ELVA earnings call analysis

NASDAQ:ELVA Q1 2026 Earnings Call Transcript Generated on 6/6/2026 Conference Operator | Operator: Greetings. Welcome to the Electrovia Q1 2026 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.

spk14

Thank you.

John Gibson | Chief Financial Officer

Good afternoon, everyone, and thank you for joining today's call to discuss Electrovia's Q1 2026 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 quarter ended December 31st, 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, our management discussion and analysis, You can access those documents on the Cedar Plus website at www.cedarplus.ca, the SEC's EDGAR website at sec.gov forward slash EDGAR, or at our updated website at www.electrowire.com. As with previous calls, 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 risk 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 Q1 fiscal 2022-2026 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 the numbers discussed on this call are in U.S. dollars, unless otherwise notified. And now, I'd like to turn the call over to Raj. Thank you, John, and good evening, everyone.

Dr. Raj Dasgupta | Chief Executive Officer

It is a pleasure to speak with you today as we review our first quarter fiscal 2026 results. Q1 provided a strong start to the year. Historically, this has been our weakest quarter due to seasonality in our core material handling vertical. Despite that, we continue to demonstrate meaningful momentum. Revenue increased nearly 40% year-over-year, margins improved materially, and we maintained profitability, delivering approximately $2 million in EBITDA and about $1 million in net income. I'LL BEGIN BY HIGHLIGHTING KEY OPERATIONAL DEVELOPMENTS DURING THE QUARTER AND YEAR TO DATE, FOLLOWED BY UPDATES ON OUR PRODUCT AND MANUFACTURING INITIATIVES. DURING THE QUARTER, WE FURTHER STRENGTHENED OUR BALANCE SHEET THROUGH A COMBINATION OF SOLID OPERATIONAL PERFORMANCE, SUPPORT FROM OUR FINANCIAL PARTNERS, AND THE EQUITY RAISE COMPLETED IN NOVEMBER 2025. WE ENDED Q1 WITH THE FINANCIAL FOUNDATION execute the next phase of our strategy including expansion of manufacturing capacity in jamestown new york expansion into new verticals and continued development of next generation products and technologies within our core material handling vertical we continue to make strong progress our new oem integrated high voltage battery systems developed over the past two years ARE NOW SCHEDULED TO BEGIN COMMERCIAL DELIVERIES IN MARCH 2026. WE ALSO MADE DELIVERIES DURING THE QUARTER TO AN EXISTING GLOBAL DEFENSE CONTRACTOR FOR A NEW VEHICLE PLATFORM EXPANDING OUR RELATIONSHIP TO TWO DISTINCT APPLICATIONS WITH THAT OEM. WE EXPECT DEFENSE TO BECOME A MEANINGFUL CONTRIBUTOR TO REVENUE THIS FISCAL YEAR AND A STRATEGIC PRIORITY FOR THE COMPANY OVER THE LONG TERM. we initiated commercial deliveries of our latest modular 48-volt battery systems to a robotic OEM partner this January. We view robotics as a high-growth vertical aligned with our technological strengths, and we expect deployments to accelerate. Testing of our initial airport ground support equipment battery systems continues across multiple locations and climate conditions with the leading U.S. airlines. While this process has taken a bit longer than initially anticipated, we remain optimistic and believe this product line represents a meaningful long-term opportunity. We also established a Japanese subsidiary during the quarter to support growing demands across Japan and the broader Asia Pacific region. We are seeing encouraging interest across multiple verticals and believe this presence will support long-term growth in the region. TURNING TO SOME PRODUCT DEVELOPMENT ACTIVITIES, DEMAND TRENDS IN AUTOMATION, ROBOTICS, ADVANCED MOBILITY, AND ENERGY STORAGE FOR DATA CENTER INFRASTRUCTURE ARE INCREASINGLY ALIGNED WITH ELECTROVIA'S CORE STRENGTHS, WHICH INCLUDE SAFETY, CYCLE LIFE, AND HIGH POWER CAPABILITIES. WE ARE MAKING STRONG PROGRESS ON SEVERAL KEY INITIATIVES, INCLUDING THE RAPID CHARGING VERSION OF OUR INFINITY TECHNOLOGY and new energy storage systems focused on high power especially 800 volt dc architectures our ultra fast charging power cell development is advancing well this product integrates a next generation anode technology with our infinity platform including our ceramic separator technology to deliver enhanced safety and long cycle life while targeting five-minute charge and discharge capability. We have some significant application potential ranging from high-intensity robotic systems to data center infrastructure support, and we are targeting commercialization in 2027. In parallel, we are developing energy storage systems designed for emerging 800-volt DC data center architectures. These systems are intended to provide short-duration ride-through capability and manage rapid power fluctuations associated with workload shifts and generator transfers. We are currently in early stage discussions with potential partners in this area. To support these initiatives, we recently hired a new head of energy storage with extensive industry experience to help guide our technical AND COMMERCIAL STRATEGY FOR THIS KEY AREA. WE ARE ALSO ADVANCING OUR NEXT GENERATION CERAMIC SEPARATOR TECHNOLOGY, WHICH IS EXPECTED TO FURTHER IMPROVE ENERGY DENSITY AND CERAMIC STABILITY BEYOND OUR CURRENT PLATFORM. WE ARE ALREADY SEEING STRONG RESULTS AND ARE MOVING FORWARD WITH PLANS TO DOMESTICALLY SCALE UP THE STRATEGICALLY IMPORTANT TECHNOLOGY. CLOSER TO MARKET, WE PLAN TO LAUNCH NEW PRODUCTS FOR CLASS III MATERIAL HANDLING VEHICLES, AS WELL AS NEXT GENERATION SOFTWARE AND ANALYTIC SOLUTIONS AT MODEX 2026 THIS COMING APRIL. FINALLY, REGARDING OUR JAMESTOWN EXPANSION, WE HAVE COMMENCED BOTH INTERIOR AND EXTERIOR FACILITY UPGRADES. INITIAL DRIVE ROOM EQUIPMENT REQUIRED FOR CELL MANUFACTURING HAS BEEN DELIVERED. and we have begun hiring key personnel to support equipment installation and automation activities. This expansion remains a critical component to our strategy to increase capacity and support domestic production. With that, I will now turn the call over back to John for a detailed review of our financial results.

