Energy Vault Stock

Greetings. And welcome to Energy Vault's Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I would now like to turn the conference over to Mr. Nitin Dahiya, CFO. Please proceed, sir.

Thank you, Operator. Good afternoon, everyone -- for joining us today, and welcome to Energy Vault's Second Quarter 2026 Financial Results Call. Our earnings release and investor presentation are available on the Investor Relations section of our website, and we will refer to the presentation throughout today's call.

Before we begin, I want to remind everyone that today's discussion contains forward-looking statements that are subject to risk and uncertainties. Actual results may vary materially from those expressed or implied by these statements. Please refer to our most recent SEC filings and the safe harbor language in today's earnings materials for a discussion of the factors that could cause actual results to differ. We undertake no obligation to update these statements except as required by law.

We will also discuss certain non-GAAP financial measures. Reconciliation to the most directly comparable GAAP measures are included in our earnings materials. On a personal note, this is my first earnings call as Chief Financial Officer of Energy Vault. The combination of our differentiated power infrastructure platform, growing contracted asset base, strong execution, and disciplined approach to capital creates a compelling opportunity to build long-term shareholder value.

I'm excited to join the team at this important inflection point in Energy Vault's journey. Joining me today is Robert Piconi, our Chairman and Chief Executive Officer. Robert will take us through the strategic and operational update, and then I will take you through the quarter, liquidity, backlog, and our increased full-year guidance. Robert, over to you.

Great, Nitin. Thank you, and I'd like to welcome everyone to our Q2 earnings call. And also a friend, Nitin, pleasure to have you here. We're all very excited. Nitin just joined us just last month and excited for the contributions here and this very important phase in our company's growth profile. So welcome, Nitin. I also want to remind everyone that we have posted an investor deck out to the investor website. It would be helpful, I think, for those following through if you'd like to follow through that. I will be referring to some of those charts as we go through and before turning it back to Nitin on the results.

Hopefully everyone's had a chance to take a brief read of our earnings announcement, and as I think the results reflect, I'd say two main things up front; I think number one, the execution of our strategy, and if you have been following us, that execution means delivering for customers, and that shows up in revenue. It shows up in profitable revenue and gross margins, and it shows up in the quality of the availability of the power solutions we provide.

But secondly, I'd say it also reflects a commercial execution and capturing the demand being driven by AI compute infrastructure. This is something we've talked about strategically. If you go back the last 6 to 12 months, about positioning our company with our great expertise, with our strong execution capabilities with customers, that's not just here in the U.S., but that's globally as we've demonstrated, and very excited to see not only that begin to show up in the results this quarter, but as we'll talk about in our improved outlook, both for this year and for next. The strategy we've been describing is now in full translation mode into some of the results we've just seen. That means stronger growth, higher margins, increasing cash, a substantially larger backlog, and importantly, greater visibility into both near-term revenue and long-term recurring earnings.

If you turn to Chart 3, which is the first page of the deck, three main messages there before I jump into some of the numbers. First, I think the '26 and '27 outlook has strengthened materially. As you've seen in the backlog, the backlog increased by about $650 million to roughly $2 billion. That's a strong 40% increase just quarter-over-quarter, let alone more than doubling that on a year-over-year basis, and what we see there is expectation also to convert that revenue over the next 12 to 18 months at attractive margins for about 40% of that backlog.

This gives us substantial and greater visibility into the delivery ramp ahead of us, and that's both, I'd say, this year and into a very strong Q4 we're going to have, just as we did last year, but also as we look at 2027. Second, we're converting the AI data center and high compute platforms demand into real contracted wins. We've talked about the Crusoe win that was mentioned about six months ago as we began to enter the module data center space.

But in addition, we recently announced a 1.25 gigawatt agreement, which is our largest contract in the history of the company, to support an integrated power generation and storage solution for hyperscale data centers. And then all of these efforts have given us substantially greater visibility into the delivery ramp ahead of us now. Third, we have strengthened the capital formation and the project financing capabilities. Now, the company mentioned Nitin's appointment here as our new CFO joining from BlackRock, where he had built a strong career also in the energy infrastructure in addition to other sectors.

But also I've mentioned Cory Magnuson's appointment as President of Asset Vault in Q2. All of these things adding the deep capital markets, the structured finance, the IPP, and project finance expertise at exactly the point where the scale of opportunity is accelerating. And that matters because the next phase of growth is not simply about winning more projects. It's about financing the right projects efficiently, protecting our returns, bringing those assets online predictably and at the quality levels we've done to-date, and converting that execution into cash flow and long-term shareholder value.

If you turn to Chart 4, we'll jump into just some of the numbers at a high level, Nitin will be covering them in more detail in a minute. I think you'll look at numbers we refer to immediately on the number of megawatts. We discussed the 1.1 gigawatt over the last three months as the last time we were together in May. That's important because those gigawatts are under our control. Some of them are operating, some of them are under construction, and some of them are now in a ready-to-build state. That 1.1 gigawatt is what's translating, and I'll share the chart and a few more charts here to look at the timeframes that they'll be coming online, but that will be translating into the $180 million of the recurring annualized EBITDA, which has been fundamental for our strategy the last two years.

But importantly, if you shift to the right, the backlog, and we'll spend more time and we have a few charts here where we're actually going to share the composition of that backlog between what's the long-term recurring versus what's our more near-term revenue conversion opportunities. That's increased now to $2 billion, a large increase quarter-over-quarter, doubling on a year-over-year basis as you see, and gives us a lot of visibility.

On the revenue side, we've doubled the revenue on a year-over-year basis. Again, a reflection of strong execution of the backlog we built last year in projects both in the U.S. and Australia. I think one of the most impressive performances as we looked at Q2 was our gross margin. Gross margin is fundamental because those are the dollars and the cash generated from the revenue to cover the operating expense as you go forward, and the fact that we've improved that both on a quarter-over-quarter basis and on a year-over-year basis from an adjusted gross profit up to 38.6%.

And the reason we talk about adjusted gross profit, because it is the cash gross profit that does not include some of the non-cash depreciation elements associated with our build, own, and operate portfolio. But even the GAAP gross profit, even growing to 31% this quarter. Again, just a strong result. What that means is we are executing well. We are executing well in the field to avoid any issues that can come up when you're building large energy projects and doing it in a manner with high quality and with high safety.

And I think ultimately here, this has to show up in cash and increasing our cash. I'm going to give you a look at what we've done the last six quarters now. So this is our sixth straight quarter of increasing cash. I think a great reflection of the focus and some of the discipline of the company to ensure that we are building that cash book, we're improving the balance sheet as we have a lot of attractive investments that we'd like to invest in. It was a 26% increase on a quarter-to-quarter basis and more than 150% on a year-over-year basis.

I'd like to turn now to the backlog. If you turn to Charts 5 and 6, and we provided a little more detail here to give people some color into not only the existing backlog, but even how's that's going to evolve into the end of the year. As well as on Chart 6, we have broken down that backlog and characterized it between our build-and-transfer and our build and operate.

And Slide 6, I think, is particularly important because it provides a more detailed composition showing how that 40% of that backlog is the build-and-transfer that supports more near-term revenue conversion and cash generation, while about 60% is the build, own, and operate component creates that long-term recurring revenue and earnings visibility. Standing at $2 billion today, that's roughly 3x where it stood at the end of 2024. But more important is that composition where we have about 60% of it tied to that long-term recurring revenue from our owned and operated assets, while 40% now, which has grown since last quarter, is supporting that near-term project delivery and revenue conversion over this next 12 to 18 months.

And I'd say that's exactly what we wanted to see. While we're making this transition by building and transferring and operating some of these assets on the build, own, and operate strategy, that means we give up revenue as we do that. And that's where we wanted to see good conversion on our build-and-transfer business to continue to build that revenue and cash growth as we did that. And that's exactly what we're delivering and showing you today. Together, they give us a much more balanced, more predictable, and ultimately, a much more valuable earnings model.

A little bit of time on Chart 6, because that is a new one. You're looking at our build-and-transfer breakdown of those megawatt hours. These are storage projects where we talk about them in megawatt hours instead of megawatts. You see there on the revenue side, the total in that backlog is about $700 million of that $2 billion backlog. But in particular, we are also showing the advanced contract negotiation, which represents about another $0.5 billion that we're expecting to execute and close on those.

If you look at then the revenue for both this year and then into 2027, there's a total of about $1.2 billion that we have underway. So very excited about that. That's a reflection of some of the growth we're capturing in the execution on our commercial teams. And the other thing I point out there, if you look to the right, are the gross margins associated with that revenue. So as you saw in the earnings release, we'll be talking more in a minute, we are increasing our gross margin or lifting that to the upper end of the range. Again, this is driven by strong demand, but also speed. So you hear the term speed to power. If you can execute quickly in this market and -- with a high probability of strong execution and predictable execution, that's going to buy you not only winning contracts, but it's going to buy you the ability to also drive that growth and, in fact, profitable growth here with our margin profile.

The second piece of this chart on Page 6 is the build, own, and operate side where we've segmented that. That represents the other $1.3 billion of the backlog. These are revenue streams that are going to be anywhere from 7 to 15 years. It's a substantial portion of the backlog, which you want to see that grow and you want to see that continuing to growing. That allows us to have a lot of visibility going forward. And remember, these are streams that are anywhere from 70% to 80% gross margins.

So as we build these projects and they come online, we've mentioned $180 million annualized streams just EBITDA that you're going to see out of this, I think fundamental to our execution, to our longer-term strategy of owning and operating energy infrastructure. We'll continue to update this chart to give you that visibility, both in the near-term revenue on the build-and-transfer and as we execute on the build, own, and operate.

If you go to Chart 7 then, and as you saw, I think, in the headline of our earnings release, we are increasing and raising the ranges of our guidance, starting with revenue, where we're increasing from the $225 million to $300 million to the upper end and even above the high end of the range, $270 million to $310 million. Just like last year, as we executed in Q4 in a very large way to over $150 million, last year in Q4, we're going to have another large ramp this year. That supply chain is secured. It includes batteries. It includes some of the other high voltage equipment driven off of some of the recent contract announcements. Expect to have that margin range then, also you see there we're raising to the higher end there and lifting that range up to the 20% to 25%.

I think as you just saw in the Q2 results that I just reviewed, we're continuing to execute well. I would say that those numbers -- and if you look at our Q2, represent over 2x the market in terms as you're executing EPC contracts across the board. And if you look at any of the others in the space that are executing, we feel very good about that range and our ability to continue to execute to the upside of that range. And then very importantly, on the cash side, reiterating but narrowing to the higher end of the guidance. So we're lifting our guidance on cash there at $160 million to $200 million. And these near-term revenue contracts are going to be very helpful to that. We continue to manage that well. And I think the additions of Nitin and Cory, between the project financing and the broader capital formation expertise and network they bring to the table, will continue to keep us with a healthy and growing balance sheet.

Turning to Chart 8 from the deck, we're reflecting both revenue here and its growth over the last three years, but also reflecting that backlog growth. And we are showing what we expect to be a backlog growth, even with some of the revenue recognition we're expecting in Q4 that's going to be approaching almost $3 billion. And again, that's a number we don't take lightly. We're executing with a lot of contracts underway that give us a lot of confidence, and that should give investors a lot of confidence, and that's both some of the near-term revenue for recognition, but more importantly, we're going to expect an increasing percentage of that backlog on those recurring revenue streams in our build, own, and operate portfolio.

I'm going to jump everybody to Chart 11 because I want to spend a little time on our powered land portfolio. We summarized some of our existing powered land projects. One of them underway, our Calistoga Resiliency Center, that's the two-day, the 48-hour backup to the City of Calistoga, Napa. That is supporting Pacific Gas and Electric. So we have a 10.5-year agreement with them. That project is operating as planned and is there to secure the city in the event of wildfires or any other events where that would cause the grid to shut down.

Shifting to the right there, an update on Snyder and our AI campus. We recently announced just two months ago an update on breaking ground with our Crusoe project. That's the module data center project. It's starting with 8 megawatts and heading up to 25 megawatts for the initial deployment and very excited. We also announced plans for an expansion of that site, up to 500 megawatts. So that's going to involve a series of both generation, renewable, as well as storage as we expand our new AI campus there. That is a wholly owned facility and excited as a showcase center as well with multiple storage technologies already operating there today.

For Mesa del Sol and our New Mexico campus, we mentioned this powered land opportunity. We actually had a single page on this in the last deck where we got right up to the 75 megawatt, which is the next milestone. So we're starting with that as an update. I'm on track to start with that in our Q1 there in the state of New Mexico. We have a lot of expansion planned given our ownership rights on the surrounding land. We had mentioned we had acquired 225 megawatts of also -- of gas generation and reciprocating engines capability and also would complement that with storage and solar over time up to the 1 gigawatt in that area.

We have multiple locations in and around that area as well that we're advancing and having multiple discussions with hyperscaler off-takers and expecting to be announcing some things here in the coming months as we get to the second half of the year. So excited about these larger opportunities. They do create the 15-year plus revenue streams. We're investing for them in the right infrastructure and the assets. And as we've seen with the 1.25 gigawatt announcement of power generation and storage together that's behind-the-meter work adequately and I think very, very quickly advancing our knowledge and our execution here in the space.

Page 12 is a chart that we've also showed for the first time last time, that shows the details of the projects that make up the $180 million of annualized recurring EBITDA. So these are the 1.1 gigawatt of projects and essentially all operating within the same timeframes we outlined before. The first two there on the left are already operating there for the 2025. They went online. That's Calistoga and Cross Trails. We're expecting to hear more about Sosa here in the coming months. We have already talked about the Crusoe deployment, and then there's a set of other listed projects that's both in Australia, and in Japan, where we announced the acquisition that was closed in a more near-term, two projects in particular, the 350-megawatt there that you'll be expecting to hear more of in the coming months. And then our New Mexico powered land project here.

So all within line, I think, with what we reported before and good execution of the team to stay on track in various phases of the planning, the construction, and a lot of the financing efforts underway there.

We also provided on Page 13 a level of detail that walked through each of the years and how we expect those megawatts to come online. These are annualized numbers. So the way you can read this chart is looking at the number of megawatts and gigawatts we bring online and the associated EBITDA that's an annualized number as we bring them online. So that's where, in this illustration that we have here. We have the walk year by year that we expect to achieve, getting up to roughly in almost 5 gigawatts by 2030 and approaching a number of about $2 billion on an annualized basis of the EBITDA. Again, this is another one we'll continue to keep investors updated about, and I think important to continue to look at the megawatt ads as we announce new projects here for the second half of the year.

Finally, and just to finish and wrap up, now before I turn it over to Nitin, we'll talk about some of the focus areas on Page 15 for the second half of the year. I think primarily, and as job #1 with us, as you continue to hear, it always starts with execution. And that's for the second half of the year, we've outlined some additional revenue growth and upside on that revenue and margin that we expect to deliver.

That's going to come through how we always do things in a very disciplined way, a very passionate way in serving our customers. And we see even upside to some of the projections we have here that we're expecting to close on now in the next coming months, and we'll be sharing more as we give additional updates in November. I think converting on this owned and operate pipeline to the megawatts under control is another key one to watch. We have multiple projects to add to that 1.1 gigawatt. This is fundamental, I think, to continue to build and execute on our strategy to build a recurring annualized EBITDA streams.

Thirdly, as you saw in the announcement and executing around the large behind-the-meter modular generation and storage platform that we announced, again, this deal was all about speed to power. Recently executing it has a large amount of revenue for both the second half, and in particular Q4 this year, but also for 2027 as we announced. We're hoping to expand this platform and this relationship into many parts of the U.S. given the demand we see, and in particular, given some of the wait lists and the waiting lines you have to power. So with this behind-the-meter solution, we believe we can get customers to power much more quickly.

Fourth, we're working on the further optimization around the capital structure of the company and ,essentially, reducing our overall cost of capital. That involves not only strengthening the balance sheet, but we're also building our own team and a self-financing team as opposed to paying a lot of fees and costs to outside advisors. So that's fundamentally to some of the leadership announcements that we've announced in the last three months.

And then finally, as we look globally, you can expect to see continued footprint expansion in these key growth markets. So we've been very focused on only the largest and, I think, the most attractive storage markets, most recently adding that acquisition in Japan, continuing to expand in Australia will be important, and right here home in the U.S. continuing to build and expand given the tremendous demand we see in the AI compute infrastructure. With that, I'm going to turn it back to Nitin to go over some of the details of our financial results.

Thank you, Robert. I will cover the second quarter financial results, liquidity, and capital discipline, backlog, and then our updated full year outlook. Revenue for the second quarter was $17.4 million, compared with $8.5 million in the prior year period, an increase of 104%. This increase was driven by progress on our Australian projects. GAAP gross profit was $5.4 million compared to $2.5 million a year ago, an increase of 116%. GAAP Gross margin came in at 31%, up 140 basis points. Adjusted gross margin, which excludes depreciation and amortization associated with owned and operated projects, was up almost 900 basis points year-on-year.

So the gross margin performance is important because it demonstrates that the growth we are seeing is not simply volume-driven. The gross margin was exceptionally strong this quarter and product mix -- a project mix and execution continues to support healthy economics as the business scales.

Adjusted operating expenses were $23.7 million compared to $16.2 million a year ago. The increase primarily reflects commercial support, project development, and legal expenses associated with scaling the owned and operated and AI infrastructure platforms. We expect to see the benefit of this higher OpEx over the next 12 months in contract activity. As such, we remain focused on managing controllable OpEx while investing in growth where warranted.

GAAP net loss for the quarter was $29.7 million from $34.9 million in the prior year period. And the GAAP EPS was a loss of $0.17 compared to $0.22 last year. Adjusted net loss was $24.6 million compared to $18.4 million a year ago. Coming to adjusted EBITDA, adjusted EBITDA was a loss of $17 million compared to a loss of $13.6 million in the prior year period, with higher operating expenses partly offset by higher gross profit.

Turning now to liquidity. Total cash and cash equivalents, including restricted cash, were $148 million on June 30th. This was approximately $31 million higher sequentially and $90 million higher year-over-year. I want to emphasize here that we remain focused on ensuring adequate liquidity for the business as it grows.

As the company moves towards a larger owned and operated portfolio, ensuring adequate parent liquidity and optimizing each project's capital structure are fundamental to creating value for shareholders. We intend to extensively use project-level financings, including tax equity, and use corporate capital where -- only where appropriate with clear return to thresholds and disciplined allocations. That discipline is especially important as the opportunity set expands. We intend to grow in a way that focuses capital on projects with more attractive risk-adjusted economics for the parent while ensuring a resilient capital stack.

Backlog, as we talked about previously, as of August 10th was about $2 billion, more than doubling versus a year ago. About 60% is attributable to owned and operated projects, and 40% to third-party projects. The increase in third-party backlog materially improves near-term visibility across '26 and '27. And at the same time, the owned and operated component creates a growing base of contracted, longer-duration earnings as those assets reach commercial operations. And again, as we talked about previously, the additional disclosure on Slide 6 should give you a better sense of how each of these components is expected to drive future earnings mix for the company.

Moving on to guidance, we are increasing our full year 2026 revenue guidance to $270 million to $310 million from a prior range of $225 million to $300 million. The increases in guidance reflects stronger commercial execution and stronger visibility in contract timelines. That sell -- sorry, that said, quarterly revenue recognition can be uneven because of project timing and milestone accounting. So, there, I would flag that a vast majority of second half revenue is expected to be recognized in the fourth quarter.

We are narrowing our full year GAAP gross margin range to 20% to 25% from 15% to 25%. And year-end cash, we are currently targeting it to be $160 million to $200 million compared to $150 million to $200 million previously. Together the raised revenue outlook, revised gross margin, and strong liquidity demonstrate the increasing financial capacity of the platform as we continue to grow the owned asset portfolio. As we look to the second half, our priorities are straightforward. Execute the backlog, maintain margin discipline, ensure adequate liquidity, and deploy capital against the highest return opportunities. With that, I will hand the call back over to Robert for a few closing comments before Q&A.

Great. Thank you very much. And again, I want to thank everyone for -- and in particular our employees for all their focus and execution as we delivered another solid and very strong quarter. I think it's a great precursor, and as we look at the second half, Nitin just mentioned some of those key priorities, and you can continue to expect from us a strong focus on our customers, but also a very, very strong focus on only the most attractive and largest growth opportunities.

We referenced a big milestone, a landmark for the company in the signing of what is our largest contract since inception, a little over $0.5 billion. We liked, obviously, those types of relationships, not just for the size, but for the ability to grow that relationship over time. And that's why, generally, we've maintained being very selective with customer sets. We don't go out too far to really all customers really focus on ones that can be those partners that we build a lot of trust with, with initial projects, and then expand over time. And you can continue to expect to hear that from us as we look at this year.

And in particular, very encouraged for what this is yielding for next year with the type of backlog now that we've grown, but in particular, the size of that backlog that's in the next 12 to 18 months, which makes us -- I think puts us in a very, very strong position as we look at 2027. I will mention that, at our next earnings in November, we'll be sharing more about what we see in 2027 and what can be expected at that time. And with that, operator, I'll turn it back over to you for the Q&A.

[Operator Instructions] The first question comes from Justin Clare with ROTH Capital Partners.

I wanted to start out on the 1.25 gigawatt hyperscaler agreement and just wondering how we should think about the $500 million to $600 million of revenue in terms of the split between 2026 and 2027, if you can share. And then just wondering if the margin profile you anticipate there is consistent with that 20% to 25% that you had guided to for 2026 here. And also you indicated for the projects in advanced discussion. So, yes, if you can comment on the potential margins there.

Sure. Yes, happy to, Justin. Regarding the split, you can assume on that split that there'll be a portion of that $500 million to $600 million into our Q4. So that's a recently announced deal that had been in the works, so for three to four months. So we are able to execute a portion of that delivery in Q4. And I think you can obviously assume that's not going to be the majority of it, but there will be a portion of that. And I'd say the majority of that revenue will be in 2027. As far as margins go, we feel very good, hence the raise there to the higher end of the range, of the 20% to 25%. You saw the results that we just delivered that began with a [ 3 ]. I think we feel very strong about not only the range we just gave, but I think to your question, for having that continue in that range we outlined into 2027.

Got it. Okay. That's helpful. And then just on the same, the 1.25 gigawatt agreement here, you described this as a repeatable platform. So I just wonder if you speak to, beyond the initial deployment, how would you characterize the opportunity pipeline? Maybe what storage use cases you're seeing emerge, like where you're seeing the most significant demand. And then just wondering if discussions have kind of move beyond the initial hyperscaler there, or are you more focused on the one customer at this stage?

