ELVA earnings call analysis

NASDAQ:ELVA Q2 2026 Earnings Call Transcript Generated on 10/9/2026 Operator | Conference Operator: Greetings. Welcome to the Electra Via Q2 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.

Thank you. John Gibson | CFO

Thank you. Good afternoon, everyone, and thank you for joining today's call to discuss Electrovia's Q2 2026 financial results. Today's call has been hosted by Dr. Raj Dasgupta, CEO of Electrovia, and myself, John Gibson, CFO. Today, Electrovia issued a press release concerning its business highlights and financial results for the quarter and six months ended March 31st, 2026. If you would like a copy of the release, you can access it on our website. If you want to view our financial statements, management discussion analysis, You can access those documents on CEDARplus at www.cedarplus.ca, the SEC's EDGAR website at sec.gov forward slash EDGAR, or at our updated website at www.electrovia.com. 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 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 announced in the Q2 fiscal 2026 results, and the most recent annual information form and management discussion 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 the call are in U.S. dollars, unless otherwise noted. And now, I'd like to turn the call over to Raj.

Dr. Raj Dasgupta | CEO

Thank you, John, and good evening, everyone. It is a pleasure to speak with you today as we review our second quarter fiscal 2026 results. Despite some supply chain disruptions stemming from recent geopolitical developments, we continued steady progress during the quarter across our financial, technology, and strategic business objectives. While our material handling products continue to form the foundation of our revenue base, the quarter also marked the commencement of commercial deliveries of our latest battery systems for robotic applications, in addition to shipments to two defense contractors. These developments reflect the continued expansion of our technology platform into new and strategically important verticals. We remain highly focused on new product development, continued advancement of our core battery technologies, and the ramp up of our Jamestown manufacturing facility, all of which we believe will play a central role in supporting the company's long-term growth and success. During the quarter, we also commence shipments of our latest high-voltage battery systems. We expect high-voltage vehicle platforms to scale over the coming years and become a meaningful contributor to revenues beginning in fiscal 2027. In the airport ground support equipment sector, testing activities have continued to progress well, and our trial battery systems are now operating commercially at multiple airports. However, recent disruptions within the airline industry and broader macroeconomic uncertainty may impact the timing of capital spending decisions and near-term order flow within this sector. Turning to product and technology development, we continue to advance our technology and product portfolio, spanning advanced ceramic separator technologies through to next-generation software solutions. Our most significant development initiative is focused on energy storage products, which we expect will become a showcase of the company's integrated battery system, cell, and software capabilities, delivering differentiated solutions for mission-critical energy storage applications. Electroviya is developing products and technologies that fundamentally build upon our core strengths in advanced ceramic separators, cell and system safety, longevity, cycle life, and high-performance battery operations. I'm particularly excited about our push into energy storage. This is a sector that I personally led at Electrovia more than a decade ago, before the market became increasingly commoditized. Today, however, with the rapid growth in demand for mission-critical energy infrastructure We believe that the market environment has fundamentally changed and presents a significant opportunity for differentiated technology solutions. We