John Gibson | Chief Financial Officer

Thanks, Rush. Electrify continues its steady growth into the first quarter of fiscal 2026. As Raj mentioned at the top of the call, the company has historically had lower revenues in this quarter due to customer seasonality. However, Q1 showed significant growth year over year, and we entered Q2 fiscal 26 with a strong balance sheet and the capital to continue our engineering focus on new market verticals and support organic growth. Revenue for the quarter was $15.5 million compared to $11.1 million in the prior year, year over year growth of 39%. Our gross margins for the quarter were 32.9, an increase of 240 basis points over the prior year gross margin of 30.5%. As of the case of previous quarters, gross margins are primarily driven by product mix. However, managing suppliers, prices, and tariffs continues to be at the forefront of our activities as we scale. Management believes the company is well positioned to maintain strong margins as we continue through 2026. Operating profit increased significantly year over year. Operating profit for Q1 was $1.4 million compared to an operating loss of $0.2 million in the prior year. And the company generated a net profit of $1 million in the quarter, a significant increase from the net loss of $0.4 million in the prior year. Q1 now represents the fourth consecutive quarter of net profit and positive earnings per share. And we believe we can continue this trend Our adjusted EBITDA was 2 million for the quarter compared to 0.5 million in the prior year, an increase of 1.4 million or 265%. EBITDA grew in the current year due to improved margins and managing operating costs. Adjusted EBITDA as a percentage of revenue was 13% for the quarter. The company generated positive cash flow from operations of 1.7 million after accounting for net changes of working capital. compared to cash used in operating activities of $0.3 million in the prior year. The company ended the first quarter with positive net working capital of $51.9 million, compared to $12.6 million in the prior year, a current ratio of 6 compared to 1.6. A clear indicator of improved financial performance and management is committed to continuing this positive trend. At December 31, our total debt was $27.3 million, compared to $15.3 million in the prior year, This day includes both working capital debt and debt from the Ex-Im facility. The working capital debt was 10.9 million at the end of the quarter, a decrease of 4.4 million over the prior year. This improved debt balance was driven primarily from cash flows from operations. At the end of the quarter, we had drawn 16.4 million from the Ex-Im loan. We're still in a period of no cash payments with Ex-Im, with interest payments starting on March 31st, 2026, and principal payments starting March 31st, 2027. During the quarter, the company raised gross proceeds of $28 million from an equity issuance. The company has utilized some of this cash for engineering and R&D efforts at the end of the quarter. The company had cash on hand of $22.7 million and availability within its banking facility of $9 million. We believe we have adequate liquidity to support our expansion into these new verticals and our anticipated growth as we continue through fiscal 2026.