Sure. A few questions here. Let me just generally, and as we announced, we've developed a solution that's a modular platform, and this is with a partner that we have not named for confidentiality purposes yet, but it's a large power generation EPC. We mentioned in the release that this first portion, this 1.25 gigawatt, is associated with Caterpillar gas generation. But generally, it's a platform, and to be deployed, it's all about speed to power. And these are platforms that are behind-the-meter, meaning we don't have to rely on grid power for them.

We deploy these and are planning to deploy them in 250 megawatt modular solutions. And so you can do the math on that into the 1.25. And we also see quite a large opportunity to take this platform, both with this partner, but also in the market, and expand that. You hear the term speed to power. You've heard me say that a few times. It's a -- there's a lot of opportunities where over the next 12, 24, 36 months, while grid investments are being made, while transmission lines have to be built, all the capacity upgrades now that are being executed, those things are going to take three, four, to five years.

So the fact that we've created a platform now integrating energy storage, gas generation and, in particular, I'll mention the strength of our software and that plays, because that software is doing that load optimization and orchestrating how that power gets delivered for five nines quality. So that's not a small thing, as you know, given the expectations that the customers have. And it's something we are looking to, the second part of your question, that is something that we, can expand and deploy upon. And we're very excited about that. And as you can imagine, with the announcement we made and with some of the work we've done planning, in particular, as we look at next year and the customers we're having now, we see a lot of potential to deploy the solution.

The next question comes from Julien Dumoulin-Smith with Jefferies. Please proceed.

This is [ Leonard ] on for Julien. Congratulations, again, on the great results. So the current 1.1 gigawatt portfolio underpins the roughly $180 million annualized EBITDA. But as you add new projects and potentially grow that backlog from roughly $2 billion today to towards $3 billion, where do you expect the highest incremental value to come from? Like traditional BESS assets, powered land projects, or AI infrastructure deployments? Where are you expecting the largest share of occurring EBITDA growth and like backlog expansion over the next several years?

Yes, look, I'd say there's no change in our strategy of building, owning, and operating assets over time, we believe and still believe and have conviction that, that is the best use of our capital to build longer term recurring revenue streams. I think the segments we're looking at to deliver the most profit on that will have a lot to do now with our powered land solutions and what we call our powered shell or the module data center solutions. We will own and operate those. We also have delivery models of delivering sets of batteries. We actually call it our ESaaS model for battery delivery, where we can own and operate those batteries as a part of firming up grid power or firming up other types of generation to customers. So it's a very interesting segment where I think owning and operating those megawatts over time, we believe, will have the longest-term value for shareholders.

And no change, of course, to -- as an example, the 1.25 gigawatt platform that we just announced. I mean, that is actually RevRec, so that is build-and-transfer. And I think that's, that may have been a little bit of a surprise that we were building out our backlog and also now increasing, let's say, the size of the backlog with more near-term deliveries and build-and-transfer. But that is the nature of this market because we built a very strong reputation for high-quality delivery and knowledge of the grid. We that see a lot of demand for customers that want to integrate different types of technologies and leverage our expertise as we've done that across multiple regions, multiple technologies, and in different business models.

And the last thing I'll leave you with is we are being very selective in the projects that we take on and the customers we take on. We like to focus, as I said, on larger customers, one that share our culture, share our way of working and our focus on high quality, our focus on the longer-term path to sustainability that remains, I think, front and center here with us. And we're being very selective on the most attractive projects in terms of where we put our capital.

The next question is from Noel Parks with Tuohy Brothers.

A couple things. So among your portfolio, just as a reference point, what's your sort of most active construction or installation site at the moment?

Oh, we probably have, I guess, a few of them. There's in [ Sosa ] in Australia where we're building out and have our on a build, own, operate side, we have Stoney Creek that we've announced in our beginning some of the construction activity there. But in particular, on the build-and-transfer side in Australia, we have our first and our largest project in one of the larger projects in the country with a customer called ACEN.

We are deploying 200 megawatt of a battery project there and already delivering 200 megawatts of power on that facility. So we're finalizing now the turnover and what's called in Australia the R2, meaning the R2 is the milestone where you've actually gotten the grid sign off formally. It's an important milestone for us there because having that now will enable us to actually bid on larger projects in the market. So that's I say remains very active right now in terms of the construction side.

From a pure U.S. perspective, you can imagine with the ramp we have coming in the second half of this year. So if you look at our guidance and look at the revenue today, you'll see that we're looking at another $250 million to $270 million of revenue here in the second half of the year. So that involves some sites that we're sort of finalizing some of the deliveries and installations. Consumers Energy is one of those as an example from prior projects. But in addition, the work that's going on relative to what we just announced, that's been underway for the last three to five months, this -- the 1.25 gigawatt deal, there's a chunk of that revenue and things being delivered here for this year. And then in Snyder, Texas there's work going on, as we announced, the construction start on the civil activities and a lot of the high voltage upgrade and work with the utility there at Snyder for the module data center work with Crusoe. So I'd say those are -- those three areas are the most active right now for us globally.

Great, thanks. And you just mentioned that for the 1.25 gigawatt project, you've been active on it for, you said, three, four, five months. And is it -- well, I guess I'm curious about the project, assuming it's had some considerable lead time. Whether they have been proceeding along what had been an original plan for a behind-the-meter installation or whether it's the sort of thing that they started development and became aware of the intensity of grid limitations, the difficulties, of interconnects, and at some point along the way decide they need to sort of pivot in a direction that also embrace energy storage as well.

Yes, I'll say a few comments there. This is a group -- the partner that we're working with is a partner that's one of the larger both distributors and EPC companies in the U.S. that deploys, for example, as announced, Caterpillar gas generation, but in addition, they do a lot of balance of plant design and final integration. So as you can imagine, they have a lot of customers, but in particular, they have a few very large customers. I think, historically, while they may have worked with different players, you can assume this is has been a relationship we've been building. It always starts with an initial, let's say a smaller project, where you get to know each other, sort of culture of the companies. We know when you're closing contracts and writing deals and working with attorneys, you develop a feel for each other.

And that relationship just grew to the point where they felt very comfortable working with us and with their hyperscaler partner, on a very large solution. And one where I have to say that our software played a very, very important role in the decision and some of the differentiation it enables to, essentially, integrate across and with our power plant controller and other load optimization and orchestration capabilities, the fact that we can do that across not only the gas generation side, but in addition to our storage and really play a very important role to ensure delivery of five nines power and what we called in the announcement always on availability for the customer.

So I'd say that relationship obviously doesn't, you don't just go sign one of these things overnight. So you can assume that, that was in some development stage starting smaller scale and then resulting in, as we announced, we announced this was a second of a framework agreement. So something that we intend to not only execute well here this year, but as we get into next year, and as I mentioned in the prior question, we do expect to grow this solution and grow with this partner given the tremendous demand in the market.

The next question is from Sid Rajeev with Fundamental Research. Please proceed.

Congratulations on the progress. With multiple projects on the go, I was wondering how the financing status of some of the near-term projects are, like for Sosa, Stoney Creek, and those.

Great. Well, from a financing perspective, and you mentioned two build, own, and operate projects that are on, there are two of the listed projects, one in Australia, Stoney Creek, and the other Sosa. So those -- the project financing with both those projects are well, well underway. And as we've listed them there and as we've continued to even acquire some of the equipment to safe harbor them for Sosa, for example, in the U.S., we had acquired some of the high voltage equipment already.

So those financing efforts are both underway and both proceeding, let's say, in line with expectation given both locations that we've selected are attractive locations. I'll reference on Stoney Creek, we did win the LTESA in Australia. So that's the long-term energy service agreement that is a 14-year agreement with the New South Wales government. So that's sovereign offtake agreement that essentially enables us to have a floor every year, depending on how the project's performing. And we're also in some final stages for additional financing for that project as well.

Thank you. One more question if I may. How are Calistoga and Cross Trails operating? They are small projects but it gives us an idea how these are functioning. Are they running smoothly?

They're both running well. Both of them well above 99% availability. With the CRC, so the Calistoga Resiliency Center, that is a standby system. It is utilized for some ancillary power and services as well, but all that's going well. And we're essentially at 99.4% availability on the Cross Trails system year-to-date this year.

The next question comes from Brian Lee with Goldman Sachs.

This is Tyler Bisset on for Brian. Can you first discuss any implications from the recent data center moratorium in Texas on your business, including the potential timing of revenue recognition of the 1.25 gigawatt announcement?

Sure. Yes. We have taken that into account essentially in all of our planning and all the planning and the guidance that we just gave. So if you look at the solution we've announced, in particular, the power solution we're announcing is a behind-the-meter solution, for example, that is made up of components that do not rely on the grid. So, we're from an execution perspective and what's contracted. This is all about execution as far as the second half of this year and into next year. It is something on -- that we continue to monitor. I think that is a theme in some parts of the country, and that something relative to what we just outlined and the backlog we've built and what we're going to be delivering this year and into next that would be, let's say, already taken into account.

Super helpful. And then on Slide 10, it looks like your powered land opportunity declined to about 1.5 gigawatt. I'm looking at 2030 and comparing this to last quarter. But it looks like powered land declined about 1.5 gigawatts from 1.8 gigawatts last quarter. The BESS opportunity almost doubled at 3 gigawatts from, I think, it was 1.9 gigawatts last quarter. Can you update us on the puts and takes of what changed? I imagine the increase on the BESS opportunity is mostly a function of the acquired assets, but any additional color would be helpful.

Sure. By the way, it's a great question. And the first thing I'd say is there's a change in mix between also the powered shell and the powered land. And some of this -- it's a great strategic question as well, because what we are seeing is a lot of opportunity for the edge of the grid and in around the modular data center side. Hence, this shift and the increase on the powered shell as a balance between the powered land.

Now, if you look at that on an additive basis, we see that's the same and if not more opportunity overall there. And I think an opportunity to move with a little more speed at points of interconnect that are smaller and overall megawatts, 50 to 100 megawatts, not requiring the 800 or 1 gigawatt or multi-gigawatt. There are a few of those out there, but I think if you look at the way that the sites are being deployed, the way that demand is being driven, and the economics, these powered shell and modular data center sites are becoming very attractive and potentially even higher in volume.

And again, I'll say this. I think this is the fourth time on the call, this aspect of speed to power. I think if you look at deploying in smaller segments with modular data centers and look at the impact on the communities, which is front and center. And so if you can, I think, minimize some of the larger impacts and to deploy in smaller, more modular ways at multiple points of interconnect, it can be a more integrated and holistic solution and coexistence with a lot of the local communities in which we're deploying.

The other thing that's happened there is the -- on the battery side as well that you referenced that on our battery standalone storage, but in addition, we have a lot of solutions evolving where we're providing owned batteries instead of turning them over, providing as part of an integrated power generation and storage solution to firm, whether that's firming the grid, but also firming up some of the other gas generation.

We're providing and now looking to close here. You'll be hearing more about these opportunities of us providing owned battery solutions to complement other generation and grid. That's resulting in what you're seeing in that increase in what we're calling our battery energy storage standalone. But not the traditional, typical IPP standalone storage projects, but ones that are being provided as an integrated part of solutions, in particular for the neo cloud market segment. So, we'll be sharing that a little bit more and add a little more color on how that mix is evolving.

I appreciate that. And if I could just sneak in one more question. Appreciate the higher cash and improved outlook. I believe a lot of the uplift in the quarter was related to debt issuance. So curious how you are viewing your cash burn and other potential cash inflows such as ITCs for the balance of the year. And then it looks like you've only drawn about $25 million of the preferred equity from OIC. This was closed almost a year ago, so curious how you're currently thinking about leveraging this available capital and how we should expect this to trend in the coming quarters.

Sure. So a few things there. On the ITCs, we closed one of them that did get into the quarter last quarter. So we had three of them that were outstanding. Two of them have now been closed. And the third remaining ITC, it'll be about $15 million. We're expecting to be closed here in the next month at the latest, just the early part of September. So that'll close out all the ITCs.

The other thing to your question is on the cash and our -- I think we'd announced toward the end of the quarter because of the nature of that increase in backlog. So we -- I think even we're very transparent with the disclosure. We had the increase that now you see that was $650 million in June. And because the nature of that increase required deliveries for this second half of the year, including Q4, which is one of the reasons we've raised guidance, okay?

Due to that, we did pool on an AR facility. That's a facility we've had in place over a year to manage all of the -- essentially some of the deposits that we have to pay into the supply base to be able to ensure we can get deliveries into this fourth quarter. And all of that, just to do the math and on the equation there, results in our ability to deliver higher revenue and hence the increase of our revenue range this year. So this is all standard in how we built our working capital and operating model for the business and what's, I think, very important about that is these things all are standard relative to debt facilities that you know that we will pull from time to time and then pay on schedules with our cash. And that's why also I'll reference with the increase in the activity, if you notice, we did narrow to the high end of our cash slightly for this year because of the nature of the turn in the cash accretion of the deal that we announced, the 1.25 gigawatt that we're going to begin deliveries on in Q4.

So nothing, I think, unusual for the working capital management side, and hence, what you've seen with us raising guidance across revenue and gross margin and also even on the cash side for the end of the year.

At this time, I would like to turn the floor back over to Robert Piconi for closing comments.

Okay. Great. Operator, thank you. Just to close. One is we're obviously in a position of that we'd like to be in, in terms of executing now off of a very large increase in a backlog. Our team is built for that and executing well, and delivering on the higher end and relative to expectations. We're very focused on not only the second half of this year, but a lot of commercial activity. You would have seen that in the results and in terms of that growth and that backlog that comes through, getting through a lot of detail, customer contract negotiations, signing those contracts and getting those things, therefore put in motion for us to begin to execute. Looking forward to what the increase in backlog is going to mean for our 2027 as well. We're getting into the second half of the year into that planning process, but I think a lot of market activity.

I will mention, again, we're being very selective in terms of not only which region we're focusing on -- are very focused on just the regions we've highlighted, not planning any other broader type of expansions from a geographic perspective. We're in the right markets, in the highest growth markets, and just so much activity and requiring a lot of, I think, innovation, speed to power, you'll continue to hear that theme. And I think our ability to deliver both creatively and with some of the innovation around our software across multiple solution sets, that's storage, that's generation, and to do that in predictable ways for our customers is resulting in them choosing us for their growth needs.

Finally, as I mentioned just before the Q&A period, again, a thanks to our employees that have remained very focused, and vigilant, and passionate about delivering for our customers, building the culture that we create on the company. We've announced a few senior hires in reference in terms of building the talent base to deliver on some of the results that you've just seen, but in particular, some of the outlook that we have. I'm going to continue to thank them for their focus and execution here as a company. And with that, operator, we'll end the call. I'll turn it back to you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

Greetings, and welcome to Energy Vault's First Quarter 2026 Earnings Conference Call. . [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Michael Beer, CFO. Thank you, Mr. Beer. You may begin.

Hello, and welcome to Energy Vault's First Quarter 2026 Financial Results Conference Call. As a reminder, Energy Vault's earnings press release and presentation are available now on our investor website, and we will be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations portion of our website. This call is now being recorded. If you object in any way, please disconnect now.

Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. Please refer to our most recent 10-K or 10-Q filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP financial information.

Please refer to the safe harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.

Joining me on this call today is Robert Piconi, our Chairman and Chief Executive Officer. At this time, I'd like to hand the call over to Robert.

Michael, thank you, and I'd like to welcome everybody. Good afternoon, evening and morning. I want to call out upfront as well the investor presentation that hopefully all of you by standard course, download. It is on the website and it would be great if you are listening in here to download that. I will be referring to some of the charts in that deck, in particular, Pages 4 through 9. Very interestingly, hopefully, as you've noticed, we are providing even more transparency with some of the data, in particular, as we have made this transition now to an integrated storage IPP, and we'll be providing some more details in and around backlog, for example, and even looking at our comparable companies in what we're considering as a new peer set as we've made this transition.

If you've seen the results by now, hopefully, you'll agree that this is a very strong validation of our shift into an energy infrastructure platform provider, more than doubling our megawatt capacity under management from last quarter to over 1 gigawatt. The new project acquisitions that make that up as designed will ensure long-term high-margin and recurring revenue streams as reflected in the strong contract backlog growth that as you see, is over $1.3 billion, made up primarily of our own and operate projects now, projects that are prefunded to our existing Asset Vault platform. We also see strong near-term demand growth for our AI compute infrastructure solutions, integrating storage, generation and under our unified software control. That strong historical execution capability, and I know I've talked about that a few times here, in particular in the last year, as we delivered revenue and in particular, in Q4, delivering over $150 million, we have earned this right with our customers, and that's enabling interim revenue upside potential while our larger scale own and operate projects are being constructed and coming online in the coming 12 months, 24 months and 36 months.

With the move squarely now into the IPP and digital infrastructure company peer groups as reflected by our current contracted backlog, and you can refer to Page 9 as we look at this, we do believe a re-rating here is going to help the valuation and the related upside to our current trading. Over the past 12 months, we have transitioned from a project-based provider into a fully integrated power and AI infrastructure platform. And as we can see by the results in the execution and scaling of our own and operate model, the quarter demonstrates that acceleration. This is no longer a forward-looking transition. It is now visible across our backlog, our asset base and our financial performance. In particular, it will, as it did last year as we get into the latter half of the year as revenue again scales.

We're providing an integrated energy and power infrastructure platform that's bringing together, as a reminder, not only energy storage, but also now generation components and as always, our intelligent software platform that from design, from the inception was designed to handle any generation tech, whether that be gas or renewable as well as any and all storage technologies to solve one of the most pressing challenges in the global economy today, and that's delivering reliable power quickly and at scale.

We integrate these capabilities and capital structures to build, own and operate and in particular, as a vertically integrated IPP. What that means is we can be faster, we can be more cost effective as our gross margins are showing and demonstrating at about 2x the market. And that comes from less friction and less friction in terms of cost and time. And at the end, delivers higher quality. We're achieving over 99% uptime across every one of our storage projects that are operating today. And we do this now and are solving what is the primary constraint across global markets, and that is access to power.

The most important takeaway perhaps this quarter is we're accelerating that execution now of our own and operate model. You can see that in three areas as well as any other details that we're going to be providing on the call, but our portfolio now exceeds 1 gigawatt of assets under control that's contracted, under construction or already operating.

Our backlog has grown to over $1.35 billion and over 80% of that, as you'll see, is tied to owned assets now, which is a shift if we go back just a short 4 quarters to 5 quarters. And we now have visibility to over $180 million in recurring EBITDA run rate, which is ahead of our plan, also reflecting the inclusion now of Powered Land and Powered Shell opportunities where we are owning assets and providing power. This has obviously reflected a shift from a more episodic project revenue to predictable long-term infrastructure cash flows.

And importantly, we are executing ahead of that plan, as I've just mentioned, and a lot of that's due to some of the dynamics we're seeing now in the AI infrastructure compute space. If you look at Page 4, which we provided, which looks back from our Q4 2024 actual, looks at our revenue and our backlog and shows what that looked like at the end of 2025. So growing that backlog from about $400 million to $1.3 billion today. As well, it looks at our gross margin, which has improved from 13.5% just 6 quarters ago to almost 24% at the end of '25 and projecting close to 25% for this year. I would say that if you look at the backward-looking view, we have executed now the strategy and are now, if you look at our backlog at 80% owned and operate, we're there.

At the same time, as highlighted, therefore, in the press release, we've got some -- and if you turn to Slide 5, we delivered broad-based triple-digit growth across most all key metrics. Revenue up over 150% year-over-year. Backlog more than doubled 108% adjusted gross profit up 25%, cash up 148%, reaching $117 million. And our megawatts, very importantly, under our control, up almost 5x year-over-year and already more than doubled to 140% sequentially.

Every core metric, all of these capacity backlog revenue and our liquidity is fulfilling what we've outlined and what we demonstrated with our strategic shift from 2 years ago. If you look at Slide 6, we've added this look at our backlog to take a look at where we've transitioned in just the last six quarters.

What you see is a shift from what has historically been our energy storage EPC revenue, looking at our current backlog at $1.35 billion to where it's primarily the long-term own and operate revenue streams. And importantly, the gross margins associated with that backlog will be fundamentally shifting as we build these projects and bring them online over the next 12 months, 24 months and 36 months, those margins shifting from the 20% to 25% range up to the 60% to 80% range for IPP level margins.

A lot of the growth that we're seeing both in terms of the initial megawatts we've been adding, but as well as what will be added more in the future is related to the AI data center space as well that's powering a lot of the infrastructure investments, in particular, in the U.S.

Power availability is now the gating factor for expansion. We've added 100 megawatts of Powered Land and Powered Shell just this quarter. That alone is going to be expected to generate $65 million in recurring EBITDA in the next 12 months to 18 months that, that comes online. Beyond the primary power capacity, we're addressing resilience needs through energy storage systems that we deliver and operate.

And if you go to Page 7, just a reminder of that unit economics growth that I just described from that backlog, you can see how that works relative to our core stand-alone storage there at the bottom of the metric and then moving up to our Powered Land and Powered Shell as well as the geographic expansion. And the addition of the Powered Land and Powered Shell for AI is what's helping drive our acceleration.

Very importantly, I think as you move to Page 8 as well, you can see that we're expanding where we're going to be going, not only as we look at this quarter, you see expanded from 440 megawatts to over 1 gigawatt, as I mentioned previously. But looking out over the years, we're also increasing where we're going and what we're going to have under management by 2030, reaching almost 4 gigawatts as we look at today and what we see in our funnels and our development pipeline and what we're executing that's underneath our control already.

You can see the EBITDA numbers there in those outer years get very large, and a lot of that work to achieve that is underway now as we're building and constructing these systems, they're going to come online over the next 2 years to 3 years. I want to finish here if you look at Slide 9 and highlights how the market is beginning to reframe Energy Vault, not as a traditional storage company, but as a broader power infrastructure platform. This evolution is critical as we expand into owning and operating integrated energy assets, particularly in support of the AI data center and digital infrastructure. I've mentioned this before, but not all megawatts are valued the same, and hence, our move into the AI digital infrastructure space is accelerating what we're going to be delivering in our initial targets.

We're moving into a category that commands structurally higher valuation multiples. The infrastructure platforms with predictable long-duration cash flows and low revenue volatility are valued differently from project-based businesses, and this shift is increasingly reflected in how investors benchmark this sector. Importantly, this repositioning supports a meaningful re-rating opportunity as we execute and continue to execute against our megawatt pipeline and bring assets under ownership control, we unlock the full value of the long-term contracted EBITDA streams.

Successful execution of megawatts under control is the bridge to this value realization. I mentioned again that strong historical execution capabilities have earned us this right with our existing customers who want to work with us on new projects, but also enabling this interim revenue upside while our larger scale projects are being constructed and coming online.