believe our energy storage platforms can deliver an outsized impact through a combination of high power density, long cycle life, and industry leading safety. Our objective is to enable customers to achieve more with a smaller and more efficient battery solution. improving both operational performance and overall economics. In addition, given the exceptional safety and field performance record of our Infinity technology, we believe mission critical applications will represent a key target market for the company. We've already demonstrated the strength of this approach within the material handling sector, where we successfully introduced a premium battery solution to some of the world's largest companies. We believe a similar strategy can be applied to energy storage infrastructure markets. Within our energy storage product portfolio, which is in development, we are advancing both AC coupled 1,500 volt systems and DC coupled 800 volt system architectures. These platforms are being engineered to meet UL9540A certification standards while supporting materially higher power densities than conventional lithium ion energy storage systems. Fundamentally, our goal is to deliver greater performance and capability with a smaller overall battery footprint. I'm also encouraged by the continued progress of our next generation ceramic separator development program, which is expected to deliver further improvements in battery performance and capability. To support future commercialization, we are planning scaled manufacturing expansion at one of our Ontario facilities with production targeted to commence in 2027. In parallel, our solid-state battery development efforts have accelerated following the installation of upgraded infrastructure and a new dry room earlier this year. As I mentioned previously, we are also advancing rapidly towards the development of an ultra-fast charging lithium ion cell and accompanying battery systems. This technology integrates a next-generation niobium oxide anode with the company's Infinity platform to deliver enhanced safety, long cycle life, and charging times of approximately five minutes. In-house testing of prototype cells is ongoing and has successfully demonstrated the targeted high-rate charging capabilities alongside excellent cycle life performance. We've also already produced prototype battery modules utilizing these cells and are actively designing complete battery systems targeting applications such as robotics, data center infrastructure support, and other high-power industrial markets. We're currently targeting customer sampling this year with commercial availability expected in 2027. Finally, regarding our Jamestown expansion. I was at the facility yesterday, in fact, and I'm very pleased with the significant progress being made in site preparation and infrastructure development. Construction of the dry rooms is underway. Building floors have been reinforced to support advanced manufacturing equipment and a number of additional facility upgrades are progressing on schedule. Most importantly, we continue to strengthen the leadership and technical expertise required to successfully scale the operation. Our cell manufacturing lead for Jamestown, Aksu Han, recently joined the company and has already relocated to the region. OXU has been based in Michigan since 2015 and previously led new cell product introduction initiatives at LG Energy Solutions. In addition, we have continued to add other key personnel, including process engineers and manufacturing specialists with experience across several major North American battery operations. Along with our ongoing capital equipment investments at the site, experienced talent will be critical to the successful execution of our long-term manufacturing strategy. The Jamestown expansion remains a core component of our plans to increase production capacity and support domestic manufacturing, particularly for our future energy storage and defense-related product lines. With that, I will now turn the call back over to John for a detailed review of our financial results.

