Poe Fratt

Poe Fratt from Alliance Global Partners inquired about the potential rate change for the Fortaleza Knutsen's new charter with KNOT compared to its previous Transpetro contract, the expected number of dry dockings in 2026, the stability of General & Administrative expenses after acquiring the Dan Cisne, and the conclusion of the unit buyback program. Fratt also sought a timeframe for the independent committee's evaluation of KNOT's unsolicited offer.

Answer

Derek Lowe, CEO and CFO of KNOT Offshore Partners, stated that the company does not comment on individual charter rates but expressed satisfaction with the Fortaleza Knutsen's new rate, noting market condition changes since the previous contract. He confirmed an active dry docking schedule for 2026 and indicated that G&A expenses are not expected to materially increase with the addition of one vessel. Lowe also confirmed the conclusion of the unit buyback program at approximately $3 million, short of the $10 million authorization. Regarding the KNOT offer, Lowe referred to the November 3rd press release and 13D filing, declining to provide further comment on the timeline, stating it is for the Conflicts Committee and their advisors to develop.

Poe Fratt from Alliance Global Partners inquired about the potential rate change for the Fortaleza Knutsen's new time charter with KNOT compared to its previous Transpetro contract, the expected number of dry dockings in 2026, the stability of General & Administrative expenses despite a vessel acquisition, the conclusion of the unit buyback program, and a potential timeframe for the independent committee's evaluation of KNOT's offer.

Answer

CEO and CFO Derek Lowe stated that the company is satisfied with the new Fortaleza rate but does not comment on individual rates, noting market condition changes since the previous contract. He confirmed an active dry docking schedule for 2026 and that G&A expenses are not expected to materially change with the addition of one vessel. Lowe also confirmed the unit buyback program concluded at $3 million, short of the $10 million authorization. Regarding the KNOT offer timeframe, Lowe referred to previously announced information from November 3rd, stating no further comment could be provided.

Poe Fratt asked about Tsakos Energy Navigation's fleet renewal strategy, specifically the anticipated asset sales over the next year, given the company's 20-vessel new build program and firm asset values.

Answer

Founder and CEO Nikolas Tsakos stated that the company is negotiating the sale of five first-generation vessels, with plans to potentially double that to 10 vessels over the next 12 months. He projected these transactions would generate approximately $250 million in net cash, sufficient for the new building program.

Poe Fratt asked about Tsakos Energy Navigation's fleet renewal strategy, specifically regarding anticipated asset sales over the next year, given the close to 20-vessel newbuild commitment and firm asset values.

Answer

Nikolas Tsakos, Founder and CEO, indicated that the company is actively negotiating the sale of five first-generation vessels, with plans to potentially double that number to ten vessels over the next 12 months. He projected these transactions would generate approximately $250 million in net cash, which is sufficient to fund the newbuilding program.

Poe Fratt from Alliance Global Partners inquired about Tsakos Energy Navigation's strategic decision to order new VLCC builds versus acquiring existing assets, seeking clarification on the rationale behind this approach and the status of the VLCC options and future charter arrangements. He also asked for an update on the upcoming dividend, potential company restructuring or spin-off plans, and the outlook for operating expenses (OpEx) and general & administrative (G&A) costs for the second half of the year.

Answer

Nikolas P. Tsakos, Founder and CEO, explained that the strong second-hand market made new builds more attractive, allowing them to build environmentally friendly, high-quality sister vessels in Korean yards, which helps maintain lower operating expenses. He confirmed exercising one VLCC option with an additional option secured, noting the hot VLCC market and plans to renew charters for existing VLs before deciding on new build charters. Regarding dividends, Mr. Tsakos indicated a healthy market outlook for a strong dividend. He clarified that the company is not restructuring but is exploring ideas, possibly a separate vehicle for specialized vessels, to enhance shareholder value, though nothing is imminent. For OpEx and G&A, Mr. Tsakos stated a focus on maintaining tight cost control despite inflation, aiming to keep operating expenses competitive.