With this transition, we're firmly into the IPP and digital infrastructure peer groups reflected in our contracted backlog now at about 80%. And we believe this evolution is going to support the re-rating and some meaningful upside to our current trading levels. If you look at that chart, you'll see how we've historically looked at our comp companies in there and looked at the performance, both the year-to-date this year as well as the trailing 12 months.

And you can see we've had a very, very strong appreciation of the stock price, if you go back 1 year ago, but also this year now into our current trading. But I think most importantly, if you look at some of the new trading comps in the mid part of the page there and look at the valuation multiples there on the right, you'll see the opportunity that, of course, we've seen and why we made the strategic shift back 2 years ago. To close, before I turn it over to Michael, who's going to get into some of the details of our results for the quarter. We're accelerating the execution of our own and operate strategy. I think this big increase in the uptick in the megawatts under our management is a strong reflection of that.

We're also scaling a globally diversified infrastructure platform now over 1 gigawatt. And I think that's important because things regionally can change. We saw that with the tariff environment just 1 year ago. There was a lot of uncertainty, having the exposure to markets like Australia, for example, and our recent acquisition of a large portfolio, 850 megawatts in Japan with 350 megawatts of near-term projects there reflect the fact that we are expanding in the most attractive markets and will give us that global diversity despite the fact that we see tremendous and large opportunity and probably the largest opportunity right here at home in the U.S.

Energy Vault today isn't just participating in this transition. We are building the infrastructure backbone that enables it across the energy and power side, AI and the industrial markets. I also want to mention and thank the Energy Vault team for their dedication, their passion, their commitment to executing our strategy here every day. I think the results here are a reflection of this, our reiteration of where we're going to be this year and the guidance we just set 6 weeks ago. We feel very, very good about executing and a lot of upside, we believe, that exists within that guidance range.

With that, I'll turn it over to Mike Beer.

Thanks, Rob. As you can see in the financial summary on Slide 18, we delivered Q1 revenue of $21.9 million, representing 156% increase year-over-year, driven by higher energy storage project deliveries and initial contributions from assets within our Asset Vault portfolio. Adjusted gross profit for the quarter was $6.1 million, up 25% year-over-year, with an adjusted gross margin of 27.9%.

Adjusted gross profit reflects the removal of Asset Vault operating project-related depreciation and amortization as those projects commenced operations in mid-2025. The prior year gross margin of 57.1% was highly skewed by IP-related revenue.

Adjusted EBITDA was negative $13.6 million in the period compared to negative $11.3 million in the prior year period, reflecting continued investments in our own and operate strategy, including development expense and organizational scaling to support long-term growth. Excluding onetime impacts from the extinguishment of debt and stock-based comp, Q1 2026 adjusted net income of negative $20 million compared to negative $11.8 million in the prior year period due to higher D&A and personnel from the new O&O Asset Vault projects and associated project-related financing expense and interest.

From a cash position and financing perspective, we ended the quarter with $117.1 million in total cash and cash equivalents, reflecting continued investment in our Asset Vault portfolio alongside strengthening financing activities. As Rob mentioned, during the quarter, we significantly enhanced our balance sheet through the successful completion of $150 million convertible senior notes offering, which was upsized from $125 million. A portion of the proceeds was used to repay $45 million in higher cost debt while also implementing a capped call structure with an implied conversion price of $8.12 per share.

In addition, we began monetizing investment tax credits, completing approximately $12 million of net ITC transfers with approximately $40 million in total ITC proceeds expected across all projects placed in service thus far. These actions collectively strengthen our liquidity position and provide the financing flexibility to accelerate execution of our global asset ownership strategy. At the project level, management is in the market for the SOSA and Stoney Creek project financings, which we expect to complete this quarter and in the second half of 2026, respectively.

We're also evaluating a number of other financing opportunities, including those in support of our ramp in Japan and surrounding the Powered Land space.

Turning to our latest backlog and development pipeline on Slide 17. We exited the quarter with a record backlog of $1.35 billion, representing 108% year-over-year growth with over 80% associated with our own and operate portfolio across the United States and Australia. This backlog provides strong multiyear revenue visibility and reflects continued traction in converting our developed pipeline into contracted projects.

From a commercial activity standpoint, we made meaningful progress expanding our global footprint and asset base. One, we advanced our U.S. portfolio with the acquisition of the 175-megawatt 350-megawatt hour McMurtre BESS project in Texas. Two, we announced entry into the Japan market, including the 850-megawatt development portfolio with 350 megawatts in advanced stage projects expected to close this quarter. Three, we have added a number of smaller projects in Switzerland and made headway with the opportunity in the Balkans. And four, we continue scaling our AI power infrastructure platform, including progress on the 75-megawatt Powered Land opportunity where a number of agreements have now been secured.

Across our platform, total megawatts under control, in construction or in operation now exceed 1 gigawatt, supporting a growing base of long-term recurring revenue opportunities. From a developed pipeline perspective, which we now view on a megawatt basis versus megawatt hour, we are now actively progressing opportunities valued at $3.5 billion associated with over 3.5 gigawatts. Taken together, our advanced developed pipeline and contracted backlog provides strong visibility into the next phase of growth for the company. As we continue executing our strategy, we are seeing clear validation of our transition towards a vertically integrated build, own and operate model.

Our global asset portfolio now exceeds 1 gigawatt and is expected to generate over $180 million in annual recurring EBITDA run rate ahead of prior expectations. And this positions us to deliver increasing levels of predictable, high-quality earnings as assets move into operation.

Turning to our business outlook for 2026. We are reaffirming our full year 2026 guidance, including revenue in the range of $225 million to $300 million, with approximately $75 million to $100 million in internal Asset Vault project builds. Gross margin of 15% to 25% and year-end cash in the range of $150 million to $200 million. This outlook reflects continued execution across our backlog, scaling contributions from owned and operated assets and disciplined capital deployment.

With that, I'll hand it back over to you, Rob.

Great, Michael. Thank you. I think with that, we'll turn it over to the operator for any questions.

. [Operator Instructions] The first question comes from the line of Justin Clare with ROTH Capital Partners.

Congrats on the growth in the backlog here. I wanted to just start out on the AI infrastructure here and the 100 megawatts of Powered Shell and Powered Land that you plan to complete over the next 12 months to 18 months. Wondering if you could just share more on the status of those projects. For example, how much of the 100 megawatts is contracted and has offtake versus how much is in negotiation? What's the interconnection status? And then where are you in terms of permitting those projects as well?

Okay. We have announced 100 megawatts there in Powered Land and Powered Shell. As you know, I think at our last earnings, we mentioned publicly the Southwest utility for the 75 megawatt of Powered Land that also is under a load study for application for 925 additional megawatts for a total of 1 gigawatt. So that's in the phase right now of the first 75 megawatt is already in construction and committed, and it's going to be coming online in January, okay? So as far as the Powered Land goes, from the Powered Shell perspective, we have our already announced agreement with Crusoe that's under now that development, and we have all the sites and all the load ready for that, and that's going to be constructed. And as we said before, that will start to come online in Q4 this year. So that's where we are in as far as the Powered Land and the Powered Shell.

And I think most of those and as we look at the opportunities that we're developing is where you're going to expect to see some significant growth. If you look at the -- on -- I think it's Page 8 of the deck, you'll see, in fact, that mix shift. So you'll see the mix of Powered Land and Powered Shell versus our stand-alone storage, you see it increasing significantly there between where we are today in March 2026 up through 2030. So you can see that, that's going to move from roughly about 10% of that megawatt funnel to a little over half of it over the next few years. So I would expect that you'll be seeing and you will -- can expect to be seeing more announcements in that space.

Great. Okay. I appreciate the detail there. And then on the $180 million of recurring EBITDA that is anticipated when you build out the backlog here, wondering what the timing of that is and how that ramps over the next 2 years to 3 years or so? And then wondering on the $180 million, if you could also break down how much of that may be related to BESS projects versus how much is Powered Land and Powered Shell?

Sure. Happy to comment. We previously gave guidance in November of last year around the overall size of the Asset Vault portfolio. And we had initially talked about that being sort of a target of $150 million of recurring EBITDA. We've since announced our entry into Japan. We believe Japan is a 350-megawatt sort of attractive late-stage portfolio. So that would be in addition to that initial guidance. And now we've given more fidelity around what we believe the contribution would be from Powered land and Powered Shell on the order of about $65 million in recurring EBITDA. So if you were to take the $150 million, remove the $65 million from Powered Land and Powered Shell, obviously, the increase beyond that is associated with the Japan portfolio. This is sort of envisioned to be in that sort of, let's call it, circa 2028, early 2029 type time frame.

Just to add to that, to the -- and there are some good charts we've included in the deck that referenced that, the one on the unit economics. So the reason we're seeing this acceleration as we met almost a year ago, we looked at a lot of the storage, the stand-alone storage IPP. As we've evolved the last 12 months and looked at the AI compute infrastructure space, those deals and those megawatts that we're contracting and owning are delivering anywhere from 5x to 10x the EBITDA contribution per megawatt per year. That's why we're providing some of the breakdown around what that mix shift of these megawatts is going to look like.

And as we add more of those, you obviously can expect continual acceleration in terms of hitting and just growing that annualized recurring EBITDA number. And if you look at the chart on Page 8, you'll see where we expect that to go as we've increased that just from the last quarter.

Next question comes from the line of Derek Soderberg with Cantor Fitzgerald.

First one on gross margins here. Guidance looks like 15% to 25% for the year. So just kind of thinking about that range, what are some of the variables? Maybe it's battery cell pricing, maybe some project mix. What sort of variables are going to determine where you guys sort of land in that range? And maybe as of today, where do you think you're sort of tracking towards that range, maybe the lower end, the higher end? Maybe talk about that.

Yes. You can see quarter-to-quarter, there can be some different mix components. Even a year ago, we had some significant IP-related contribution. So we had a 57% gross margin. This quarter, on an adjusted basis, it's about 28%. On a GAAP basis, it's about 22% Obviously, we're tracking to be better than the midpoint of guidance. You will have a very back-end loaded sort of revenue year associated with project deliveries, right? So we still are in the EPC business. And so the fourth quarter will be heavily influenced with some of those deliveries. Those deliveries can generally obviously balance out the overall shape of the year and the total gross margin profile. So still we are very confident on the overall range. Obviously, we endeavor to do better than the midpoint, just as we had done last year.

Derek, the other thing I would just add to that is our new gross margins now and revenue that's going to include the storage IPP is also just from a GAAP perspective, it's going to include the noncash portions of depreciation. That's why we're referring and this will make the comparisons good from last year to this year. our adjusted gross margin, which is really getting at that cash gross margin only without the IPP revenue, so you can really compare apples-to-apples as you look at the EPC revenue. If you do it that way, for example, we're closer to, I think it's 27.8%, 27.9% this quarter.

So we intend to focus on execution on managing our supply chain as we've done in the last quarter, we obviously continue to be setting ranges that we know and feel comfortable we can hit and we'll push execution to remain on that upside.

Got it. That's helpful. And then as my follow-up, sort of related to the first set of questions. So the first 75 megawatts on the Powered Land piece coming online in January of '27 and then the 25 megs coming online in Q4 of this year. I was wondering if you could sort of maybe provide some detail on how that revenue is going to scale, how the EBITDA is going to scale? Anything around that? And then also just on that opportunity to potentially go up to 1 gig on that sort of higher EBITDA per megawatt opportunity. Can you talk about what sort of milestones you need to hit before that larger opportunity starts to materialize?

Sure. Let me -- I'll hit both of those, and Michael, you can chime in as well. To the first question on both the 75 megawatt and the 25 -- the 75 megawatt is committed to be online in January, as I mentioned. So that full 75 megawatt will be online. Essentially, the switch is getting put in place. There's some transmission that's being built out. That is already underway. We already have made payments towards that to happen and committed. What you would see on that is an offtake agreement of that 75 megawatt. But once that turns on in January, you can expect that to be fully monetized, meaning we will be in a contract and monetizing that. So we should get almost a full year of EBITDA there of that 75 megawatt, and it's estimated at somewhere in and around $35 million. So that's the $75 million.

On the 25, just to be clear, we're going to be starting those deliveries, meaning we're going to start to receive and have those systems come on within Q4. So not all 25 megawatts will be in Q4, but then will -- as we've said, will come in the next 12 months to 18 months. So meaning we'll be beginning to receive and activate the Powered Shells and then be installing those and then the forward quarters from there. So that's helpful. The good news about that is we're going to -- we expect in the next 12 months to 18 months to have that roughly $65 million up and going on an annualized run rate basis.

The second part of your question on the 75 going to 1 gigawatt. So there is a study that's already underway that we're engaged with the Southwest utility. that study is looking at the addition of 920 megawatts to that 75. So that would be up to a full gigawatt. Those are large numbers. You can do the math on just what that 75 is, as I said, and scale that. But we do expect somewhere in and around $0.5 million or so per megawatt on that. But that's a study that's going to happen that's happening now. There will be some decisions, I think, made then this year, we expect in the next 3 months to 6 months on also some sizing of what the capacity upgrade will be.

And that's essentially going to be all the transmission and high-voltage equipment that will be required to bring that 925 megawatt here to market. And that will be coming in place over the next 24 months, 36 months, 48 months. We are expecting, just to be clear on that, we are expecting to look at doing an interim step with some other generation equipment that we would couple with our storage, for example, to try to bring online something on an interim basis of another 225 megawatts to potentially add to that 75. So this is within this core Powered Land segment. So that would be an interim step to get a solution in place.

Obviously, as we've said before, with a hyperscaler that it's in a very attractive location that we'll be sharing more of as we do some formal announcements, namely utility, et cetera, and other things this year. But from a time line perspective, just to summarize, the 75 megawatt in January. Following that within the next 18 months to 24 months, we're looking at another 225 megawatts to bring online on an interim basis until that other 925 megawatt of grid power would come online in the next 36 months plus.

Next question comes from the line of Brian Lee with Goldman Sachs. This is Tyler on for Brian.

Just first, I wanted to touch on the margins in terms of the backlog. So what is the time line to reach the 60% to 80% IPP margins as you execute on the backlog? And just to confirm, this would be on an adjusted basis?

Yes. So this is over time, there's obviously two distinct margin profiles for each of the different businesses. The 20% to 25% is akin to the legacy, let's call it, EPC-related business. The transition to the IPP business model, those 60% to 80% IPP margins, you can see that all laid out on, I believe it's Slide 6. Obviously, there's going to be a mix effect that will take place over time, right, as these projects come online. We're not exiting the EPC business. We'll continue to do that, not only for third-party customers, but we self-perform these projects for ourselves, and there's actually a positive working capital function that, that serves. So we'll continue to be in that business. But it will be a blending over time. It won't just be a flip of a switch.

Helpful. And then can you provide an update on just your revenue trajectory for the balance of the year? I noticed accounts receivable stepped down in the quarter. So could you see 2Q revenues decreasing quarter-over-quarter? And I guess, how are you thinking about the balance of the year from a revenue standpoint?

We generally don't give sort of quarterly guidance in that respect. But as mentioned, it will be a back-end loaded year. I would use a profile akin to what you had seen last year.

And as you saw there, just to add to that, we had very strong year-over-year compares just given we are projecting over 30% growth at the midpoint here. So if you look at the trajectory, as Michael said, and look at that framework, we are expecting something similar there. And -- but generally, I think if you look at the year-over-year compares, we're still going to be pretty favorable, I think, as we ramp and scale.

Understood. And just one more for me. Can you just provide some more details on the progress on the developed pipeline and backlog? It looks like developed pipeline increased to 3.2 gigawatts from 1.8 gigawatts last quarter, but the value went up to $3.5 billion from three. And then on the backlog, it looks like it remained flat at 3 gigawatt hours, but the value went up slightly. So can you just discuss some of the moving pieces here?

Yes. There's always a bunch of ins and outs, FX, there's a host of things that can sort of move these things at the margin. I think within developed pipeline, interestingly, we're starting to see some real benefits of this integrated model and the fact that sort of one hand washes the other. While we are in both the EPC business and the IPP business, we're now starting to see some opportunities emerge that sort of split the difference or are emerging from both camps. And so the fact that we do have a keen focus on both sides of the business is being very additive in that respect. So we're seeing new projects being added all the time. We also call our developed pipeline to make sure that if things are stale or projects have moved on or for whatever reason. So we try to keep this very current and not make sure it's stale. So I think this does represent the current slate of investments that we have here in the U.S. across multiple sort of industry subsegments. And geographically, we're seeing some other things emerge internationally.

Then the other perspective I'd share with you here, and this is an important one and it was something that we looked at as we made the decision 2 years ago to focus on owning and operating. So that means we're acquiring megawatts. We're going to be building them, but then the revenue doesn't come during that build, right? So it doesn't come until we actually go COD or we go online with the project. So you would have normally expected if we're really making that shift, you might have expected our revenue, our rev rec actually going down over a period, right, 12 months to 24 months as you make the transition.

What we challenged the team with here and what we targeted to do was despite the shift we've made from owning and operating assets where we are not recognizing revenue, even though the activity is much more than even our projected revenue is showing because we have activity that we don't recognize. We are building projects. Energy Vault is building projects for Asset Vault. It is not showing up and recognized revenue. So we have more activity than we've ever had.

The challenge was how do we keep revenue growth, meaning recognized revenue going until these new projects come online. And what I feel very good about with the team and the execution is that we were able to still have a year this year in 2026 with strong double-digit revenue growth despite the fact that as you see in the megawatts that are growing to now over 1 gigawatt that we have under our control and management and building out that we are not recognizing revenue on that.

Despite that, we're still seeing that revenue growth. And that's -- a lot of that's driven, I think, in the U.S. market, in particular, with what's happening with the AI infrastructure and in particular, these power packages that are getting put together where we're looking at and we are doing and integrating our energy storage with generation, with gas generation, for example, but also with UPS backups that are a part of those and coupled with that gas generation.

And then we're integrating that solution across a single pane of glass, meaning a single software platform to bring that all together for a customer. So those are solutions that we actually do sell and turn over. So that is -- allows us to do the revenue recognition in parallel. So this -- the whole AI compute infrastructure and the billions and arguably, you'd say trillions over time that's going to be spent for that, that is enabling us to maintain this revenue growth with that focus on these solutions.

And a lot of that has come from customers that know us, they trust us, where we've executed for, they have their systems up and running at 99% plus availability -- so we feel not only good about that in the revenue projections we've done this year for growth, but we do see a lot of upside to the current revenue projections for that growth as well.

Next question comes from the line of Sid Rajeev with Fundamental Research Corp.

Congratulations on the strong results. How are Calistoga and Cross Trails operations performing given it's been almost 12 months since both started operating? Are revenue and margins there in line with your expectations?

Yes. The Cross Trails project continues to perform well. There hasn't been a change, and we're expecting on the order of circa $10 million in EBITDA on a full year basis. across CRC and Cross Trails.

Yes. I'd add to that, too, as we all know, I think, in the market, anyone that's in the IPP market, ERCOT obviously is undergoing and has been really the last 12 months, 18 months, really almost the last 2 years, weakness, at least on a cyclical basis versus the prior year. So I think we're seeing that. And the good news about our system there in ERCOT is it's been running at a 99% availability despite that.

And obviously, we'll take advantage of opportunities when they come. But it is -- that sort of softness in the ERCOT market has made it a buyer's market when we're looking at acquiring megawatts. So therein lies some opportunity. We've been very, very careful with selecting the best points of interconnect and doing a lot, a lot of diligence there to have the points of interconnect as is the case with McMurtre that we announced that's just north of Dallas there in Texas. So at points where we do believe we can leverage good economics.

Great. And with the ownership structure of the Japanese initiative, will that be similar to your other assets given you're partnering with the local developer there?

Yes, we were expecting, and I think we mentioned this in the -- when we made the announcement, the Japanese market is fascinating because if you go back and look at where ERCOT was 4 years to 5 years ago, we see the Japanese market just evolving now in that same type of economic environment and opportunity, therefore, to initially deploy and take advantage of a lot of the frequency and some of the other ancillary services and even the arbitrage opportunity there in Japan. So in terms of structurally, that initial team that we're acquiring that was from an existing large company there. That team is going to be the one that's going to be continuing developing those near-term projects. So of the 850 that are within that portfolio, there's 350 megawatts of near-term projects that, as we said in our announcement, we expect this quarter to close on that 350 megawatt and then get those constructed and get those up and operating.

So I think from an overall structure in terms of how we look at debt and equity and financing these, I would say it would be unlike as we're looking at projects in the U.S. and Australia. I think one of the differences there, Michael can comment on this, too, is you have a very favorable interest rate environment, I think, in Japan that is going to be helpful relative to the financing and they're very known project financing models as well.

Yes. It's an existing team that we're effectively acqui-hiring with a very robust portfolio. As we mentioned in some of the prepared remarks, we are going to be going to market from a financing perspective in support of a host of those projects. So -- the fact of the matter is we entered the Australian market just a few short years ago and look at the amount of traction that we've been able to sort of generate there. So we're looking to replicate that in the Japanese market.

Any comments on the offtake pricing you can get there? Is the ROI, would you say it's comparable to the U.S. or higher?

I don't believe we've given real specifics there. It is an attractive market, but obviously, we feel as if we're early to that market. And obviously, we're putting our money where our mouth is, but we haven't given any of those specifics.

Or expecting…

I think…

Yes.

I was just going to add, we're -- I wouldn't think that it's going to be far off from what our expectations are on achieving IRRs sort of low double-digit type of IRRs as we get started there and opportunity for optimization on that. But we're –

Hence our investment there. It is -- we believe that is today and will continue to be in the coming years, an attractive market.

Next question comes from the line of Noel Parks with Tuohy Brothers.

I had a couple. One thing you were mentioning gas generation a moment ago and sort of in the landscape of potential business out there for your pipeline. I guess I'm wondering maybe what's the main pain point for potential customers? And I guess I'm thinking about whether there's any difference between those where they're looking, say, for new AI-related generation where gas generation is probably going to be at the core of it versus situations more where it's a case of playing catch-up with wind and solar for grid integration. So I guess is one of those a much bigger driver than the other, would you say?

Yes. No, it's a good question. The reason you're hearing more and more about gas is just two things. Obviously, the power demand is largely outstrips the supply or the ability to deliver it. So that's one. So any of the -- any and all solutions, solar, wind, combined with other types of generation and leveraging, we have obviously abundant natural gas in the U.S.

So I think gas is going to play an important component, in particular, over the next 3 years, 5 years plus. But in addition, remember, what's driving this are data centers and the requirements are at five-nines reliability, which is -- if you're thinking about that and thinking what that requires, and it's going to be different regionally. But look at -- if you go back to an event, for example, in Texas, we all remember in the and the cold and the frost and the freeze and that shut down things for a matter of days.