John Gibson | CFO

Thanks, Raj. Aletra continued its steady growth through the second quarter of fiscal 2026. As Raj mentioned, the company did experience supply chain issues due to the current geopolitical and macroeconomic environment. At the end of the quarter, the company had approximately 1.4 million of finished goods waiting to be shipped solely due to these supply chain delays. It's important to note that revenue is only recognized once the units are delivered to customers. Despite these issues, revenue for the quarter was $18 million compared to $15 million in the prior year, year-over-year growth of 20%. Revenue for the six-month period was $33.6 million compared to $26.2 million in the prior year, year-over-year growth of 28%. Gross margin for the quarter was 33.4%, an increase of 230 basis points over the prior year gross margin of 31.1%. And gross margin for the six-month period was 33.2 compared to 30.9 in the prior year. As is the case with previous quarters, the gross margin is primarily driven by product mix. Managing suppliers, prices, and tariffs continues to be at the forefront of our activities as we scale. And management believes the company is well positioned to maintain these strong margins as we continue through 2026 and into 2027. Operating profits increased significantly year over year. Operating profit for the quarter was 2.2 million compared to 1.4 million in the prior year, an increase of 56%. And operating profit for the six-month period was 3.6 million compared to 1.2 million, an increase of 195% year over year. Net profit for the quarter was $1 million compared to $0.8 million in the prior year. And net profit for the six-month period was $2.1 million compared to $0.4 million in the prior year, a significant increase of 404% year over year. Q2 represents the fifth consecutive quarter of net profit and positive earnings per share. Adjusted EBITDA for the quarter was $2.8 million compared to $2 million in the prior year, an increase of $0.8 million, or 41%. Adjusted EBITDA for the six-month period was 4.8 million compared to 2.6 million in the prior year, an increase of 89% year-over-year. EBITDA grew in the current year due to the improved margins and managing operating costs. Adjusted EBITDA as a percentage of sales was 15.7% for the quarter and 14.3% for the six months. The company generated positive cash provided by operating activities of 4.3 million compared to 3.2 million in the prior year, and cash use and operating activities of 5.6 million compared to 4.8 million in the prior year. The cash use being driven by increases in accounts receivable, inventory and prepaids. The company ended its first quarter with positive networking capital of 57.8 million compared to 26.2 million in the prior year, a current ratio of 7.7 compared to 3.9. A clear indicator of improved financial performance and management is committed to continuing this positive trend. At the end of the quarter, total debt was $21.9 million compared to $13.1 million in the prior year. This debt includes both working capital debt and the debt from the EXIM facility, while the prior year figure is solely working capital. Working capital debt was $12.2 million at the end of the quarter, a slight decrease of $0.9 million over the prior year. And at March 31st, the company had drawn $19.8 million from the EXIM loan. The company made the first interest payment on the EXIM loan at the end of the quarter. The company continues to utilize cash from the equity raise for engineering and R&D efforts. At the end of the quarter, the company had 20.4 million in unrestricted cash on hand and availability within its banking facility of 7.8 million. We believe we have adequate liquidity to support our expansion into new verticals and anticipated growth as we continue through fiscal year 2026. We are seeing some impact from the current geopolitical environment and resulting elevated energy prices on customer ordering patterns, particularly as uncertainty around operational costs, supply chain, and regional demand continues to evolve. As a result, we may see a portion of orders that we had previously anticipated within the current fiscal year being deferred, with some customers taking a more cautious approach to capital deployment. However, we're also seeing some customers potentially increasing their demand from our initial expectations. which may compensate for any disruptions. While underlying demand for our products remains strong, given this potential uncertainty, we may see a portion of this activity shift into fiscal 2027. We continue to engage closely with our customers and remain confident of our long-term outlook, with these timing dynamics reflecting prudence rather than any structural change in demand overall. That concludes our financial overview. Raj 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 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. Your first question comes from Colin Rush with Oppenheimer.

Please proceed. Colin Rush | Analyst, Oppenheimer

Thanks so much, guys. Could you give us an update on validation and testing of the line that will go into Jamestown? Just want to see or just understand how far along you are in terms of that testing and when we might expect delivery of all that equipment into the facility in the U.S.? ?

Dr. Raj Dasgupta | CEO

Hey, Colin. Good to hear you. So the equipment, there's a bunch of different equipment, right? So there's the cell manufacturing equipment, which is coming primarily from a Korean supplier. And for that, we're setting up the entire line actually in Korea, and we'll be conducting a pretty extensive factory acceptance test plan over there, right? So we'll have a a very large team from Jamestown primarily out there for a period of six weeks where we'll run the entire production line essentially from start to finish. And that's, I would say, a somewhat unusual factory acceptance test plan, but we've done that to de-risk operations in Jamestown and reduce site acceptance test work that we would do. So that's going to start occurring late summer. Earlier in the summer, the same sort of activity is going to occur for our module production lines, which are highly automated. But that's not as complicated, so it'll be a little bit shorter. Other equipment, a lot of it is already on site. So all the infrastructure equipment, things like drive rooms, switch gears, a lot of the other ancillary infrastructure is already on site. So there's more or less a permanent construction crew on site in Jamestown right now.

Colin Rush | Analyst, Oppenheimer

Excellent. That's super helpful. And then with the niobium batteries, obviously there's a lot of potential opportunities with that product. I just want to get a sense of, you know, what the form factor looks like right now and, you know, how big these batteries are, you know, like how much capacity they'll ultimately have as you start to roll them out because there's certainly a number of different form factors that they could end up in in different duty cycles. Just wanted a sense of that initial trajectory on that product.