spk14

The company made a solid start to fiscal 26, maintaining disciplined progress across operations, which we see continuing into Q2.

John Gibson | Chief Financial Officer

We would expect to build on this momentum as we continue through the remainder of the fiscal year and are reaffirming our revenue guidance of 30% growth for fiscal 26. Finally, I wanted to elaborate on one of the items detailed in the AGM material relating to the re-domiciling of the company. After our equity financing in November, and based on trading activity being substantially higher on the NASDAQ than the TSX, the company expects to lose its foreign private issuer status and be treated as a U.S. domestic filer under SEC rules. This change would subject the company to the full domestic reporting and governance regime, but absent a change in corporate domicile without the structural and legal advantages typically available to U.S. incorporated issuers. In addition, as a U.S. domestic issuer, the company would become eligible for inclusion in certain U.S. equities. Taken together, these changes position us to broaden our investor base, improve trading liquidity, and ultimately enhance long-term value for our shareholders. That concludes our financial overview.

spk02

Raj and I would now be pleased to hold a question and answer session.

Thank you. Conference Operator | Operator

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 is in the question queue. You may press star 2 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 1 if you have a question or a comment. Our first question comes from Colin Roosh with Oppenheimer. Please proceed.

spk12

Thanks so much, guys. You know, could you give us a bit of an update in terms of the scope and scale of the customers that are moving into your sales funnel and then how quickly they're moving through and how quickly they're – they're getting qualified on the product. We're just curious about the velocity of some of that sales activity.

spk13

Okay, Colin, are you referring to just in general or specific verticals?

spk12

You know, specific to material handling, just related to numbers.

Dr. Raj Dasgupta | Chief Executive Officer

Yeah, material handling, we're, so in terms of the end customers, there are, it's DOMINATED BY A NUMBER OF LARGE FORTUNE 100 AND FORTUNE 500 COMPANIES. THE LARGEST TWO BUYERS HAVE GIVEN US VERY GOOD INDICATIONS OF THEIR DEMAND OVER THE NEXT FOR THE FULL FISCAL YEAR, WHICH IS PARTLY HOW WE DETERMINED OUR GUIDANCE FOR THE YEAR. AND THEY ARE LARGE RETAILERS, GENERALLY, OF COURSE, LIKE TO TAKE DELIVERY IN the quarters outside of this reported quarter so there we have we have very good visibility the same time we have a pipeline of new customers in various stages sometimes they're just testing solutions more often they have already done that and they're ordering small batches of systems to get to pilot and then full distribution scale so there are various stages there and that's a pretty A GOOD PLACE TO BE IN THAT SEGMENT. SO WE'RE SEEING GOOD THERE. WE'RE ALSO NOW STARTING TO ADD SOME ADDITIONAL SALES RESOURCES TO BROADEN THAT POOL. BUT IN THE OTHER VERTICALS I'LL TALK ABOUT ROBOTICS THERE A BIT. SO WE ALREADY HAVE A NUMBER OF PARTNERS WE HAVE AND WE'RE ALREADY NOW SHIPPING GROWING NUMBERS OF BATTERIES TO TO A COUPLE OF THESE OEMS. FOR INSTANCE, IF YOU VISIT OUR PLANT TODAY, YOU'LL SEE QUITE A LARGE NUMBER OF SMALLER 48-VOLT BATTERY SYSTEMS UNDER VARIOUS STAGES OF ASSEMBLY, AND THAT'S FOR ROBOTIC APPLICATIONS. BUT IN ADDITION TO THAT, WE ARE IN DISCUSSIONS WITH APPROXIMATELY THREE OR FOUR ADDITIONAL OEMS IN THAT SPACE. Of course, when you're working on OEM projects, there is a time quotient, which is a little longer than a standardized product, which is the material handling product. That's a long answer to your question.