Poe Fratt, an analyst with Alliance Global Partners, inquired about Tsakos Energy Navigation's strategic decision-making regarding new build VLCC orders versus second-hand acquisitions, seeking clarification on the exercise of vessel options and the timeline for securing tanker charters for these new vessels. He also asked for a preview of the upcoming second-half dividend, an update on the company's exploration of potential restructuring or alternative corporate structures, and the expected direction of operating expenses (OpEx) and general and administrative (G&A) costs for the latter half of the year.

Answer

Nikolas P. Tsakos (Founder and CEO, Tsakos Energy) explained that the company opted for new builds due to the high prices in the second-hand market, leveraging their expertise with first-class Korean yards to build environmentally friendly, regulation-compliant sister vessels, which helps maintain lower operating expenses. He confirmed that the initial VLCC option was exercised, with an additional option secured, and noted strong market appetite for existing VLCCs, while charter decisions for new orders are still early. Regarding the dividend, Mr. Tsakos anticipated a healthy payout. He clarified that the company is not restructuring its debt but is exploring ideas with investment bankers to enhance shareholder value, potentially by creating a separate vehicle for specialized vessels in the next eight quarters, with Tsakos Energy Navigation as the major shareholder. For OpEx and G&A, Mr. Tsakos emphasized hands-on management and efforts to cap inflation issues, expecting to maintain competitive expense levels.

C.K. Poe Fratt inquired about Tsakos Energy Navigation's strategic decision to order new VLCCs versus acquiring existing assets, the status of the VLCC options and future chartering plans, the outlook for the second-half dividend, potential company restructuring or splitting, and the expected direction of OpEx and G&A for the second half of the year.

Answer

Nikolas P. Tsakos, Founder and CEO of Tsakos Energy Navigation, explained that the strong second-hand market made acquisitions pricey, favoring new, environmentally friendly builds from first-class Korean yards to maintain lower operating expenses and address a lagging VLCC portfolio segment. He confirmed exercising one VLCC option with an additional option secured, noting the hot VLCC market and plans to renew existing VL charters with increased base rates and profit-sharing, while new build charters are still early. Regarding dividends, Mr. Tsakos indicated it's early but expects a healthy market to support a healthy dividend. He clarified that the company is not restructuring but is exploring ideas, possibly within the next eight quarters, to create a separate vehicle for specialized vessels to enhance shareholder value, with Tsakos Energy Navigation remaining the major shareholder. For OpEx and G&A, Mr. Tsakos stated that despite inflation, hands-on management and tight controls aim to maintain competitive operating expenses, currently under $10,000 per day for the diversified fleet.

Poe Fratt of Alliance Global Partners inquired about second-quarter new build costs, the bid-ask spread in the S&P market for VLCCs, the company's strategy for selling older assets, the outlook for the second-half dividend, and potential corporate actions to close the stock's valuation gap to its Net Asset Value (NAV).

Answer

Co-CFO Harry Kosmatos detailed upcoming newbuilding payments for Q2 and Q3 2025. Founder and CEO Nikos Takos explained that TEN prefers building new VLCCs against client contracts and is looking to expand in the segment, noting favorable newbuilding prices. Mr. Takos also confirmed plans to sell about six older vessels by year-end, which would generate significant cash. Regarding the dividend, he suggested it would be at least similar to the first half's. On valuation, Mr. Takos and Chairman Takis Arapoglou argued that NAV is an inappropriate metric for TEN's industrial model, which has $3.7 billion in contracted revenue. They suggested EBITDA multiples are more suitable and mentioned a potential spin-off of the LNG and shuttle tanker fleet to better highlight its value.

The analyst inquired about upcoming newbuild payments for the second quarter, the state of the sale and purchase (S&P) market for VLCCs, the company's strategy for selling older vessels, the outlook for the second-half dividend, and potential corporate actions to address the significant discount of the stock price to its net asset value (NAV).

