Craig Irwin

Craig Irwin with Roth Capital Partners inquired about Willdan Group's 2026 EPS guidance, specifically the impact of the Section 179D tax benefit compared to the previous year, and the potential for this provision to become more favorable. He also asked about the drivers behind the company's significant EBITDA growth and any operational improvements contributing to sustained profitability, as well as the potential for accelerated project completion requests from utilities to drive margins.

Answer

Kim Early, EVP and CFO, clarified that the 2026 guidance assumes the Section 179D provision expires in June 2026 and noted a shift in project types to fewer qualifying buildings. Mike Bieber, CEO, attributed sustained profitability to moving up the value chain, improved back-office cost absorption, and a strategic approach to guidance. He confirmed that utilities are increasingly seeking cost-effective energy efficiency solutions, leading to program growth and continued organic expansion from long-term relationships.

Craig Irwin inquired about Willdan Group's success in the data center market and with utilities, asking if the trend of accelerated project completion requests, which typically drives higher margins, is becoming more prevalent across their utility customer base.

Answer

President and CEO Mike Bieber confirmed that utilities are indeed facing pressure, with generation struggling to keep pace with demand, making energy efficiency a cost-effective resource. He noted that utility programs have grown over time, and the 17% organic growth in 2025 was largely driven by expansion within these long-term utility relationships, indicating the trend is continuing.

Craig Irwin of Roth Capital Partners, LLC inquired about Willdan's capacity for sustained organic growth into 2026-2027, its strategic positioning for grid-side projects following the APG acquisition, the risk profile of its fixed-price contracts, and the potential for booking large-scale contracts over $100 million.

Answer

Director & CEO Michael Bieber attributed the outstanding 23% organic growth to successful cross-selling from recent acquisitions like APG, which is creating numerous opportunities in the data center space. He also highlighted the company's trusted reputation with utilities. EVP & CFO Creighton Kim Early explained that the risk on fixed-price contracts is low as they subcontract much of the work and manage pricing in advance. Bieber confirmed Willdan is pursuing several large opportunities, including a significant contract in New York and multiple projects with RENS in California.

Craig Irwin asked about the sustainability of Willdan's robust organic growth, its positioning for grid-related work following recent acquisitions, the risk profile of its fixed-price contracts, and the pipeline for potential large-scale project awards.

Answer

CEO Michael Bieber attributed the 23% organic growth to strong intercompany collaboration and cross-selling opportunities catalyzed by new acquisitions like APG, particularly for data center clients. He noted their strong reputation with utilities is key. CFO Creighton Kim Early explained that their fixed-price contracts carry relatively low risk as they often subcontract work or are service-based agreements. Bieber confirmed they are pursuing several large opportunities, including a significant contract in New York and multiple projects in California.

Craig Irwin asked about the drivers of Willdan's 23% organic growth, its potential for sustained performance into 2026-2027, the company's positioning for grid-related work following the APG acquisition, the risk profile of its fixed-price contracts, and if any large-scale projects are in the pipeline.

Answer

CEO Michael Bieber attributed the outstanding organic growth to strong intercompany collaboration and cross-selling catalyzed by recent acquisitions like APG, which is opening up data center opportunities. CFO Creighton Kim Early clarified that fixed-price contracts carry low risk due to significant subcontracting and advance material pricing. Bieber confirmed Willdan is pursuing several large opportunities, including a major contract in New York and others with RENS in California, with awards expected in late 2025 or early 2026.

Craig Irwin inquired about the potential impact of tariffs on Willdan's operations, the company's role in addressing the return to secular electric load growth, and the key drivers behind the decision to raise full-year guidance after a strong Q1.

Answer

President and CEO Mike Bieber addressed the tariff issue, stating that while it's a risk for equipment pricing, Willdan has front-loaded purchases for the year and is adding flexible contract terms. He confirmed that the return to load growth, accelerated by AI and data centers, is driving significant customer conversations and demand. Regarding the guidance raise, Bieber explained that Q1 performance exceeded internal forecasts across all business lines, providing the confidence to lift the full-year outlook.

Craig Irwin asked about the revenue ramp-up and potential start-up issues for the renewed LADWP contract, the funding sources and administration of the Regional Energy Networks (RENs), and the potential business impact from a change in the U.S. presidential administration.

Answer

Mike Bieber, President and CEO, explained that the LADWP contract is a recompete, minimizing start-up risks, but revenue will ramp in the second half of 2025 after a brief pause. He clarified that RENs are funded by electricity bill surcharges and overseen by the PUC, allowing for simpler contracts. Bieber also stated that a change in administration is expected to have minimal impact due to Willdan's focus on state and local funding and contractual protections against potential tariffs.

Craig Irwin asked about Willdan's sensitivity to federal versus state energy policy, the impact of rising energy prices on utility commission actions, and the potential for organic growth to exceed 10% in 2025.

Answer

President and CEO Michael Bieber explained that state-level policy is the dominant factor for Willdan's business, noting that the company has performed well under different federal administrations. He confirmed that higher electricity prices are increasing the value and focus on energy efficiency programs. Regarding 2025, Bieber maintained the company's outlook for high single-digit organic growth as a reasonable modeling assumption, while acknowledging the potential to outperform that target.

Craig Irwin from Roth Capital Partners asked for Electrovaya's CapEx outlook for the Jamestown facility, including the quarterly tempo and fiscal year expectations, along with an update on workforce hiring and training. He also inquired about the revenue contribution from Jamestown this year, the timeline for cell manufacturing, and expected cell revenue in fiscal 2026/2027. Finally, Mr. Irwin sought an update on the 45X tax credit, its benefit on equipment purchases, and potential contribution once cells are manufactured in Jamestown.

Answer

CFO John Gibson stated that Electrovaya expects to spend approximately 90% of the $50 million EXIM loan (currently $16 million drawn) by the fiscal year-end, with the majority in Q3 and Q4. CEO Raj DasGupta added that hiring is underway, including a senior individual from LG Chem and other experienced battery manufacturing personnel. Mr. DasGupta confirmed no cell revenue contribution from Jamestown in fiscal 2026, but anticipated some module and system revenue in fiscal Q4, with cell production and potential revenue contribution starting in fiscal 2027. He explained the 45X tax credit involves $10/kWh for module production and $35/kWh for cell production, with the company planning to transition from the module credit to the cell credit once cell production reaches a certain speed.

Craig Irwin with Roth Capital Partners asked about the CapEx outlook for the Jamestown facility, the quarterly tempo of spending, progress on hiring and training the workforce, expected revenue contribution from Jamestown in fiscal 2026 and 2027, and the potential benefit of 45X tax credits.

Answer

CFO John Gibson stated that the majority of the $50 million EXIM loan is expected to be spent on CapEx in Q2, Q3, and Q4 of fiscal 2026. CEO Raj DasGupta noted that hiring for Jamestown is underway, with senior talent from LG Chem and other battery manufacturing sites joining. He confirmed no cell revenue from Jamestown in fiscal 2026, with cell contribution anticipated from fiscal 2027, and some module and system revenue in fiscal Q4 2026. Raj DasGupta also detailed the 45X tax credit benefit, starting with $10 per kWh for module production and transitioning to $35 per kWh for cell production.

Craig Irwin of Roth Capital Partners, LLC sought details on the robotics market, including the breadth of applications and potential for rapid growth. He also asked for an update on rail projects and questioned the shift in strategy towards Class 8 electric trucks, a market the company was previously cautious about.

Answer

CEO Rajshekar DasGupta detailed that the robotics opportunity is dynamic, focusing on 2-5 kWh batteries for applications needing high cycle life and safety, such as warehouse logistics. He noted the rail project stalled due to a partner's loss of government funding. Regarding Class 8 trucks, he explained that failures by competitors using standard automotive batteries have created an opening for Electrovaya's more robust, high-performance technology, making the market more attractive now.

Asked about the mix of forklift battery shipments, progress in market diversification, the status of pack production at the Jamestown facility, and details on the new BMO credit facility's interest rate and usage.