spk12

No, that's super helpful. And then I'm just curious about preparations for a pilot on the stationary storage product, how those are proceeding, if you've had any incremental interest since announcing the new product where it's a little bit different. you know, characteristics and performance specs. It seems like it's really well tuned to what we're seeing on the data center side in terms of what the real needs are. So just curious about the timing on those pilots and growth and potential customers there.

Dr. Raj Dasgupta | Chief Executive Officer

A great question. So essentially, we're coming out with two products for the energy storage space. One is more of a standardized product, which is based on the existing cell that we currently manufacture and uh it's it's a design for high power applications still 30 minute one hour energy storage uh and for that product we we have uh pilots scheduled one is a government-backed a us government-backed project which will hopefully um announce soon uh and then we are planning some internal pilots as well before we put them at uh customer sites The second product, which I mentioned in our prepared remarks, is that 800-volt DC system. And that is something that we've been in discussions with, I'd say, some electricity generation companies. So if you look at these data centers, they're often putting diesel gensets and turbines on-site for power generation. But those devices need, when you're looking at the 800-volt architecture, they need a energy storage component to deal with the seconds to minutes of demand response there. And so that's the system we're very excited about that's under development right now. And that system will utilize this ultra-high power cell spk14: Great. Thanks, guys. I'll hop back in, Kim.

Conference Operator | Operator

The next question comes from Daniel Magner with Raymond James. Please proceed.

spk00

Afternoon. Thanks for taking my questions here. Just curious as it relates to these new verticals, given the announced deliveries in the defense sector, do you still expect robotics will be the second largest revenue driver in the near term, or could defense potentially leapfrog it?

Dr. Raj Dasgupta | Chief Executive Officer

We are expecting robotics this year to be larger than defense, but they'll both be present in a material way.

spk14

Okay, got it.

Dr. Raj Dasgupta | Chief Executive Officer

But the robotics delivery just started in the current quarter, so there are zero deliveries in fiscal Q1.

spk00

And I guess just a follow-up here, recognizing you have the EXIM loan, the New York State grants and incentives. Given, obviously, the growth in defense and the current administration's focus on it, are there other potential government programs you think you could potentially be able to tap into?

Dr. Raj Dasgupta | Chief Executive Officer

We think so. This is something that we're starting to look at. Currently, our number one focus is, of course, getting the partners, the right partners here. So we already have two very good, well-established defense contractors Customers, we are in discussions with another two. One of them is planning to test our products. So I think that's the route we're going at it. Eventually, let's perhaps look at some of those opportunities you just mentioned.

spk00

Got it. And I guess lastly for me, given all the positive progress in other areas, is energy as a service still a key initiative for you? And just wondering... If you could provide me color on how it's progressing.

Dr. Raj Dasgupta | Chief Executive Officer

It still is a key initiative. What we've seen is some of the customers we thought were going down that route decided to make purchase orders instead, which is great, of course. However, we are looking at a couple partnership opportunities to support energy as a service. One route is partnering with a group who has a a large company who has a long history in supporting similar type of activities, and that's something we're considering pursuing.

spk00

Got it. All right. Well, that is for me for now, and I'll jump back into the queue.