With the requirements in SLAs at five-nines reliability and AI compute infrastructure, these are things that, therefore, require not only redundancy, but in some case, there's multiple redundancies. So you can think about having a grid connection, okay, everybody likes that. You can add energy storage to that, which will be good for -- if there's an outage, you can name it for some hours, let's say, and even up to the day. But if you get into a multi-day outage, that's where we're looking at having some type of reciprocating engines or gas, diesel gen, et cetera.

So you can actually have a solution that when you put together, for example, grid power plus energy storage plus some gas power backup, you've got something where you can deliver on five-nines. So it's -- hence, that's the numbers. you're seeing in those -- that tremendous amount of CapEx in the data center build-outs. A lot of that CapEx is also essentially guaranteeing that power availability and delivery. Does that make sense?

Yes, absolutely. And you did touch a bit on it already, sort of the comparison of Japan to where ERCOT was a few years ago. But when you announced the Japan acquisition, you sort of stressed the importance of grid stability and load balancing in Japan that they're at that stage now. I just wonder if you could maybe just dig into that a little bit deeper and whether there are similar analogous regions that might be needing to deal with this sooner rather than later?

Yes. I'd say that the perspectives we've shared from the announcement and what you've just articulated is what we see. And as I mentioned, we're going to see some of the fast frequency response, that load balancing and I think opportunities to capture different types of pricing at different times of day. So I think generally, that dynamic is going to be positive, we believe, for the market. And I think others that have entered there recently are seeing the same thing.

As far as other markets that have those same dynamics, there's an important aspect to look at this, and I think Asia-Pac is a great example where there are other markets that may have those same types of environmental factors. But the other thing we look at is scale and priority in terms of the markets we choose and not spreading ourselves too thin. So there would be -- there are, I think, other markets that have those same characteristics and even in some newer European growth markets, for example, that we're seeing. But we're very focused right now, I think, on some of the largest opportunities and focusing our capital investment, our human resource investment in the areas where we see the biggest upside. And a lot of that, by the way, is right here at home in the U.S.

Right. Great. And if I could just run one more by you. I was thinking about the process of project financing over the last couple of years, you've seen this real transition from being able to get it much earlier in the project life cycle. So I'm just wondering, as you're going through your process of negotiating and raising it for your upcoming projects. I'm just wondering, is there considerably less of an education burden that you have to address in terms of your counterparties and their due diligence? Or is it essentially still just everyone needs to go through a pretty similar pattern taking process?

Yes. The market is evolving so quickly, whereas nobody would have even looked at sort of merchant years ago, now that's being sort of incorporated in the models and we were getting very creative in how they structure bridges or construction financing sort of in and around some of the ITCs. The market is evolving very, very quickly. Certainly, here in the U.S., we're also seeing that bleed over into some of the other markets where we're constructing assets such as Australia and what I suspect is likely Japan, but we need to go through that process. The fact of the matter is we've now done this a few times, and we now know what we're looking for as we're evaluating project attractiveness and what can possibly go wrong. So just mitigating risk where possible, bringing partners into the fold earlier in the conversation and trying to build a good, let's call it, feedback loop of existing partners so that we can sort of instant repeat across the entire portfolio and just remove friction where possible.

Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Robert Piconi for closing comments.

Great, operator. Thank you. Look, just in closing here, and hopefully, as you've gone through the numbers and go through the charts, again, encourage everyone to download those. We are sharing more and more detail and some transparency on things that tie to the future profitability and growth of this business. I think a lot of the key metrics we share, the growth in the megawatts under management that have more than doubled since just going back since we last spoke, which wasn't that long ago, 6 weeks, 7 weeks ago, getting over that gigawatt -- that first gigawatt that's within our control now to go execute. Those are not small markers.

And I think on top of that, then you look at the backlog, which is a different cut, looking at what we've actually contracted -- so just to highlight, 80% now of that backlog that stands today at the $1.3 billion is contracted at much, much higher IPP type of gross margins. Again, that's something that should give investors a lot of comfort relative to the future profitability as we bring those online. But also just operationally, and this, I think, as investors look at teams and companies to invest in and the execution that we've had, if you look at just the last 6 months, 8 months, last year, one of the most challenging years starting off with the tariffs and uncertainty really through the first half of the year into the mid part of the year, yet the team at Energy Vault executed and delivered the only energy storage company to deliver on their original guidance that we set for the year and in a strong way in the quarter, delivering positive adjusted EBITDA even in that last quarter as we delivered.

We're expecting to do the same this year and with strong execution, expect to have some continual positive and upside surprises in what we're doing just with the nature of our market penetration, in particular, what's happening here in the U.S. market. So we have a lot underway. As I mentioned in answer to one of the questions here on other regions, other markets, we are staying very, very focused on these three core segments and just the very attractive core markets. And that's the Asia-Pac as far as Australia and Japan go. That's in Europe, we're developing. I think some of the interesting own and operate opportunities there, as we've mentioned before, but in particular, right here at home in the U.S. And it's required us to have a very nimble and diverse and dynamic supply chain given the changes in the rules and FIAC and a lot of the focus on domestic solutions. So that is something our supply chain has been able to be very nimble and deliver as we demonstrated in Q4. But really, as far as where we are at this point with what we have both under contract now and under development that's within our control as well as those opportunities as referenced by one of the questions, we -- our developed pipeline has more than doubled just from the last time we spoke, which was 6 weeks ago. These are really important markers to look at.

We've had a very good hit rate in terms of a conversion rate, I'll call it, in terms of taking that developed pipeline and converting that, in particular, those megawatts into things that are within our control, meaning acquiring attractive points of interconnect. These are really the markers that I think investors should be looking at relative to the future with a very proven team that's been able to execute and deliver here for customers at extremely high availability, which is, at the end of the day now, how we're really being judged by our customers is being able to achieve that 99% plus availability that they not only require contractually, but really demand. It is a market requirement now as we look at power solutions.

And finally, just again, as I always do, none of this happens by itself or under standard processes and procedures. We have a very nimble and agile and hardworking and do whatever it takes team at Energy Vault. A lot of hours worked to deliver what we deliver day in and day out. I want to thank all the employees that make these results happen that are passionate about delivering for customers, are passionate about maintaining our focus on sustainability as we announced also this past quarter, 2 years in a row now being ranked the #1 energy storage company, #1 energy company in our industry from a sustainability score judged by S&P Global.

So true to our mission and the vision we want to achieve as a company, I could not be prouder of the team here at Energy Vault and where we are today. And personally, I have never felt better about where this company is going to go, what we're going to be able to achieve. We do not limit our thinking in terms of where we go, how big the hill is to climb and what it takes to get there. As all of you know, listening in on this call, there's no shortage of capital to put behind strong management teams in a very attractive space with a proven track record of delivery. And I think we hit on all those fronts. With that, operator, I completed the call here. I'll turn it back to you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Energy Vault's Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Michael Beer, Chief Financial Officer. Please go ahead, sir.

Thank you. Hello, and welcome to Energy Vault's Fourth Quarter and Full Year 2025 Financial Results Conference Call. As a reminder, Energy Vault's earnings press release and presentation are available now on our investor website, and we'll be referring to the presentation during this call. A replay of this call will be available later today on the Investor Relations portion of our website. This call is now being recorded. If you object in any way, please disconnect now.

And please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates may differ materially from actual future events or results due to a variety of factors. Please refer to our most recent 10-K or 10-Q filing for a list of those factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.

In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.

Joining me on the call today is Robert Piconi, our Chairman and Chief Executive Officer. At this time, I'd like to hand the call over to Robert.

Thank you, Michael, and thanks to everybody for joining the call today. We're very excited to again be talking to you about our results from not only last quarter but for the full year 2025. I'd also like to call out here upfront that we've included a slightly more robust investor presentation for this earnings call. I encourage everyone on the call, if you can, to go ahead and download that and view that. We will be referring to pages of the presentation during these remarks for the earnings. So we will refer to those, please, if you can download that presentation and you'll be able to see some of the things there live with some graphs that might be a little bit easier to understand. .

Our press release has been out, and I'd like to just get right into the numbers at the high level and then put these numbers into context of it in some of our objectives we targeted for 2025.

I think one of the first things to talk about is the contract backlog where we had significant increases sequentially of 42% quarter-over-quarter. But I think importantly, if you look at the last 4 to 5 quarters, up 4 to 5x over where we started as we began our transition of the strategy to Asset Vault, very significant. I think it does represent why we shifted and moved from just delivering technology and delivering projects to owning and operating them over time.

And I think from an investor perspective, it's an important metric to keep an eye on. That's the metric that I think is going to guide all of our future ability to be a little more predictable and with the recurring long-term revenue streams that are very high margin.

Jumping to revenue. I think a very strong finish to the year in Q4, a very large quarter for us, over $150 million for the quarter and a little over $200 million for the year, quite significant and that we actually finished within our original revenue guidance. That's before the tariffs and before some of the volatility that, of course, we've experienced this year. I'll talk about that in just a minute. From a gross profit perspective, also finished quite strong, delivered $48 million. A lot of that on the revenue we saw in the quarter, of course, in the year, then overall over $200 million, about 8x the prior year.

But importantly, look at the unit economics, so the gross margin improving from 13.4% last year to 23.6% this year. Again, I'll get into more of what's behind those numbers in just a minute.

And finally, I know this was a little bit of a surprise. We finished with that strength with a positive adjusted EBITDA. That adjusted EBITDA was essentially the result of the revenue performance, but also the strong unit economic performance and the gross margins and also by managing our operating expense, again, I'll add some more color around that as I get into some of the details here.

I think importantly, we also are highlighting now, and you'll continue to see us highlight our contracted megawatts. So that's a very important number that you want to watch as we continue to execute the Asset Vault strategy essentially, the larger that number grows, all of those numbers on those megawatts will be backed by long-term contracts. So that will enable us to achieve annual and recurring and predictable revenue streams, again, at much higher margins than the traditional EPC or the integration business. and that's an important number to watch where we've taken that number now up to 540 megawatts. That also now includes some of our AI digital infrastructure wins that we'll also talk about today.

And something if you look at that mix over time and if you look at Page 13 that we'll refer to in a minute, you'll see what the implications of that, both in terms of this year with that contracted megawatts getting up to 540 and some thoughts on as we evolve the company, what that might look like in 2030.

As we entered the year and just going those -- through some of those results, which had a very difficult start, I think that's probably one of the most difficult years we've had that I would equate to something like the COVID year we had, where we had something that took place that was an existential threat potentially to the company with what happened with the tariffs and just the uncertainty in the market, the front half of the year.

We had a few goals as we entered the year coming off. I think one of the biggest questions investors had was around liquidity and our ability to not only put the cash on the balance sheet to manage our business, but as well to fund the large projects we were anticipating with our Asset Vault strategy. And that's one of the things I think I put that first here that we feel very good about. It's essentially, if you think about an air, water, food analogy. You obviously need air to breathe here and that cash was fundamental. I think that started with us getting the project financings done on the 2 projects that we were investing in off of our balance sheet and hence us drawing down cash at the end of 2024 as we enter 2025. So got those executed in a volatile environment.

In addition, had the closure of our $300 million preferred equity fund non-dilutive to shareholders. I think that was a major event that closed in October. To answer the question of Energy Vault, how are you going to fund the large projects you anticipate this 1.5 gigawatt hour of projects that you want to own and operate, how is that going to be funded? That $300 million enables $1 billion to $1.2 billion of total CapEx for us to go ahead and build those projects. So I think that was a very important milestone that achieved, and I think that helped us with some of the finish with the increase in the stock price toward the end of the year.

And then finally, and very recently, us executing the convertible was another, I think, important step in us not only putting more cash on the balance sheet, putting it on the balance sheet and as nondilutive a way as possible, but also enabling us to immediately retire much higher cost debt and debentures that were on the balance sheet and within our capital structure that will also help avoid potential future dilution in the market, and Michael is going to talk a little bit more about that.

I think the end result on that, I think, shows up in what we're talking about today, which is finishing at over $100 million as we did at the end of the quarter in Q4, but I think importantly, taking a look at the guidance that, again, Michael will cover, we're guiding now $150 million to $200 million of cash for our end of the year for 2026 that should give investors a lot of confidence that we not only have the liquidity and cash today to execute, but that we are going to continue to be growing that cash this year and into the future.

I think the second thing I'd put into context here on these results is this transition and the execution of the strategy we outlined in May 2024 with our Asset Vault model. This was a pretty big shift in shifting from being what started as more of a technology company or -- and then an integration company, although, I guess, the public corollary would be Fluence, and shifting that into -- instead of delivering and turning over the megawatts, doing that but also owning and operating them, which entails a lot of project financing, obviously, a little more CapEx is as we're managing and not a small shift, I think, for the company to make and feel very, very good on how we've executed that. That's going to show up in a few ways, and the results that I just talked through.

And one of them is just the contracted megawatts. I mentioned moving from 65 megawatts, which were the first 2 projects that we did get project finance in the last year to where we stand today at 540 megawatts. And those are megawatts that are already contracted. Some of them are in operation already. The rest of them are in construction. Just tremendous progress just in the last 12 months alone.

And then essentially, as you look at the portfolio we have, that we're delivering those megawatts around that's our core storage, stand-alone storage IPP business, which we've come to know as Asset Vault, but also now includes about 100 megawatts associated with the AI digital infrastructure segment. And that you're going to hear us refer to as powered shell. So all of the agreement we announced with Crusoe but as well as powered land. -- and we'll be talking more about those 2 segments within the AI digital infrastructure as we go forward.

What did that show up in the P&L? Essentially, on the EBITDA side, we're accelerating what we had talked about before, which was $150 million roughly for Asset Vault, with just this 540-megawatt now contracted, we're looking at delivering $130 million to $150 million over the next 18 to 36 months. You'll recall that we had targeted about 1.5 gigawatts to be able to deliver that $150 million before. Now we're at 540 megawatts with a little broader portfolio and segmentation that's going to be accelerating that delivery.

The other line item that this shows up and very clearly in the execution of this strategy is associated with that contract backlog number. Again, that's one of the main reasons we really shifted this. We've got now on long-term contracts anywhere from 8 years to up to 15-year contracts. That gives us a lot of visibility. It's predictable. It's recurring. They're high-margin streams and they're long term.

So those, I think, are the 2 main areas. There's a very interesting page. You'll look at on Page 13 as well of the deck. -- that outlines where we are today with that 540-megawatt and the range of EBITDA over the next 18 to 36 months that we're going to be delivering with it. But in addition, we also project out to 2030 and where we expect to be with the number of megawatts and what that range of EBITDA would look like out there.

You'll see we have that at $1.5 billion plus. Just as we've gone from our 50 -- 65 megawatts to the 540 here in the last 12 months, you can imagine that it's not a stretch for us to look at getting over 3 gigawatts here by 2030. So very excited about our positioning right now to be able to go ahead and achieve that and wanted to frame what we're targeting internally here as a company as we look at the different markets we're pursuing.

I think the third area that is a strength of the company and has resulted in the strategy as an integrated storage IPP is around our execution capability. And this really gets to our ability to drive time to power and this is everything from designing the systems, constructing them, commissioning them and then managing those assets over time. We've developed very quickly a reputation in the market for executing well.

Every one of our customers that we've delivered projects can be spoken to and I think would really assert that one of the strengths that they've seen from us is our ability to do what we say to execute that budget at the schedule acquired and do it with the high quality and achieving the availability of the power in the market.

That's obviously going to show up in revenue, and we were the only energy storage company in the market to actually hit our original revenue range despite what happened with the tariff. We had some just very difficult discussions internally on holding on to those numbers to be able to get there.

And not surprisingly, with the team we've got in Energy Vault here, that the entire market had to deal with the tariff issues. The way we executed and still maintained and achieved our original guidance is attributed to the people. their fortitude, their courage, the strength they had through a very difficult environment, also with the volatility in the stock price. And I recognize them here to execute at the unit economics that were delivered. So growing and essentially by 10 points from 13% to 23%. The gross margins not a small thing.

It shows focus on our customers, the supply chain, the efficiency and this is versus comps for this type of business and integration and doing that EPC work the comps in the market are between 5% to 12%. So the fact that we're at about 2x the market in this space is significant. And I think worth noting, we manage our OpEx well and efficiently. We did take a reduction in June last year as there was a lot of uncertainty in the market. So we're not afraid to adapt to what we see in the market. I think that's also been a strength of the company.

And then ultimately, that reflected and resulted in us delivering a positive EBITDA contribution of almost $10 million in the quarter. As I said, this area of the execution capability really comes down to our people, -- their focus on customers, they're focused on our mission as a company, and that's never been a doubt in my mind or those of our customers.

I think the fourth area here, the shift to Asset Vault was very, very key as a model, shifting that and taking that own and operate model and applying that now to this fourth area of the AI digital infrastructure. We've talked about the contract with Crusoe and working on the powered shell. You're going to begin to hear more about our efforts in and around powered land and how that's going to manifest itself.

Pages 7 and 8 of the deck, do call out some of the details of the announcement that we made with Crusoe and also the announcements with Peak Energy. I will reference that, that -- the 25 megawatts noted with Crusoe is significant. I know those megawatts when you think about data centers may seem like smaller numbers. But when you actually look at some of the graphs we've used of the EBITDA per megawatt per year, it's quite significant because those numbers for the powered shells are between 1.5 million and 2 million per megawatt. So you can imagine when you just do that math, even at 25%, it is a significant and will be a significant contributor to our EBITDA and our profitability.

And then finally, not a small and not lastly, for any reason, but our sustainability efforts. I know in these days in the desire for sort of power of any kind and I'd say almost at any price.

We maintain consistent with our mission as a company and our vision of the company, our focus on sustainability, and that was reflected again with improvement from S&P Global, who does their CSA, their corporate sustainability assessments every year. We finished in the top 2% and again, also is the top energy storage company as far as sustainability goes. Very proud of the team's efforts here and continuing with our mission and now moving into a segment in the AI data infrastructure segment where I think those attributes are going to become more and more important as we make that shift and deliver that growth.

I think back to the financial performance and before turning it back to Michael, if you look at Slide 4, operationally, and if you look at all the different metrics, they're starting with the backlog growth, but the delivery of the revenue getting to the gross margin, I think, which is best-in-class in our market, just, I think, a very good performance that bodes well for how we're going to be executing in 2026 now and for the next 12, 24 and 36 months.

I would say from the strategic evolution of the company and stepping back, it's really important to reflect on the bigger picture of what's happened with us in the last 12 months in particular. I think we have been viewed as more of a technology provider and also as an integrator in the market, I think with our migration now an acceleration into owning and operating megawatts and with these results and that growth and that backlog, I think there's, I think, a great corollary now as we're making this shift and now delivering these megawatts and building the projects, while concurrently turning over projects to customers that led to a lot of the revenue that you saw delivered.

If you go through the deck, you're going to see on Pages 5 and 6, some descriptions of 2 projects that have been wins since we last spoke on the earnings of both SOSA, which is in Texas and also in Australia, a win with our developer there around another long-term energy service agreement. Those are 14-year agreements. They were with the government in New South Wales, again, very significant. Those do go into our backlog as we sign those offtake agreements and fully consistent with our strategy.

Slide 7, you're going to see some detail around the Crusoe partnership, very excited working with Chase and Kelly and the team there at Crusoe and helping them and supporting them in their Spark strategy, in particular, in the module data center space.

Slide 8 talks a little bit about what we announced with Peak Energy, which is a broad global partnership, but also very importantly, a co-development of their sodium ion technology for batteries optimized for supporting and firming up power for the module data center and broadly for the data center market.

I think just to tie some things together then and in closing and as we look beyond, I think as you've come to know Energy Vault and as we progress the company a few things really haven't changed with us. As you've seen, I think we've shown a tremendous resiliency as a company and ability, I think, to adapt to what's been a very dynamic market, absolutely.

We've got a very innovative DNA and a fabric in the company that really permeates everything we do from the daily activities to a lot of the activities we do that are a little more forward-looking and inform us and just simply how we listen to customers and how we deliver for our customers. I think we're maintaining still a very entrepreneurial culture in the company while continuing to put in place the processes that are going to enable us to scale and scale very quickly.

And one thing that certainly has been a part of our DNA from the beginning and continues to show up in the numbers and the results is our conviction around how we execute and our passion really to execute well. That's in delivering to our teammates and our employees that's delivering to our customers. It's delivering for our shareholders, which, as you've seen in the results, very excited about not only the delivery from what we achieved in 2025, but really that as a stepping stone to what we believe is going to be a very bright future on the company. It's relentless internally on that delivery. It's a great internal competition we almost have with ourselves, but always with the framework of continuous improvement.

We always have sessions where we sit back and evaluate not as much as what went well, but what are the things we need to fix. That's everything from operational, that's processes. That's how we interact with each other, as colleagues.

So I think just to wrap it up, I feel very good, I think, about our positioning now is we're going to be going forward. We're targeted on the right segments. -- targeted on the right growth segments, the profitable ones, I think, is a vertically integrated infrastructure platform. It is something unique that as we're seeing in the results, we believe we can leverage.

And that's integrated from not only being a traditional storage IPP where we're owning and operating assets, but we're leveraging as a competitive weapon, our internal capability to also design those projects to deliver them, commission them very quickly and efficiently and then manage those assets over time. We're still making significant investments and our most significant investments in R&D are in our software platform, our energy management system, think that's fundamental, enables us to manage the coexistence of not only generation technologies, whether that be fossil or renewable, but as well as various storage technologies and something that's important enabler for us to be agnostic as we look at defining and developing and proposing the best technical solutions for customers.

I think as you've seen from the announcements, we are accelerating our growth as well through partnerships. And with some of the most innovative and fast-moving companies in the world, we mentioned Crusoe, we mentioned Peak Energy. You'll be hearing more about other customers and partners as we do that.

And I'd say, finally, all underpinned by the capital position that we've been able to build over this last 12 months and feel very good that, that's going to continue to enable us to invest in the right segments and at the right pace.

So with that, let me turn it over to Michael to go through some of the details of the results. Michael?

Thanks, Rob. Turning to our Q4 and full year 2025 results on Slides 15 through 18. We delivered Q4 revenue of $153.3 million compared to $33.5 million in the prior year quarter, reflecting strong project execution in both Australia with ACEN and the U.S. with Consumers Energy, along with initial contribution from our Asia portfolio, including projects in Calistoga and Cross trails.

For the full year 2025, revenue was $203.7 million, representing over 340% growth year-over-year. and coming within our previously issued guidance range. This growth was primarily driven by the ramp in Energy Storage Solutions in Australia and the U.S. as well as commencement of operations from first assets within the asset portfolio. Q4 GAAP gross profit of $31.6 million compared to $2.6 million in the prior year quarter, resulting in Q4 gross margin of 20.6% versus 7.8% in the prior year period.

