Derek Soderberg

Derek Soderberg asked for details on annual software fees for new customers as a percentage and inquired about the potential dollar opportunity or number of modules for the 76 million sq ft healthcare distribution center market in the U.S.

Answer

Izzy Martins (CFO, Symbotic) stated that Symbotic does not provide specific color on annual software fees as a percentage, advising to consider the general trend of systems becoming operational. Rick Cohen (CEO, Symbotic) indicated he hadn't calculated the exact opportunity for the healthcare vertical, while Izzy Martins (CFO, Symbotic) commented it would be "quite large."

Derek Soderberg asked about the recurring software fees, specifically if Symbotic could share the annual software fee as a percentage for new customers. He also inquired about sizing the healthcare vertical opportunity in the U.S., asking for an estimate of modules or the total dollar opportunity based on the 76 million square feet of distribution centers.

Answer

CFO Izzy Martins stated that the company does not provide specific percentages for annual software fees, noting that it generally maps to systems becoming operational. CEO Rick Cohen deferred the specific math for sizing the healthcare vertical to Izzy but indicated it would be a 'quite large' opportunity.

Derek Soderberg of Cantor Fitzgerald asked for an assessment of the competitive landscape, particularly concerning emerging technologies like humanoid robots and competitors' robotic truck unloading systems. He also questioned the long-term target for structural gross margins in the Systems segment, given recent innovations.

Answer

Founder, Chairman & CEO Richard Cohen expressed confidence, stating that humanoid robots are better suited for stationary manufacturing tasks, whereas Symbotic's bots operate at high speeds. He views technologies like truck unloading as potential add-ons. CFO Carol Hibbard reiterated that the new structure is a key enabler on their path to achieving a 30% system gross margin, building on improvements from bringing EPC in-house and streamlining assembly.

Derek Soderberg of Cantor Fitzgerald asked for more color on the nature of the ASR revenue and where it is reported in the financial statements. He also inquired if Symbotic is exploring new ways to monetize the vast amounts of data generated by its systems.

Answer

CFO Carol Hibbard clarified that the ASR development and design revenue is reported in the 'Systems' line, while a small amount of recurring revenue for maintaining existing APD systems runs through 'Software' and 'Operation Services'. CEO Rick Cohen stated that they cannot sell customer data, but the insights gained, such as on box shapes and sizes, have helped them redesign systems to be smaller and more efficient, which is factored into their pricing.

Derek Soderberg of Cantor Fitzgerald questioned the sequential decline in software subscriptions and support revenue and asked about the company's vision for adjacent growth opportunities.

Answer

CFO Carol Hibbard explained the sequential software revenue decline was due to a one-time benefit in Q4; normalizing for that, the revenue actually grew sequentially and is expected to continue growing. CEO Rick Cohen identified future growth areas including frozen and perishable automation (part of the Walmart APD project), automating returns, and handling smaller packages, noting the company has been too busy to fully pursue returns yet.

Derek Soderberg asked for a quantification of the total opportunity with Walmex and sought more details on the GreenBox Georgia facility's purpose, as well as the status of the agreement with SoftBank.

Answer

CFO Carol Hibbard declined to quantify the full Walmex opportunity but noted it expands their addressable market into a new region. CEO Richard Cohen explained the Atlanta GreenBox is a multi-tenant profit center and a proof-of-concept for the market. He also confirmed that the partnership structure with SoftBank for GreenBox remains unchanged.

Derek John Soderberg with Cantor Fitzgerald asked if Oklo needs to make prepayments to secure long lead time items in its supply chain and if management could quantify the capital required to ensure access to these items as the company scales.

Answer

CFO Craig Bealmear stated that prepayments for long lead time items are typically in the 10% range and are not significant. He emphasized that Oklo's recent capital raise ensures capital is not a constraint, allowing the company to make prepayments when they lead to better asset price points.

Derek Soderberg from Cantor Fitzgerald asked about the level of prepayments required to secure long lead time items in the nuclear and non-nuclear supply chain and if Oklo could quantify the capital needed to ensure access to these items at scale.