Thanks. Conference Operator | Operator

The next question comes from Eric Stein with Craig Hallam. Please proceed.

spk09

Hi, everyone. Just jumping around between calls. I apologize if I'm pressing on things you already have. Maybe just material handling. I know that's the lion's share or the majority of your outlook here in fiscal 26. But when you think about that growth and when you think about the opportunity going forward, how do you think of that between existing versus adding new customers? and maybe penetration level with those existing customers that you've currently got?

Dr. Raj Dasgupta | Chief Executive Officer

So today, Eric, we're already supplying at various stages of penetration level the world's largest company. And so you couldn't have a better pool of end customers that we have. they all are relatively early in adoption rates, right? So if you look at the addressable market within our existing customers, it's massive, right? So the need to bring in new end customers is actually not, you know, it's important, but the larger opportunity is selling more to the folks who are already buying the product. In terms of penetration rates, I'd say we're still early days. The largest operator of our systems has a very large number of distribution centers globally. So I'd say we're early innings with the existing customer base.

spk09

Got it. And maybe following up on that, I know that your thought process has been that your solution is really applicable to all sizes of facilities for those existing customers. Has that come to fruition? Are you thinking any differently about the opportunity? And I guess that just speaks to the size of the overall opportunity.

spk13

Yeah, the number of...

Dr. Raj Dasgupta | Chief Executive Officer

Battery systems we deploy at a typical distribution center can vary widely. There doesn't seem to be a limit to how large a site we can support. So I'd say that's not really a factor.

John Gibson | Chief Financial Officer

Yeah, we have a site, Eric, with over 300 batteries deployed in vehicles. Yep.

spk09

I was actually getting at it the other way, that there are some solutions out there that it's tougher to go to the medium and smaller sizes, which is obviously a big part of the market. Whereas that is an area where I would think that you do quite well in.

Dr. Raj Dasgupta | Chief Executive Officer

For sure. So there are plenty of sites operating our solution with probably under 10 systems.

spk14

So there seems to be a broad range that we can service.

spk09

Okay. Let's see. Maybe last one for me, just on the defense side. So just so I'm clear. So what you called out is just, you know, so expansion with one of, I think you currently have two defense contractors that you've been working with. So I guess first, just confirming that. and then secondly when you talk about the two plus two additional you're talking with i mean are these i know it's hard you can't disclose a whole lot but are these similar applications with those contractors or is it using your solution in a wide range of things it appears and you know we only know so much but it appears these are different applications so with the Dr.

Raj Dasgupta | Chief Executive Officer

defense contractor we discussed in our prepared remarks, they initially and they continue to use our solution for an autonomous land-based application. And the second application, which we just made initial deliveries for, is for a hybridized vehicle system. The second defense contractor is a submersible.

spk14

But in general, we see defense as a good vertical for this technology, given the safety and high performance of our technology.

spk02

Yep, absolutely.

spk14

Thank you.

Conference Operator | Operator

The next question comes from Craig Irwin with Roth Capital Partners. Please proceed, Craig.

spk11

Good evening, and thank you for taking my question. So Raj, I have a bunch of small questions around Jamestown that would be really important to understand as we shape the future. So the first one is the CapEx outlook for this year. Can you maybe shape that as far as the quarterly tempo and what your expectations are in this fiscal year? And then associated with that, where do you stand on the hiring and training of the workforce that would be necessary sort of in tandem with the installation and commissioning of that equipment.

Dr. Raj Dasgupta | Chief Executive Officer

Yes, Craig, I'll let John answer the first part, and I'll jump on the second part.

John Gibson | Chief Financial Officer

Yeah, hi, Craig. So essentially what we were at the end of the quarter was we'd drawn $16 million, over $16 million of the full $50 million eggs on loan. So we expect to spend that money before the end of the fiscal year or at least, you know, 90% before the end of the fiscal year. So from a CapEx perspective, you're going to see it increase certainly within Q2 and Q3. The majority of it will be within Q3 and Q4 though. So yeah, fully spending, or at least spending 90% of that loan and including that CapEx within the fiscal year.