Dr. Raj Dasgupta | CEO

So, essentially what we've done here with the niobium oxide is we've partnered with a leading technology player who's developed the anode material combined it with our Infinity platform, which is essentially our ceramic separator, our unique electrolyte. And it appears that we're getting actually higher rate performance with our platform as opposed to the standard setup. So that's a good sign. The cells we're making with this new material, we're going straight to large cell format, so about 40 amp hour cells. which would allow us to make larger battery systems, which we think is what the market would want for this type of technology. And so we're going after both the robotics segment. We have a product being developed for that, as well as the, I would say, a rack-based energy storage system. The rates that these are getting is about, in battery terms, over 10C, so five-minute charge, five-minute discharge, which is very, very high power levels for a battery, and then it's quite exciting. But it's still early, so it's too hard to say exactly how this is going to progress, but it's moving quickly.

Colin Rush | Analyst, Oppenheimer

Excellent. Thanks so much, guys.

Operator | Conference Operator

The next question comes from Eric Stein with Craig Hallam.

Please proceed. Eric Stein | Analyst, Craig Hallam

Hi, Rajai, John. Eric. Hey. Maybe we could just talk a little bit about the guidance qualifications. So I just want to be clear. I guess I was unclear. So are you seeing some impact to order patterns now, or is this just kind of being prudent and taking your typical approach to be conservative? that it is possible that you see it? I guess that would be first. And then second, I mean, is there a way you can kind of give at least a high-level idea of what sort of a range or amount we are talking about?

John Gibson | CFO

We've not seen significant impact to order flow, but there is, you know, with the current global environment, there is a chance that it does happen. So while some customers may slow down their orders, we are seeing some customers potentially speeding up the order. So it's really difficult to determine the actual full impact that it may have on the fiscal year, which is why we wanted to just kind of communicate that today.

Dr. Raj Dasgupta | CEO

Yeah, I'll expand a little bit on that. For instance, I'll give you an example of the airport ground equipment, which is a new space for us. Most certainly, I would say the current geopolitical situation is affecting what may have been an earlier order flow from that sector into something that's further out. As John just said, we've seen some, we haven't necessarily seen direct impacts just yet, but we've heard chatter that some capital budgets in some of our customer segments may be getting pushed. At the same time, potentially, you know, one of our largest buyers might be increasing their demand beyond what we had initially expected. So it's just, there's just a lot of noise at the moment, which is creating a little bit of difficulty for us in predicting how the rest of the fiscal year is going to go specifically. But in general, the trend and demand signals for our products is very strong. It's just this is a relatively unpredictable time and it's always hard to give specific guidance.

Eric Stein | Analyst, Craig Hallam

Right. No, I mean, I think it's prudent to take that approach given everything that's going on. Okay, and maybe you mentioned airport ground support equipment. You know, you do, I mean, even though, yes, a possibility that things get pushed a little bit, your commentary seems to indicate that things have taken a bit of a step forward. I think previously you talked about, you know, deployed at two airports and kind of a pilot. This go-around talking about that it's deployed at multiple airports and that it's more...

Dr. Raj Dasgupta | CEO

commercialized so I don't know if I'm reading too much into that or not I think you know it's not it's not commercialized in material terms at this point but the batteries which I would call demo demonstration batteries which have been purchased but there's very small numbers of them they are being used in commercial activities right there at the airport doing work the airline seems to be happy with them, right? Otherwise, we would have heard. But I do believe these airlines are pushing back some of their capital expenses, expenditures due to the higher fuel prices.

Eric Stein | Analyst, Craig Hallam

Okay. All right, maybe last one for me. Just, you know, as you've talked about the emerging applications in energy storage, I mean, that certainly has been positioned as it'll arguably or likely be the largest market but that maybe it was a little bit further out. And today it does seem like, again, maybe I'm reading too much into it, but it does seem like you're more optimistic and potentially that it maybe has moved forward a little bit in terms of the contribution to your business. So I guess correct me if I'm reading too much into it.