Answer

Jacob DeWitte, CEO of Oklo, indicated that prepayments for supply chain partnerships are typically in the 10% range and not significant. He highlighted that the recent capital raise provides flexibility, allowing Oklo to make prepayments if they offer better asset pricing without capital constraints.

Derek Soderberg of Cantor Fitzgerald asked about the factors behind TerraPower's accelerated regulatory timeline and whether Oklo could experience a similar positive shift due to recent executive orders.

Answer

Co-Founder, CEO & Director Jacob Dewitte confirmed the NRC is responding to policy goals by targeting an 18-month review, down from 24-36 months, and cited Oklo's successful Phase 1 readiness assessment as a positive indicator. He also highlighted that the executive orders could create entirely new, faster licensing pathways, potentially under DOE authorization, which would significantly accelerate deployment.

Derek Soderberg from Cantor Fitzgerald asked for details on the sole supplier agreement with the large medical customer, including the program's history, margin profile, and location. He also inquired about the drivers behind the significant improvement in cash conversion days (CCD).

Answer

CFO Jana Croom clarified that while contract terms are similar, Kimball's role has expanded from PCBAs to being the sole provider of full and final assembly for the customer's respiratory program, which is produced in Thailand. Regarding CCD, she explained the improvement is a return to a more normal level (targeting ~75 days) driven by internal initiatives like AR factoring and supplier financing, rather than a broader industry shift.

Derek Soderberg asked for clarification on the margin outlook, questioning an implied Q4 margin step-down and the trajectory for the next fiscal year. He also inquired about the timing and strategic rationale for the new Indianapolis facility and how it impacts the company's inorganic growth plans in the medical space. Finally, he asked about balance sheet management, including inventory, cash conversion days (CCD), and the potential for continued share repurchases.

Answer

CFO Jana Croom clarified that the company does not expect a 2% operating income margin in Q4; rather, she anticipates a quarter similar to Q3 but maintained conservative guidance due to market uncertainty. CEO Richard Phillips explained the new facility is essential for securing larger medical CMO contracts, which the current facility cannot accommodate, and that the company continues to evaluate inorganic opportunities. Croom confirmed the share repurchase program will continue, noted significant progress in reducing CCD with more room for improvement, and expressed pride in the inventory reduction efforts.

Derek Soderberg of Cantor Fitzgerald inquired about the cost-effectiveness of moving production from Mexico to avoid potential tariffs, asking if Thailand would be a better solution than the Jasper, IN facility. He also asked for an outlook on inventory reduction and future targets for cash conversion days.

Answer

Chief Operating Officer Steve Korn explained that for most products, moving business to Thailand would be a more cost-effective solution to eliminate tariffs from both Mexico and China. Chief Financial Officer Jana Croom, along with Steve Korn, addressed inventory, stating the focus is on reducing inventory days, with a goal of reaching a double-digit number. They confirmed that inventory levels are expected to continue dropping over the next 6 to 12 months.

Derek Soderberg of Cantor Fitzgerald asked about the quarterly trend in tariff impacts, the assumptions for tariff pass-throughs in the updated annual guidance, and the next significant growth opportunities for the rotating electric and braking business segments.

Answer

CFO David Lee explained that the net tariff cost impact decreased significantly to $1.4 million in Q1 from $4.6 million in the prior quarter and confirmed the raised guidance includes pass-throughs without specifying the amount. CEO Selwyn Joffe added that the record sales were driven primarily by organic growth, not tariffs. Joffe then identified major growth opportunities in expanding the Quality Built brand into the professional installer market, growing the newer brake-related product lines, and leveraging their North American footprint for future global expansion.

Derek Soderberg of Cantor Fitzgerald inquired about the reduced tariff impact in Q1 compared to the prior quarter, the assumptions behind the raised full-year revenue guidance, and the next major growth drivers for the rotating electric and braking segments.