Answer

Forklift shipments were a 50/50 mix of new and existing sites. Market diversification is progressing with repeat orders in defense and scaling activity in robotics. Pack production has already started at Jamestown to add capacity. The new BMO facility offers over 5% interest savings and will be managed tightly to support growth.

Asked for updates on new market penetration, the contribution of new high-power products, the North American supply chain strategy related to the EXIM loan, and the impact of the Jamestown facility on customer discussions.

Answer

The company is seeding new markets (robotics, mining, defense) for future growth (2026+), with new products contributing minimally this year. The Jamestown facility will use a phased approach to a North American supply chain, avoiding PRC components from the start. This domestic manufacturing plan is already attracting new customer interest, including from defense contractors.

Inquired about the ranking of new market opportunities for fiscal 2025, the drivers and outlook for gross margins, and the impact of sustained profitability on customer relationships and winning new business.

Answer

The CEO explained that while material handling will dominate in FY25, rail applications could be substantial, with mining being a major long-term opportunity for FY26 and beyond. He expects gross margins to continue improving due to stable material costs and manufacturing efficiencies. He confirmed that sustained profitability is crucial for securing better financing and attracting new Tier 1 customers who are concerned about the stability of other suppliers.

Craig Irwin asked for a ranking of non-material handling opportunities (e.g., Japan/Sumitomo, mining, high-voltage) by their potential revenue contribution in fiscal 2025. He also inquired about the drivers of the strong gross margins and their potential for future expansion or volatility. Finally, he asked about the significance of sustained EBITDA profitability for strengthening customer relationships, particularly with Tier 1 clients.

Answer

CEO Rajshekar Gupta explained that while material handling will dominate fiscal 2025 revenue, rail applications could be surprisingly substantial. He identified mining and construction as the largest long-term opportunities, with significant revenue expected to begin in fiscal 2026. Gupta anticipates gross margins will continue to improve due to stable material costs and manufacturing efficiencies, with low volatility. He affirmed that six consecutive quarters of positive EBITDA significantly enhances their credibility with both lenders and customers, noting that some new customers are approaching them due to concerns about the stability of their existing vendors.

Craig Irwin of Roth Capital Partners asked for clarification on the accounting treatment of the $500,000 reversal of incentive compensation, specifically how it was allocated between cost of sales and SG&A, and if it would impact future quarters or if bonuses would be restored.

Answer

CFO Kevin Royal explained that the reversal pertained to incentive compensation accrued in Q1, which was reversed in Q2 because performance objectives were not met, particularly in light of the significant customer announcement. He specified that the amount was primarily allocated to SG&A and R&D, with approximately $50,000 in Cost of Goods Sold (COGS), and confirmed it would not affect upcoming quarters.

Craig Irwin asked for clarification on the accounting for the $0.5 million reversal of incentive compensation, specifically how much was allocated to cost of sales versus SG&A, and if it would impact current or future quarters.

Answer

Kevin Royal, CFO of Flux Power, explained that the incentive compensation was accrued through Q1 and reversed in Q2 because objectives were not expected to be achieved, particularly given the significant customer announcement. He confirmed that the reversal would not impact upcoming quarters and was primarily recognized in SG&A and R&D, with approximately $50,000 in COGS.

Craig Irwin inquired about the drivers behind the strong gross margin expansion in the quarter and the company's progress towards its 40% gross margin target. He also asked for an update on the beta rollout of SkyEMS 2.0, including customer reception and how it compares to the initial version.

Answer

Kelly Frey, Chief Revenue Officer, attributed the gross margin improvement primarily to cost input initiatives (60% of the improvement) and reduced warranty-related expenses due to improved product quality. Krishna Vanka, CEO, President & Director, explained that SkyEMS 2.0 was designed with customer feedback to address pain points like charging efficiency and battery overuse, making it mobile-friendly. He noted positive beta feedback from an airline customer and an upcoming rollout to a material handling customer, emphasizing its bundling with battery sales. Kelly Frey further detailed a three-pronged strategy for SkyEMS: bundling with new batteries, upselling to the existing 28,000-unit installed base, and offering advanced reporting/optimization upgrades.

Craig Irwin asked about the commitment of airport ground support equipment (GSE) customers to electrification amidst tariff pressures, the potential ROI and life-cycle benefits of the SkyBMS platform, and whether economic uncertainty is affecting lithium-ion adoption in the forklift market.

Answer

CEO Krishna Vanka responded that GSE customers remain highly committed to their long-term ESG goals, viewing the transition as 'business as usual.' He explained that SkyBMS delivers ROI by enabling remote maintenance and integrating with customer fleet telematics for better optimization. Vanka also noted that tariff challenges for competitors are creating a market share opportunity for Flux in the forklift space, evidenced by increased customer interest and quotation activity.

Asked about the potential for continued balance sheet improvement and positive cash flow, the specific costs related to the restatement and severance, details on recent price increases, and the market opportunity with the new medical equipment customer.

Answer

Executives expect to be breakeven to positive cash flow in Q4. They quantified restatement costs at $1.2M and severance at approximately $400k for the first half of fiscal 2025. Price increases were mid-single-digit on about half the product line, with the full effect coming in H2 FY25. The medical equipment market is viewed as a significant growth opportunity, especially with the trend towards automation.

Commented on the strong gross margins and asked for an update on the path to the 40% target. Also asked a strategic question about potential diversification into adjacent markets like military or industrial batteries.

Answer

Gross margins are benefiting from lower battery pack costs from China, ongoing lean manufacturing efficiencies, and increased pricing leverage due to the company's established reputation for quality and service. The company is actively pursuing adjacent markets to build scale, including recently submitting a bid for a Department of Defense (DoD) project and exploring other opportunities that leverage their core technology.

Inquired about the company's competitiveness and market activity in the airport ground support equipment (GSE) sector, and about planned product certifications (like UL), related expenses, and the R&D spending trajectory, particularly for new initiatives like telematics.

Answer

The GSE market has come back to life post-pandemic, with strong growth and interest from major airlines like Delta. Flux claims leadership in the U.S. GSE market, leveraging its reputation and core competencies. The company will continue to pursue UL certification for new models, viewing it as a competitive differentiator. They can now do most testing in-house, mitigating costs. R&D spending will increase for key initiatives, particularly for developing the telematics platform, including a user GUI and a mobile app.

Craig Irwin from Roth Capital Partners questioned the quarter-over-quarter increase in SG&A and R&D expenses, asking for details on the intentional drivers behind these costs. He also inquired about the confidence in the continued increase of AI revenue mix and the general tempo of the base business, as well as the unusually high 83% GAAP tax rate.

Answer

Bob Daigle, Chairman and CEO of Amtech Systems, attributed R&D increases to accelerated investments in next-generation AI packaging equipment and resources for the specialty chemicals business. SG&A increases were due to consulting and variable compensation costs. He expressed improved visibility and confidence in continued AI momentum, driven by new facility build-outs, but noted less certainty for traditional mature node markets. Mark Weaver, Interim CFO, clarified that the high tax rate was due to U.S. entities being in a loss position with a valuation allowance against deferred tax assets, meaning only foreign entity income was taxed.

Craig Irwin questioned the quarter-over-quarter increase in SG&A and R&D expenses, the confidence in continued growth of AI revenue mix and the general tempo of the base business, and sought clarification on the unusually high 83% tax rate.

Answer

Chairman and CEO Bob Daigle attributed R&D increases to accelerated investments in next-generation AI packaging equipment and resources for semi-fab solutions. He noted G&A increases were due to consulting costs and variable compensation, with some consulting costs potentially decreasing. Mr. Daigle expressed improved visibility and confidence in continued AI momentum, driven by new facility build-outs, but less certainty for traditional mature node markets. Interim CFO Mark Weaver explained the high tax rate resulted from U.S. entities being in a loss position with a valuation allowance against deferred tax assets, meaning tax benefits are not recognized, while foreign entities' income incurs tax.

Craig Irwin inquired about Amtech Systems' visibility with AI customers, including backlog trends and direct investment in facilities. He also asked about potential sublet savings from underutilized facilities and new applications for silicon carbide, specifically as a substrate for AI chips.