For the full year, GAAP gross profit reached $48 million, improving nearly fold versus the prior year, with gross margin of 23.6%, up 10 percentage points compared to 13.4% last year. reflecting both increased revenue scale and more favorable business mix.

Q4 adjusted EBITDA turned positive to $9.8 million compared to a loss of $13.4 million in the prior year quarter driven by a strong revenue ramp and improved gross profit contribution. For the full year, adjusted EBITDA improved to a loss of $21.2 million compared to a loss of $58 million in 2024. And representing a significant year-over-year improvement as the business continues to scale.

Adjusted net income also turned positive in the fourth quarter at $3.7 million compared to a loss of $25 million in the prior year period. reflecting the strong operational leverage achieved in the quarter.

Cash positioning and financing. Total cash as of December 31, 2025, was $103.4 million, up more than threefold versus the prior year and up 67% sequentially from Q3, coming in above our previously issued guidance range.

Subsequent to year-end, we further strengthened the balance sheet through several strategic financing initiatives. In February 2026, the company completed a $150 million convertible senior notes offering, upsized from $125 million with a portion of the proceeds used to repay $45 million in higher cost principal debt. This transaction enhances our liquidity and financial flexibility as we continue executing on our growth strategy.

We also implemented a capped call, resulting in an implied conversion price of $8.12 per share. As previously discussed at the company's Investor and Analyst Day last fall, we closed a $300 million preferred equity agreement with OIC to support the launch and expansion of our Asset Vault own and operate platform, which we'll discuss further in a moment.

Latest backlog and developed pipeline as detailed on Slide 19. As of December 31, 2025, the company reported a revenue backlog of $1.3 billion, representing 3x growth versus the prior year and 42% sequential growth versus the end of the third quarter. This increase reflects continued commercial momentum across several areas of the business as well as additional contracted projects and services across our global storage portfolio.

On the development side, we continue to expand the Asset Vault portfolio, including the acquisition of the 150-megawatt SOSA battery storage project in Texas which represents the fourth project in the Asset Vault platform and Energy Vault Australian development partner, Bridge Energy, was awarded the 14-year long-term energy service agreement by Australia services for the EBOR Battery project in New South Wales. The 100-megawatt 870-megawatt hour project is expected to provide 8 hours of dispatchable capacity and is expected to commence operations in 2028, subject to obtaining necessary contractual and regulatory approvals.

Energy Vault holds an exclusive option to acquire and construct the project, which we will -- which will utilize our proprietary B-VAULT technology and EMS and will be owned and operated within the company's Asset Vault platform.

In addition to ongoing project deployments in Switzerland, we recently announced an agreement in the EU with EU Green Energy to deploy up to 1.8 gigawatt hours of battery storage over the next 4 years. including a 400-megawatt hour project in Albania subject to final legislative approval.

From a developed pipeline perspective, which we now view on a megawatt basis versus megawatt hour, we are now actively progressing opportunities valued at more than $3 billion associated with 1.8 gigawatts of capacity. Taken together, our advanced development pipeline and contracted backlog provides strong visibility into the next phase of growth for the company.

Turning now to Asset Vault, our strategic owned and operated platform. Asset Vault is designed to create a vertically integrated ecosystem that captures value across the entire energy storage life cycle. With the backing of the $300 million pref equity from OIC, Asset Vault positions the company to accelerate the deployment of more than 1.5 gigawatts of storage capacity across priority markets, including the United States, Australia and Europe.

We've already placed the first 2 projects, Calistoga and Cross Trail into service. And on a stand-alone basis, these assets are expected to generate $10 million in annualized adjusted EBITDA.

Looking forward, the Asset Vault Fund I is expected to contribute roughly $60 million in recurring asset recurring adjusted EBITDA once the currently identified projects reached operation. with the potential to scale the $100 million to $150 million in recurring adjusted EBITDA by year-end 2029 as additional projects are developed and brought online.

Importantly, this platform enables us to generate predictable, recurring and high-margin infrastructure cash flows, while also unlocking meaningful synergies with our EPC integration business and supplier relationships. We are expecting to complete project financing for the 150-megawatt SOSA project during the second quarter of 2026 and the 125-megawatt 8-hour Stoney Creek project in the second half of 2026. We estimate $75 million to $100 million in full year 2026 internal project integration work to be completed, which is expected to yield a 15% cash margin along with the capitalization of associated labor. Please note, this contribution will not appear in either consolidated GAAP revenue or gross margin given the consolidation of majority-owned projects, but it is expected to generate positive cash flow in excess of Energy Vault's equity investments.

Turning to our outlook. For full year 2026, we're estimating revenue in the range of $225 million to $300 million, representing roughly 30% growth at the midpoint compared to 2025. This outlook reflects the timing of U.S. battery deliveries, third-party project time lines, full year contribution from operating assets within Asset Vault and the initial contribution from our modular AI data center initiatives.

From a profitability standpoint, we expect full year 2026 gross margin in the range of 15% to 25%, which compares to the 23.6% reported in full year 2025.

From a liquidity perspective, we are targeting total cash of $150 million to $200 million by the end of 2026, supported by the recent convertible notes, the project level financing, expected ITC proceeds of approximately $40 million, customer receivables and ongoing project execution work.

With that, I'll hand the call back over to Rob.

Michael, thank you. We'll wrap up here now and open for questions. Before I do, I think it's important just to note that we, as a company, are -- and have, I think, from a positioning perspective, feel very good about where we are with liquidity, with the portfolio we have to deliver, and I think most importantly, the team we have at Energy Vault to go ahead and deliver and execute well, as you've just seen from the results.

I'll call your attention again to Page 13. If you look at that, you'll get a sense of some of the new segments that we're pursuing there and not only evolving as we have from our stand-alone storage into the powered land and the powered shell area and what we're targeting as a company. And there's a lot of other information in the deck about the results that I encourage you to look through.

With that, operator, we'll turn it back to you for questions.

And our first question will come from Noel Parks with Tuohy Brothers.

Great. A lot of really great information in the update. And one thing, you mentioned that a good portion of R&D will be going to software, the technology platform side. And I just wonder if you could talk a little bit about the evolution of both sort of market demands for and also your own development of the overall EMS platform, sort of like what's ahead for that?

Yes. Sure. We, as you know, made significant investments back starting in 2021, late 2020, 2021 as we were approaching the market and looking at, one, ensuring we had a capability to basically leverage the best technology in the market at the right economics to deliver for customers. And we've always taken that approach. And to do that, we wanted to have a software platform that would allow us to essentially choose that best of best.

And I think a lot of the projects and I'll use Calistoga as an example where we had a software platform to take green hydrogen fuel cells, combine them with lithium ion and deliver what's the largest microgrid operating that backs up for 2 days an entire city. In this case, it's Calistoga. So there was a fundamental emphasis for us to be able to have that flexibility. There's a lot of capabilities that were developed in the software initially looking at how we both operate and monitor the battery energy storage systems and really any of the energy storage systems we were developing across different technologies.

And that's very important as you get into, in particular, as you're turning battery systems over and you're monitoring them from a safety perspective temperature you're monitoring the humidity levels, for example, and different things and environmental characteristics to ensure a safe operation. So I think some of those things and getting into more predictive analytics and to get in front of failure modes very early on. So there's a lot of early work in the software that was more operational focused.

And then Noel, we also developed capabilities over the last few years to essentially move up the stack. When I say that, that means getting into broader asset management as we were going to be managing more and more portfolios but also now owning and operating them. So that got us up into example, our Vault bidder platform or having an ability to utilize AI to manage how we're going to charge and discharge it optimum times in the market. as we're owning and operating these systems ourselves.

So I would say, I think the level of investment we've made here as I'd say, is a little over and above what a normal storage IPP would do because of the nature of the fact that we're building these and operating them and monitoring them over time, but also providing new tools that get into how we're going to optimize economics and provide economic dispatching, for example, of the systems.

Great. And I was wondering and thinking particularly about maybe fuel cells as components of microgrids. I'm just wondering what you're seeing in the marketplace with -- for data center environments, the sort of load following piece, implementation of that functionality to support the sort of particular the power needs of for example, AI facilities. Anything you had on that piece of the puzzle would be great.

Sure. We're looking at and developing a lot of different technologies to optimize how, for example, data centers are dealing with the inference models and how they're dealing with some of the spiking in the volatility.

And hence, for example, what we announced with Peak Energy, and their new sodium-ion battery and looking at a more optimized battery performance system to support not only what you would consider as sort of standard backup for data center, but as well the data center at the edge and the module data centers. So we're looking at that optimization.

And probably, that doesn't exclude, for example, stand-alone microgrids or utilizing, for example, fuel cells potentially as sort of island or essentially off-grid type of backup systems. So we're looking at a few different models in technology and even some trials with some customers. And hence, you've seen 1 or 2 announcements from us around looking at that in those technologies.

I'd say fundamentally, that firming between looking at combining, for example, a renewable asset that's intermittent like solar with a storage asset and some level of potentially some fossil and other generation, let's call it, technology. I think we're right in the middle of all of these different hybrid systems, and it will be different. I think the technology that's going to be applied based on where it resides in the network, meaning at the edge or supporting some of the larger data centers.

Great. And just a last one for me. I wonder if you could -- given the gross margin for the year coming in near the high end of the guidance. I wonder if you could just sort of tease out a little bit that margin improvement and maybe just how it came in at the high end as opposed to be a little bit narrower?

Yes, sure. Happy to. It's definitely something we're very focused on, and it really gets down to those unit economics. And for us, as we deliver the projects. And if you look at the nature of the revenue that was delivered, a lot of that recognized revenue is coming from us building and turning over these systems. So we're building them, commissioning them and turning them over. So one is we have, I think, a very strong confidence in how we deliver projects and ensure that we can be very cost-effective and shrink time lines and deliver an accelerated schedules on site.

We do that through, for example, building digital twins before we even get to a site. So we model the site before we come on site, that gets us in front of any issues and ensures we're not going to have any layout issues or issues with construction and design. So I think the effort we spend one in designing the systems and planning before we even get to the site, I think that's one.

I think the speed at which therefore, we're able to shrink the actual time from mechanical completion to when you have the site up fully visible through cold and hot commissioning. We do that in really at lightning speed. I think we're one of the best in the industry is shrinking that time line as our customers would attest. So that saves a lot of cost and time on site. That obviously shows up in gross margins. So all of this lower cost and efficiency will show up in gross margin.

And then the third thing I'd say is how we've managed the supply chain and the team, and this is all under Akshay Ladwa who runs essentially all of our execution as well as the battery design and the software area of the company is our Chief Operating Officer, the work done to ensure we have flexible partners, especially as we've had to deal with the [ fee arch ] and some of the tariff areas this year. that was fundamental.

So we didn't have to take any massive hits that would have, of course, hit that gross margin. And I think, Noel, the results are pretty clear. You can compare us, I think, given the revenue we're recognizing now to -- the only other pure play, I think public is fluent out there, and they -- I know they had a difficult quarter last quarter at about 5% gross margin, but they're still averaging somewhere in around 12%, 13% from the prior 4 quarters before the last one.

So we're really achieving something in the space about 2x the market for what includes a big EPC component, which I know is a is typically something that's a little tougher road as far as managing your cost goes. But I think it's -- for those reasons I mentioned those 3 reasons, I think it's really become a strength for us.

[Operator Instructions] We'll go next to Sid Rajeev with Fundamental Research. .

Congratulations on the sale. And yes, I love the new deck highlighting both your short-term and long-term vision. My question is regarding your project financing, if I may. How much are you planning for both SOSA and Stoney Creek? Maybe some color on the CapEx for both?

Yes, sure. As we highlighted in the deck, we're expecting somewhere on the order of $125 million to $150 million in total project cost for the SOSA project. in the U.S. based on past experience, a not unreasonable to assume sort of, let's call it, 40% leverage on the project from a project financing perspective. And then remember, here in the U.S. we would anticipate a 40% gross ITC. So hopefully, that helps with some of the modeling.

In terms of Stoney Creek, which that project financing is really envisioned to be sort of a second half event. We kicked it off of some of the preliminary parts of that process. this project, I believe it was quoted as an AUD 350 million construction cost. And because of the 14-year long-term offtake agreement that we have with the New South Wales government, we're expecting to have a project leverage sort of in excess of 50%. And so we're going to market here soon. But having executed 2 of these over the last 12 months we feel like we've got a pretty good handle on what that's going to look like.

Unfortunately, in Australia, you don't get the benefit of investment tax credits, but it is a very attractive project from an economics perspective.

Got it. Now I know you don't provide segmented revenue, but any color how much of the 2025 revenue and you project revenue come from third-party deployments, EPC and as Asset Vault?

Well, with Asset Vault, what we don't report those separately, we have stated that on an annualized basis, Calistoga and Cross Trails, the only 2 operational assets within Asset Vault our envision to upwards of $10 million of recurring EBITDA, and these are very high margins that you should kind of assume something slightly higher than that from a recurring revenue perspective. So again, very high margin and this portfolio is just starting to ramp.

Yes. And Sid, it's Rob here. I think just to add to what Michael said, it's -- if you think about that in a context on $203 million, and we had those assets up and running basically the second half of the year, so right only half the year. So it was a very small portion of the revenue in 2025.

And yet those contributions as we go forward is those revenues now in particular, not as much this year, but as we get into '27 and '28 when the revenue is going to come off of those long-term service agreements, and they're going to be coming in, in the 70% to 80% gross margin range, you're going to begin to see a real shift on that gross margin line as these assets that we've contracted that 540-megawatt now that's either contracted or in construction as those things come online, you're going to see a good shift in the mix, let's say, on the gross margin side.

Right. But for the 2026, do you see -- are you expecting increased revenue from third-party deployments flat? Or any guidance you can give there?

Yes. The total revenue guidance of $225 million to $300 million is obviously an increase, and the majority of which would come from third-party projects.

Okay. Just finally, last question. The contract backlog, $1.3 billion, it doesn't include the latest fifth project, right, the one you recently signed after December?

That does include the fifth project, there is still upside associated with the fourth project based on where we are with the offtake and the project financing on that, project.

This now concludes our question-and-answer session. I would like to turn the floor back over to Robert Piconi for closing comments.

Okay. Thank you, operator. Again, I want to thank everybody for joining special thanks to our employees that persevered through, I think, what was a very volatile year for sure and one that we're very excited now to look at how we're going to build this platform and continue to have another growth year here, as Michael referenced in 2026, and looking forward to sharing a lot more details around those things and some of the new things we're working on in the quarters to come. Thank you very much.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Greetings. Welcome to Energy Vault's Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Michael Beer, Chief Financial Officer. Thank you, sir, you may begin.

Thank you. Hello, and welcome to Energy Vault's Third Quarter 2025 Financial Results Conference Call. As a reminder, Energy Vault's earnings press release and presentation are available now on our investor website, which we'll be referring to during this call. This call is now being recorded. If you object in any way, please disconnect. A replay of this call will be available later today on the Investor Relations portion of our website.

Please note that Energy Vault's earnings release and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. Please refer to our most recent 10-K or 10-Q filing for a list of factors that cause our results to differ from those anticipated in any forward-looking statement. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.

In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe harbor disclaimer and non-GAAP financial measures presented in our earnings release for more details, including a reconciliation to comparable GAAP measures.

Joining me on this call today is Robert Piconi, our Chairman and Chief Executive Officer. At this time, I'd like to hand the call over to Robert.

Great. Thank you, Michael, and good morning and evening and afternoon to everybody that's joining this call. Our third quarter of 2025 was one of the most pivotal in Energy Vault's history. The quarter marked the formal launch of our Asset Vault platform, solid execution across our global project base and the establishment of the financial foundation that will fuel our next phase of profitable growth.

It was less than 18 months ago, we outlined a bold strategy to execute a plan involving developing, building, owning and operating energy storage assets over time, constructed at financially privileged or attractive points of grid interconnection to achieve top quartile investment returns. In that time, we have also built, commissioned and now are operating for the first time the 2 initial projects in Texas and California, with the revenue included in all the Q3 results also for the first time.

And while initially built using our balance sheet cash, we followed with 2 consecutive project financings closed in the last 6 months as we continue to put cash back on our balance sheet with now 3 consecutive quarters of growing cash. And as you will hear from Michael and saw in our investor presentation, a large increase in cash also expected for our fourth and final quarter this year.

You'll recall at our last earnings, we announced the framework of the new non-dilutive preferred equity platform to fund and put into operation an initial 1.5 gigawatt of energy storage IPP projects, unleashing over $1.1 billion in capital that we formally announced the close of the $300 million transactions just last month with Orion Infrastructure.

In the spirit of moving with speed and velocity, which are becoming table stakes now for success in this industry, we immediately put that capital to work last month with the purchase of a 150-megawatt interconnect site outside of Houston, Texas from Savion, a U.S. division of Shell. Coupled with the 125-megawatt site at Stoney Creek in Australia already closed earlier this year with the long-term energy service 14-year contract with the New South Wales government, that now brings our project total to 4 and 340 megawatts operating or in construction, which will be delivering a little over $40 million in recurring annual EBITDA for these initial projects as all come online in the next 12 to 24 months.

When I was in Australia last week, I shared for the first time as well at our Investor and Analyst Day, our deepening collaboration with the team at Crusoe. Crusoe, the AI factory company. Chase, Cully and the team there with their focus on energy first are innovating and redefining what it means to move with the speed and velocity that I referenced earlier in vertically integrating to deliver the largest AI data centers in the world in time frames previously thought impossible, as the initial Stargate project in Abilene shows alone. I think an example for all of us for what is now becoming a requirement to be successful in this industry.

In a similar fashion, Energy Vault is vertically integrating and originating now, designing, building and now owning and operating energy storage assets over longer time frames, a synergistic endeavor with the same relentless focus on execution and now with greater speed and efficiency of getting capital deployed with the new Asset Vault platform. While these larger projects will take some time to be built and come online in the next 12 to 24 months and then with the subsequent 10- to 15-year plus revenue streams, a reminder that it is Energy Vault that will be building these projects.

So when we talk about the $1.1 billion in CapEx that the $300 million preferred enables, that CapEx will be funding into Energy Vault to build and commission these projects, which results in another $100 million to $150 million in cash flow back to the parent company in the form of project margins, long-term service agreements, among other cost and profit recoveries.

I realize it's been a little longer time given how busy it's been the last 60 days since we last spoke at the quarterly earnings. I do want to jump right in here to our quarterly results. But as you get a sense, there's been just a lot going on that we've been executing as a company on a series of fronts, and really proud of the team at Energy Vault and all of our partners, as well as the support of our Board of Directors that all supported in making this happen.

Michael has been be covering the results in more detail, I would like to cover some of the top of the waves here on the results as we entered into the second half of our year and began to deliver the expected revenue ramp and what was a strong and expected performance for the quarter. Also a reminder for everyone, there is a publicly available investor presentation that's on the website that you can download, and we would be referring to some of the charts that are in that presentation.

As you saw, the contract backlog remains near $1 billion for us to execute upon in the years to come, which has more than doubled this year and about 4x what it was from this time last year in 2024. The ramp started as expected with $33 million, a substantial increase on both a year-over-year and sequential quarter basis and expecting an even larger jump of about $150 million or thereabouts in Q4 with the deliveries in Australia and the U.S. That $33 million also includes some of the first recurring contributions now from our 2 energy storage IPP projects in Texas and California.

We also delivered strong unit economics with gross margins of 27% in the quarter, bringing our year-to-date gross margins to almost 33%. This reflects strong management of our project deliveries of our supply chain and just general execution competencies, which is one of the most critical core strengths of the company. We saw the EBITDA loss narrow to only $6 million for the quarter, noteworthy on only $33 million of revenue. We continue to find ways to optimize our OpEx and be as efficient as we can as we push to a full year profitability.

And another good story on our cash creation. As we have every quarter this year, we continue to grow our cash balance and return cash to the balance sheet through the project financings completed and with the first phase of the Asset Vault platform just coming online. Noteworthy here that we are still expecting now another $30 million to $40 million in investment tax credits as well to return to our balance sheet this quarter in Q4, hence, the expected jump in our cash to $75 million to $100 million range as we close the year, setting ourselves up well for 2026.

And for us at Energy Vault, our results, of course, encompass more than just the financial side, but also the results and the impact we strive to make as a company, reflecting how we do our business and the sustainability of our solutions to enable prosperity for all humankind in a resilient way.

I'm very proud to share today that we have continued to advance our leadership in sustainability with S&P Global's latest release of their ESG scores. Energy Vault continued along its improvement path year-over-year, placing again in the top 98th percentile of all companies reviewed by S&P Global, while critically maintaining its leadership as the #1 company in the energy storage segment. This speaks to the culture and the execution philosophy that we have as a company that really comes down to our purpose of what we seek to fulfill and the impact we are making and will continue to make in our global communities.

I want to send out a special thanks to Edward Johnson and Michael Van Parys as well for their specific leadership within Energy Vault to make this happen, but also their humility, which reflects our humility as an organization to realize that we have much more work to do here. The insatiable demand for power we see now will make this focus even more critical if we want to have a shot at improving the quality of life on earth for decades to come.

With that, I'd like to turn it over to Michael Beer, our CFO.

Thanks, Rob. Turning to Q3 2025 results on Slides 3 and 4 in the attached presentation. We delivered Q3 revenue of $33.3 million compared to $1.2 million a year ago, representing a 27x increase year-over-year, driven by strong execution on Australia projects and the initial contribution from the Asset Vault assets.

Q3 ' 25 GAAP gross profit of $9 million improved nearly 18x versus the prior year, driven by increased revenue and favorable business mix, resulting in a Q3 2025 gross margin of 27% and 32.6% year-to-date. Q3 adjusted operating expenses were $16.2 million, flat quarter-over-quarter, but up modestly versus last quarter as ongoing cost reduction initiatives were generally offset by start-up costs and development expense related to Asset Vault and growth in Australia.

Q3 adjusted EBITDA, excluding stock-based compensation and other onetime items outlined on Slide 11 of the earnings presentation, improved to a loss of $6 million from a loss of $14.7 million in the prior year ago quarter, driven by higher revenue and gross profit. Regarding cash and project financing, cash as of September 30, 2025, was $61.9 million, up 7% sequentially and in line with our previous guidance. The company completed a securities purchase agreement for up to $75 million, of which $30 million has been drawn to date.

Following the quarter, we closed a $300 million preferred equity agreement with OIC for the launch of the own and operate business called Asset Vault, which we'll discuss in a moment. Along with the large sequential increase in revenue and customer receivables anticipated during the fourth quarter, we also expect to receive $40 million of investment tax credit proceeds, which we've committed to those projects now placed in service.