Answer

CFO David Lee confirmed the lower tariff impact and noted it would continue to decline, but declined to specify the portion of the guidance raise attributable to tariff pass-throughs. Chairman, President & CEO Selwyn Joffe emphasized that record sales were driven by organic growth, not just tariffs, and highlighted significant opportunities in the professional installer market, brake-related products, and future global expansion.

Derek Soderberg of Cantor Fitzgerald inquired about how tariffs could create a strategic competitive advantage and potentially boost market share for Motorcar Parts of America. He also asked about the expected impact of customer price increases on the company's gross margin for fiscal 2026.

Answer

Selwyn Joffe, Chairman, President & CEO, explained that MPAA's competitive advantage stems from its proactive supply chain adjustments, with less than 25% of products now sourced from China. He noted that competitors holding inventory in the U.S. will face greater cash flow burdens from tariffs. CFO David Lee added that while price increases to cover tariffs could slightly dilute the gross margin percentage, other margin-enhancing initiatives are expected to offset this impact.

Derek Soderberg of Cantor Fitzgerald inquired about the potential impact of the current tariff environment, the specific drivers of the significant year-over-year gross margin expansion, and the company's forward-looking capital allocation strategy.

Answer

Selwyn Joffe, Chairman, President and CEO, stated that the company has implemented tariff surcharges and is well-positioned due to its reduced dependency on China and its global footprint. He attributed margin expansion to broad-based efficiency initiatives and improved overhead absorption from sales growth. CFO David Lee added that future cash flow will be used to continue paying down debt and for opportunistic share repurchases to enhance shareholder value.

Derek Soderberg of Cantor Fitzgerald & Co. asked for details on the $10.5 million contract with the Defense Innovation Unit (DIU), including its purpose and manufacturing location requirements. He also questioned how Amprius is positioning itself to capitalize on the broader DoD push for a domestic drone supply chain.

Answer

President Tom Stepien explained the DIU contract is to expand the Fremont pilot line's capability and capacity, including adding electrode manufacturing, to produce NDAA-compliant batteries primarily for drones. He noted the contract covers over half the project's cost. Regarding the broader DoD opportunity, he emphasized 'velocity,' stating that recent policy changes are accelerating drone adoption, creating a larger market where Amprius's high-performance batteries provide a key differentiation.

Derek Soderberg of Cantor Fitzgerald & Co. sought clarification on the current backlog value, the qualification timeline for the Fortune 500 customer testing the 21700 cell, the gross margin outlook as higher-tech cells are commercialized, and the planned growth CapEx for the remainder of the year.

Answer

CFO Sandra Wallach clarified that remaining performance obligations (backlog) stand at $37.8 million. Executive Kang Sun projected that volume orders from the Fortune 500 customer would likely arrive in late 2026. Wallach added that the SiCore platform, which includes the 21700 cell, is already gross margin positive and will be the primary driver of margin improvement. She also stated that growth CapEx for the rest of the year will be 'very little,' focusing mainly on maintenance.

Derek Soderberg inquired about the criteria for project expansion with Fortune 500 customers, where these opportunities fit within the company's customer categories, and the expected progression of gross margins in the coming year.

Answer

CEO Kang Sun described two key Fortune 500 engagements: one for light EVs requiring battery qualification and another for consumer electronics that is a simple replacement with a custom format. CFO Sandra Wallach explained that gross margin improved to -21% in Q4, driven by the gross-margin-positive SiCore product line, and she expects continued improvement as SiCore sales grow and non-recurring costs from 2024 are not repeated.

Derek Soderberg from Cantor Fitzgerald asked for an update on the UAM and drone market opportunity, including supply chain needs and ramp-up timelines. He also questioned what is required to convert companies trial-testing the Molecular Universe software into joint development partners.

Answer

Qichao Hu, Founder, Chairman & CEO, stated that revenue from drones and UAM has increased as customers seek alternative supply chains, and SES AI is certifying its Korea facility to meet this demand. He noted that production capacity is not a current constraint. Regarding software adoption, Hu explained that the key to converting trial users is demonstrating that Molecular Universe can solve complex problems that the best human scientists cannot. He mentioned that large battery companies are currently testing the platform with such challenges, and success will be a catalyst for widespread adoption.