Dr. Raj Dasgupta | Chief Executive Officer

Yeah, and on the second question, Craig, we are hiring people right now. So about six months ago, we hired a senior individual from LG Chem who was closely involved with one of their large-scale giga plants. And more recently, we've been hiring other employees, be located at the site who have experience with other battery manufacturing sites in the United States, some of which may have been closed down. We also are hiring great talent. There's a long list of folks we're in process of giving offers to, and it seems to be an opportune time to bring in these types of individuals. If we were building this plant a year ago, it would have been much harder to find this level of talent that we're seeing in the market today.

spk11

Understood. That's a good thing. So next question is, can you maybe give us some color on the revenue contribution out of the Jamestown facility this year? You know, I know your cell manufacturing is supposed to start at the end of the year, if you could just confirm the timeline for that. But do you expect any cell revenue in 2026 from the Jamestown facility, and roughly what percentage of revenue would you expect this facility to contribute?

Dr. Raj Dasgupta | Chief Executive Officer

Yeah, Craig, all along we were anticipating Jamestown, especially at the cell level, contributions starting from fiscal 27. So fiscal 26 for us ends on September 30th, and there will be no cell contributions to revenue Battery systems, on the other hand, that's different. You will likely see some revenue generation out of that plan in our fiscal fourth quarter, both probably on a module and system side of things.

spk11

Sorry, I meant calendar year. So I'm assuming that all of the cell manufacturing equipment will be in place in your fiscal year before the end of September. with commissioning work underway, but do you expect cell production in that facility in the first quarter of your fiscal seven, the last three months of this calendar year?

Dr. Raj Dasgupta | Chief Executive Officer

Potentially, correct. Potentially, yes. Of course, it doesn't start out, we'll make sure the output of the plant is matching what we need, of course, right? There's a bit of a start-up period. associated with that, but we could most definitely see some contribution in that quarter.

spk11

Understood. And the last question, if I may, can you update us on 45X, what you think the benefit will be on equipment purchases, whether or not you're seeing tariffed equipment impacted And what do you think the potential contribution is, you know, once you are manufacturing your own cells in Jamestown in fiscal 27?

Dr. Raj Dasgupta | Chief Executive Officer

So there's two parts of 45X. There's the $10 per kilowatt hour associated with module production. And then there's $35 per kilowatt hour associated with cell production. And under the new rules, under the Big Beautiful Bill Act, you can only get one or the other. So what we anticipate is we will start off with the $10 a kilowatt hour as we manufacture modules. And when the cell production hits a certain speed, we'll transfer to the $35 a kilowatt hour.

spk14

Excellent. Thank you for that. Congrats again on the progress.

Conference Operator | Operator

Up next is Amit Dial with HC Wainwright. Please proceed.

spk08

Thank you. Good afternoon, everyone. Most of my questions have been asked, but just with respect to the outlook for the year, you know, the backlog still is at 100 to 125 million. So the, you know, the top line guidance seems a little conservative. You know, can you maybe provide any color on what could drive upside to the 30% growth you are targeting this year?

John Gibson | Chief Financial Officer

Yeah, so the growth is based on not just the backlog, but the front log as well. So that number you quoted is backlog plus front log. So essentially, we're taking purchase orders we've received, purchase orders that we know are coming in, confirmation from the customers of demand, and then our estimates of run rate. And then what we do is we take that number and discount it back based on historic experience with customer delays or purchase order changes, et cetera. So, yeah.

Dr. Raj Dasgupta | Chief Executive Officer

And 30% growth is not a bad number. I think there, as you can see in our Q1, some people forget this, there is some seasonality on our core material handling vertical. Sometimes distribution centers open a little later than they plan to if they're a new site. So there's some of that activity that's taken into account. But of course, there's some upside. We haven't taken into account meaningful revenue from the airport ground equipment space, which could most certainly come into the current fiscal year. But overall, we're very focused on maintaining growth, maintaining the profitability, and these new product developments and new technology developments in addition to the Jamestown setup.

spk08

Well understood. Thank you. And then on the solid state side, any important milestones you are targeting to hit this year? Do these include maybe any pilots that could begin with customers?