Answer

The company detailed the newbuild payment schedule, noting a ~$17M payment in Q2 and a ~$67M payment in Q3, with financing arranged. They are focused on ordering new VLCCs from top-tier yards rather than buying secondhand. They plan to sell about six older vessels by year-end, generating significant cash. The second-half dividend is expected to be at least similar to the first half's. To address the valuation gap, they highlighted their unique industrial model and mentioned a potential future spin-off of the LNG/shuttle tanker fleet, while dismissing a share buyback.

Poe Fratt of Alliance Global Partners inquired about TEN's capital commitments for newbuilds in Q2, the state of the sale and purchase market for VLCCs, the company's strategy for selling older vessels, the outlook for the second-half dividend, and potential corporate actions to address the significant discount of the stock price to its net asset value (NAV).

Answer

Co-CFO Harry Kosmatos detailed the newbuild payment schedule, clarifying a significant shuttle tanker installment falls in Q3. Founder and CEO Nikos Tsakos explained their focus on building new high-quality vessels against contracts rather than speculating in the S&P market. He also confirmed plans to sell several older ships by year-end to generate cash flow and stated the company hopes to at least maintain the dividend level for the second half. Regarding the stock's valuation, Mr. Tsakos and Chairman Takis Arapoglou argued that NAV is an inappropriate metric for their industrial model, suggesting a potential spin-off of the LNG/shuttle tanker fleet could better highlight its value, and emphasized their preference for dividends over share buybacks.

Poe Fratt with Alliance Global Partners inquired about Chairman and CEO Aristides Pittas's involvement in the acquisition review, the dry dock schedule and long-term charter prospects for the M/V Joanna, the chartering strategy for the newly acquired MR product tanker, and the current S&P market conditions for additional MR acquisitions.

Answer

Chairman and CEO Aristides Pittas clarified that he was not excluded from the acquisition review committee as his family's 8% interest did not constitute an interested party. He also stated that negotiations are underway for a one-year charter extension for the M/V Joanna at current market rates, with maintenance scheduled to allow trading until its 2027 special service. For the new MR tanker, the company plans to utilize the spot market initially due to high rates, while considering longer charters for future expansion. Regarding the S&P market for MRs, Mr. Pittas noted stable prices, softer than a year ago, but not excessively low.

Poe Fratt with Alliance Global Partners inquired about Chairman and CEO Aristides Pittas's role in the independent committee for the LATCO acquisition, the dry dock schedule and long-term charter prospects for the MV Joanna, the chartering strategy for the new MR product tanker, and the current S&P market for additional MR acquisitions.

Answer

Chairman and CEO Aristides Pittas clarified that he headed the acquisition committee as his family's 8% interest did not make him an interested party. He also stated that the company is negotiating a one-year extension for the MV Joanna at current trading levels (high teens) with a short maintenance stop, allowing it to trade until its 2027 special survey. For the MR tanker, Euroholdings plans to utilize the spot market due to high rates but may consider longer charters based on expansion plans. Regarding the S&P market for MRs, Mr. Pittas noted that prices are relatively stable, softer than a year ago but not too low, and difficult to predict future development.

Inquired about the competitive landscape for acquiring modern MR tankers, the company's long-term fleet size target, and the re-chartering prospects for the vessel GM Express, including timing, expected rate, and duration of the next contract.

Answer

The company sees the product carrier market as less crowded than dry bulk or container markets, with manageable competition. They are actively inspecting vessels with the goal of substantial and rapid growth, supported by their major shareholder. They expect to secure a new time charter for the GM Express by the next quarterly meeting at a rate higher than the current one, for a term likely between 12 and 24 months.

C.K. Poe Fratt from Alliance Global Partners asked about the competitive environment for acquiring modern MR tankers and whether Euroholdings had made any bids. He also inquired about the company's long-term target fleet size and the expected timing and terms for the next charter of the vessel GM Express.