Answer

Chairman and CEO Bob Daigle stated that demand from AI customers is strong, with most equipment going into existing facilities, though new facilities are planned. He noted that Amtech can typically book and ship within the same quarter due to efficient manufacturing, with lead times of about six weeks. Daigle estimated annualized savings from subletting underutilized leased facilities in both segments to be between $700,000 and $1 million. Regarding silicon carbide, he mentioned its potential as a consumable if processing migrates to it and highlighted its use in power electronics for data centers, but indicated that its use as a substrate for AI chips is likely 'a ways out.'

Craig Irwin asked about the potential impact of evolving U.S.-China trade tariffs on business activity and how the U.S. initiative to repatriate semiconductor manufacturing could create long-term opportunities for Amtech. He also inquired about the company's role in emerging technologies like diamond wafers and how customers leverage Amtech's expertise in materials processing for cutting-edge applications.

Answer

Robert Daigle (executive) explained that while tariffs have weakened U.S. orders for their China-made reflow equipment, this was more than offset by strong AI-related demand in Asia. He noted the U.S.-based front-end business is less affected. Daigle sees the U.S. repatriation of manufacturing as a long-term positive and is exploring manufacturing in other regions to mitigate tariff risks. Regarding technology, he stated that challenges in advanced AI packaging are expanding the addressable market for their core technologies like chemical-mechanical planarization (CMP), and they are actively using their foundry services to engage with customers on these leading-edge problems.

Craig Irwin of ROTH MKM asked about Amtech's renewed strategic focus following its segment renaming, specifically inquiring about opportunities in AI and data centers, new product offerings, and the growth outlook for its silicon carbide consumables business.

Answer

CEO Robert Daigle explained that the segment renaming provides clearer definitions for its front-end fabrication and back-end packaging businesses. He stated that Amtech is targeting AI growth through its back-end reflow equipment for advanced packaging and is also developing consumables for thermal management. Daigle emphasized a strategic shift to grow recurring revenue from consumables, parts, and services to improve margins and reduce cyclicality. He confirmed strong growth in the silicon carbide consumables business, noting a 28% year-over-year increase at PR Hoffman, and expressed optimism for continued demand driven by new applications beyond EVs.

Craig Irwin asked about Gold.com's ability to maintain inventory for popular SKUs amidst surging demand, particularly concerning its captive mint capacity and combined monthly production. He also questioned the monthly throughput aspirations for the AMGL facility and the feasibility of establishing similar logistics facilities in Europe or Asia. Finally, he sought clarification on the -$1.892 million non-controlling items in Q2 GAAP EPS.

Answer

Gold.com CEO Greg Roberts stated that having their balance sheet and two mints allows them to sell more products than competitors, with anticipated production of over 800,000 ounces this week, up from 200,000 ounces a week mid-last year. He acknowledged some challenges with delayed deliveries and preorders but believes they are gaining market share. For AMGL, Roberts expects monthly throughput to reach 150,000 packages within six months once planned automation and software improvements are online, noting December and January saw over 120,000 packages. He deemed a similar large-scale facility outside the U.S. a significant capital commitment not currently needed for small package delivery. Regarding non-controlling items, Roberts attributed the negative impact primarily to Sunshine Mint's facility consolidation and reliance on U.S. Mint demand, considering it an anomaly expected to improve this quarter.

Craig Irwin with Roth Capital asked about Green Plains' CI score exiting 2025, what's achievable in 2026 beyond the 5-point reduction assumed in the $188 million, and the feasibility with higher capital spending. He also inquired about the potential impact of on-farm practices on CI and the payment terms for third-party financed carbon sequestration equipment.

Answer

Ann Reis, CFO, explained that all facilities qualify for CI capture (below 50 score) in 2026 due to the removal of the ILOC penalty, with Nebraska plants well below 50. She noted the new guidance's inclusion of on-farm practices for CI reduction as a potential upside, which Green Plains will calculate. Regarding on-farm practices, she expressed optimism for value capture, considering their direct purchases from farmers. Will Joekel, VP and Treasurer, clarified that compression equipment liabilities become balance sheet debt upon ownership, with monthly principal and interest payments similar to an amortizing loan.

Craig Irwin from Roth Capital Partners, LLC asked about Green Plains' CI score, specifically what it was exiting 2025 and what's achievable in 2026, questioning if the 5-point assumption in the $188 million can be exceeded with higher capital spending. He also asked for clarification on the payment terms for third-party financed carbon sequestration equipment.

Answer

Ann Reis, Chief Financial Officer, explained that all facilities qualify for CI capture in 2026 with the removal of the ILUC penalty, being below the 50 score, and Nebraska facilities are well below that. She noted the surprise addition of on-farm practices qualifying for CI reduction in the new guidance, which presents an upside opportunity that Green Plains will calculate in the next quarter. Will Joekel, Vice President and Treasurer, clarified that once Green Plains takes ownership of the compression equipment (now for all three Nebraska plants), the liability flips to balance sheet debt, requiring monthly principal and interest payments, similar to an amortizing loan, which will be reflected in interest expense and debt repayments.

Craig Irwin asked about cash needs for Q3, the strength of the ethanol export market, and requested a quantitative EBITDA range for Q3 given the company's high level of hedged production.

Answer

CFO Phil Boggs confirmed Q3 cash flow should be 'strongly positive' and that proceeds from an asset sale were received in July. SVP Imre Havasi described the export market as a sustainable bright spot. Phil Boggs reiterated the Q3 consolidated crush margin outlook of 'mid-teens' but did not provide a specific EBITDA number, despite the high visibility.

Craig Irwin asked about cash needs for Q3, the strength of the ethanol export market, and requested a quantitative EBITDA range for Q3 given the company's high level of hedging.

Answer

CFO Phil Boggs confirmed Q3 cash flow would be 'strongly positive,' including the ~$24M from the Tharaldson sale, and reiterated an expectation for mid-teens consolidated crush margins. SVP Imre Havasi described the export market as a 'bright spot,' with a strong and sustainable outlook driven by demand from Canada, India, and the EU.

Craig Irwin of Roth MKM asked for details on the $50 million cost-saving initiative, progress in the aquaculture market, and the timeline for realizing EBITDA from carbon capture projects.

Answer

Todd Becker, President and CEO, explained that the cost savings stem from rationalizing innovation and research costs as the company shifts to commercialization. He confirmed significant progress in aquaculture with a major sale, reducing the need for direct R&D. He projected the carbon capture in-service date for late Q3 or early Q4 2025, with construction and equipment manufacturing on track.

Craig Irwin asked if the Clean Sugar Technology (CST) start-up confirms prior economic projections and what milestones are needed for a second facility. He also asked about the 50 Pro vs. 60 Pro sales mix and for an update on the Novozymes partnership.

Answer

CEO Todd Becker confirmed the economics for CST remain attractive and that the team is proving the technology at scale, though a decision on a second plant will take more time. He stated that the Novozymes partnership was renewed and that while 60 Pro sales are currently limited, significant volume increases are expected in 2025 as they work with large pet food customers.

Craig Irwin asked about the momentum of NEVI funding driving installations, the runway for financing, and whether states' financial support is becoming more material now that federal uncertainty has passed. He also inquired about the levels of support and subsidy for new stations.

Answer

CEO Rick Wilmer confirmed that NEVI projects are moving forward, with 40 states now active and awarding contracts, and ChargePoint is involved in many. He characterized the support levels as having returned to where they were before the program was paused.

Craig Irwin asked about the current momentum and runway for NEVI funding, specifically whether state-level financing is becoming more material now that federal uncertainty has subsided, and if the levels of financial support for new stations have changed.

Answer

CEO Rick Wilmer confirmed that NEVI projects are moving forward, with 40 states now active and awarding contracts, and ChargePoint participating in many. He characterized the level of support as having returned to where it was before the pause.

Craig Irwin inquired if 'back to office' trends are creating a tailwind for the commercial business and asked about further opportunities to generate cash from the balance sheet, specifically from inventories and prepaids.

