, Roger. Operator | Conference Operator: Hi, John. Eric Stein | Analyst, Craig Hallum: Hey, Eric. Hey, so just going back to the orders and the $25 million just material handling, can you just go down into that a little bit? I know one of the themes here in the first half of the year is the recovery in orders or the resumption from your Fortune 100 customer. I know you've had some repeat orders from logistics and cold storage, et cetera. I'm just wondering if you could talk about how that kind of breaks down between that customer who's kind of resumed at higher levels, new customers, et cetera. Dr. Raj Dasgupta | Chief Executive Officer: Yeah, it's a combination of all the above. So that Fortune 100 customer placed fairly significant orders during the quarter. However, they're continuing the order in the current quarter, and we expect that number to grow substantially. So they're a big part of it. What we've also seen is one of our OEM partners has We launched a leasing program with them last year. That's generating a lot of mid-sized orders for us. That's great to see that momentum. So that's smaller orders, but those are very helpful to fill in the gaps with regards to production planning. And then other major end customers, we have a leading discount retailer who has been ordering consistently. and will be a major part of our fiscal 2025 revenue. And then both Raymond and Toyota are steadily providing us other customers as well. We're breaking into some other major end users as well, potentially with... energy services, looking at energy as a service as opposed to just selling the batteries. That's something that's currently not very significant for us, but it could become quite significant for us, especially in fiscal 2026. So it's a smorgasbord, really, of interest. Eric Stein | Analyst, Craig Hallum: Okay. Great color there. Maybe then just turning to some of the emerging applications, I know that now you've got a second construction OEM from Sumitomo. When you think about those new applications, I mean, I would think that Sumitomo opens up a significant number of potential customers in end markets, but do you think about that as you potentially add other trading house partners, or is Sumitomo get to the market reach that you want? Dr. Raj Dasgupta | Chief Executive Officer: Well, in Japan, it's very much a relationship business, and we have a great relationship with Sumitomo Corporation. I think we'll maintain that. We will not be looking to work with other trading partners. Right now, today, we have the two construction OEMs, which have been press released, but there's a great deal more of activity in the background. And we're very enthusiastic about the momentum that we're gaining out there in Japan. We'll probably be setting up a... operation there eventually as well to support some of that growth that we're seeing. So we're very, very pleased with that relationship that we've built up. And things move, you know, in the battery space. It takes time, of course, to get yourself qualified and into production programs. It doesn't happen overnight. But you have to seed those divisions. And then once you have, it turns into a garden eventually. Eric Stein | Analyst, Craig Hallum: And I guess just to follow up, and then I'll jump back in line, but the, as you said, great deal more activity in the background, is that more construction equipment, or has that broadened out to other applications? Operator | Conference Operator: There's two in construction. Dr. Raj Dasgupta | Chief Executive Officer: There's a third in construction as well we're talking to. There are other robotic applications that we're looking at in Japan as well. That seems to be the general focus. John Gibson | Chief Financial Officer: Yeah, the batteries themselves are very similar to each other, so application-wise, we can kind of fairly easily pivot towards a different size of vehicle. Operator | Conference Operator: Okay. Thank you very much. Thank you. Your next question is coming from Craig Irwin from Roth Capital. Operator | Conference Operator: Your line is live. Dr. Raj Dasgupta | Chief Executive Officer: All right. Good evening, and thanks for taking my questions. So, Raj, can you maybe comment a little bit about the forklift battery shipments in the quarter? Proportionately, were most of them into preexisting installations, any greenfield facilities out there? you know, how would you explain the mix within the forklift batteries? You know, I'd say it was approximately a 50-50 mix, which is new for us. Most in previous quarters, it's mostly new vehicles, new sites. This was a pretty diverse mix. With the discount retailer we've been supplying, that's mostly into existing distribution centers. With the Fortune 100 other customer there, it's, I would say, new sites. And then on the leasing program with Toyota, that's probably mostly existing distribution centers, smaller numbers, but adding up to becoming a significant sum. Excellent, excellent. And then maybe can you update us on the progress diversifying your markets, diversifying your reserve markets outside of the lift-up markets? You mentioned robotics. You know, there's a long list of different things that you are addressing, everything from rail to military opportunities. Where do we sit right now with the – the different customers that you're working with there. You know, you shared the second construction customer with Sumitomo. That's online now. But, you know, any additional colors that you could share with us as far as repeat orders or