Dr. Raj Dasgupta | CEO

No, you're not. We're definitely aggressively pursuing this segment. We've been in discussions with I'd say a fairly wide array of potential stakeholders and interested parties in this technology. The initial reception has been very strong. I think the direction on the product development is fitting a portion of the market which is not served well, right? So what is that? That's short-duration energy storage. There's a lot of players looking at two hours, four-hour energy storage. I mean, that's obviously an important area, but it is not an area we're focused on. We're focused on high-power, mission-critical applications. And there are a lack of solutions for that, in my opinion. We also bring fully, there's a word for this, FEOC compliant, which is FEOC compliant U.S. manufactured solutions. So our solutions coming out of the Jamestown plant will be eligible to up to 40% investment tax credits. Those are That's a very strong incentive. And finally, it will be a fantastic product. We know these batteries work extremely well, extremely reliably in very high stress environments already. We already have an extremely, you know, a very good customer roster of folks who are using our batteries inside buildings. Now we're asking them to use them outside the building. So I think things are aligning well. We also recently won that Department of Energy project, which is a good example of how this is going to move. And we're going to use these products ourselves. So, right, the Jamestown facility in terms of improving power reliability, which is important for an industrial site such as ours. We're going to install our own energy storage systems there instead of using diesel gen sets, right? So we are going at this aggressively in terms of hiring people to support it. We have a, we've been adding key personnel, including our head of the product design, someone to support the high power, high, thermal modeling capabilities. That guy just came from StoreDot. So we're going all in on this, and I think it can become quite rapidly a very significant part of our business.

Eric Stein | Analyst, Craig Hallam

Okay, that's great.

Thank you. Operator | Conference Operator

The next question comes from Theo Genzebu with Raymond James. Please proceed, Theo.

Theo Genzebu | Analyst, Raymond James

Yeah, hey, great. Thanks, guys. Just, Raj, picking back off of your last question just there on energy storage, it clearly appears to be becoming a much larger strategic focus for the company. And at this stage, I guess, are customer discussions primarily centered around, like, pilot-scale deployments, or are you beginning to see, like, maybe interest around, like, larger multi-site commercial opportunities there? Just any color on that would be great.

Dr. Raj Dasgupta | CEO

We're looking at both. Both are important to us, right? So we've started giving pricing for larger opportunities. At the same time, we want to support our existing base of customers, right? There is an opportunity to sell these solutions coinciding with existing installations of our forklift battery solutions, right? So if a building has, you know, 100 batteries inside it that are made by Electrovia, there's an opportunity to upsell to that same customer and putting an energy storage system outside, right, which would benefit them in terms of reducing electricity costs, right? That's one opportunity. There's also opportunities to do with single customers, you know, larger scale deployments, right?

Theo Genzebu | Analyst, Raymond James

Okay, great. Thanks for counting on that. And you mentioned also the FEOC, the FEOC compliance there. So would you say are you beginning to see that become a more important competitive differentiator when you're for customer procurement discussions at all?

Dr. Raj Dasgupta | CEO

I think so. Obviously, we're not going to be the only manufacturer who has that capability, but it becomes a slimmer number, right?

So. Theo Genzebu | Analyst, Raymond James

Okay, great. And maybe just last one. I know like last quarter you highlighted the start of commercial robotics, the reason increasing activities with like several OEMs. Can you help maybe frame for me how those engagements have progressed over the last few months and whether you're beginning to see maybe broader like fleet scale deployment discussions emerged?

Dr. Raj Dasgupta | CEO

Yeah, that is progressing well. I mean, this last quarter, John, we shipped hundreds of packs. 300. 300 packs, and that's going to continue and accelerate. We're adding additional OEMs, right? It takes time, of course. There's a qualification and validation period, but we're working with already a handful of OEM partners. These are often very large companies. And we're developing more as time goes on, right? So it's definitely a key area of focus. It's already our second number two after material handling in terms of revenue generation. And it's going to grow. We're very bullish about the segment for sure.