Dr. Raj Dasgupta | Chief Executive Officer

Yeah, good question. I didn't discuss the solid-state battery much in the prepared remarks, but we had reached a certain level of development, I'd say, back in the summer, which was looking good, but we were somewhat hamstrung by equipment in terms of to get it to a pilot scale. We ordered the equipment several months back. It has arrived at our lab site already and it's being installed so we will start scaling up cells using our solid state battery technology in really from April onwards and at that point things look good we will start looking to sample them as well so there's definitely activity there we've added a couple key researchers to our team most definitely we have not forgotten about that that technology On the IP side as well, we're close to being awarded some patents around our solid state technology, but we're in the back and forth with the examiners at the moment. Okay.

spk08

Thank you, guys.

That's all I have. Conference Operator | Operator

Next question comes from Jeffrey Campbell with Seaport Research Partners. Please proceed.

spk06

Good afternoon, gentlemen. Raj, my first question is I assume the OEM integrated high-voltage batteries refers to Toyota heavy-duty MHE, but you can correct me if I'm wrong. But if so, can you give us some color on how many models are integrated at present and what it might look like over the next couple of years?

Dr. Raj Dasgupta | Chief Executive Officer

Yeah, you're probably correct. You are correct, Jeff. The model I refer to is the high voltage system, which is going into, there are a couple models of batteries, and it's going, we believe, into two distinct vehicle systems. And so there are orders for those vehicles already. Reason production is starting in, spk14: March, as it coincides with certification. Okay, great.

spk06

My next question was regarding the solutions you mentioned. I think you're going to have a place where you're going to display your solutions targeting Class III MHE. I was wondering, is this going primarily to robotics applications, or will you also support more traditional Class III equipment? Because I believe in the past you've tended to Dr.

Raj Dasgupta | Chief Executive Officer

identify class three as generally unable to support your margins uh it is the latter uh so it's our expanding in uh in the material handling uh vertical with a class three product which we normally had shied away from uh we believe we can maintain those margins uh the reason we're developing that product is it has sort of been driven uh customer driven But we will be able to maintain the margins with that product. It takes advantage of some aspects of the robotic battery systems that we've developed. So there's some overlap in the design of the system.

spk06

Okay. Yeah, that's very interesting. And I guess my last question for today is kind of a more open-ended one regarding the next generation ceramic separator development that's undergoing. I was just wondering, what are the specific areas that you see demanding improvement here? I'm not trying to be coy, but the existing tech is class leading. So I'm interested in your insight here.

Dr. Raj Dasgupta | Chief Executive Officer

Yeah, that's definitely a valid question. So the current technology is working well, very well validated. Of course, you want to continue to improve that technology. And that's one aspect of what we're doing here. improvements would be to make it thinner make it even higher thermal stability use new novel materials which were working on and also the current current separators working very well it's being manufactured under contract in Japan this one will be manufactured domestically so that's another I wouldn't say it's a benefit, it's just in addition. But it supports some activities like for, for instance, this high, super high, ultra high power cells. It has a benefit there. Potentially, this new material can also be utilized in other cell formats. That would be a major breakthrough for us, but that's too early to say.

spk06

Well, we'll stay tuned for that. That sounds provocative. Thanks very much.

I appreciate it. Conference Operator | Operator

Thank you. We have a follow-up coming from Colin Rush with Oppenheimer. Please proceed.

spk12

Thanks so much, guys. You know, other than asking around the ground service equipment opportunity and how we should think about the cadence of that moving forward, going from piloting into a more substantial order and kind of the order of magnitude of that opportunity set for you guys right now.

spk14

SO WHAT WE'RE LOOKING AT IS TO GO TO THAT MORE SUBSTANTIAL ORDER.