Answer

CEO Rick Wilmer noted continued strong growth in the non-retail commercial segment, including workplace, but found it hard to directly correlate with 'return to office' trends. CFO Mansi Khetani identified continued inventory reduction and a lower adjusted EBITDA loss as the two main drivers for improving cash flow, stating that other balance sheet items are relatively stable.

Craig Irwin inquired about the relative revenue contribution from new versus existing products next year and asked about the availability of hardware for the NACS transition and the potential for related service revenue.

Answer

Executive Richard Wilmer stated that fiscal '26 revenue will come almost entirely from the existing portfolio, with new products contributing more significantly in the following year. He confirmed the company is ready for the NACS transition with its 'Omniport' solution, which is shipping soon, and expects customers to spend on upgrades.

Craig Irwin requested the dollar value of the total backlog and the EV backlog, noting that Blue Bird had provided these financial metrics on a quarterly basis in previous earnings calls.

Answer

CFO Razvan Radulescu stated that while they are currently focusing on units, they can provide the requested dollar value details in follow-up calls if specifically requested.

Craig Irwin requested the dollar value of the total backlog and the EV backlog, noting that Blue Bird has provided these financial metrics on a quarterly basis in previous years.

Answer

CFO Razvan Radulescu stated that while the current focus is on units, they can provide the requested dollar value details in follow-up calls if specifically requested.

Craig Irwin of ROTH Capital Partners, LLC requested details on Blue Bird's general pricing strategy cadence beyond tariffs. He also explored the potential to accelerate volume for the new Class 5/6 strip chassis given strong demand for propane, and asked for an outlook on SG&A growth relative to revenue.

Answer

CFO Razvan Radulescu outlined a standard cadence of two price increases per year of roughly 2% to cover inflation, separate from tariff-related adjustments. CEO John Wyskiel described the commercial chassis launch as cautious, with a focus on getting demo units into the field for testing before committing to higher volumes, though he acknowledged capacity exists to meet stronger demand. Radulescu projected that SG&A growth would taper off to low single digits, with revenue growth expected to outpace it in the coming years.

Craig Irwin asked if a favorable resolution to the tariff situation could create upside to the Q4 guidance, what fuel preference customers are showing for the new commercial chassis, and about the potential impact of a competitor reportedly launching a propane bus next year.

Answer

CFO Razvan Radulescu confirmed that since the EV orders are in the backlog, a quick, favorable resolution on tariffs could represent upside, which is reflected in the high end of the Q4 guidance. CEO John Wyskiel noted strong initial interest in the propane version of the commercial chassis. Regarding competition, Radulescu stated they are not aware of any confirmed competitive propane product but remain confident in their established offering, strong brand loyalty, and partnership with ROUSH.

Craig Irwin asked for an update on cost reduction efforts for EV school buses, including work with alternate drivetrain OEMs, and questioned the potential to backfill EV demand with propane buses if federal funding support for EVs were to diminish.

Answer

CFO Razvan Radulescu noted a recent $25,000 EV price reduction as a step toward total cost of ownership (TCO) parity. CEO Phil Horlock added that Blue Bird is actively working with alternative component suppliers and will soon demonstrate a new commercial chassis with a different drivetrain. Horlock confirmed that propane buses are the logical alternative to backfill demand, emphasizing their best-in-class TCO which requires no subsidies, and their ultra-low emissions that already meet 2027 standards.

Craig Irwin asked for details on $6 million in one-time Q4 expenses, clarification on the timing of an expected EV order surge, and commentary on the continuity of federal funding programs under a potential new administration.

Answer

CFO Razvan Radulescu explained the $6 million in one-time costs were mainly higher bonus accruals from record results and are not expected to recur. CEO Phil Horlock clarified that the EV order surge is now expected late in fiscal Q2, as the EPA is granting extensions to customers for infrastructure planning. He also expressed strong confidence in the continuity of the Clean School Bus Program due to its 2021 bipartisan support and alignment with U.S. manufacturing, jobs, and child safety priorities.

Craig Irwin asked for more color on the cross-selling opportunity through the Bowers Group, the speed of integration, and the timeline to achieve a regular mix. He also inquired about Bowers' contribution to fabrication expansion, new capabilities, and the importance of Legence's ongoing expansion for capturing increased business.

Answer

Stephen Butts, CFO, and Jeff Sprouw, CEO, expressed excitement about Bowers, noting existing electrical and EMC capabilities in the Northern Virginia region and a head start due to decades-long relationships. Jeff Sprouw clarified that Bowers' 370,000 sq ft fabrication footprint was a positive discovery during diligence, not the initial driver. Stephen Butts added that Bowers brings shared capabilities like process piping and hydronics, providing an East Coast presence, while Legence's current expansion remains crucial for driving capacity and managing workload.

Craig Irwin sought more details on the cross-selling opportunities with the Bowers Group, particularly how quickly these synergies could materialize given Legence's existing EMC capabilities in the region, and the timeline to achieve a regular mix. He also asked about Bowers' contribution to fabrication expansion, whether it introduces new capabilities, and the importance of this expansion for capturing increased business with tier-one customers.

Answer

CFO Stephen Butts expressed excitement about leveraging Bowers' mechanical expertise with Legence's existing electrical and EMC capabilities in the region, noting that while it's not an overnight process, targeting client bases for full-package offerings is a high priority during integration. CEO Jeff Sprouw added that existing decades-long relationships and trust between the companies provide a head start. Stephen Butts confirmed that Bowers brings over 370,000 sq ft of fabrication capability, sharing similar expertise in process piping and hydronics. This expands Legence's fabrication footprint to the East Coast, complementing existing capacity in the West and Southwest, which helps reduce shipping costs and supports increased workload capacity.

Craig Irwin asked for more details on the experience with new NACS connectors, including utilization, Tesla driver behavior, and metrics guiding future adoption. He then inquired about the status of dynamic pricing, its impact on utilization, and future developments. Finally, Mr. Irwin asked about the growth of the autonomous vehicle fleet, revenue recognition for training versus commercial operations, and the correlation to demand growth for EVgo.

Answer

CEO Badar Khan discussed the significant upside of NACS, detailing a thoughtful, data-driven approach to switching CCS cables and plans for a scaled rollout in 2026. For dynamic pricing, Mr. Khan confirmed a 1.0 rollout across the network, achieving double-digit overnight utilization, with a next iteration planned for Q1 2026. Regarding autonomous vehicles, Mr. Khan identified them as a significant upside, explaining the current contract structure of monthly rent per stall. CFO Paul Dobson elaborated on the revenue recognition for long-term AV contracts, which involves a deemed sale and gain on sale.

Craig Irwin from Roth Capital Partners asked for more details on EVgo's experience with NACS connectors, including utilization, Tesla driver behavior, and metrics guiding future adoption. He also inquired about the current status and impact of dynamic pricing across the network, and how revenue recognition works for autonomous vehicle fleet partnerships, particularly regarding training versus commercial operations.

Answer

CEO Badar Khan noted significant upside from NACS, with 100 cables installed by October, and observed higher Tesla driver usage at these retrofit sites. He emphasized a data-driven approach for a scaled rollout in 2026, with new stations including NACS by mid-2026. For dynamic pricing, Khan stated version 1.0 is across the entire network, driving double-digit overnight utilization, with version 2.0 planned for Q1 2026. For AV partnerships, Khan and CFO Paul Dobson explained contracts typically involve a monthly fixed fee per operational stall, with revenue recognition including a gain on sale for long-term contracts when the site goes live.

Craig Irwin of Roth Capital Partners, LLC requested more color on the strong ancillary revenue and its Q4 outlook, asked about key investment priorities, and sought to quantify the impact of the Q2 firmware issue on throughput.

Answer

CFO Paul Dobson attributed strong ancillary revenue to the autonomous vehicle hubs business, which is expected to more than double for the year with a significant Q4 ramp. CEO Badar Khan identified lowering gross CapEx per stall via the next-gen charging architecture as the top investment priority. To quantify the firmware issue's impact, Khan suggested that July's throughput, which approached 300 kWh/stall/day, serves as a good proxy for what Q2's performance could have been.