Answer

Chairman & CEO Aristides Pittas stated that the product carrier market is less crowded than other shipping segments, and while the company is actively inspecting vessels, no deals have been finalized. He affirmed the goal is for substantial and rapid growth. Regarding the GM Express, Mr. Pittas anticipates it will be re-chartered before the next quarterly call for a 12-to-24-month term at a rate higher than its current one.

C.K. Poe Fratt asked for an update on margin trends halfway through the third quarter and sought more detail on the current M&A environment, including the types of opportunities DTI is seeing.

Answer

CFO David Johnson reiterated that margin compression is anticipated in Q3 and Q4 and is factored into the company's forecast, but declined to provide intra-quarter guidance. President, CEO & Director Wayne Prajon commented on M&A, stating that DTI continues to have meaningful dialogue with potential targets and is actively pursuing good bolt-on and synergistic candidates despite a potentially strained bid-ask spread in the current market.

C.K. Poe Fratt from Alliance Global Partners asked for details on the newbuild vessel program, including the schedule for progress payments and the requirements for securing pre-delivery financing.

Answer

CFO Anastasios Aslidis outlined the newbuild payment schedule, with installments due in late 2025, 2026, and 2027. He confirmed that the company can secure pre-delivery financing from banks for these installments without needing to have a time charter already in place for the vessels.

Asked for details on the newbuild payment schedule for 2026 and 2027, and inquired about the financing requirements for these pre-delivery payments, specifically if a time charter would be necessary.

Answer

Management outlined the payment schedule, with one payment in late 2025, one in 2026, and the remainder in 2027. They clarified that a time charter is not required to secure pre-delivery financing, as banks are willing to finance each installment at approximately 60% loan-to-value.

C.K. Poe Fratt of Alliance Global Partners questioned the payment schedule for the newbuild program for the rest of 2025 and 2026, and asked for the reasons behind the lack of share buyback activity in the first quarter.

Answer

CFO Anastasios Aslidis detailed the newbuild payment schedule, noting a potential $7.2 million payment in Q4 2025, followed by approximately $14.4 million in 2026. Chairman & CEO Aristides Pittas attributed the pause in share repurchases to very limited stock liquidity and a market that was improving through March. He suggested that with the market dropping again in May, buybacks could resume if liquidity allows.

Asked for details on the newbuild payment schedule, the rationale for not installing scrubbers, the current state of the S&P market for potential acquisitions, the timeliness of the NAV calculation, and Q1 bookings to date.

Answer

The company provided a breakdown of newbuild payments for 2026 and 2027, explaining the next payment is in 2026. They decided against scrubbers based on a cost-benefit analysis for smaller vessels. They stated they would need asset prices to drop another 15% before buying. The NAV calculation is current as of year-end, and Q1 TCE rates are below $10k/day but improving.

C.K. Poe Fratt of Alliance Global Partners inquired about the specific asset held for sale on the balance sheet, the company's view on the Sale and Purchase (S&P) market for vessels, details on trade routes experiencing deferrals due to macro uncertainty, and the strategy for the Port Logistics business, specifically regarding organic growth versus potential acquisitions.

Answer

CEO Mark Filanowski identified the asset for sale as the Strategic Endeavor, an older and smaller vessel from a recent acquisition. COO Mads Petersen elaborated that the sale was timed with a pending special survey and that the company is not rushing to acquire a replacement due to current macro uncertainty and asset values. Regarding trade routes, Filanowski mentioned temporary pauses in Far East to U.S. movements due to tariff concerns, which have since resumed, noting that such inefficiencies can create opportunities. He also affirmed that the Port Logistics strategy remains focused on organic growth through leases and licenses, integrating with their core shipping operations rather than pursuing large, capital-intensive terminal acquisitions.

C.K. Poe Fratt of Alliance Global Partners asked for clarification on Genco's strategy for its stock buyback program and requested commentary on a new significant shareholder.