Dr. Raj Dasgupta | Chief Executive Officer

WE'VE ALREADY RECEIVED SOME PILOT ORDERS WHICH ARE ESSENTIALLY ALREADY BEEN DELIVERED OR SOME OF THEM HAVE MOSTLY BEEN DELIVERED. BUT THIS WOULD BE TO GO TO SCALE RIGHT AWAY. AND SO THE OPPORTUNITY WE'RE LOOKING AT WITH THIS FIRST AIRLINE IS FOR REASONABLY LARGE SCALE DEPLOYMENT.

spk02

Okay, great. I'll take the rest offline. Thanks, guys.

Conference Operator | Operator

Once again, if you have a question or a comment, please press star 1. The next question comes from Graham Tanaka with Tanaka Capital Management. Please proceed.

spk05

Hi, guys. Thank you. I'm just putting this all together. You have a lot of moving parts, and I just wonder if you could summarize for the next two years what are the main areas that can increase gross margins and operating margins versus decreasing. And on the decreasing side, if you could address your semiconductor content and what kind of cost increases you're getting in semiconductors.

Thank you. Dr. Raj Dasgupta | Chief Executive Officer

So, overall, you know, as you saw in this current quarter, margins improved, going from about 30 percent to about 32 percent. WE EXPECT TO MAINTAIN THAT LEVEL OF ACTIVITY, THAT LEVEL OF IMPROVEMENT IN THE COMING QUARTERS. THAT'S SORT OF WHAT WE'RE ANTICIPATING. I WOULD SAY RELATIVELY MODEST IMPROVEMENT IN MARGINS, BUT IT COMES WITH, YOU KNOW, CORRELATES TO IMPROVED FINANCIAL RESULTS. THE BIGGER CHANGE IN MARGINS WILL OCCUR FOLLOWING JAMESTOWN SELL PRODUCTION COMING ONLINE, AND THAT WILL BE DUE TO A, you know, the vertical integration, but B, the ability to leverage the 45X production tax credits. And the second part of your question on, I guess you don't mean semiconductor, you mean input materials. We're, you know, electrified, our batteries are generally more expensive already. So input material price variations have an impact, of course, but I probably have a, more nuanced impact than it does on our commodity-driven rivals.

spk05

So I just want to make sure that if there's any issues on supply or cost increases in semiconductors, which we're seeing across all Silicon Valley companies, whether you can cover any cost increases and can secure all supply that you think you might need in semiconductors.

Thank you. Dr. Raj Dasgupta | Chief Executive Officer

So in terms of material inputs, the one that has fluctuated is lithium carbonate pricing, but it hasn't fluctuated enough for us to have any noticeable impact on margins. We, of course, can also update pricing to our customers if we haven't needed to, if those prices do go in the wrong direction enough. The only materials which probably are common with the semiconductor space is maybe alumina, but there, again, it's not substantial and often our bill of materials have a major impact.

spk14

Right.

spk05

That's great. I don't know if you can have added up, but what percent of your business can be coming from military spending, you address defense, but it kind of goes into a few different areas. I'm just wondering if that is going to rise as a percentage of the mix, and are the margins going to be lower in defense?

Thank you. Dr. Raj Dasgupta | Chief Executive Officer

So, starting on the last part, margins in defense we would expect to be higher. Now, the defense base, at least from our experience, it moves slowly in terms of qualification, and they're very, very careful. A lot of testing goes, a lot of testing validation goes into this. There's also certain certifications. I don't want to get too deep into it, but there's MIL and Navy certification levels that you have to achieve sometimes. So it moves, it's a sticky space. Once you get designed in, you're designed in. But in terms of how quickly it scales in volume, spk02: My anticipation has scaled slowly.

spk03

We have no further questions in the queue.

Conference Operator | Operator

I'd like to turn the floor back to management for any closing remarks.

Dr. Raj Dasgupta | Chief Executive Officer

Now, that concludes our call this evening, and thank you for listening. We look forward to speaking with you again after we report our second quarter 2026 results.

spk14

Have a wonderful evening.

Goodbye. Conference Operator | 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:20260606090119-00'00'

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'