Theo Genzebu | Analyst, Raymond James

Okay, great. So it sounds like it's safe to say that it's coming along more or less in line with your expectations from like, say, five months ago.

Dr. Raj Dasgupta | CEO

Correct. Now, these are much smaller batteries, right, that go into these devices as opposed to our material handling systems, which are larger, right? So you need more of them to generate more, to have a more material revenue generation. But it's most certainly a sector which has a long way to go and a huge growth trajectory.

Theo Genzebu | Analyst, Raymond James

All right. Well, I appreciate the time and color today, guys.

I'll get back in queue. Operator | Conference Operator

The next question comes from Craig Irwin with Roth Capital.

Please proceed. Craig Irwin | Analyst, Roth Capital

Good evening. Thanks for my questions, Raj. The first question I have is about backlog, right? So in your press release, there's a boilerplate section about forward-looking statements where you talk about backlog being Approximately 100 to 125. It's very similar to your comments last quarter where you said in your prepared remarks 100 to 125. Can you maybe update us on backlog trends? Has your backlog been kind of flattish sequentially quarter over quarter? Are we seeing a little bit of churn there? What do we need to see to see the backlog grow? I do realize it is a healthy trend. level above what you will be shipping over the next 12 months, but, you know, what do we need to see for people to commit around the Jamestown facility and your capacity expansion and your new technologies and everything else?

John Gibson | CFO

Okay, John, I'll take that one on. So the number we use there is a combination of the backlog, the front log, and the pipeline, right? So the backlog would be orders in hand, front log is Orders that are one that we know are coming in and pipeline are things that we have pretty good certainty over them coming in. So that's really how we get to that number. And that number has not really changed from last year to this year. All that's happened is there's going to be increases and decreases in each of the three categories to make up the same figure. So that's really more than just like a 12-month outlook as well. That would cover you know, 2026 and go right into 2027. So some of that front log, some of that pipeline is definitely going to be going to Jamestown. And it's also only material handling. There's no revenue for it. There's no pipeline or, you know, amounts counted from other verticals in that number either. So there's no real robotics number. There's no energy storage. There's no airport ground equipment in there. There's no defense equipment in there. It's really just the material handling. In terms of looking at us filling up Jamestown, once you bring all those new verticals into the conversation, we don't have any fear about there being any downtime or anything within Jamestown.

Dr. Raj Dasgupta | CEO

The other point there on that, for material handling specifically, companies actually place orders often at the last moment, right? Like today we received a pretty, you know, an order which is over a million dollars which requires delivery within two weeks. Obviously we were expecting that order well before so it would be part of a pipeline which we were expecting and which it gets delivered. So that's often how it works in material handling. The other sectors are more traditional in the fact they give longer forecasting and it's more predictable in some senses. But we have obviously a number of key relationships which we rely on both, you know, our OEM partner provides us pretty good forecasting which is built into this, as well as our largest end customers, right? So that's how we put this together. Obviously timing can always shift. And that's built into the FOI.

Craig Irwin | Analyst, Roth Capital

Okay, I understand that. So my second question is about the energy storage market and your technology and how it fits, right? So when we look at what the hyperscalers have done, they've got a whole lot of business with Toshiba around their tightening batteries, which tend to be very, very expensive, but have an impressive safety profile. and, you know, a tremendous cycle life. Now, your product is sold at a modest premium to the typical, you know, industrial lithium, but has a vastly superior product profile with, you know, I guess we're still running out the cycles, but let's say somewhere between 9 or 10 and 14,000 cycles available. So, you know, it should be really compelling economics to these potential customers. You know, Can you talk about where you stand in conversation with some of these very large customers? The third-party test data has to be very interesting to them. Are you in advanced discussions with any specific hyperscalers, or this product approach is simply build a block and market it and let people choose if that's what they want to use?