Answer

President, CEO & Director John Wobensmith explained that the stock buyback program is viewed as supplemental to dividends, the primary method of capital return. He stated that no shares were repurchased in the last quarter as market conditions did not warrant it, but the program remains available for periods of downward volatility. Regarding the new shareholder, Wobensmith declined to comment on specific investor discussions but referred to the shareholder's public statements indicating a passive investment.

Poe Fratt of Alliance Global Partners requested details on the potential impact of U.S. trade decisions regarding port fees, referencing a specific deadweight tonnage exemption. He also asked for an update on the market conditions for selling Genco's older, smaller vessels.

Answer

CEO John Wobensmith stated that Genco anticipates 'no impact' from the new U.S. port fees. He explained the minor bulk fleet is exempt due to being under 80,000 deadweight tons, and the Capesize vessels are exempt because they arrive in the U.S. in ballast (empty), which is a separate exemption. Regarding vessel sales, Wobensmith described the market for older ships as 'fairly good' and 'pretty liquid,' noting that recent clarity from the USTR has improved market activity.

C.K. Poe Fratt of Alliance Global Partners inquired about the timing for non-PROFRAC PowerTech revenue to impact results, the potential revenue scale per new customer, expected revenue from the custody transfer business, and an updated outlook for the chemistry segment.

Answer

CEO Ryan Ezell stated that non-PROFRAC revenue will begin in Q3 2025 and accelerate into 2026. CFO Bond Clement added that while it's too early to quantify economics for new smart skids, they could be financially meaningful. For the chemistry business, Ezell anticipates near-term softness in commodity chemicals but expects continued growth in proprietary technologies like complex nanofluids.

C.K. Poe Fratt of Alliance Global Partners sought clarity on the production guidance, asking what conditions would lead to hitting the low end of the range. He also questioned the cost structure, specifically the quarter-over-quarter increase in LOE and the run-rate for G&A. Lastly, he asked about the forward-looking implications of the recent legal settlement and the status of the 'chunkier' M&A pipeline.

Answer

CFO Jimmy Henderson stated there is a 'minimal chance' of hitting the low end of production guidance. President Brian Cree added that it would likely require a significant drop in oil prices causing widespread curtailments. On costs, Cree attributed higher LOE to initial fieldwork on the new Lucero assets, while Henderson pegged the G&A run-rate at mid-$3s per BOE, expecting it to decline with scale. Henderson also quantified the positive impact of the new gas contracts, and Chairman & CEO Bob Gerrity confirmed the M&A pipeline for large assets is the most active he has ever seen, though the company remains disciplined on its high return hurdles.

C.K. Poe Fratt of Alliance Global Partners sought clarity on production guidance, asking what conditions would lead to hitting the low end of the range. He also inquired about the cost structure, specifically the quarter-over-quarter increase in LOE and the expected run-rate for G&A expenses. Lastly, he asked about the forward-looking financial implications of the recent legal settlement and the status of the 'chunkier' M&A pipeline.

Answer

CFO James Henderson stated there is a 'minimal chance' of hitting the low end of production guidance, with President Brian Cree adding it would likely require a significant oil price drop causing operator curtailments. Cree attributed higher LOE to initial fieldwork on the new Lucero assets. Henderson projected G&A to be in the mid-$3s per BOE, expecting it to decline with scale. He also estimated the new gas agreements would have improved first-half results by $2.5-3.0 million. Chairman & CEO Bob Gerrity described the M&A deal flow as the most active in 12 years but stressed that any deal must meet their strict, dividend-accretive return hurdles.

C.K. Poe Fratt from Alliance Global Partners sought clarity on production guidance, asking what conditions would lead to hitting the low end of the range. He also inquired about the cost structure, specifically the quarter-over-quarter increase in LOE and the expected run-rate for G&A. Lastly, he asked about the forward-looking financial impact of the recent legal settlement and the status of the 'chunkier' M&A pipeline.