test packs as far as, you know, where the customers are in their evaluations for follow-on orders and extension to other opportunities? So with one of our defense customers, they've placed repeat orders, placed another repeat order just like last week. So, again, it's small numbers, but it really demonstrates that the relationship is building and we're tracking to something more meaningful. So we're seeing that type of activity on robotics. We've had a long history with a group called Jabil. They have been a relatively minor part of our revenue over the last few years, but started to scale things with us. Now we've received more meaningful orders and are expecting to get into additional platforms with them. So that's exciting. Then there's a group called Fashion Solutions, similar idea there. So we're seeing some more activity in the robotics space. Airport ground equipment, again, feed orders in that space as well. That's one which is a fairly adjacent market to material handling. And what have I missed there? So that's about it. Construction, of course, we've mentioned that. So those are the areas that we're seeing a fair bit of activity, and I'd expect those to... to scale up in next fiscal year. Excellent, excellent. And then last quarter we talked about the potential to maybe pull forward pack production in Jamestown. You know, can you say whether or not this is a priority at the moment? Is this something that helps you strategically, given that this facility will be producing cells in the not-too-distant future? And does this maybe improve the – potential for customer capture as you're looking at growth markets. So we have started that operation already, correct? So we have a team there, and they're already working. So the plan is that we'll have – that the Jamestown operations will support our growth. So they will be taking care of a certain portion of our targeted manufacturing goals. over the next 12 months. That gets the team there very familiar with lithium-ion batteries, specifically our batteries, and well-prepared for what happens afterwards, which is when the cell and module production starts up. So that's already in place. I think it benefits Electrify significantly in the fact that it provides us added capacity. So instead of maybe adding a second shift here in Mississauga, we can have operations in both plants, meet our growing targets, and... and it really benefits us operationally. So we're seeing that. In terms of it attracting additional customers, I'm not sure just yet. I think the cell and module production that's scheduled next year really is a piece that is attracting a lot of interest. because we'll be one of very few lithium-ion battery plants that can support customers in North America. Great. And then lastly, if I can ask a financials question. So your total debt was down, I guess, around $3.8 million sequentially, but the BMO facility is going to also deliver you, I believe, some substantial interest. Can you update us on the – the interest rate on the BMO facility, how this compares to your legacy facility. And, you know, should we expect you to be using that for growth working capital so that, you know, the net interest can actually trend up? Or is this something where, you know, you're going to continue to have a very tight balance sheet and we'll see actual cash interest, you know, tightly controlled possibly going down over the next few quarters? John Gibson | Chief Financial Officer: Yeah, good question, Craig. Interest savings are over five points from our previous lender. So what I'll say there is that it is a specific working capital loan. We're always going to manage that tightly and save on our finance costs. There's no point having millions of dollars in the bank if we're paying the interest on it. So you're always going to see that. It will fluctuate based on timing as these things all do and cash receipts and payments come during the weeks and the months. Essentially, this facility will allow us the room we need to grow and grow quickly. And that's what we were looking for in a banking partner, someone who is flexible. From an interest rate perspective, obviously, we have We can split our loan within Canadian and US dollars as we see fit and as our suppliers require it. So you're going to get different rates north and south of the border. But we're able to manipulate where the money fits to save on our interest costs. Dr. Raj Dasgupta | Chief Executive Officer: Understood. Well, congratulations on the solid EBITDA number. It's impressive. Thank you. Operator | Conference Operator: Thanks. Dr. Raj Dasgupta | Chief Executive Officer: Thanks, Craig. Operator | Conference Operator: Thank you. Your next question is coming from Samir Joshi from HC Wainwright. Your line is live. Samir Joshi | Analyst, HC Wainwright: Hey, good afternoon, guys. Congrats on a good quarter. Just following up on sort of previous questions, will you just let us know whether the Ex-Im Bank loan is going to be drawn down upon as you order and pay suppliers or is this already in your bank and you will be paying interest starting now? John Gibson | Chief Financial Officer: So this is, it's a draw-based facility. So what we've done is we've issued all the purchase orders and when those are due for payment, we'll draw from Exum and pay. There's not really much point in us drawing it before it's due because otherwise we're going to incur interest on that. So we're just going to target the due dates. And from that moment on, that's when the interest accumulates. Samir