Derek Soderberg from Cantor Fitzgerald asked for an outlook on the Ag market, questioning if positive factors like trade deals and tax depreciation are enough to spur a recovery or if interest rates remain the key hurdle. He also requested more details on the new strategic investment in Brazil, including how to model its financial impact.

Answer

CEO & President Paul Reitz confirmed that while legislative and trade developments are positive, high interest rates are still the primary factor causing a "pause" in equipment purchasing. He anticipates a 2026 Ag market uptick but noted the timing is unclear. Regarding the Brazil deal, Reitz identified the partner as Roderos and described the initial $4 million investment for a 20% minority stake as a strategic move to create a wheel-tire assembly "one-stop shop," which will not be consolidated initially.

Derek Soderberg asked for clarification on the Q2 EBITDA guidance given the full-quarter tariff impact and questioned if Titan could benefit in the short-term from competitors offering employee buyouts.

Answer

CFO David Martin clarified that the tariff impact on roughly 10% of sales is manageable and that Q2 stability is supported by strategic material sourcing with minimal cost dislocation. CEO Paul Reitz confirmed there is a potential short-term benefit, as changing customer inquiries show a preference for Titan's U.S. production capabilities to mitigate risk. He noted that while Titan isn't always the lowest-priced, its value proposition shines in times of uncertainty, which could lead to market share gains.

Derek Soderberg of Cantor Fitzgerald asked for insight into the demand drivers for the Community, Commercial & Industrial (C&I) market and what is fueling the strong quoting activity in that segment.

Answer

CEO Brandon Moss attributed the C&I business growth to increasing customer understanding of the value proposition of Shoals' kitted solutions, especially for smaller projects where labor is at a premium and supply chains are complex. He stated that business is accelerating as a result of improved commercial and operational execution in this area.

Derek Soderberg of Cantor Fitzgerald asked for a breakdown of the number of car models ECARX will equip in the current year, split between Geely and non-Geely brands. He also asked if U.S. tariffs have impacted conversations with U.S. customers and about the timeline for ECARX's expansion into the U.S. market.

Answer

COO Peter Cirino confirmed a very robust launch pipeline for the year but did not provide a specific number of models. On tariffs, he reiterated that the flexible contract manufacturing model minimizes impact. Regarding U.S. expansion, Mr. Cirino stated that ECARX is already engaged in a few opportunities, expects to ramp up engagement with U.S. automakers in late 2025 and into 2026, with revenue translation to follow a few years later.

Derek Soderberg of Cantor Fitzgerald asked if hardware gross margins are improving on new wins with existing customers and inquired about the biggest growth opportunities for the high-margin software business.

Answer

Chief Financial Officer Phil Zhou explained that hardware margins remain challenged by competition in China, and the company's strategy is to balance this through a portfolio approach, including global expansion and new domestic customers like FAW. He noted that while legacy software products are declining, the software business has strong growth momentum driven by new products like Flyme Auto and Cloudpeak, as evidenced by strong quarter-over-quarter growth.

Sought clarification on the number of AR customer purchase orders, the nature of the second order, and the potential average selling price for these devices. Also asked about the timeline for adding a second high-volume production line.

Answer

Enovix has purchase orders from two AR customers and is making custom cells for both. The ASP premium for this market is 'very nice' due to the battery's importance, though specific numbers were not disclosed. A second production line can be brought online faster than the first by pre-ordering long-lead-time items, with the timeline aligned to the 2026 demand cycle for these products.

Derek Soderberg asked for clarification on the two purchase orders from AR companies and the potential average selling price for that form factor. He also inquired about the timeline to procure and install a second high-volume manufacturing line.

Answer

CEO Raj Talluri confirmed purchase orders from both AR customers, noting the ASPs are 'very nice' and are further enhanced by the ability to deliver full battery packs. Regarding expansion, he clarified that significant demand is expected in 2026. COO Ajay Marathe added that the timeline for a second line will be 'significantly lesser' than the first because they are having suppliers stockpile long-lead-time components in advance.