Answer

CFO Jimmy Henderson stated there is a minimal chance of hitting the low end of guidance, which President Brian Cree added would likely require a significant oil price drop and production curtailments. Cree attributed the higher LOE to initial fieldwork on the acquired Lucero assets. Henderson projected a mid-$3s per BOE G&A run-rate going forward and estimated the new gas contracts would have improved first-half results by $2.5-3 million. Chairman & CEO Bob Gerrity described the M&A deal flow as the most active he has ever seen but reiterated that all deals must meet high, dividend-accretive return hurdles.

C.K. Poe Fratt of Alliance Global Partners asked about the probability of hitting the low end of the 2025 production guidance. He also inquired about the cost structure, specifically the quarter-over-quarter increase in LOE and the expected run-rate for G&A expenses. Lastly, he sought details on the forward-looking impact of the recent legal settlement and the status of the 'chunkier' M&A pipeline.

Answer

CFO Jimmy Henderson stated there is a 'minimal chance' of hitting the low end of production guidance. President Brian Cree added that such a scenario would likely require a significant drop in oil prices causing operator curtailments. Cree attributed higher LOE to initial fieldwork on the newly acquired Lucero assets. Henderson projected the G&A run-rate at mid-$3s per BOE, expecting it to decline with scale, and estimated the new gas agreements would have improved first-half results by $2.5-$3.0 million. Chairman & CEO Bob Gerrity confirmed deal flow for large assets is at an all-time high, but the company maintains strict, dividend-supportive return hurdles.

Poe Fratt asked for details on the NVIDIA DRIVE AGX integration, the strategy behind the new Optus platform, and more color on the customer pipeline. In a follow-up, he inquired about the breakdown of the company's $126 million in total potential liquidity and sought clarification on whether the new engagement with a top-five global OEM was separate from the recently announced $30 million contract.

Answer

CEO Matt Fisch explained that the NVIDIA partnership provides a critical performance benchmark, access to NVIDIA's sales and marketing channels, and a path for Apollo's integration into the Hyperion platform. He positioned Optus as a full-stack solution to accelerate non-automotive revenue by opening the platform to third-party developers. CFO Conor Tierney detailed the pipeline's strength, with over 100 engaged customers and 30 in advanced negotiations, attributing the traction to Apollo's performance and versatility. Regarding the follow-up, Tierney deferred the liquidity breakdown to the 10-Q filing but confirmed the cash balance had more than tripled since quarter-end. Fisch confirmed the top-five OEM engagement is a separate opportunity from the $30 million transportation contract.

Poe Fratt of Alliance Global Partners inquired about the specifics of the NVIDIA DRIVE AGX integration, the strategic role of the new Optus platform, and details on the customer pipeline growth. He later followed up to clarify the components of the company's liquidity and to confirm if the new top-five OEM engagement was separate from the recently announced $30 million contract.

Answer

CEO and Chairman Matt Fisch explained that the NVIDIA certification validates Apollo's performance, provides access to NVIDIA's sales channels, and paves the way for integration into the Hyperion platform. He positioned Optus as a full-stack solution to accelerate non-automotive revenue by leveraging an open platform and a global developer network. CFO Conor Tierney detailed the pipeline's strength, with over 100 engagements and 30 in advanced negotiations across diverse industries. Fisch confirmed the new top-five OEM engagement is a separate opportunity. Tierney deferred the specific liquidity breakdown to the upcoming SEC filing but noted the recent capital raise will accelerate customer deployments.

The analyst inquired about the status and timeline of the MOU conversion, the first-quarter cash balance and cash burn rate, and the impact of the production pause on the order book and the path to revenue. He also asked about the details of the planned corporate restructuring.

Answer

The company confirmed the MOU timeline is on track, with payments already being received. The Q1 cash balance was $61 million, and the monthly cash burn is expected to be reduced from $5-6 million to $3-4 million by year-end. While vehicle delivery revenue is delayed due to the production pause, customer interest in the company's software-defined vehicle technology remains strong, and the company will focus on generating software revenue in the interim. Details on the restructuring will be announced later.