Craig Irwin asked for an update on the progress of deploying NACS (Tesla) connectors, including the potential scale of the rollout in 2025. He also inquired about the potential for new eXtend partners and the revenue growth shape for the eXtend business in 2025.

Answer

CEO Badar Khan stated that the NACS rollout is in a data-driven technology validation phase to ensure reliability. He anticipates a retrofit rollout of approximately 100-150 NACS connectors in 2025. For the eXtend business, Khan clarified that EVgo is not actively seeking new partners and is focused on its existing relationship with Pilot Flying J (PFJ). He reiterated that eXtend revenue is expected to be broadly flat year-over-year, with a slight weighting towards the first half of 2025.

Craig Irwin from ROTH Capital Partners asked about the growth opportunity from serving the Tesla fleet once NACS connectors are deployed and questioned the potential expense burden and operating leverage from the planned DOE-funded expansion.

Answer

CEO Badar Khan stated that deploying the NACS (J3400) standard is a major growth opportunity, allowing EVgo to attract the roughly 60% of EV VIO that is currently Tesla. He highlighted EVgo's urban-focused network as a key differentiator. Regarding expenses, Khan emphasized that the company expects significant operating leverage from its existing infrastructure and talent, planning a prudent, phased ramp-up of the 7,500 new stalls over five years to maintain its commitment to 2025 EBITDA breakeven.

Asked about Motive's experience with New Jersey's incentive programs, how the combined company will leverage government programs for growth, and the outlook for deliveries into 2026.

Answer

The company highlighted Motive's successful partnership model in New Jersey as a template for national expansion with Workhorse's dealer network. The merger provides a stronger balance sheet, which is expected to unlock orders from large fleets previously concerned about financial stability. New financing will speed up production for voucher-backed orders, but the long-term goal is to lower the total cost of ownership (TCO) to be competitive without incentives.

Craig Irwin of ROTH Capital Partners inquired about the combined company's strategy for leveraging government incentive programs, specifically asking about Motive's history with the New Jersey ZIP program and Hudson County Motors, and how this could facilitate future growth.

Answer

Motive CEO Scott Griffith described the relationship with Hudson County Motors as a successful model for their consultative sales approach, which they plan to expand. Workhorse CEO Rick Dauk added that the combined entity's stronger balance sheet addresses previous customer concerns and positions them to capitalize on restored incentives in states like California. Scott Griffith also emphasized the long-term goal of achieving cost parity with ICE vehicles, independent of vouchers, supported by new financing to improve working capital and shorten delivery times.

Asked about the sustainability of gross margins given the high mix of lower-margin DC fast chargers, the drivers for expected sequential revenue growth through year-end, and the outlook for cash flow improvement in the second half of the year.

Answer

The company expects gross margins to remain at healthy levels, with higher-margin Series and Zometric products balancing the DC fast charger mix. Sequential growth is expected to be broad-based across product sales and services. Cash burn is projected to decrease significantly in the second half due to the elimination of non-recurring costs, annualized savings from workforce reductions, and improved working capital practices.

Craig Irwin asked about Q2 gross margins, specifically the impact of strong DC fast charger sales, and inquired about the drivers for the expected sequential revenue growth through the end of the year. He also questioned the outlook for cash flow and the potential progress toward neutral cash use.

Answer

President, CEO & Director, Michael Battaglia, explained that while DC fast chargers have lower margins, the higher-margin Series and newly acquired Zometric products should help maintain healthy overall margins. He confirmed broad-based sequential growth is expected across product sales and services. CFO Michael Bercovich added that the Q2 cash burn was elevated by one-time costs and that cash flow should improve in the second half due to revenue growth, lower operating expenses, and better working capital management.

Craig Irwin inquired about Blink's gross margin trajectory, the product mix's impact, the strategy behind developing new value-oriented chargers, and details on operating expenses related to achieving EBITDA breakeven, including spin-off costs and non-cash compensation.

Answer

CEO Michael Battaglia explained that a higher mix of Level 2 chargers helped Q1 gross margins and expects margins to remain consistent in the mid-30s range as the company shifts to producing its own L2 units. He detailed the strategic decision to build new chargers in-house to control quality and avoid onerous third-party manufacturing terms, leveraging facilities in Maryland and India. CFO Michael Rama noted that non-cash compensation is stable and that further cost savings are expected from integrating past acquisitions. Battaglia added that the company is pursuing broad cost reductions beyond payroll, such as facilities consolidation and renegotiating software contracts, to support its path to profitability.

Asked about drivers of network utilization, the path to positive EBITDA, potential for gross margin expansion, the sustainability of favorable business mix trends, and the ability to continue generating cash from working capital.

Answer

The company stated that the benefit from NACS connectors is a future tailwind, not a past driver. They declined to give a specific timeline for positive EBITDA but confirmed more cost cuts are planned. Margin expansion is expected more on the owner-operator side. They are optimistic about state contracts and European opportunities. They will continue to implement measures to improve working capital management.

Craig Irwin asked about the sales mix between Level 2 and Level 3 chargers, the contribution from federal versus state subsidies, the corporate partnership funnel's resilience to political changes, and the progress on reducing cash burn.

Answer

COO and CEO-elect Michael Battaglia explained that 2023 had a higher mix of DC fast charger sales due to automotive dealership programs, whereas 2024 has shifted to more Blink-manufactured, higher-margin L2 chargers. He noted that Blink does not heavily rely on subsidies. President and CEO Brendan Jones added that while they participate in government programs, it's not the majority of their business. Regarding corporate partnerships, Battaglia described a dedicated business development team targeting verticals like hotels and retail, with a growing pipeline. On cash burn, he attributed the significant reduction to lower compensation and G&A expenses, providing a solid cash runway.

Asked about the reasons for Xos's outperformance compared to competitors, the status and customer feedback for the MDXT vehicle, and the quantifiable impact of tariffs on the business.

Answer

CEO Dakota Semler attributed their success to a strong team, long-term customer trust, and an adaptive corporate culture. He noted strong interest and ongoing demos for the MDXT truck, with opportunities in both private and municipal fleets. The tariff impact was described as variable (5-15% of ASP) and is being shared with customers to maintain relationships.

Craig Irwin of Roth Capital Partners, LLC asked about the key factors driving Xos's outperformance relative to competitors, the status and customer feedback for the new MDXT truck platform, and the quantifiable impact of recent tariffs on the company's financials.

Answer

Co-Founder, CEO & Chairman, Dakota Semler, attributed the company's success to three core factors: a skilled and adaptive team, deep customer trust built over nearly a decade, and an adaptive corporate culture that enabled them to navigate supply chain disruptions. Regarding the MDXT, Semler confirmed strong commercial interest from national, regional, and municipal fleets following a national demo tour, with some initial sales orders already signed. He also explained that the financial impact of tariffs varies from 5% to 15% of the average selling price depending on the product, and that Xos is sharing this cost burden with its customers.

Craig Irwin from ROTH MKM inquired about the new MDXT platform, focusing on parts commonality, required investment, and market development. He also sought clarity on the revenue recognition timing and margin profile for the 31 UPS units shipped but not yet recognized, and requested an update on the commercial progress and customer interest in the Xos Charge Hub.

Answer

CEO Dakota Semler explained that the MDXT shares over 90% of its components by value with the existing stepvan, requiring minimal incremental CapEx. He noted the MDXT targets a larger addressable market than the stepvan and expects deliveries for the large UPS order to be concentrated in Q2 and Q3 at lower, single-digit margins. COO Giordano Sordoni added that the Charge Hub is seeing strong interest and orders from outside the Xos customer base and that a next-generation version is being planned based on feedback.

Craig Irwin asked about the drivers behind Xos's strong Q4 adjusted gross margin despite lower unit volumes, the business outlook and production capacity for the Xos Hub, the significance of FMVSS certification for the Drivetrain business, and the major improvements in working capital and free cash flow.