Joshi | Analyst, HC Wainwright: Makes sense. In terms of operating expenses, you have started initial assembly at the GameStop security and are targeting mid-next calendar year for full commercial operations. Should we expect to see an uptick in operating expenses or any additional expenses will be sort of cogs yeah majority will be tough okay and then the last question from me is you have maintained your guidance but have come very strong in the second quarter historically third quarter is relatively flat to second and the fourth quarter fiscal quarter is quite a jump If you do that, then it seems you might exceed, well exceed the 60 million guidance. Is that what you're looking at, especially looking at your 25 million orders issued this quarter? Should we expect that kind of advance? Dr. Raj Dasgupta | Chief Executive Officer: Yes, we want to be conservative. However, we are expecting Q3 to show meaningful sequential growth. That's, you know, halfway through the quarter. So, we'll most definitely exceed that. a Q2 result, and we hope to maintain those into the Q4. So, yes, we potentially can exceed our guidance by a strong margin, but we don't want to put it on... We don't want to have it... Yeah. There's a lot of volatility in the market right now, so I think it's a prudent thing to keep it constant. John Gibson | Chief Financial Officer: We'd rather have... continued growth in a healthy state through the year. Samir Joshi | Analyst, HC Wainwright: I would like to squeeze one more. You mentioned some of the applications and it seems that these could be newer applications. These could command higher prices and could be higher margins. Should we think of it that way or is it going to be the same form factor and pricing and margins for everything? Dr. Raj Dasgupta | Chief Executive Officer: So we want to maintain, we don't want to go after any verticals where we can't get at least 30% margins. Of course, some of those verticals will be higher margins, especially on defense, for instance, the volumes will be lower. So on margin wise, we will most definitely continue to exceed 30% threshold. Now, with all the uncertainty on material prices as of late, it's harder to predict things, but we expect that the Jamestown cell and module production are going to enhance margins, whether IRA exists or not at that point. So generally speaking, when it comes to mining or construction or robotics, they're all strong margin applications. Samir Joshi | Analyst, HC Wainwright: Got it. Thanks for taking my questions and good luck. Operator | Conference Operator: Thanks, Amir. Thank you. Once again, everyone, if you have any questions or comments, please press $1 on your phone. Your next question is coming from Jeffrey Campbell from Seaport Research Partners. Your line is live. Jeffrey Campbell | Analyst, Seaport Research Partners: Thank you, and congratulations on the strong quarter. Ron, I wanted to start with something that's probably a little off the track, but UCF recently announced a 20K head layoff. They said they were closing 70-plus facilities, and Somehow they tried to blame Amazon for the comeback. I just thought to ask how your leasing business, which I assume UPS would be most relevant to, continues to progress. Dr. Raj Dasgupta | Chief Executive Officer: So, you know, there are always going to be fluctuations with regards to these third-party logistics companies. Some do better, some do worse. But generally speaking, The industry as a whole is growing, and the need to re-power lead-acid batteries is increasing. So that's what we're seeing. We're seeing that transition from lead-acid to demanding better batteries, and that's driving growth in orders for us. Previously, we got very little in the way of orders from third-party logistics companies, primarily because they get five-year contracts. And now with this program that we have with Toyota material handling, they're getting quite a bit of interest from that sector. So I don't want to speak about UCF specifically, but we're seeing demand going up, and that's all we can really comment on. Jeffrey Campbell | Analyst, Seaport Research Partners: So that's all we really care about. That's fine. You mentioned the possibility of setting up an operation in Japan. I just wondered, as you're saying, does this mean an assembly facility or – might the country want a Jamestown-sized facility? No, no. Dr. Raj Dasgupta | Chief Executive Officer: It would start out at, you know, if volume goes dramatically upwards, we would consider an assembly phase. But the first phase of it would be to support customers there. So that's more like service, sales support, that kind of thing. And then as demand grows, It would follow demand, so if demand reached a certain threshold, we would consider assembly there as well. Jeffrey Campbell | Analyst, Seaport Research Partners: As you noted, robotics was an early point of activity for ElectroBear, but it sounds like this is ready for a new phase. I'm just wondering if you could provide some color on what sort of robotics applications are really driving the potential growth. Operator | Conference Operator: So it's a variety of things. Dr. Raj Dasgupta | Chief Executive Officer: There's material handling robotics. There's automated cleaning. There's automated monitoring. All sorts of new products by exciting companies that are getting launched. And what's common to them is they need good batteries. And we'll be there to support them with that. Jeffrey Campbell | Analyst, Seaport Research Partners: And finally, regarding