As it relates to the latest backlog and developed pipeline, as reflected on Slide 5, the company currently maintains a revenue backlog of $920 million, up 112% year-to-date, offset in part by the $50 million in recognized revenue this year, including the initial contribution from Calistoga and Cross Trails projects now included in Asset Vault. The backlog increase reflects new projects with, Consumers Energy, a long-term service agreement with an existing customer and long-term offtake agreements in the U.S. and Australia.

As highlighted in the press release, the company also recently acquired the 150-megawatt 300-megawatt hour SOSA project in Texas as part of the Asset Vault portfolio and entered into an agreement with EU Green for a 400-megawatt hour project in Albania, subject to final Albanian legislative approval, both of which we expect to be included in backlog once finalized and key milestones are completed. Our total development pipeline for advanced projects, third party and those within Asset Vault is around $2.1 billion or roughly 8.7 gigawatt hours.

Turning to our business outlook. Reflecting the timing of U.S. battery deliveries associated with Consumers Energy projects and other project time lines in Australia, we are estimating full year 2025 revenue of $200 million to $250 million within the prior guidance range. We are estimating full year 2025 gross margin of between 14% and 16%, in line with our historical averages. From a cash and project financing perspective, we are estimating $75 million to $100 million in total cash at the end of this year, unchanged versus previous guidance.

We are now scaling up development activity and support services for Asset Vault with both Calistoga Resiliency Center and Cross Trails now in service, we expect these assets to contribute annualized adjusted EBITDA on a stand-alone basis of $10 million.

As Rob had mentioned, on October 29, management held its second Investor and Analyst Day to provide additional detail around the recently launched Asset Vault business, Energy Vault's wholly owned subsidiary focused on global development, construction, ownership and operation of energy storage assets. We also discussed strategic growth plans as the company leverages Asset Vault to build and manage an expanding portfolio of contracted and operational storage projects. That presentation and replay are available on our website.

With the backing of the $300 million preferred equity investment from OIC, Asset Vault creates a vertically integrated ecosystem that captures value across the entire energy storage life cycle. That platform combines Energy Vault's proven operational expertise with long-term asset ownership to generate predictable recurring and high-margin cash flows.

With the launch of Asset Vault, Energy Vault is positioned to accelerate deployment of 1.5 gigawatts in attractive priority markets and upper-tier IRR projects as part of Fund 1. And that Fund 1 is expected to contribute roughly $40 million in recurring adjusted EBITDA by year-end 2027 from the 4 maiden projects, including the recently announced SOSA project and the Stoney Creek project in Australia, both of which are in the process of commencing their respective project financing processes, and to achieve $100 million to $150 million in recurring adjusted EBITDA by year-end 2029 from attractive projects yet to be disclosed across high-growth markets in the U.S., Australia and Europe.

The project portfolio is prioritized with a clear monetization strategy, supported by long-term offtake agreements with bankable partners and/or attractive merchant markets. We're currently expecting our merchant exposure to be around 25% Further, by leveraging Energy Vault's existing EPC integration capabilities as well as a host of other services we provide today to our third-party customers, we can unlock notable synergies across the business, including larger volume commitments with suppliers, et cetera, adding incremental cash flows and liquidity to the parent company. Case in point, as Rob had mentioned, assuming a mid-teens average historical gross margin on $1 billion plus of CapEx for internally developed projects, Energy Vault should generate additional cash flows that more than cover the associated equity investment.

With that, I'll hand it back over to Rob.

Thank you, Michael. I think we were going to open it up for some questions now.

[Operator Instructions] Our first question is from Noel Parks with Tuohy Brothers.

Just one item I noticed in the P&L is it looks like R&D expense actually declined sequentially a bit. And I was just curious if you had any updated thoughts on with some of the structure changes, just what the -- how the expense lines might be affected as if there's more capitalization going on going forward or something.

Sure. Happy to take this one. I would say it's a confluence of a handful of things. As you know, we've been tightening the belt from a cost perspective really over the last year. So this is the reflection of some of those activities. Furthermore, the company was in a different phase following the IPO and around that time where we were investing heavily in R&D. And at this stage, we're looking to harvest the benefits of some of those earlier investments. And so a little less focus around R&D and more around certain activities such as Asset Vault and so forth.

Great. And I guess I'm thinking a little bit bigger picture. As we've had a fair amount of macro uncertainty in the quarter and the months before that. And things like the shutdown certainly haven't improved the clarity of where many things in the marketplace are heading. So I'm just wondering if sort of your pace of discussions on the customer acquisition, bus dev side, I just wondered if you've kind of characterized customers feeling a sense of urgency and sort of pressing on unabated or whether there's been some more hesitation introduced and thinking especially maybe as you're doing with utilities at times. So I just wondered what that pace has been like since the summer.

Thanks, Noel. It's Rob here. I'll comment, and then I'm sure Michael may want to add a comment or 2 as well. Look, this year, for sure, if anything, has been quite volatile and dynamic between the tariff side of the equation, which obviously impacts a lot of the battery shipments that were coming from China and then up to and including the most recent shutdown and recent changes and ups and downs on tariffs. So we've had to manage through that as have our customers, and it's required a lot more terms with customers in terms of the deal structures and trying to deal with it. So I think that's definitely caused some delays.

And interestingly, on the Asset Vault side, meaning on the origination of deals we're looking at attractive assets, it is a buyer's market from what we see. I mean we have opportunities getting thrown our way daily, looking at sites that have interconnects and projects. So I think from an Asset Vault perspective, we're seeing a pretty target-rich environment and just obviously being careful on the ones that do make our list. We have a fairly formal and in-depth way that we evaluate these projects.

But generally, I'd say from a U.S. market perspective, we have had a lot of stop and starts across the board. And I think noteworthy, we're holding our guidance. I think we're one of the few companies in our space that are holding their guidance because of deliveries that we have underway and a lot to do next quarter, as you know. But that's what I'd share with you.

Michael, do you have anything to add to that?

Yes. We pride ourselves in having a nice diverse footprint and also being very agile. So earlier this year during tariff gate, I think on the earnings call, we had commented that only about 10% of our backlog was really subject to some of the volatility around U.S. tariff rates. So starting to prepare and protect ourselves against some of these shocks.

The other thing is just being agile over the last 5 years plus, we've seen a 90% decline in battery prices, right, at the cell level. And so being able to participate in the most attractive parts of the value stack and choosing to own and operate assets rather than simply being a third-party service provider has set us up exceptionally well.

[Operator Instructions] Our next question is from Sid Rajeev with Fundamental Research Corp.

Just to confirm, the current backlog, it does not include the recently announced projects in Albania, right? And also, any plans to add these projects to asset in the future?

That's right. So the $920 million backlog today does not include either the SOSA project or the project that we had announced with EU Green. The SOSA project is part of Asset Vault and will contribute to a lot of those recurring EBITDA numbers that we had guided previously. I would expect those to be added to backlog, yes.

No, to Asset Vault?

They'll be added to the backlog for the broader company and it will also be part of Asset Vault. That's correct.

Okay. Just one more. The development pipeline showed a massive increase from 5.9 to 8.7 gigawatt hour, $300 million added. What -- which projects specifically were added to this?

We've not disclosed the specific projects. These are what we internally classify as Stage 4 or Stage 5 opportunities where we've either been shortlisted or awarded opportunities. And obviously, as we curate the pipeline around Asset Vault, there certainly are -- there's been some ins and outs, and that is likely reflected in that change.

Okay. And congrats on the Q3 results.

[Operator Instructions] With no further questions, I would like to turn the conference back over to Robert for closing remarks.

Thank you, operator. Look, I'm happy to be talking about this quarter now as -- and in the last 6 years, in particular, have been quite transformational for us in terms of executing on what we said we were going to do, in particular, with getting the Asset Vault platform in place, I think that was significant. But in addition, and not to lose sight of the execution capabilities of this company and keeping our eye on the ball despite all of the various transactions that are going on around us between the project financings, between what it takes to get all the investment tax credits all organized and administered. Just delivery of product around the world.

I think what's going on in Australia right now is one of our larger projects, which Australia represented more than half of our revenue this quarter and will continue to play a large part, I think, into the next quarter, getting there and delivering product toward our first, what's called an R2, which in Australia is your first grid interconnected project. That for us is the ACEN project. They're a large customer, a large partner of ours. We're delivering a few projects for them right now, and Q4 and into next year will play an important role in that for our future and the growth in the Australian market.

I just want to thank all of our employees first, our days start and end with all of you. And thank you, everybody, for your focus and dedication through what remains a pretty volatile time, a lot of things going on around us that we do not control. However, we do have to plan and continue to plan for that as a company and ensure we have all the levers available to us to ensure we can respond and react and adapt as needed in the market while just staying focused on our strategy, which really starts with serving our customers.

We feel really good about that. We've announced a few new projects, new collaborations, some things focused on the new AI infrastructure that's getting built out and excited about how those developments are going to proceed and impact our company as well.

I also want to thank our Board of Directors who, in the last quarter, all participated in buying stock in the company during the non-blackout period as well as some of the management and myself. Hopefully, it's not lost on you all, the investors who are listening in, but also the employees that you've got management buying into the future of the company because of our faith and confidence in the prospects. And again, that really starts with the people of Energy Vault. So thanks to all of you.

And operator, thank you for your support today.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Hello, and welcome to Energy Vault's 2025 Virtual Investor and Analyst Day Webcast. We appreciate you joining us today as we provide an in-depth look at our strategy, business performance and growth trajectories.

Our focus today is on the continuing evolution of Energy Vault as an integrated energy storage IPP and the introduction of Asset Vault, our new investment platform designed to accelerate deployment and value creation in the energy transition.

As a reminder, Energy Vault's presentation is available now on our investor website, and we will be referring to the presentation during this call. A replay of this webcast will be available later today on the Investor Relations portion of our website. This call is now being recorded. If you object in any way, please disconnect now.

Please note that Energy Vault's presentation and this call contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements are only estimates and may differ materially from the actual future events or results due to a variety of factors. Please refer to our most recent 10-K or 10-Q filing or Slide 2 in our deck for a list of factors that cause our results to differ from those anticipated in any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. In addition, please note that we will be presenting and discussing certain non-GAAP information. Please refer to the safe harbor disclaimer and non-GAAP financial measures for more details, including a reconciliation to comparable GAAP measures.

If you'd like to submit questions, please do so using the webcast portal or e-mail us at [email protected]. We'll be happy to address questions throughout this whole session.

Please let me quickly guide you through today's agenda before I hand you over to our speakers. Firstly, we'll begin the opening remarks and an introduction of Asset Vault and Energy Vault's position as an integrated storage IPP presented by Robert Piconi, our Chairman and CEO. This will be followed by a brief Q&A session. Next, we'll move to the Asset Vault investment overview led by Matthew Brezina, our Vice President and General Manager of Asset Vault, along with Chris Leary, Investment Partner Head of Infrastructure Equity at OIC. After the session, we'll gain -- give you another opportunity for Q&A. Following that, Michael Beer, our Chief Financial Officer, will provide a detailed financial outlook covering financial metrics, performance drivers and capital allocation priorities. We'll have another Q&A session immediately after Michael's remarks. Finally, Robert Piconi will return to deliver closing remarks, summarizing Q&A's takeaways and our outlook for the year ahead, followed by one last opportunity for any final Q&A.

Once again, thank you for being here and for your continued interest and support of Energy Vault.

With that, let's begin, and I'll now hand over to Robert Piconi, our Chairman and CEO.

Great. Laurence, thank you very much. A very warm welcome to all of you from this very early morning here in Australia, just after 4:00 a.m. I'm also here with Marco Terruzzin, our Chief Revenue Officer; and also Lucas Sadler, our Head of our Commercial business here in Australia.

A little over 15 months ago, at our first Investor and Analyst Day, we outlined a bold and ambitious strategy to leverage our strength in designing and delivering energy storage technologies to become an integrated energy storage IPP that owns and operates energy storage infrastructure. Today, after a culmination of a very intense year of development and progress is with great excitement about our future of our company, our people, our partners and perhaps most importantly, for our shareholders who have continued to invest in our future, we officially launched Asset Vault as the financial platform to enable the role we are playing in operating critical energy storage infrastructure that powers our future.

We're sitting here at the dawn of the AI infrastructure age. We believe the greatest value we can provide as a company lies in the ownership and operation of these critical energy storage assets. These are the assets that are powering the world's most essential infrastructure today. The assets generate stable, recurring and high-margin cash flow streams, driving superior and predictable value creation for our shareholders. All of the know-how and IP we've developed over the past six to seven years have now converged into our integrated independent power storage model.

As I look at these last even 12 months, we brought online the first 65 megawatt of projects into operation as committed in California and in Texas and contracted an additional 275 megawatts, including the 125-megawatt 8-hour Stoney Creek project right here in Australia and the recently announced 150-megawatt 2-hour SOSA Energy system in Texas. Moving with speed and the velocity that you will hear as a theme today and becoming a market imperative for this industry to meet critical energy infrastructure needs that are being redefined and accelerated daily by the transformation into the AI data center build-out that's rapidly underway. These first four projects alone totaling 340 megawatts will generate approximately $40 million in annual recurring EBITDA in the next 24 months alone and more to come.

Our announced $300 million funding of nondilutive preferred equity will enable up to 1.5 gigawatts of new deployments, equating to over $1 billion in new capital expenditures, positioning Energy Vault to accelerate our profitability ramp to $100 million to $150 million in annual recurring EBITDA from Asset Vault alone as these assets come online in the next three to four years, which is additive to the various cash and gross profit streams coming from the rest of Energy Vault's energy storage solutions business.

With Asset Vault in place and with its first fund as our vehicle to secure and deploy capital for the development, ownership and operation of these critical energy assets, we also sit here today with a contract backlog that has more than quadrupled this year to almost $1 billion as we continue to add very visible and long-term contracted revenue streams.

Critical to our mission and resilient and sustainable energy, Asset Vault not only will help us deliver on the global shift toward low-carbon power, but it also uniquely positions us to leverage our deep energy storage and grid expertise of our people to support the explosive build-out of AI infrastructure, where clean, reliable energy and grid resilience are mission-critical.

Very excited to be sharing for the first time publicly our collaboration with the team at Crusoe, hey are the AI factory company. Chase, Cully, the co-founders there and the whole team with their focus on energy-first are innovating and redefining what it means to move with the speed and velocity I just referenced and vertically integrating to deliver the largest AI data centers in the world in time frames previously thought impossible as the initial Stargate project in Abilene shows alone. Think an example here for all of us for what is now becoming a requirement to be successful in this industry. And not only in large singular scale for data centers, but our collaboration is focused on the modular data center build-out at optimal grid interconnection points, and we'll be touching a little bit more on this later and specifically some of the work that we're doing.

The takeaway is simple here as we share over these next 100 minutes or so, and we will be talking about things in minutes. Through proven execution of the team, the deep expertise we have, the innovation, the strategic ownership of critical energy infrastructure assets, we have positioned Energy Vault to capture the opportunities in front of us and create long-term sustainable shareholder value.

I know a chart like this, and you've seen many of them that look at the sector of energy storage and in particular, in power. But as you see here through 2030, we've got double-digit growth here in just the electricity output alone. But in particular, for energy storage, energy storage growing at about 3x to 4x that of the electricity demand. Very interesting here, and a lot of you that follow the sector know this as well. If you look at the period from about 2016, '18 through 2021, we had basically flat energy demand in the sector in terms of overall electricity demand. But you see with storage here, we've got a big multiplier on that and very excited with our position now and roughly the 28% CAGR that we're going to be having and participating in here over the next period in the next four to five years.

Just to graphically represent here the company now. And if you look on the left-hand side, you've got Energy Vault there. And as we've mentioned, Asset Vault there to the right and introducing it today as a wholly owned subsidiary. It is, of course, a complement to our existing core businesses, but we'll be more and more defining a lot of those priorities in terms of our investments in critical energy infrastructure. Asset Vault is a very efficient platform as designed in terms of governance to secure capital. It is nondilutive to shareholders. It is a scalable platform and really focuses on enhancing the speed of our capital deployment.

First and foremost to this is also the self-integration and the grid expertise that Energy Vault brings as a part of this, which will help us reduce the project CapEx, reduce the operating expense of these assets from our software systems and how they optimize the operation and therefore, increase the IRRs.

Now a little bit more detail around with Asset Vault and us becoming a fully integrated IPP now. You see on the left-hand side there, a lot of the activities that Energy Vault is going to be bringing to the table in support of the Asset Vault platform. We have a stronger earlier-stage focus now on good asset identification and the development. We're going to be leveraging that self-integration expertise as a company that we built and moving very quickly in the last two years to bring on multiple gigawatts of power and energy storage.

We're going to leverage our management on the EPC side as we look at managing the build-out of that infrastructure, our software platform, which is fundamental and critical. It allows us to actually deploy not only our core technologies that we develop, but also to deploy any technology that's fit for purpose for the application we're going to serve and as well as our long-term service agreements in managing and monitoring and ensuring safety and reliability of these assets.

If you move to the right, therefore, how does this process work? I just talked through a lot of our core expertise, how that increases the IRRs. Asset Vault is the vehicle to finance this energy infrastructure. The way the fundamental works, it is preferred equity, addresses also and helps support our project financing activities that follows right on the heels of the equity investment. It enables us to achieve step-ups as well as take advantage of any tax credits regionally. And there are other cash returns to Energy Vault. There's a post-pref-equity cash distributions, of course, that go back to the company. There's all the integration margin and services that flow back into Energy Vault. And as I mentioned, the long-term service agreements and any other fees that come back to the company. And finally, I think the most important aspect here is the financial return on this first 1.5 gigawatt, this $300 million will enable is a range $100 million to $150 million of EBITDA, supported by the initial what we're calling Fund 1.

Just to bring it home a bit here now for investors on the investment thesis, and I've already talked through some of these things, but just to emphasize here, we are in a very attractive market that's going through a tremendous transformation. I think the decision that we made and was actually taken almost two years ago that became visible and we shared it 15 months ago at our first Analyst and Investor Day was fundamental to position us not only for the reason we made the transition to own energy storage assets, predictable recurring revenue streams, high margin that become, therefore, quite predictable for us, but also it's now positioned us for what's happening with the AI data center transformation and playing a much more critical role in the management of that energy infrastructure. The CAGRs are there to support the energy storage. We've built a technology-agnostic software platform to be able to bring all the right technologies to bear and that will play a very important role as we look at different applications.

But I think another thing for investors is fundamental is our proven execution. While we're a newer company of about seven to eight years old now, our team has a tremendous deep expertise, which is why if you look at the first few years of our energy storage deployments, we moved very quickly, faster than any energy storage company in its first years to not only win new contracts, but have in 12 to 18 months, those contracts fully deployed, commissioned and up and running and at availability that's over 99% today.

The other pieces of the execution, of course, stem from what we've done just in the last year, as I referenced, in getting now 340 megawatts either in operation with the first two projects, but as well as the last two projects that have been announced, the one here in Australia and the one just recently announced in Texas for another 275 megawatts. and that's going to be generating by the end of the next two years on an annual basis, over $40 million in EBITDA. And just not to forget to reference that we put on the board about $550 million of revenue in our first few years here as a public company and our first few years generating revenue.

And finally, I think here with Asset Vault and really one of the reasons that we're here and talking to you today, it really accelerates our push now into profitability as a company, the growth and to build the shareholder value. We have a strengthened balance sheet and liquidity. Michael Beer is going to be covering some more details of what we've done recently, not only with the preferred equity, but also to get in place some strong working capital lines as we support our growth. We have a large and developed pipeline of about 4x what that contract backlog was just one year ago to almost $1 billion. the $100 million to $150 million of EBITDA that's going to come just solely from this preferred equity investment alone.

And the last point and a very important one is the aligned incentives with you all, our investors, with management that owns about 20% of the company. You've seen a lot of the recent buying, I think, just in the last 60 days between the buying that I did, some of the management team and even our Board of Directors. That is a show of our faith in our future, and it's a show and I think for the investors, the dedication of this team to the future.

Just graphically to represent this, and this goes without saying, and I think we've referenced this on our prior earnings calls as to why do we believe as a company that owning infrastructure is important. You can get a sense of how the economics change from how we have been and will continue to develop and deploy energy storage systems.

In owning and operating those assets over time with optimal project financing, you can see the returns and the unit economics grow significantly and hence, the EBITDA creation that I've referenced. We have dealt with as a company, the industry of all the changes we've seen, whether that be from some of the tariffs this last year, I think one of the most volatile years that we've seen here in the industry and just some of the changes that happen and as happens with our customer sets as we look at project-specific work. I think now with the energy infrastructure ownership, we're going to have much more visibility, and we'll be obviously sharing all that visibility now as we go forward.

These things do not happen overnight, of course, as we bring these assets online, there's investments. These projects take anywhere from 12 to 24 months from the time that we begin building them. But that visibility now we're going to have will be fundamental, I think, to the value proposition and the investment thesis here of our investors.

And if you look there to the right and what's happening on the recurring revenue, we mentioned our traditional grid services, the microgrids, of course, and what's happening in the AI data center. And that's very interesting for us. I think as we look at that transformation and that spending, it is unprecedented. I think it will be, at least in our lifetime, the biggest transformation that we've seen and something that we are excited to begin to participate in.

I referenced this in my opening remarks and very excited to share the collaboration and that we're doing here with Crusoe here for the first time. And really with the thesis here that not all megawatts are created equal. As you saw on the prior chart, there's a lot more value as we look at -- we're managing, providing energy storage, owning and operating those over time is already a shift that you see in the bottom left-hand quadrant in terms of that profitability or the EBITDA, the dollar EBITDA per megawatt. But you see as you move up the curve and up to the right and as we look at data center infrastructure, GPU as a service and enabling that and the role storage is going to play, you can see it's not just a multiple of 5x to 10x, but there are just important economics, synergies and opportunities for energy storage to play a role in a segment that's creating a ton of value.

We're excited to do that. We're collaborating with Crusoe to advance that development and ownership of their modular AI factory projects. Our energy storage hardware, our software, our grid expertise will all be critical enablers for the rapid deployment and the scalable operation of the Crusoe cloud. This is a new and very high-value asset and infrastructure class. And as you see there, significantly increases our ability to generate EBITDA as a company. And it's just at the beginning.

And wrapping it up here for my upfront portion, this all, I think, comes back to how we're maximizing the shareholder value of this company now. Just to map it in the cycle here, you can get a sense of our developed pipeline is large, $4 billion to $5 billion that we're focusing on globally. Contracted, I've mentioned this $1 billion contract backlog we have there at the top. You can go down to the left or the right of that, starting on the left with Asset Vault. We are building assets with a very long technical life. We are signing long term and have signed long-term offtake agreements with every project we brought to the market so far and the ones that we're currently bringing to the market that are under contract and starting construction.

