MacMurray Whale

MacMurray Whale of Cormark Securities questioned whether focusing on currently viable markets like buses could compromise technology development needed for future markets like trucking.

Answer

President and CEO Marty Neese responded that core stack technology improvements are applicable across all verticals. He positioned the truck market as a '2030 and beyond' opportunity, providing sufficient time to adapt. Neese stressed that the current rigorous focus on total cost of ownership (TCO) and delivered value will be beneficial for entering any market, now or in the future.

MacMurray Whale of Cormark Securities raised concerns about whether focusing on currently viable markets like buses could compromise the technology development needed for future markets, such as trucking, which require more significant cost and performance improvements.

Answer

President and CEO Marty Neese addressed this by explaining that core stack technology improvements are fungible and benefit all verticals. He stated that the heavy-duty truck market is viewed as a '2030 and beyond' opportunity, allowing ample time to adapt. Neese emphasized that the current rigorous focus on defining and delivering value based on total cost of ownership will serve the company well in any future market it enters.

MacMurray Whale asked about the customer transition timeline for the new generation product, how the introduction impacts the existing order backlog, and whether the reduced CapEx guidance included spending for the Texas facility.

Answer

CEO Randall MacEwen explained that the transition to the new product varies by customer, with newer clients adopting it faster, particularly in the truck market. He confirmed the current backlog is almost entirely for existing products. CFO Paul Dobson clarified that the previous CapEx guidance did include spending for the Texas facility, which has now been reduced to a de minimis amount for this year pending a final investment decision.

MacMurray Whale of Cormark Securities Inc. inquired about the customer transition timeline for the new generation product, how the order backlog reflects new versus old technology, the impact of cost savings on future backlog value, and whether the Texas facility was included in previous CapEx guidance.

Answer

CEO Randall MacEwen explained that the transition timeline varies by customer, with the current backlog almost entirely comprising existing products. He confirmed the cost per kilowatt is decreasing, necessitating cost reductions to outpace price erosion for margin expansion. CFO Paul Dobson added that previous CapEx guidance included spending for the Texas facility, which has now been reduced to a de minimis amount for this year pending a final investment decision.

MacMurray Whale of Cormark Securities asked about the drivers behind the significant Q4 cost decreases, the sustainability of the current G&A run rate, and the future of provisional pricing.

Answer

Executive Matthew DeYoe attributed cost savings to improved ferrosilicon recycling and replacing contractors with local labor, and confirmed the lower G&A is a good run rate due to a 'draconian' focus on cost control. CEO Ana Cabral Gardner added that provisional pricing is an element of the past, as the company has moved to a 'fixed floating formula' based on demonstrated product value, creating a partnership with clients. DeYoe noted this retains upside price optionality.