battery storage for energy of service, What battery modifications are you needing to make relative to material handling, if any? Dr. Raj Dasgupta | Chief Executive Officer: Not really needing to make any modifications. We have software to support that, which we have already developed. Jeffrey Campbell | Analyst, Seaport Research Partners: Okay. Is that software similar to the things we talked about in the past with the Monitoring the energy consumption of the batteries in a warehouse-type environment or is it something... Exactly. Dr. Raj Dasgupta | Chief Executive Officer: Downloading. Jeffrey Campbell | Analyst, Seaport Research Partners: Yeah. Okay, great. All right. Thanks a lot. I appreciate it. Thanks, Jeffrey. Operator | Conference Operator: Thank you. Your next question is coming from Aaron Martin from A Investment Partners. Your line is live. Aaron Martin | Analyst, A Investment Partners: Hi, Rob. Hi, John. Congratulations on the continued progress. A lot of the questions have been covered. You had very large amounts of orders in the first half of the year and it really even went into the year with some of the greenfield opportunities that we were expecting to happen last fiscal year due to the time that the customer got pushed out to this year. Are those still on track, the orders that we thought were going to be in fiscal 2024? Are they still on track for 2025? Dr. Raj Dasgupta | Chief Executive Officer: Well, some of those got delivered. Actually, one of them has moved to 2026, but it's not going to affect our revenue guidance at all because we're getting other orders. So when it comes to new buildings, the timing sometimes is a bit unpredictable sometimes. But generally speaking, the trend, I would say, is we're seeing the order rates being sustained. It's not just happening in the early part of the year. I would expect it to continue that type of – based on what we hear from our pipeline, right? So there's orders that are issued, and then there's orders that, of course, are discussed and in place. Aaron Martin | Analyst, A Investment Partners: So you find that really – Yeah, I guess that's literally my next question. Are we, you know, as we think about the pipeline for 2026, is that starting to build now, whether as orders or as, as you said, you know, pipeline, the heads up against the customers? How should we start thinking about that? Dr. Raj Dasgupta | Chief Executive Officer: Yeah, so we already have orders in hand, which are, you know, significant numbers of orders in hand, which are due for 2026, and then pipeline on top of that that's been communicated. For instance, with the Fortune 500 discount retailer, they've given us a fairly strong indication of what they are looking to do in 2026, and it would be probably larger than what they were expecting in 2025. Similar kind of communications from other major end users, including Fortune 100. customer we have. So we're getting the visibility for 2026 is it's getting better by the day and it's good timing because we really want to ensure that 2026 and fiscal 2027 numbers we can maximize the production out of Jamestown. So that's what we wanted to see and that's what we're headed towards based on what we've based on information at hand right now. Aaron Martin | Analyst, A Investment Partners: Got it. Switching gears a little bit towards gross margin. You've done a great job there. When it comes to tariffs, I want to differentiate between the short-term and the longer-term. Obviously, the Jamestown facility and that act of having cell production there is incredibly interesting to the customers. But in the shorter term, before Jamestown is up and running on the cell side, how do you think about tariffs and your, you know, cost of goods. Dr. Raj Dasgupta | Chief Executive Officer: Yeah, so tariffs are affecting some material prices, and they've gone up. At the same time, we've managed to get some material prices to go down, and then we've had optimizations in our own assembly process. Remember, $15 million in revenue is still, I would say, on a quarterly basis, a relatively small number. We hope to get to much larger ones. And so our buying power is growing, and that's offsetting any of these cost increases due to tariffs. So I would expect us to maintain margins where they, you know, probably where they are, maybe grow them a little bit. And then when we start James Town, of course, I would expect margins to grow more sharply. Aaron Martin | Analyst, A Investment Partners: And does any of that involve, you know, passing on price increases to your customers, or that really hasn't been necessary? Dr. Raj Dasgupta | Chief Executive Officer: You know, it really has not been necessary. What we have noticed, though, is most of the competition has been increasing prices, so there's an opportunity to do so if we thought we should, but right now we're not seeing the need to do so. and it's making us more competitive as a result. Aaron Martin | Analyst, A Investment Partners: Okay, great. Operator | Conference Operator: Congratulations on the progress again. Operator | Conference Operator: Thanks, Aaron. Thank you. Operator | Conference Operator: There are no further questions in the queue. That concludes our call, and thank you for listening. Dr. Raj Dasgupta | Chief Executive Officer: We look forward to speaking with you again after we report our third quarter 2025 results. Have a wonderful evening. Operator | Conference Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation. jsPDF 3.0.3 D:20260606090124-00'00'