Answer

Dakota Semler (executive) attributed the strong gross margins to a favorable product mix, with a higher concentration of unique, high-margin products like the Xos Hub and powertrains. He stated that Hub production capacity is aligned with current demand but can be expanded. Semler clarified that completing FMVSS certification is a key milestone that allows for the sale of production units to end-user customers. He also detailed that working capital improvements stem from a mix shift to strip chassis, better supplier terms, and using floor planning partners to accelerate cash collection.

Inquired about the impact of recent tax credit legislation (45e, 48e) on customer conversations, the outlook for cash flow from inventory liquidation, and the future pace of PPA cash reduction.

Answer

The new tax credits have excited customers, making business cases for electrolyzers and material handling stronger, with healthy growth expected in 2026. The company targets at least another $100 million reduction in inventory this year. The PPA portfolio wind-down is expected to continue at a pace of about $200 million per year, with potential for acceleration next year through early buyouts.

Craig Irwin asked for an update on communications with the Department of Energy (DOE) regarding its loan package and sought to understand the profile of potential outside investors for the Texas project.

Answer

CEO Andrew Marsh confirmed ongoing, regular discussions with the DOE, highlighting continuity in the working-level team and strong local political support in Texas for the project. He stated that construction is expected to begin in Q4. Regarding investors, Marsh identified them as primarily infrastructure funds and noted that clarity on the DOE loan is a key factor for finalizing partnerships.

Craig Irwin asked about the company's operational flexibility if the DOE loan is not funded, the customer value proposition in newer markets, and potential breakthrough hydrogen production technologies.

Answer

CEO Andy Marsh asserted that the business plan for the next two years is not dependent on the DOE loan, as they could bring in equity partners and have strong international growth. EVP Sanjay Shrestha and Marsh highlighted the economic value proposition in e-fuels, ammonia, and heavy-duty mobility. They see long-term potential in using hydrogen from renewables and nuclear to stabilize the grid, driven by continued improvements in stack efficiency and system costs.

Craig Irwin from ROTH Capital Partners posed several strategic questions: the company's operational flexibility if the DOE loan fails, the long-term value proposition for customers in new markets like electrolyzers, and the potential for breakthrough hydrogen production technologies.

Answer

CEO Andrew Marsh stated that a lack of a DOE loan wouldn't dramatically change the next two years, as the company could pivot to a more international focus and bring in equity partners for projects like Texas. Executive Sanjay K. Shrestha affirmed the strong value proposition in electrolyzers for producing hydrogen derivatives and in heavy-duty mobility. Both executives discussed the long-term vision of using hydrogen to stabilize a renewable-heavy grid, viewing nuclear as a complementary, not competing, technology.

Asked about the company's flexibility if the DOE loan fails, the economic value proposition of new products, and the potential for breakthrough hydrogen production technologies.

Answer

The company has contingency plans if the DOE loan doesn't materialize, including bringing in equity partners and leveraging its strong international business. The value proposition for new products like electrolyzers is strong, driven by efficiency. They view nuclear and other technologies as complementary long-term solutions for low-cost hydrogen production.

Craig Irwin of ROTH Capital Partners questioned the path to positive gross margins, a key milestone for investors, and asked if legacy backlog commitments could be a hurdle. He also inquired about the company's strategy regarding hydrogen fuel availability for its customers.

Answer

President and CEO Marty Neese responded that the company is actively working with strategic customers in the backlog to deliver product cost reductions, which simultaneously improves Ballard's margins. On fuel strategy, Neese leveraged his past experience at a hydrogen producer, emphasizing the critical need for 'thoughtful partnerships' with fuel suppliers to deliver a complete end-to-end value proposition and total cost of ownership for customers.

Craig Irwin of ROTH Capital Partners asked about the path to achieving positive gross margins, a key investor milestone, and whether Ballard was adopting a more proactive strategy regarding hydrogen fuel availability for its customers.

Answer

President and CEO Marty Neese explained they are working with customers in the existing backlog to deliver product cost reductions, which improves margins for both parties. On fuel, Neese leveraged his past experience as a hydrogen producer, affirming that thoughtful fuel partnerships are essential for TCO and that a more integrated strategy is being considered.

Craig Irwin asked for clarification on shipment metrics, the outlook for gross margins, and the priorities for the 2025 capital expenditure budget.

Answer

CEO Randall MacEwen clarified that the mix of engine sizes (70kW to 200kW) drives the difference between unit and megawatt shipments. On margins, he and CFO Kate Igbalode explained that improving contribution margin is the highest priority, but achieving positive gross margin will take a couple of years and require more volume. They expect a step-wise improvement in 2025 but not full-year positivity. The CapEx priority is completing Project Forge, along with standard maintenance spending.

Craig Irwin asked about the current pricing environment and customer price sensitivity, the key risks to achieving positive gross margins in Q4, and whether a specific high level of revenue was required to reach that goal.

Answer

CEO Randall MacEwen stated that pricing is not the main driver for smaller, early-stage projects but becomes very important for higher-volume orders. He identified achieving sufficient Q4 revenue as the most significant risk to the gross margin target, as it's needed to cover fixed overheads. CFO Paul Dobson added that other risks include potential customer delivery deferrals, but he expressed confidence due to sharper inventory management and the absence of large expected write-offs like last year.

Craig Irwin of ROTH Capital Partners questioned the current pricing environment and customer sensitivity, and asked about the primary risks to achieving the company's goal of positive gross margins in Q4.

Answer

CEO Randall MacEwen explained that pricing is critical for large-scale orders but less so for smaller, early-stage projects where reliability is key. He identified revenue volume as the biggest risk to achieving positive Q4 gross margin, as sufficient revenue is needed to cover fixed overheads. CFO Paul Dobson added that customer delivery deferrals are another risk, but he does not expect significant inventory write-offs like last year.

Craig Irwin questioned the current pricing environment and whether mix issues were impacting gross margins. He also asked for details on the start-up costs for the new Indiana facility, including hiring and the timeline for these costs to taper off.

Answer

President and CEO John Lowe described the pricing environment as rational and competitive. CFO Jeff Hochstadt elaborated on the gross margin pressure, attributing it to a lower-margin sales mix, higher production costs, and incremental costs from operating two Indiana facilities during the transition. He expects similar pressure in Q2 before improvement in the second half, offset by tariffs. To counter this, the company has initiated SG&A cost reductions. Regarding the Indiana facility, Lowe and Hochstadt confirmed that cost overlap from running both locations will continue through 2025 and was factored into the affirmed guidance, though no specific cost figures were provided.

Craig Irwin asked about Ameresco's process for stress-testing the profitability of its RNG assets given RIN price volatility and questioned the drivers behind the decline in operating expenses despite significant revenue growth.

Answer

CIO Josh Baribeau detailed a thorough vetting process for RNG projects that includes stress-testing scenarios with downward-sloping RIN price forecasts to ensure projects meet their levered teens IRR hurdle rates. CFO Mark Chiplock explained that the decrease in operating expenses was primarily due to the divestiture of their AEG business at the end of 2024 and disciplined cost controls, rather than a major reallocation of personnel.

Craig Irwin asked management to quantify the degree of conservatism in the 2025 guidance due to federal uncertainty and inquired about the potential to expand the ESPC contracting model to non-energy federal projects.

Answer

CEO George Sakellaris stated that while he couldn't provide a specific number, performance could have been 'considerably better' without the political transition, noting some projects were pushed out by about six months. Regarding ESPC expansion, he expressed enthusiasm for applying the concept to other areas like military assets and mentioned data centers as a potential future opportunity the company is exploring.

Craig Irwin from ROTH MKM asked about the mix of state versus federal funding for customers, the status of EPA program payments, the sequential increase in G&A expenses, potential one-time costs from operational consolidation, and the sales outlook for the EV Star vehicle.

Answer

CEO Fraser Atkinson detailed that federal funding remains fluid, but highlighted robust state-level support, including $500 million initiatives in both California and New York. CFO Michael Sieffert attributed the G&A increase to headcount, which is expected to decrease with consolidation, and confirmed no significant one-time charges are anticipated. President Brendan Riley noted rising interest in the EV Star for vocational applications and from customers placing follow-on orders after initial trials.