There are synergies we will leverage and uniquely leverage as a company from our energy storage expertise, from our expertise in deploying these assets from commissioning them, having a flawless safety record as we monitor and manage them and at very significant EBITDA margins.

Over to the right, our Energy Storage Solutions side, we will be benefiting from cash flows that are going to be coming from Asset Vault there in terms of the internal contracting and building back using Energy Vault and our core operational teams to build those assets out. the long-term service agreements, of course, that Energy Vault will do to monitor and manage these assets and then various license and royalty streams from the significant IP and technology that we've built up here over time.

In the end, we're going to be a function of both levered free cash flows you see there on the left and the EBITDA that we've already discussed and talked about as well as project free cash flows that are going to be coming from the contributions from the energy storage that we're going to deploy and ultimately, therefore, resulting as we get into anything more predictable, stable, recurring long term, I think if you look at the comparable companies that are doing that, whether that's other IPPs or yieldcos that are public, the multiples are going to change, and we're going to be looking at a much different value proposition and valuation, I think, of our company.

With that, I want to introduce Matt Brezina now for the next section here. Matt Brezina is our new Vice President and General Manager of Asset Vault. We're very excited. Matt's been with the company here about six years now. He's been in the industry now all his career, so in the power industry. He's played a very critical role in the project financing side of the power sector in renewables, a deep expertise in financing at one of the largest international players in renewability in E.ON and RWE.

So, with that, I'll turn it over to Matt Brezina.

Thank you, Rob. Hi, everyone, and thanks, Rob, for the great intro. I want to start off briefly by going over the Asset Vault structure. And how it's capitalized and the use of funds and cash flow distributions from the vehicle.

So as we've announced in our 8-K previously, Asset Vault will be fully capitalized through two different methods. 100% of the common stock will be issued to Energy Vault holdco. And subsequently, 100% of the preferred equity will be issued to Orion Infrastructure Capital or OIC. Those preferred shares will have a perpetual nonvoting rights, which are non-dilutive, as Rob mentioned earlier, and are milestone based. We have the ability to participate in Energy Vault's equity, assuming we achieve various milestones through the deployment of the different tranches up to the $300 million of commitment that they've provided to the Asset Vault entity.

Based on the structuring with the strategic, we will be able -- Energy Vault holdco will be able to fully consolidate Asset Vault, and this will allow us to retain and report all the revenue and EBITDA generated from the project to Energy Vault Holdings.

Now the capital structure in Asset Vault will be a 4:1 ratio. So for every $4 that Orion will contribute into the subsidiary, Energy Vault will be responsible for contributing $1, so an 80-20 split. So in this example, with OIC's commitment up to $300 million of capital, that will trigger if we draw on all $300 million of capital, that will trigger Energy Vault to contribute $75 million to achieve a total amount of $375 million of capital to deploy to accelerate all the growth ambitions that we have in the Asset Vault portfolio. So that's the equity side of the equation.

As Rob alluded to earlier, we're going to continue to raise nonrecourse project level debt and monetize the tax credits generated by projects in the U.S. Over the next six months, we expect to draw roughly $200 million of capital from Asset Vault, which will facilitate the funding and construction, not only for the SOSA project that we just acquired in Texas last week, but also the Stoney Creek project that is in New South Wales, Australia. And in addition, of that $200 million, there will be enough capital left over to continue to acquire Tier 1 projects and portfolios to expand the robust pipeline that we've already created.

Under the Asset Vault structure, the preferred equity owners will receive a quarterly distribution, and it will be the higher of a 12% IRR or 1.65x MOIC over the capital deployed over the life of the vehicle. Now during the first three years, we'll only -- the first three years, we will only include PIK only. And at the discretion of EV, we can choose to pay that down in cash as well from distributions from the projects. After year three, Asset Vault will then provide 8% quarterly cash distributions to OIC with the ability to PIK the remaining 4%. At the end of the redemption period, which is six years, we'll or at EV's discretion, we can call and redeem that capital prior to that six years. But at six years, there will be a redemption period that we will need to make whole OIC for their investment on their or their 12% interest.

So that gives us a three-year runway of being able to collect cash from the projects that we bring to market with the ability to pick at least a portion or all of that interest until the redemption period at the end of the year sits.

I'd now like to introduce Chris Leary, who is the Investment Partner and Head of and for Capital at OIC to give a little background on their execution strategy and the partnership relationship that we're building with them through the asset bought vehicle.

So, Chris, I'll hand it over to you now.

Fantastic. Thanks, Matt, for the intro, and thanks to the entire Energy Vault team for inviting me here to present today. Of course, also appreciate all the investors and analysts that are joining us on the phone.

I'm definitely delighted to be here and even more delighted to kick off the capital partnership with Energy Vault. So maybe what we can do is flip the slide, and I can give a quick introduction on OIC.

We are a multi-strategy capital solutions platform, and we are exclusively focused on infrastructure in North America. Our product is primarily structured debt and structured equity investments, and we've been doing it for over a decade. We've managed now about $5 billion of assets, and we've closed about 45 transactions over that 10-year period, all across the variety of infrastructure verticals with a specific expertise and focus on sustainable power and also storage and related assets. In fact, our investment in Asset Vault here is #45 in our most recent and exciting.

Our focus at OIC is actually working with operating companies to help them achieve two goals, specifically minimize dilution, which Rob highlighted upfront and also minimizing loss of control by utilizing accretive capital structure. The companies that we typically work with are innovative companies and businesses that have a strong sustainability profile, exemplified really well by Energy Vault vis-a-vis our investment into Asset Vault. We use structuring as our calling card. Obviously, the outline of our investment that Matt just highlighted does have some complexity to it, but that's something that we don't shy away from. We actually lean into that because often the companies that we're working with are going through an inflection point of growth, where it's incredibly expensive to issue equity relative to the eventual value proposition that they will grow into. So, in short, OIC is a creative capital solutions provider, and we are an entrepreneurial group here at the firm. So we believe that our capital solutions or our entrepreneurs and structured by entrepreneurs here and are excited to partner with Energy Vault.

If we turn the page, we can spend a moment looking at our focus and portfolio. So this is the entirety of the investments that we've made across North America. Obviously, you can see the different infrastructure sectors that we have and continue to invest into. But we've actually made a number of investments into sectors that are very similar and complementary to what the folks at Energy Vault are doing here in Asset Vault. Specifically, we've actually created in the past life, a solar IPP called K Road Power as the principals here. So we know what the value proposition entails to be an asset owner. Secondarily, we've made an investment into a listed company called Gevo in a subsidiary of the listed business in a similar format to what we've done here in Asset Vault. We've also invested in the fuel cell business, which is incredibly relevant to our underwriting of the Calistoga Resiliency Center in California. And we've also backed an EPC business called Radiance. So obviously, a lot of similarities across the value proposition at Energy Vault here.

So flipping to the next slide, if we could do. I'm not going to cover it in the same level of detail that the Energy Vault team has and will continue to discuss. But I believe fundamentally, the transaction combines the best attributes from both parties, specifically project development and operational know-how from the robust Energy Vault team. Combined with the capital and investment experience in the sustainable power space from OIC, I believe that we're ready to execute and have a long runway of development projects to continue to partner on vis-a-vis the Asset Vault structure.

I strongly believe and OIC strongly believes it's a great opportunity to get long energy storage assets in light of the increasing power demand across the country, partially driven by the AI phenomenon that we're going through right now. We think it's a great story for increasing power demand and increasing price volatility that we all experience together vis-a-vis our investment into Asset Vault.

So I'll turn it back to Matt to see if there's any other questions from the group, but we can move on.

This is Laurence. I'm just going to take a few questions off the floor that have already come in and then before we move on to Matt's section. So, Rob, we've had a couple of questions from your section.

The first question is from a shareholder. How committed are you to your core energy storage solution businesses? You seem to be very focused on asset bolt. Will you slow down your commercial and technical investments in these businesses?

Okay. Thanks, Laurence. It's a great question. And from our perspective, this is a symbiotic relationship between that expertise that we built and demonstrated, I think, over the last four to five years, in particular, as we began to scale and deliver energy storage platforms. That is a value add and a synergy and a differentiator for why we believe and we know because we've been building them projects at lower CapEx at lower operating expense. And therefore, for Asset Vault now as a platform and as we're investing and shifting to invest more and more in energy infrastructure, that's going to play very strongly for us to be a very strong and larger player here in the coming years in energy infrastructure.

So I will say that our priorities and investment is going to follow the dollars, obviously. So while we will continue to leverage that expertise and continue to make investments in R&D and core technologies, our focus as a company is going to be on identifying, owning and operating these assets.

I think that creativity and expertise, just as an example, our Calistoga project up in Northern California for PG&E, what did we focus on there, solving a customer problem. What that meant was bringing the best of the best, latest technology to the table to solve that problem not only cost effectively, but sustainably. So we brought together hydrogen fuel cells. We brought together some lithium-ion for specific capability there for grid forming and black start and our software that orchestrated all of those technologies to deliver what's the longest duration and the largest green hydrogen storage project in the world, a two-day duration, 48 hours.

So I use as an example is that core expertise and creativity and solving customer problems, think about unleashing that on some of the challenges that we're seeing in the grid with the data center and the AI build-out. So that's going to be a weapon that we're going to use, and that will go into the way we're going to differentiate and being a very cost-efficient company and a very efficient use of our capital and how we cost effectively deploy the asset infrastructure for energy.

Thanks, Rob. We've got lots of questions, but I'll separate them between the groups. There's quite a lot that are coming in for Michael, for example. I do have one more for you, though, and this is from one of our early investors and shareholders.

Rob, very excited to hear about your collaboration with Crusoe. Can you tell us any more on that impact, timing, et cetera?

Sure. Yes, happy to. I have Marco Terruzzin here in the room with me. So I'll -- let me turn the screen and he can comment on that as well here. Marco?

Thank you, Rob. Definitely, it is an exciting time now in the power industry. At the same time, we are also experiencing new challenges. The grid is undergoing a massive transformation with large load that are coming online. And I think it's extremely exciting to collaborate with Crusoe Energy because we have the convergence of two technological platforms. It's very interesting to -- that we found not only a technological fit, but also a cultural fit with the understanding of the importance of velocity to bring solution to the market. And now in particular, focusing on modular data center and expertise of Crusoe Energy and our technological platforms both from a hardware and software perspective, we will be able to solve a problem that otherwise will be challenging for the grid to overcome.

So, exciting time, and I've never been more positive that we can overcome some of this challenge now.

Actually, Marco, just I've got one more question that's just come in for you, if that's okay, before we move on.

I'll just read it out from the screen. This is from Adam Forsyth of Longspur Capital. What is your view on structuring of project offtakes? Are you looking at tolling agreements? Would you leave some merchant exposure open?

Everything in the end goes to the underlying problem that this large load that they are causing to the grid. So the opportunity and the challenge is there. I think that the industry is undergoing new situation. And with the velocity and creativity, we can create a commercial structure that ultimately generate value for the utilities, for the balancing authority and also for the provider of equipment and going from the GPUs and also the infrastructure that will be deployed.

So, for sure, the return on investment will be attractive, and this is what makes this initiative even more exciting.

And Laurence, if I to add there just as a comment to that. But absolutely to the question, signing the long-term agreements to minimize and derisk the project is fundamental. We've done that with all of our projects. Very interestingly, there's other type of instruments that can be used to even get above those long-term contract floors. The merchant side is also interesting for us to participate in what will continue to be a very volatile price environment for power, right? That's why we're in this business, quite frankly, we're one of the reasons.

So, I think, more and more, we're seeing a lot of more sophisticated instruments come out to help us deal with some of that merchant risk. But absolutely, as you've heard and seen for our first projects, I think getting those contracted for the long term is fundamental for us.

Thank you very much.

So, with that, we're going to hand back to Matthew Brezina.

Thank you, guys. I kind of want to jump into the Asset Vault portfolio, the project portfolio, kind of how we evaluate our assets that come across our desk, what our due diligence and screening process looks like and then how do we make the determination to include those assets into our portfolio.

So we take a -- it's simplified, but we take it into four larger buckets: developer reputation, project economics, project risk and project geography. On the developer reputation, we've, in the last 18 months, have developed strong relationships with Tier 1 developers, both on the IPP side. So think of the RWE, Orsted, EDF, NextEra as well as the development flip shops. So the smaller undercapitalized developers who bring projects to NTP and then sell to the Tier 1 IPs like RWE, EDF, et cetera.

So over the last 18 months, building those relationships, getting to know each other, how we work and operate has led to an influx of portfolios, both on the individual asset level as well as the portfolio level to bring them across our desk and be able to work with those developers, whether it's a project that's at NTP, where we can acquire and that's where our expertise really aligns and we can bring the project from NTP to COD or if it is a project that is a little slightly earlier in the development process we are working with those earlier developers to enter into a development service agreement to make sure that we can get the project from the development status that it's at up until NTP.

So we're working with a handful of developers, both on the own and operate side as well as just the development side to make sure that we have a robust -- we're at the nexus of kind of where all developers sit, leveraging our third-party energy services, energy storage as a service as well to really facilitate those relationships and make sure that we get the best projects that are out there for acquisition to take a look at and do a proper due diligence on.

The next bucket I'd like to speak to is the project economics. So in addition to developing relationships with the actual developers and IPPs themselves, we've developed a really deep relationship with the leading market consultants and experts in the storage space, such as Ascend Analytics, Orennia, Aurora, a lot of the independent engineers, et cetera, to ensure that we have a very well-rounded view of not only the market dynamics, revenue potential as an asset can generate based on where the project is located, the node location, the market conditions, timing of commercial operations and an ability really to attract an investment-grade offtake.

We've used consultants views and insights as well as performing various sensitivities, not only on the revenue side, but also surrounding the macro environment that we're continually faced with on a daily basis and the change in administrative policies to make sure that we have a well-rounded view of our supply chain, where the costs lie on our base case and potentially where they could fluctuate based on changes in administration policies.

So, with all that in mind, Asset Vault will only pursue and add projects to the pipeline that really exceed our own internal hurdle rate to ensure that we cannot only just achieve the returns that we need on these projects, but maximize and exceed those hurdle rates so that we can continue to bring and maximize shareholder value.

The next bucket I want to speak to is on project risk, and this kind of ties into developer reputation. So we're working with the Tier 1 developers. And to do that, we've created our own internal scoring matrix or criteria to objectively score these projects. And we have over 70 inputs surrounding project development status, economic viability, the list goes on to really make sure that, hey, the projects that we're bringing in that we want to do diligence on, we have an objective view of the risks and the opportunities that these projects bring along with them. And so only certain projects that obtain a certain scoring threshold, which we can get into at a later slide, we'll move on to the next stage of our due diligence.

And most of the projects that do enter the Asset Vault pipeline are mostly later-stage development assets that are near COD or near NTP or very derisked from a development perspective. And so the assets that are further out that I spoke about earlier, 2028, 2029 CODs, we work with those developers to make sure that we can enter into those development service agreements to ensure that we have aligned interest to use their skill set to make sure that we can bring these projects to NTP and successfully reach the project to be placed in service once the development aspect has been fully derisked. Once we get to that NTP phase, that's really where Energy Vault shines. We have that in-house expertise on the energy storage solutions side of the business to ensure that we can execute projects on time and on budget to reach the targeted COD.

The final bucket is the project geography. So to date, we have projects in California, Texas and Australia that we either own, operate or will begin construction in the next year. We want to continue to expand on that geographical diversification, not only in the U.S., also in the Australian market by entering into other government offtake tenders, but especially in the U.S., getting outside ERCOT, CAISO, getting into the PJM markets, the WECC, CERC, SPP, you name it, the developers that I spoke about in that first bucket have a very robust development pipeline that expand to pretty much any TSO that operate inside the U.S.

So we're not taking just, hey, how fast can we deploy megawatts in ERCOT, but where is the load growth going to be? Where are the data centers going to be growing and taking a hard look at those project portfolios to make sure that we can position ourselves to take advantage of the load growth that will be coming out with investment-grade offtakes to continue to expand and leverage the portfolio as we've laid out in the presentation so far.

So, as I previously mentioned, we've built our own internal scoring criteria to try and have an objective view of a project and where it stands today and what needs to be done to get it to NTP and ultimately COD. So the matrix we created can be broken down into 6 main buckets, and they're all risk-weighted to provide a well-rounded objective view on how a project can line up against another project. So project A versus project B, how does it score, where its strengths, where it's weaknesses, and that helps us really focus and prioritize which projects we want to enter in the diligence phase at a more comprehensive level.

These six buckets are broken down into market, where market -- where is it located, how can we optimize the revenue stack, the economics of the project? Is it located in a good node location? Can we enter into capacity schemes, the interconnection status, does it have a signed SGIA, the engineering and construction, how far developed are the engineering and construction design drawings. The project schedule is the project schedule laid out by the developer or the seller achievable based off our in-house expertise. And then finally, land and permitting. Do they own the land? Do they have the permits needed to construct?

So all of those taken into consideration really allow us to fit into really four different buckets. AAA is a 90-plus score, which is at the top tier, call it Tier 1, AA between 80 to 90, single A, 70 to 80 and BBB would be 60 to 70. The projects that we will bring into Asset Vault have to at least clear that A scoring, 70 to 80. And just for reference for the projects that we have acquired, they've all entered into that AA category range. So, Calistoga with the investment-grade offtake the PG&E, Gridmatic with the Cross Trails project, SOSA with investment-grade offtake and then Stoney Creek with a sovereign or government-backed investment or offtake have all scored into the 80 to 90s, more so on the mid-80s to upper 90s scale.

So now moving into the targeted. And we touched on this briefly prior, but the targeted contracted versus merchant exposure. And the way that we see the market, it's a balancing act. We want to have, call it, 75% of the potential revenue from the asset contracted from an investment-grade offtake, but leaving some merchant exposure to capture that upside. And to date, all four projects that we own, operate or are in the middle of constructing have that fit that mix. And on average, across all four of them, we have a 75% investment-grade offtake ranging between 8 to 14 years and then a 25% merchant upside across that portfolio. As you can see, obviously, the more that you have that fully fixed toll, it weighs on the project economics, allows you to lever the project a little bit higher, as you can see by the bottom green bucket.

On the other end of the spectrum, you can have a fully merchant project, and that can allow you to achieve levered returns in excess of 20%, but a loan-to-value ratio of maybe 15% to 20% as far as leverage is concerned. And so we're finding the sweet spot is let's get to that 40% to 50% loan-to-value of project finance, bring in the ITC to lever the project up more, and that leaves 10% to 20% of the equity of the capital stack for Asset Vault to contribute into.

So this not only allows us to maximize the capital stack through project finance debt, but also allows us to maintain and capture the upside through our minority merchant exposure, not only during the life of the offtake, but then once the project is fully derisked from a debt perspective, then we have 100% of the merchant upside from there on out to capture at the Energy Vault developed level.

So moving on to the portfolio mix that we touched on again briefly earlier. You can see that we're more heavily weighted in the U.S., and that is by design. The investment tax credit allows that dollar to go a little bit further than it does in Australia or Italy. We are developing assets in Australia, like the Stoney Creek project that we have in LTESA with the government offtake. There's a few other projects there that we're developing and hoping to bring to market within the next coming years. But the large focus is in the U.S. with really vibrant market. The investment tax credit allows us to lever the project up to 80-plus percent of leverage, really making that Asset Vault dollar go just a little bit further.

To date, we've been heavily focused in CAISO and ERCOT. Some of the developers that we've been working very closely with have a portfolio of stand-alone energy storage assets, not only in ERCOT and CAISO, but also in PJM, which is a very target market for us. SPP, MISO, WECC, CERC, et cetera. There's a wide range and the TSOs are really starting to adapt the idea of stand-alone energy storage and the benefits it can add to their local grid. So we're expanding into doing a lot of due diligence in those other markets to further diversify the footprint that we have in the U.S., but also in Australia and Italy.

And Michael will touch on this next slide here and a little bit later, but just to kind of highlight how the dollar can be stretched in the various markets that we operate with. You can see from the slide that and what we've alluded to in the previous slides, we're heavily concentrated in the U.S. for all the reasons I mentioned on the previous slide. There's just a lower amount of equity that's required to bring project to operations and the market sophistication is growing exponentially.

So based on market trends and cost improvements by deploying all $375 million of capital raised under Asset Vault, we envision reaching upwards of 3.3 to 1.75 gigawatts of deployed projects over the next four years on all the target geographies that we've touched on today.

I want to take just a couple of minutes to go into the two projects that I recently spoke about, the SOSA project and the Stoney Creek project. So the SOSA project was the first acquisition that we had under the Asset Vault platform. We previously had originally contributed Cross Trails and Calistoga. Last week, we finalized the acquisition of SOSA Energy Center, which is 150-megawatt, 300-megawatt hour stand-alone best project located in ERCOT North near College Station, so just north of Houston proper and has a targeted COD date of Q1 of 2027. Asset Vault advanced negotiations with an investment-grade offtake who will provide a revenue floor for the project while allowing the asset to main some level of the upside above the floor.

We recently kicked off the project financing efforts for this asset and are aiming to achieve construction finance rolled into term project finance collateralized by the investment-grade offtake over an eight-year period. This will bring Asset Vault's total installed capacity to 215 megawatts, roughly 700 megawatt hours of assets under operation by the beginning of Q2 of 2027.

And then finally, the Stoney Creek project, which we acquired in Q1 of 2025 is located in New South Wales, Australia. It's been awarded a 14-year LTESA, which is a long-term energy services agreement backed by the New South Wales government. The offtake provides a revenue floor with the ability to participate in upside above the floor, similar to every other contract that we've entered into under the Asset Vault platform. It will be one of the largest, best deployments to date, reaching 1 gigawatt hour threshold and one of the largest eight-hour lithium projects deployed globally. The anticipated COD will be in Q4 of 2027, at which point our operational portfolio will exceed 340 megawatts and over 1.7 gigawatt hours of energy. Asset Vault has also begun raising project finance efforts locally with the desired construction start date at the end of Q1 of 2026.

The final piece I want to touch on is a strategy we call Flex IPP, and that is a way for us to participate in our energy storage solutions part of the business by leveraging our capital, our in-house expertise and showing our customers that we have skin in the game. We want this project to succeed. And the way the Flex IPP works is we enter into what we call a preferred equity structure partnership or a minority ownership where we will help contribute to the project achieving a step-up to increase the ITC and maximize leverage on the project. That is a way for us to not only showcase to our customers that, hey, we believe so much in our product and the way that we can operate, which we'll get to our operational efficiencies at a later point in time, but we're putting our money where our mouth is.