Dr. Raj Dasgupta | CEO

Yeah, I think as you just stated there, Craig, the product, technology, the performance is compelling for this space. And that's why we're going after it in such a big way. We've had, for the larger systems which we're developing, we've been presenting the specifications a wide variety of potential end customers, one of which is, I guess you could classify as a hyperscaler, and a few others are supporting hyperscalers in terms of power infrastructure. And so we're getting good feedback, good responses. However, the product isn't quite ready yet, right? We're in that development phase and hope to bring it to market pretty much coinciding with the startup of the Jamestown plant. So in early 2027 when we're making cells and modules there, that's when we're aiming to ramp up deliveries into the sector. The Toshiba product with lithium titanate, that's one we admire and have both in terms of the robotic segment, that robotic segment, that technology has done well. We're going after the same sort of customers that that technology has gone after with, you know, I would say higher performance and lower cost.

Craig Irwin | Analyst, Roth Capital

That makes a lot of sense. Last question, if I may. You did mention robotics. That's something people ask about a lot. Can you maybe update us on the applications you're serving there? Any new customer interest or progress with existing customers where we might see commercial ramps for the demand for your product over the next couple quarters?

Dr. Raj Dasgupta | CEO

Yeah, so the ones we're delivering now to are primarily going into I would call a surveillance robot machine. Most of the ones we're in discussions with are in material handling devices in which are autonomous, right? So we already have two of them which are validated and will go into production later and a number of others in discussions. These are, you know, sometimes they're American companies, sometimes they're Japanese companies. That's what, but there's a lot of discussions taking place for sure. Nothing too much in the humanoid space at this point, but that could always happen.

Cool. Craig Irwin | Analyst, Roth Capital

Well, congrats on the progress. I'll hop back in the queue.

Operator | Conference Operator

Next question comes from Jeffrey Campbell with Seaport Research.

Please proceed. Jeffrey Campbell | Analyst, Seaport Research

Good afternoon, and congratulations on another strong quarter. I wanted to ask, with regard to the storage products, this might be a John question, and with regard to the storage products, can you help us understand what significant scaling of the product would look like from a financing perspective? Will this possibly be a lease or a lease to own or will the customer own it? Will you bring in financial partners to take the tax benefit? Just any color you can provide would be appreciated.

John Gibson | CFO

I think we'd offer a number of different options to each customer. Each customer is going to have a different capital budget. In some instances, it's going to be beneficial for us to own it and lease it to them. In some instances, they're going to want to purchase it and take the tax credits. It's really just going to be... customer-specific. I don't think we're initially going to bring in a financing partner to help us with this just because I expect more people, more companies to actually purchase the storage units. So if we get to a point where we find that leasing is more advantageous, then we need to sit down and think about how we finance that. you know, in the short term, short to medium term, I think most of them are going to be purchased.

Jeffrey Campbell | Analyst, Seaport Research

Okay, thanks. My other question was I was glad to see the solid state battery work is accelerating. It would seem like a natural tech for certain military applications. I was just wondering if the traction that you're getting in that space with the Infinity technology might be paving the way for the solid state battery testing when you deem it's ready.

Dr. Raj Dasgupta | CEO

Yes, certainly. We have developed good relationships in the defense space already with the Infinity technology. When we think we're ready to bring this other platform up to them, we certainly will. In my experience, it's never good to bring something that's premature to a potential commercial activity. So we're not there yet, but There was a period of time where work was essentially stalled in this area, partly due to infrastructure and equipment, and that's now been resolved. So in a priority level, it's not as high as some of the other endeavors we're after, but certainly we're not ignoring it.

All right. Thank you. Operator | Conference Operator

Okay, we've reached the end of the question and answer session. I would like to turn the floor back over to management for any closing remarks.

Dr. Raj Dasgupta | CEO

Thanks so much. That concludes our call this evening, and thanks for listening. We look forward to speaking with you again after we report our third quarter 2026 results.

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:20261009125846-00'00'

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

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