The analyst inquired about the reason for higher G&A expenses in Q4, the reporting methodology for the spin-off in Q1, a discrepancy in the presentation's time charter chart, and the payment schedule for newbuilds.

Answer

The company explained that higher Q4 G&A is due to normal year-end bonuses. For Q1, earnings from the spun-off vessels will be included until the distribution date, with adjusted figures also provided. The chart discrepancy was a web display error. Newbuild payments are zero in 2025, $12 million in 2026, and the remainder in 2027.

The analyst sought clarification on the terms of the company's working capital line of credit and asked for more details on the progress made in securing non-dilutive capital from government loan programs.

Answer

The executive clarified that the credit facility is a 12-month term, not 90 days, explaining that earlier bridge loans were converted into this line of credit. Regarding government funding, he confirmed they have received their first 'letter of encouragement' for a loan program, which is a significant positive development, but the timing of any actual funding is uncertain. The potential funding is described as meaningful for their phased approach.

The analyst asked about the significant use of cash for working capital in Q2, the outlook for working capital in the second half, and whether the Q2 SG&A level is a sustainable run rate.

Answer

The finance executive explained that the Q2 working capital build was due to increased receivables from higher project activity and is expected to become a source of cash in the second half. He also indicated that the Q2 SG&A level is a reasonable run rate for the remainder of the year, given the sustained high project activity.

Inquired about the timing of the VMC 1200's U.S. launch, the status of previously invoiced trucks, the company's pro forma cash position after recent financing, the renewal status of a working capital line, and the composition of the order backlog.

Answer

The company stated the U.S. launch of the VMC 1200 is on track for the second half of the year. About 20-something trucks from a previous batch are still invoiced and awaiting delivery. Recent financing was already included in the Q1 cash balance, so there is no pro forma increase. The working capital line has a two-month extension while a longer one is negotiated. The company declined to provide a detailed backlog split for competitive reasons but indicated the bus order number is still around 100.

Inquired about the truck production run rate, the status of the U.S. dealer network, the reason for 71 invoiced trucks not being recognized as revenue, the decline in the reported backlog, and the status of debt refinancing.

Answer

The company can produce more than the 115 trucks made in Q1 but is focused on selling current inventory. They are just beginning to prospect for U.S. dealers. The 71 trucks were not recognized because dealers were finalizing financing and awaiting incentive programs. The backlog decline was attributed to deliveries and currency fluctuations, not cancellations, with the actual figure being closer to $150M than the stated $125M+. Debt refinancing discussions are currently in progress.

Inquired about truck inventory and work-in-progress at the Ferndale facility, the timeline for converting these units to revenue, and the reason for the sequential decline in Q3 truck deliveries. Also asked about the company's recent refinancing, future capital needs, and the status of the Optimal litigation.

Answer

Management stated there are approximately 400 trucks in various stages of production at Ferndale, expected to be completed by Q1 2024, with a target of 100 deliveries in Q4. The Q3 delivery dip was attributed to timing issues with signing new dealers. A recent refinancing pushed debt maturity into the following year, and no further financing is currently anticipated. The Optimal litigation is in discovery and expected to go to arbitration in Q2 2024.

Poe Fratt from Alliance Global Partners asked for performance metrics on the latest EAS 9.0 update, the sources of significant new customer interest, and whether the Q1 operating expense level represents a reasonable run rate for the year.

Answer

Chairman and CEO Lior Tal noted that EAS 9.0 focused more on customer-facing features than efficiency metrics. VP of Business Development Ben Landen attributed new interest to increased commercial readiness rather than a change in lead generation tactics. CFO Don Alvarez confirmed the current cash burn trajectory would be fairly consistent, with a potential slight increase due to the full-quarter impact of recent hires.