Derek Soderberg asked about the smart glass market opportunity, including its addressable market size relative to smartphones and the typical battery capacities required. He also sought quantification of the term 'mass production' for the recently announced IoT customer.

Answer

CEO Raj Talluri described the smart glass market as a strong fit for Enovix's technology due to its high power draw and small form factor needs, citing potential for high ASPs. He mentioned industry forecasts of 20-30 million units in the coming years. Regarding the IoT customer, he could not quantify 'mass production' or name the device due to confidentiality agreements.

Derek Soderberg of Cantor Fitzgerald asked what smartphone OEMs currently pay for flagship batteries and requested clarification on the size of the industrial handheld device opportunity.

Answer

CEO Raj Talluri estimated that OEMs pay roughly $1.50 to $2.00 per amp-hour, with a premium for higher energy density, putting an 8 amp-hour battery in the $15-$16 range. CFO Ryan Benton confirmed the industrial handheld opportunity represents a potential for 'multiple million units on an annual basis,' which CEO Raj Talluri noted also includes a replacement battery market.

Derek Soderberg of Cantor Fitzgerald asked how the two cleared milestones with a key smartphone OEM affect the 9-to-12-month qualification schedule. He also requested elaboration on the shareholder letter's commentary regarding industry trends toward supplier diversity.

Answer

CEO Raj Talluri clarified that clearing the two milestones signifies that the qualification process is 'on track' with the agreed-upon schedule. On supplier diversity, he explained that geopolitical factors and tariffs are creating tailwinds for Enovix, as customers are increasingly seeking North American battery manufacturers.

Derek Soderberg inquired about the significance of the new 77-degree hail stow tracker, its potential architectural advantages, and its impact on pricing and margins.

Answer

CEO Kevin Hostetler explained the 77-degree tracker was developed in response to customer and insurer feedback seeking enhanced protection against large hail. Built on the proven DuraTrack and OmniTrack platforms, it's a straightforward enhancement. While not providing specifics, he indicated that such enhancements often create margin opportunities and noted the product received an enthusiastic response at the RE+ conference.

Derek Soderberg from Colliers Securities sought more detail on the automotive segment's upside, asking if upfront payments were a factor and requesting a breakdown of revenue sources between touchscreens and physical buttons. He also questioned the rationale for raising capital given the company's strong cash generation and profitability, and inquired about any M&A activity.

Answer

CFO Aaron Akerman confirmed that upfront, fixed-fee payments from new and existing automotive licensees contributed to the segment's performance. Regarding the capital raise and potential M&A, he stated there were no active M&A engagements and referred to the company's public filings for details on the offering. Interim CEO Jared Smith added that automotive applications include both button and screen implementations across the vehicle, and the mix varies over time.

Derek Soderberg asked about the expected timeline for mid-tier automotive adoption, potential opportunities with Apple's CarPlay system, and the company's plans for its significant cash balance, including potential acquisitions or share repurchases.

Answer

Interim CEO Jared Smith stated that Immersion expects to see continued mid-tier automotive adoption in the current year, with technology cascading down from luxury models, and that revenue from these wins will materialize in subsequent years. Regarding CarPlay, he clarified that Immersion's model focuses on licensing Tier 1 hardware manufacturers, but benefits from any ecosystem trends that drive demand for advanced haptics. CFO Aaron Akerman addressed the cash balance, stating that while the company doesn't pre-announce its plans, the board continuously reviews capital allocation to maximize shareholder value.

Derek Soderberg asked about the company's satisfaction with the Sony PlayStation 5 royalty deal and whether Immersion expects to have more pricing power with future gaming controller customers. He also followed up on sustainable operating expense levels.

Answer

Interim CEO Jared Smith expressed that he is 'very happy' with the Sony license, its economics, and its potential. He added that for other gaming peripherals, ASPs vary but are higher for high-value products. CFO Aaron Akerman addressed operating expenses, stating that the current non-GAAP OpEx range of $17 million to $19 million annually is sustainable and provides ample room for disciplined investment in growth initiatives.