We enter as a preferred equity partner, and we help more efficiently optimize the capital stack, really being a win-win for both sides. It's a win for Asset Vault by deploying capital with collateralized return profile, similar to what we've done with Orion as well as allowing us to deploy our EPC side of the business and LTESA side of the business. So it's really a win-win for the customer as well because they get to maximize leverage, create a higher ITC value and deploy less of their own equity so that they can stretch their dollar further to increase their footprint in their own portfolio.

So, with that, I think the next...

I have some questions. Matt, I have some questions for you.

Sure.

Just coming to a couple of questions for you, Matt. One firstly is from an investor. What is your primary constraint today? Capital, internal resource, attractive opportunities? And if there were no constraints, could you accelerate this rollout?

Yes. I would say it's the latter. It's a buyers' market. There are plenty of opportunities that come unsolicited that come across our desk of individual projects, co-located projects, portfolio projects to look at across all ISOs in the U.S. So it's really a matter of having the capital to deploy effectively. There are plenty of attractive projects out there with the uncertainty of the administration and tariff regime, that brings a lot of uncertainty to developers that may or may not want to build, divest or put projects on hold, which is an opportunity for us to really expand and grow our platform as quickly as possible.

So it's not a lack of resourcing or in-house capabilities, more so a fact of getting the capital in place, which we alluded to earlier, this is Fund I. We want Fund II, we want Fund III. And by raising Fund II, III, IV, et cetera, we can really move as fast as possible as the market allows.

Thank you. Two more, and then we'll move on to Michael. How are you managing the complexity of the business and leveraging the supply chain in this environment as you are now adding asset ownership to the mix?

Yes. We really -- and under Akshay Ladwa's leadership, we've really expanded and grown our supply chain, not only to avoid fiat concerns or tariff concerns, but really the whole mix. And so we have a robust supply chain without getting into too much detail of being able to source from several different countries, many of which are not as highly exposed to the tariff implications that we've seen over the last, call it, six months.

So we -- and we're still continuing to develop that supply chain, both domestically and internationally.

Thanks, Matt. And internationally comment is appropriate because the same question from the same investor. You're already in multiple geographies with multiple customers. What key trends are you targeting or risks you are focused on mitigating?

Yes. I'd say in the U.S. is the main focus just with the administration, you have to try and manage and mitigate if there's going to be a new trade deal that's announced today, right now, potentially or in 6 months. And so having that robust supply chain, specifically for the U.S. in Australia and in Italy, we're not seeing the same headwinds that we're seeing in the U.S. And so with the supply chain that we have, not only out of China, but several other surrounding countries and areas that have not been affected by the administrative tariff implications or fiat concerns, we have a plan A, a plan B, a plan C to really whatever curveball thrill next, we have a plan in place to mitigate that risk.

And so that's mainly focused on the U.S. because that is where we're seeing the most uncertainty on that side of the equation, but also in other regions as well in case that we face those same headwinds.

Thank you.

And with that, I'll hand it over to Michael Beer, our Chief Financial Officer.

Thanks, Laurence. Thanks, Matt. Well, as Rob had articulated, we've made a lot of headway since our May 2024 Analyst Day, in which we outlined the strategy of owning assets. We've been taken it one step further to really execute. And year-to-date, we have made in which we've now placed in service the Calistoga asset, the Cross Trails asset. We completed the project financing around both of those, raising upwards of $35 million and bringing that capital back to our balance sheet, creating a mechanism to monetize around $40 million in ITCs, investment tax credits. And of course, the most recently announced $300 million facility with OIC. Obviously, that sets the stage for the next five years and effectively allowing us to build about a 1.5 gigawatt portfolio of very attractive and diversified assets.

You would have also seen recently, we had raised a $75 million convertible debenture. And so that allows us to continue to co-invest in projects and manage accordingly. But it's not just about balance sheet, it's not just about sort of the dollars and cents. It's also about having a very robust network of partnerships with other financial counterparties, insurance counterparties managing working capital, working with our suppliers for very attractive payment terms. All of this helps ensure a very, let's call it, bankable platform. And it's with that bankable platform that allows us to really accelerate and to leverage what we think is a very differentiated footprint, having the asset ownership arm in concert with the energy storage solutions.

Kind of digging into that symbiotic business mix. Longer term, there will be substantial levered cash flows that will come from those owned assets, long-lived assets, technical life upwards of 20 years. And in the near term, we'll be able to generate significant cash flow associated with self-performing the project integration, the EPC work, software and long-term service agreements. And so there are a number of benefits and synergies really across this platform, and it's highly differentiated.

And as a result, going from 2024, 2025, which was more or less the window that we had looked at during our last Analyst Day to what are we projecting now at the end of the decade in 2030, going from relatively infinitesimal exposure to the asset ownership segment here going to being over 70% of our gross profit by the end of the decade. I think it showcases how the company is going to become far more levered to the repeatable portion of the business rather than to the more lumpy episodic EPC side of the business, but there are significant synergies again, between both of those operations.

The one thing -- there are two things that don't necessarily come through here. On one occasion, these are consolidated financials. And we are consolidating the financial performance of Asset Vault. And as a result, we won't be consolidating the self-performed EPC work that we will be performing on behalf of Asset Vault. But there is significant cash flow accretion associated with that, and we'll talk a little bit more about that in a moment.

The other thing that this doesn't necessarily capture is the benefits associated with the Flex IPP platform. Flex IPP is our co-investment platform that allows us to take minority investments for third-party projects. That obviously drives additional third-party work, but there's also going to be added contribution, return on investment that would be included below the gross profit line, below the EBITDA line in other income.

The other thing I would highlight, and we've not talked about this, the company does have tax loss carryforwards and accelerated depreciation that will shield, we think, a lot of the tax liability going forward and allow us to create a bit of a yield vehicle and distribute a far greater proportion of those cash flows than we would otherwise do if we were paying full boat on statutory taxes.

Matt had alluded to this slide, and I think it's important to highlight our geographic presence. So looking at the $375 million in equity capital between both the common equity and the preferred equity within Asset Vault, it allows us to really lever up and build about $1.1 billion to $1.3 billion worth of operating assets. We expect most of those, 2/3 of those, 3/4 of those to be in the United States, where we can, again, stretch those dollars a bit further using those investment tax credit proceeds. And then energy capacity and power capacity, this multiple is really going to be a function of the duration and not all megawatts or gigawatts are created equally. Obviously, we, as a company, have focused on longer duration opportunities. We'll continue to do so.

And case in point is the Stoney Creek project. Stoney Creek is an 8-hour system, 125 megawatt, 1 gigawatt hour of energy storage. And it just goes to show you that over the last couple of years, how battery prices have sort of fallen such that you can now build an eight-hour battery system in a country like Australia with no tax credits and the economics actually do pencil. And so I think our high-level thesis years ago has played out in our favor. But this, again, goes to show you how we're intending on deploying the first $375 million associated with Fund I to build this very substantial portfolio of diversified assets.

And digging into that a little bit, we wanted to provide a bit more fidelity. How is this going to occur over the course of the next three or four years. And we sort of viewed this in really two steps. One, we've already executed on Calistoga and Cross Trails. Those assets are placed in service today. We've recently announced the acquisition of both Stoney Creek and the SOSA assets. Those are out being project financed as we speak. And having a clear line of sight to those four operating assets will drive an exit rate EBITDA of about $40 million in 2027.

Then we look at how we're going to be scaling this portfolio beyond SOSA and Stoney Creek, which are the assets that we've talked in depth about earlier. And we can look at a number of other projects that we're evaluating today. In some cases, we have exclusivity or in negotiations for exclusivity, and we'll look at the timing of deploying these assets, again, largely biased towards the United States, but there are opportunities overseas in Australia and in EMEA. And over time, before 2029, we expect to have upwards of $100 million to $150 million of recurring EBITDA. Obviously, these are levered cash flows, and we'll talk more about that in a moment, but having $100 million to $150 million of target EBITDA exiting 2029, four years from now. This encompasses what we call Fund I. There are going to be future fundings. There are going to be additional opportunities to deploy capital. What we've really built here is the platform, and this platform can scale.

Now looking at an individual project, and this is meant to be generic. This is meant to be for analysts to just understand what does the capital stack look like, how do we think about debt? How do we think about leverage? How do we think about ITCs and how do we think about the equity contribution from both OIC and Energy Vault. And you can see we basically showcased a generic $100 million type project in which obviously, there's going to be project DevEx at the beginning. There's construction CapEx and EPC and integration margin, which our sister company, Energy Vault, as the entity that will be self-performing this CapEx would be the beneficiary of. And when you look at the actual capital stack itself, the sources of that capital, project financing typically comprises around 40% to 50% of the project CapEx. So let's call that $40 million to $50 million.

ITCs are anywhere between 30% to 40%. However, we're also going to be getting the benefit of the fair market value step-up, right? Obviously, assets are worth far more than simply the construction cost. And then lastly, the residual amount would obviously have to be borne by the equity partner, both ourselves and OIC. And so Asset Vault would be contributing anywhere between $10 million and $20 million in that particular example of equity, and it's divided obviously, four parts to OIC, one part to Energy Vault. And these are all to yield a 15% type levered IRR. When we say levered IRR, we're obviously leveraging the ITC benefits. We're leveraging the project financing benefits and leveraging the equity capital by our preferred equity partner, OIC.

Interestingly, there are a number of other sort of intercompany cash flows. And these are worth noting because as you're modeling the business and thinking about this, obviously, Asset Vault is going to be developing assets, going to be contracting with our sister company, the Energy Storage Solutions business for that EPC and integration service. And so that 15% type margin that I had articulated in the prior slide would flow back to Energy Vault. There's also software and long-term service agreements and support services that will be offered by Energy Vault to the Asset Vault portfolio, keeping it relatively asset-light in terms of personnel.

There's also going to be benefits associated with tax loss carryforwards, accelerated depreciation, allowing for this to be a bit of a yield vehicle and allowing for more of that cash flow to be used to both for debt service as well as distributions to our preferred equity partner.

And net-net, at the end of 2029, running with an annualized EBITDA of about $100 million to $150 million. We wanted to look at a pro forma balance sheet, what do we think the debt balance and preferred equity balance would be in that same sort of type time frame. So at year-end 2029, building over $1 billion of operating assets, we would expect to have project debt on the order of $450 million to $550 million, and that's obviously net of any sort of amortization payments and paydown that has occurred over the next five years. The preferred equity, this is assuming all $300 million of OIC's preferred equity is deployed, but just highlighting that there's a 1.65x MOIC or a 12% IRR, whichever is greater. So it gives you a sense. But again, remember, these project EBITDA figures are levered cash flows. And so one also needs to take into consideration the other capital that played a role in us constructing that very attractive portfolio.

And then we wanted to look at as the business is evolving, we believe this platform merits a re-rating, right? Looking at comparable companies and comps in the industry, whether it's a clean energy index, IBP type index, a yieldco type index, these are companies that generally trade on a one-year forward EV to EBITDA of between 15x and 18x. And so obviously, thinking about our company as a platform that can yield $100 million to $150 million of recurring EBITDA exiting 2029. Many of you analysts, obviously, will do the math that you're going to do. But this is how we're viewing the company and why we believe this makes such an attractive investment from our perspective and bringing in our ecosystem partners.

And lastly, I just wanted to highlight, we've not talked about much of the rest of the business this year. Obviously, the contribution from Cross Trails and Calistoga has just started with those assets now placed in service, but wanted to give line of sight around our 2025 objectives. Revenue, again, reiterating guidance at the low end of the revenue range between $200 million and $250 million. Our gross margin expecting to be in that average level of about 14% to 16%, in line with where we've been effectively since we've been a public company. And we expect to end the year with total cash balance of $75 million to $100 million. Obviously, that's going to be dependent upon how we deploy capital and the timing of certain project financings and so forth. So that's the end of my prepared remarks.

Laurence, did we want to perhaps address some Q&A?

Yes. I've got some questions for you, Michael, if that's okay.

Sure.

So first one from Justin Clare of ROTH Capital Partners. What could drive EBITDA to higher end versus the lower end of the anticipated $100 million to $150 million range?

Yes. Terrific question, Justin. So I wanted to dig in a bit more on this slide that I pulled back up here, Slide 35. And you can see, obviously, we have a clear line of sight of how those first four projects are going to be -- the capital going to be deployed in those projects coming online and the timing therein. Obviously, these projects we've talked quite a bit about. There's a lot of detail in the deck. So it should give you a lot of confidence around the certainty of that.

In terms of future projects, we sit at the nexus of some really terrific deal flow. And over the last year, 1.5 years, we've really built out the capability. And as Matt talked about, our ability to screen for those projects and identify those that, frankly, we want to pursue and those where we believe we can leverage our internal capability, whether it's supply chain, whether it's technical capability to extract some additional value. and drive further upside. Also, as we continue to build out our relationship with all of our offtake partners, having that offtake in place and the ability to go to market and have a really optimized capital stack, it all plays into the equation, and this is really very, very important.

But as we've talked about, our ability to lever up that $375 million of asset vault equity, $300 million of which comes from OIC, we believe we'll be able to construct that very attractive, very diversified portfolio. And this is a buyer's market. We have -- we're a glut of riches in terms of opportunities that we tend to deploy capital. And again, this is only the first of multiple funds and future funding rounds associated with this platform. And so here, we're calling it Fund I, Fund II, Fund III, but obviously, it's part of a broader long-term vision of really continuing to build out this portfolio over time.

Thank you, Michael. I have two questions from Tyler Bisset from Goldman Sachs. Oh, sorry, Rob.

Laurence, just to mention just on top of what Michael said to the question of how do we get to the upper end of that. We have not reflected the impact of what's happening in AI infrastructure here, okay? So these are -- we've been talking about the $100 million. You notice we're talking about it as $100 million to $150 million. If you do the math on the 340 megawatts that we've contracted, right? And we've said that's $40 million of EBITDA. If you can do the math on that, that's above $100,000 of EBITDA per megawatt.

So we're already above and you think about 1.5 gigawatt that we've mentioned this is going to enable. So that already gets us close to that $150 million on just the projects we're developing. This is not reflecting what we've announced today, for example, in the collaboration with Crusoe as well as just generally what's going to be happening on the AI side. Go ahead.

Rob. So again, two questions from Tyler Bisset from Goldman Sachs. First one is, so how are you recognizing EBITDA from projects funded by OIC, but the cash is going to OIC, and they get the 12% IRR on top of those cash flows. Won't it be dilutive to repay the OIC funding if you aren't already receiving any cash flow from the projects. Please help me understand the mechanics of these cash flows.

Yes. Great question, Tyler. So, as we've highlighted, these are levered cash flows, right? We are levering our $375 million in equity and adding both project debt and ITCs to build what is the 1.5 gigawatt portfolio of assets. That portfolio of assets is generating $100 million to $150 million of EBITDA. And as we're showcasing here, obviously, there's going to be -- when you do an EV to EBITDA calculation, one would need to remove the net debt and also take into consideration anything else that allow you to generate those levered returns, right? And so that would be inclusive of the paydown of the preferred equity.

It's at our election, how we want to pay down those distributions in the near term, whether it's PIK payment in kind or whether we want to make cash distributions to effectively work down that from a redemption perspective over the next five to six years. So it's really at our election. And obviously, these assets can always be refinanced and so forth going forward.

Now I think what's important here, everything we're talking about is over the next five, six years, these are 20-year useful life assets. And so once the debt is paid down, once these are constructed, once we've satisfied our preferred equity obligation, you then have seemingly 13 to 15 years in which you're going to be benefiting from those recurring earnings streams. So, hopefully, that's helped address the question.

And the second question, Michael, from Goldman Sachs. Is your drawing $200 million all from OIC in the next six months and NLGV has to commit $50 million? Or will you be drawing $160 million from OIC and you're committing $40 million?

Yes, terrific question. So as we mentioned when we closed the transaction, $200 million has effectively already been sort of earmarked. Some of that is associated with the recapitalization of Calistoga and Cross Trails, right? We effectively self-funded that off of our balance sheet before Asset Vault existed. And so now these assets have been injected into the vehicle and in order to preserve the 4:1 ratio around equity dollars, there's a bit of a recap.

Around SOSA and Stoney Creek, just given the CapEx numbers associated with those particular projects and also the consideration where we will be self-performing the EPC work that's what that $200 million capture. So that $200 million is what would be drawn from the OIC funding. Our portion of the contribution is a combination of both cash and services that we're contributing around the construction of those vis-a-vis the EPC and integration capabilities.

Thank you, Michael. One more question. This is from Sid Rajeev of Fundamental Research. What is your gross margin for Asset Vault businesses? Will it be higher than typical IPPs?

Yes. We talked about this a little bit to kind of give you a flavor for the overall mix. The traditional EPC and integration business, we've talked about quite a bit, has an average margin of about 15%, right, anywhere between 15% and 20% sort of historically. In terms of Asset Vault and owned and operated assets, the gross margin on that business is 75% to 85%. So it's substantially different.

Obviously, there's different asset intensities associated with that, but that probably gives you a good sense. And those numbers are really similar to what we disclosed in the past, actually at our prior Analyst Day.

Thank you, Michael.

And with that, I'd like to hand it back now to Robert Piconi.

Okay. Great. Laurence, thank you very much. Just to wrap it up here, one thing to mention. There were quite a few questions coming in on the Q&A. So just to let everyone know, our earnings will be announced in about 1.5 weeks. We will dedicate, I think, some time on that to go through, I think, some of the other questions that have come in and make sure we're providing that visibility. Of course, post earnings, Michael will be available to the analyst community, and we're happy to set up other sessions when we get into the non-blackout period post our earnings.

I think just to wrap it up here now a few things, and I say five things just to mention here. You heard a lot about Asset Vault. That's why we scheduled this to, I think, provide a little bit of a deep dive. I think you got hopefully a sense today of both the structure, how it operates, how cash will flow the fact that we are leveraging these synergies between the expertise we bring to the table, why we believe that's going to result in higher IRRs in terms of as we look at these capital investments and how we're managing that. Infinitely scalable as a platform. Not all the funds we do will be, I think, structured in the same way. I think as we look at different markets, there may be different types of structures that can apply, for example, to different segments and as we think about asset ownership over time.

I think as all of you are aware in the investment community, there is plenty of capital out there. But I think very importantly, we have to be very prudent and judicious, especially with looking at some of the things available in the market. You heard Matt Brezina mention that it is a buyer's market. We get daily unsolicited opportunities but we are very careful also with our process to ensure that we are investing at the right points of interconnect. So hopefully, you've got, I think, from a point one on Asset Vault, a better understanding of some details and how that's going to work and why we're excited about having that vehicle as a platform.

Secondly, this works and we're differentiated because of the nature of the expertise of our team. We're applying 30- to 40-year individuals of experience with the grid, with energy storage, with different technologies with applying software to various technologies and how we ensure safe, reliable, resilient, high availability. I want to emphasize that we have over 99% availability uptime on all the assets we've deployed, whether something we've turned over to customers in our first few years and we're doing a long-term service agreement to monitor or the initial projects that have just come online that we're owning and operating. So I think that's fundamental and should give investors, I think, that confidence.

I'd say third, this is an attractive market, and it's growing. Energy storage is growing 3x to 4x what the growth in that energy demand we're seeing and just generally. I think we're sold out on power in the U.S., for example, at least through 2030 here. So I think being creative of what technology we deploy at what points of interconnect in the grid and working with very innovative groups that are transforming how these assets and infrastructure is getting deployed for AI like Crusoe, for example, I think our knowledge and combining knowledge with other partners and leveraging each other's strengths is going to accelerate how we think about that.

And that gets to the fourth theme that I hope has come out a few times here around speed and velocity. That doesn't mean we're not being prudent with how we deploy capital or jumping to quick decisions. I think we've made those points. But the market is moving. I think those that can get things online reliably and manage assets faster in a fashion that will meet market needs, but give a lot of credibility for how you perform and deliver. I think those companies that have those characteristics are going to be the ones that are successful. So that is definitely -- has been our theme. The last 12 months and for those that follow us closely in terms of how we've invested in the first two projects off of our balance sheet, so using our own cash to invest in these projects and then the confidence to actually get them project financed and then execute and get it done in a very dynamic and volatile market.

Just to highlight, we've had a lot of things going on in the tariff regime here and a lot of the trade discussions that had a big impact on us in the first half of the year in terms of some of the uncertainty of our supply chain. I think Akshay Ladwa, who was mentioned by Matt Brezina here, who's listening in on this call. He's in India this week, has done a great job in managing the supply chain and giving us options regardless of the outcome. But we've had a lot to manage through and I think deal with, but focusing on our customers and executing on our commitments has been fundamental to that. It is a culture we have as a company.

Those that have been investing with us from the beginning, you see how the markets have changed, you see how the dynamics in the market, what's happened with lithium-ion pricing and how that's sort of reset benchmarks for how we think about storage and duration and which technology can apply. We've had to adapt to that. And I think we've done a pretty good job of ensuring that we're always going to be robust here in the market and meeting market needs.

And then finally, and that's what this is all about, this should all show up in the end in profitability and cash flows that drive our share price. And I think what we've presented today and if you look at the nature of what we've executed already, the growth in that backlog, there's a reason that's growing. That is a contracted backlog of about $1 billion right now. It will continue to grow. Despite us getting projects and deployed, we have a large ramp coming this quarter, this Q4 now. We're excited to talk about our Q3 results, which we will be doing, as I mentioned, in 1.5 weeks. But we are -- have quite a lot we're going to be delivering here this quarter.

And while that will then come out of backlog, you can imagine with also having Asset Vault in the platform now and how quickly we went to the very first project there with the 150-megawatt project in Texas we announced just 1.5 weeks ago. You can imagine that a lot of those things as we contract them, and they are going to go into our long-term contract backlog. So that all should be reflected in the confidence then in the future of those cash flows as that backlog grows, this becomes a game of execution. I think we've proven we've been pretty good at that here the last years if we built out energy storage projects and now owning and operating them efficiently in the market.

So, with that, I want to thank everyone for your time and joining. We're, and being efficient with our time, we're going to give people back 30 minutes. We had scheduled this for two hours. And I didn't know if there were any other questions. Laurence, was there anything else that needed to be asked or we're okay?

No, I think you've covered those, Rob. And then we'll compile any others we can, as you said, cover in our earnings call.

Okay. Great. Well, thank you, everybody. Also just a final thanks and call out to all the employees at Energy Vault and the work you're doing every day, the collaboration with our partners, a lot of our investors here and shareholders that have been continuing to invest in the company as we've seen, in particular, the last few months and look forward to sharing more here in the coming weeks. Thanks, everyone.