Craig Irwin of Roth MKM inquired about the size of GreenPower's order book beyond the officially announced 78 units, the expected gross margin progression across different product lines, and the specific composition of the finished goods inventory.

Answer

CEO Fraser Atkinson confirmed the sales pipeline is significantly larger than the 78 units cited, with substantial follow-on orders pending final approvals. He also explained that gross margins, which were low due to plant overhead allocation on limited production, are expected to return to the traditional 16-18% range as throughput increases. CFO Michael Sieffert detailed the finished goods inventory, noting the largest category is the rapidly depleting EV Star Cab & Chassis, along with over 40 various EV Stars and more than 10 Nano BEAST school buses.

Inquired about the company's strategy for addressing charging infrastructure challenges for customers, the state of working capital and its expected impact on cash flow, and the reasons for current gross margin levels with expectations for future improvement.

Answer

The company acknowledged charging infrastructure challenges involving utilities but highlighted the flexibility of the Nano BEAST. Working capital management is focused on aligning finished goods with a build-to-order model, supported by a new credit facility. Gross margins were impacted by initial production costs and one-time inventory write-downs but are expected to improve with increased efficiency and cost stabilization.

Craig Irwin of ROTH Capital Partners asked about the historical and current level of support from the U.S. government for silicon carbide technology. He also inquired about the competitive dynamic, asking what makes Wolfspeed's products 'sticky' and difficult for customers to switch away from, especially during the recent period of financial uncertainty.

Answer

Executive Chairman Tom Werner stated that U.S. government interest is 'growing, and meaningfully so,' driven by national security needs for an American supplier of high-power technology. Werner explained product stickiness by highlighting that material quality is inextricably linked to device yield and performance, making supplier changes risky. CFO Neill Reynolds added that multi-year design-in cycles and an integrated supply chain further solidify customer relationships.

Craig Irwin of ROTH Capital Partners asked for details on the company's $150 million in capital investments, including project timelines and expected returns. He also questioned the company's capital allocation strategy, given its underleveraged balance sheet, and asked about the potential for share buybacks or increased M&A. Finally, he inquired about the company's view on participating in the Sustainable Aviation Fuel (SAF) market.

Answer

EVP and CFO Brian Valentine detailed that capital spending includes the Houston port upgrade, ethanol facility enhancements for corn oil and efficiency, and automation projects in the Nutrient business, with expected returns in the low-double-digits to low-teens. Valentine affirmed they are balancing growth objectives with shareholder returns, noting that market conditions may create more M&A opportunities. President and CEO William Krueger stated that The Andersons is very focused on SAF, monitoring policy and technology, and believes the company is well-positioned to participate as a supplier or investor as the ethanol-to-jet pathway develops.

Asked about the profile of customers for early 2025 deliveries and what kind of public milestones, like order commitments, should be expected.

Answer

The company is focusing on a select few high-volume, multi-year, creditworthy customers whose implementation schedules align with Canoo's scaling ability. This 'judo model' helps control costs. Regarding milestones, Canoo operates like a tech company, treating its plans as proprietary and part of its customers' competitive strategy. Announcements will be driven by customers when they are ready, with some anticipated in the current quarter.

Irwin inquired about the identity and characteristics of Canoo's undisclosed Fortune 100 customers, using the USPS partnership as a reference point for timelines and engagement structures.

Answer

Aquila emphasized the confidential nature of their partnerships, which are designed to provide competitive advantages to high-volume, long-term clients. He stated that their model focuses on creating configurable, scalable platforms and that they are methodical in their execution and disciplined in capital deployment, such as buying manufacturing assets at a discount.

Asked for details on the success in commercial sales, the timeline for price increases to impact gross margins, and whether European manufacturing efficiencies are the key driver for future margin growth. The questions were asked by Andrew on behalf of Craig Irwin.

Answer

Commercial sales are benefiting from a post-COVID return to focus and the growing necessity of EV charging for commercial real estate. The impact of the price increase is already beginning, with about 20% of Q2 sales at the new price, and will become more significant as the old backlog is depleted. European manufacturing provides real, not hypothetical, cost savings (e.g., 2-3% margin improvement from base plates alone) and is a key part of the strategy for further margin enhancement.

Irwin asked for a quantification of savings from the new cost-reduction initiatives, an update on the liquidity outlook including CapEx commitments, and whether there's a potential opportunity from reallocated EPA vouchers due to infrastructure challenges faced by other awardees.

Answer

The company quantified savings from workforce reductions at approximately $16 million per quarter compared to a 2023 baseline, with additional savings expected from subleasing facilities. CapEx for the year is projected to be minimal at around $5 million, and the inventory reduction plan is on track. They see the potential for reallocated EPA vouchers as an opportunity but have not seen it materialize yet.

Craig Irwin asked for details on the Roush contract manufacturing agreement, including the start of production and vehicle qualification. He also inquired about the future cash burn trajectory and how REE will prioritize customer deliveries for 2025.

Answer

COO Josh Tech clarified that Roush will perform full vehicle assembly to REE's certified specifications, with production preparations underway to start in Q4 2024 for 2025 deliveries. CFO Yaron Zaltsman stated that cash burn is expected to continue decreasing as R&D expenses fall, a trend reinforced by cost efficiencies from the Motherson and Roush partnerships. CEO Daniel Barel and CBO Tali Miller added that customer delivery priority is determined by a matrix scoring order size, price, fleet readiness, and future potential.

Asked about REE's delivery priorities for major new customers like U-Haul and Penske, the evaluation criteria these customers use for placing follow-on orders, the company's controlled spending on R&D and G&A, and the nature of a $1.4 million tax provision in the quarter.

Answer

REE will focus on fulfilling its current order book, with the production ramp-up depending on firm orders from major partners. Customer evaluation criteria vary, but positive feedback from demo rides is a key driver for follow-on orders. The company confirmed that spending will continue to decrease to $4-5 million per month as the main engineering phase is complete, with additional cash expected from a UK grant. The tax provision was a one-time, non-cash accounting item related to UK R&D regulations.

Craig Irwin of ROTH Capital Partners inquired about REE's delivery strategy for major new fleet partners like U-Haul and Penske, asking whether the focus is on broad distribution or deep penetration with select clients. He also asked about the specific evaluation criteria these fleets use to determine follow-on orders, the company's control over operating expenses, and sought clarification on a $1.4 million tax provision.

Answer

Executive Daniel Barel explained the goal is to fulfill the existing order book and ramp up production based on incoming orders from partners, noting that evaluation criteria vary by fleet but positive feedback from demo rides is a key driver. CFO Yaron Zaltsman added that monthly spending is expected to decrease to $4-5 million. Regarding the tax provision, Zaltsman clarified it was a one-time, non-cash accounting item related to U.K. R&D regulations and not a cash movement.

Craig Irwin from ROTH Capital Partners asked for a big-picture view on how internal initiatives, like the longer-term layaway program, and external tailwinds, such as the high price of gold, are impacting the business. He also inquired about the growth and expansion plans for the luxury brand, Max Pawn.

Answer

Executive Lachlan Given confirmed that both internal operational execution and external macro factors are driving strong performance. He noted that the layaway program defers sales recognition, which should benefit future quarters. On the luxury front, he stated that Max Pawn is ahead of expectations and gathering momentum, with plans to expand into new U.S. markets in a disciplined manner over the next few years. Chief Financial Officer Timothy Jugmans added that layaway sales will begin to materialize in the coming months and that the company lends against gold based on longer-term price trends, providing a buffer.

Inquired about the drivers of the company's improved cash burn, the long-term applicability of testing efficiencies, what 2023 revenue might have looked like under a less conservative accounting model, and how federal hydrogen infrastructure support is impacting fleet interest.

Answer

Management attributed the reduced cash burn to strategic focus, cost efficiencies, and lower legal fees. Learnings from the comprehensive testing program are considered long-term and are improving fuel efficiency and performance, which will benefit future applications. For revenue, management pointed to the $14.8M remaining performance obligation as an indicator. The federal support, combined with the operational challenges of battery-electric trucks, is increasing fleet interest in hydrogen and providing a clear path for deployment outside of California.

Craig Irwin from ROTH Capital Partners asked about the composition of the $5.6 million in inventory, the number of vehicles available for near-term delivery, and how the $4.5 million in deposits will be converted to revenue. He also inquired about the state voucher programs utilized for the quarter's sales, the progress of the Osceola facility, the accounting for the $27 million state incentive package, and the sustainability of the company's strong gross margins.

Answer

CEO Phillip Oldridge detailed the inventory, including approximately 60 Class 3/4 vans and 25 inbound trucks, and noted that deposits are for new Class 5/6 trucks and school buses scheduled for delivery. He confirmed voucher success in New Jersey and California, alongside non-voucher sales. Regarding the Osceola facility, he outlined an 18-month timeline for full production. CFO Christian Rodich explained the $27 million incentive would be recognized over 8-10 years as various tax rebates and credits. CEO Oldridge attributed healthy gross margins to strong cost controls, in-house engineering, and modest executive compensation, expecting margins to hold or improve as domestic production reduces shipping costs.

Craig Irwin from ROTH Capital Partners asked about the significant Q3 inventory increase, its composition, and liquidation plans. He also inquired about product development for 5G, opportunities in the marine and military markets, and the slower-than-expected international sales growth.

Answer

CEO Arthur Sams and CFO Luis Zavala explained the inventory build-up of engines and components is a strategic move to shorten delivery times for Tier-1 customers and support new product launches, noting most inventory is fungible. Regarding 5G, Sams stated they are working with European equipment makers and developing backup power solutions for micro-cells. He clarified the marine market is a low priority, while the military market offers valuable R&D funding and long-term opportunities. For international sales, Sams acknowledged misjudging sales cycle timelines but remains optimistic due to new regulations in markets like Chile creating demand for their LPG products.

Craig Irwin of ROTH Capital Partners questioned the company's current backlog, the low bookings of $2.7 million in the quarter, and the outlook for near-term orders, including the potential for fast book-and-ship business in Q3.

Answer

CFO Luis Zavala explained that the company could not disclose the current backlog but noted that Q3 is typically a planning quarter for Tier-1 telecom customers, with orders historically increasing in late Q3 and Q4. CEO Arthur Sams added that budget competition and technical uncertainty related to the 5G rollout are causing some short-term order delays. COO Raj Masina confirmed they expect contributions from book-and-ship business in Q3 and that over 90% of the current $7.6 million backlog is expected to ship in the quarter.

Craig Irwin of ROTH Capital Partners asked about working capital management, the nature of current investments in the on-road market, and the potential hurdles for larger opportunities like the USPS vehicle, natural gas compression, and combined heat and power to be included in forecasts.

Answer

CFO Michael Lewis and COO Eric Cohen addressed working capital, noting aggressive collections and payables management, with Cohen highlighting that the pace of inventory reduction accelerated through Q1, giving them confidence in further reductions. Chairman and CEO Gary Winemaster explained that on-road investments include significant one-time costs for durability testing and validation to ensure a high-quality launch. Regarding larger opportunities, Winemaster stated that while they are excited about partnerships like Sterling & Wilson for CHP, they remain conservative and will only include such programs in forecasts once contracts are signed.

Craig Irwin of ROTH Capital Partners inquired about the company's debt covenants, the potential to generate free cash flow by reducing inventory, the oil and gas revenue expectations within the 2016 forecast, and the timeline for new market opportunities like demand response and combined heat and power (CHP).

Answer

CFO Michael Lewis explained the debt covenants, primarily the ABL's trailing 12-month adjusted EBITDA measure, and confirmed a focus on reducing inventory by at least $10 million from the 4.3-liter engine line alone to generate cash. CEO Gary Winemaster added that oil and gas revenue for 2016 is expected to be about half of its 2014 peak and that new opportunities in demand response and CHP should begin contributing in the second half of the year.

Craig Irwin from ROTH Capital Partners asked about the primary drivers for 2016 revenue growth, the competitive dynamic between LPG/gasoline and diesel in China, and potential new products for the oil and gas market.

Answer

Chairman and CEO Gary Winemaster cited growth from 3PI, on-highway markets, and an expanded forklift business in China. He noted the VW scandal has accelerated China's shift from diesel. He also mentioned the delayed Perkins 4000 series and a new 550-kW product for the oil and gas sector. CFO Michael Lewis added that PSI's multi-fuel engine capability (natural gas, propane, gasoline) facilitates quicker customer adoption.

Craig Irwin from Roth Capital Partners asked about the business characteristics enabling PSI to grow while other engine manufacturers face declines, the company's progress toward its $500 million on-road revenue goal, and its current appetite for further acquisitions.

Answer

Chairman and CEO Gary Winemaster attributed PSI's resilience to its fuel-agnostic strategy (gasoline, CNG, LPG), which provides flexibility as fuel prices shift. He confirmed they have the right products and key OEM relationships with Navistar and Freightliner to achieve the on-road goal. Regarding M&A, Winemaster stated the current focus is on organic execution and integrating recent acquisitions, though they remain open to opportunistic situations. COO Eric Cohen added that being a full solutions provider, not just a component supplier, is a key advantage.

Craig Irwin from ROTH Capital Management inquired about the sequential decline in the chemical segment's revenue and gross margins, the company's strategy regarding 'clawback' provisions for the blenders tax credit, the status of the RIN inventory, and the company's M&A strategy given its large cash position.

Answer

VP of Business and Marketing Paul Flynn and CFO Rose Sparks addressed the questions. Sparks attributed the chemical segment's performance to lower volumes in bleach activator products and challenges in the agriculture market. She also confirmed that FutureFuel has contracts with 'clawback' provisions for biodiesel sales, similar to industry peers, and noted that 2 million RINs produced in Q2 were sold in Q3. Regarding M&A, Flynn stated that the company is more active than ever in evaluating acquisitions, focusing on downstream opportunities that complement its existing assets, and has hired dedicated personnel for this effort, though no ideal strategic fit has been found yet.

Craig Irwin of ROTH Capital Partners inquired about the 2016 supply arrangement with P&G, efforts to secure third-party demand for the knobs product, and overall plant utilization. He also asked about the company's status as a blender of record for its biodiesel, the impact of RIN inventory on profitability, and how the company's biodiesel performance compared to competitors in the quarter. Finally, he sought clarification on the potential retained value from a reinstated blender's tax credit.

Answer

Executive VP Paul Flynn stated that while FutureFuel is working to extend its supply agreement with P&G beyond 2016 and grow the knobs business with other parties, he could not provide specifics on signed agreements. He also noted the plant has ample room for growth without giving a utilization figure. CFO Rose Sparks addressed the biodiesel questions, confirming the approximate value of RINs held in inventory was accurate. She explained that Q2 profitability was impacted by a reduced spread on selling prices, the significant RIN inventory build, and unfavorable comparisons to Q1, which had benefited from a retroactive tax credit. Sparks declined to comment on the potential percentage of the blender's credit the company would retain.

Craig E. Irwin of ROTH Capital Partners LLC inquired about several key operational and strategic areas, including the impact of overhead cost allocation on the Chemicals segment due to lower Biofuels revenue, the growth potential of the herbicide intermediate business, and the future of the bleach activator product with P&G and other customers. He also questioned the company's acquisition appetite given its strong cash position and new credit facility, and sought its perspective on the Renewable Fuel Standard (RFS) and its contractual approach to the blender's tax credit.

Answer

CFO Rose M. Sparks explained that excess overhead from the underutilized biodiesel plant was allocated to the Chemicals segment, creating a headwind. She also confirmed that FutureFuel has clawback provisions in its contracts for the blender's credit. EVP Paul M. Flynn added that the herbicide intermediate business is operating near full capacity with growth potential. He noted that while the bleach activator market is declining, discussions with P&G are ongoing and the product is being marketed to other companies. Regarding M&A, Flynn stated the company is positioned for a complementary acquisition in the chemical sector but will not rush. He also expressed support for higher RVOs but remains cautious pending the EPA's final decision.