Earnings call transcript: Eos Energy Q2 2025 misses EPS, shares dip

Eos Energy Enterprises Inc (EOSE), a $1.46 billion market cap energy storage company, reported its Q2 2025 earnings, revealing a significant miss on earnings per share (EPS) and revenue forecasts. The company posted an EPS of -1.05, far below the anticipated -0.1371, resulting in a 665.86% negative surprise. Revenue came in at 15.24 million dollars, missing the forecasted 25.11 million dollars by 39.31%. Following these results, Eos Energy’s stock dropped by 7.43% in premarket trading. According to InvestingPro analysis, the stock generally trades with high price volatility, which investors should consider when evaluating these results.

Key Takeaways

• Eos Energy reported record quarterly revenue, despite missing forecasts.
• The company experienced a substantial increase in shipments and product innovation.
• Market reaction was negative, with a notable drop in stock price.
• A strong commercial pipeline suggests potential future growth.

Company Performance

Eos Energy Enterprises demonstrated operational growth with a 46% increase in quarterly revenue from Q1 2025 and a 122% rise in shipments. However, the financial results were overshadowed by a significant net loss of 222.9 million dollars, including non-cash adjustments. InvestingPro data reveals concerning weak gross profit margins and an overall WEAK Financial Health Score of 1.59. The company raised 336 million dollars through oversubscribed offerings, indicating investor confidence in its long-term potential. For deeper insights into EOSE’s financial health metrics and 12 additional ProTips, consider exploring InvestingPro’s comprehensive analysis tools.

Financial Highlights

• Revenue: 15.24 million dollars, up 46% from Q1 2025.
• EPS: -1.05, significantly below the forecasted -0.1371.
• Net loss: 222.9 million dollars.
• Adjusted EBITDA loss: 51.6 million dollars.
• Total cash at quarter-end: 183 million dollars.

Earnings vs. Forecast

Eos Energy’s EPS of -1.05 was a significant miss compared to the forecast of -0.1371, with a large negative surprise of 665.86%. Revenue also fell short by 39.31%, coming in at 15.24 million dollars against a 25.11 million dollars expectation.

Market Reaction

Following the earnings release, Eos Energy’s stock declined by 7.43% in premarket trading, reflecting investor disappointment in the earnings miss. With a beta of 2.01, the stock shows higher volatility than the broader market. Despite recent volatility, the stock has delivered an impressive 200.51% return over the past year and remains well above its 52-week low of 1.395 dollars, suggesting some market confidence in the company’s future prospects.

Outlook & Guidance

Looking forward, Eos Energy expects full-year revenue to range between 150 million and 190 million dollars. The company plans to double production quarter-over-quarter and aims for a positive contribution margin by Q4 2025, with a positive gross margin expected by the end of 2026.

Executive Commentary

CEO Joe Mastrangelo emphasized the importance of efficiency, stating, "Every electron counts, and any efficiency you can bring to the system makes the system more robust." CFO Nathan Kreger highlighted the company’s strategic positioning, saying, "We’re positioning EOS as the preferred solution for grid resiliency and sustainability."

Risks and Challenges

• The significant earnings miss raises concerns about operational efficiency and cost management.
• Achieving profitability targets by the end of 2026 remains uncertain.
• Macroeconomic pressures and supply chain challenges could impact future performance.

Q&A

During the earnings call, analysts questioned the company’s strategies for improving project-specific internal rate of return (IRR) and levelized cost of energy (LCOE). Management highlighted ongoing efforts to enhance flexibility in delivery windows to meet customer needs.

Full transcript - Eos Energy Enterprises Inc (EOSE) Q2 2025:

Conference Operator: Good morning, and welcome to EOS Energy Enterprises Second Quarter twenty twenty five Conference Call. As a reminder, today’s call is being recorded and your participation implies consent to such recording. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. With that, I would like to turn the call over to Liz Higley, Head of Investor Relations.

Thank you. You may begin.

Liz Higley, Head of Investor Relations, EOS Energy Enterprises: Good morning, everyone, and welcome to EOS’ Second Quarter twenty twenty five Conference Call. Today, I’m joined by EOS’ CEO, Joe Mastrangelo and CCO and Interim CFO, Nathan Kreger. This call, including the Q and A portion of the call, may include forward looking statements, including but not limited to current expectations with respect to future results and outlook for our company. Should any of these risks materialize or should our assumptions prove to be incorrect, our actual results may differ materially from our expectation or those implied by these forward looking statements. The risks, uncertainties that forward looking statements are subject to are described in our SEC filings.

Forward looking statements represent our beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update these statements made during this call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events except as required by law. Today’s remarks will also include references to non GAAP financial measures. Additional information, including reconciliation between non GAAP financial information to U. S.

GAAP financial information is provided in the press release. Non GAAP information should be considered as supplemental and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non GAAP financial measures may not be the same as or comparable to similar non GAAP measures presented by other companies. This conference call will be available for replay via webcast through EOS’ Investor Relations website at investors.eose.com. Joe and Nathan will walk you through our business outlook and financial results before we proceed to Q and A.

With that, I’ll now turn the call over to EOS’ CEO, Joe Mastrangelo.

Joe Mastrangelo, CEO, EOS Energy Enterprises: Thanks, Liz. Welcome, everyone, to the 2Q, earnings call. I want to start off with our operating highlights page. Nathan will walk through the details of the numbers on the page, but I want to talk about a couple of themes. Last month, I was able to attend, the Pennsylvania Energy and Innovation Summit hosted by, senator McCormick and attended by the president.

It was a great two days that we had here. What it proved to me is that energy is at the forefront of everything that we wanna do as a country to grow the country, and EOS plays a very important role in how we position the The United States for its energy future. You know, a modern grid is going to require, bulk stationary storage. It eases congestion. The easiest way to think about congestion is when there’s too many electrons trying to get onto the grid, and there’s not enough electrons getting off the grid.

So we are able to take those, park them in our system, and put them back on to better match supply and demand curves in the market. The one of the most important things I’ve learned through my thirty five year career in the energy industry is every electron counts, and any efficiency you can bring to the system makes the system more robust and also allows you to avoid costly new investments and make what you have produced better. And that’s what curtailment is about. Curtailment is when you take existing generating assets and stop them from operating because you can’t put them on the grid. Again, an EOS solution, a standalone energy storage, Nathan will talk about how 50% of what’s in our pipeline today is standalone energy storage, allows you to keep running those assets, put the electrons in a parking lot, if you will, then put them back on the grid.

So think of the grid like a highway when there’s a lot of traffic and you can’t get on that on ramp, park in your EOS energy storage system. And and when there’s when it frees up and one of the exit ramps wants power, we’ll put it back on that highway and get it delivered cost effectively, to to to the to the people that use it. The other the other piece that I would say on the summit is, you know, really, you saw the strength of the company being in Pittsburgh. I think what you see is this ecosystem of of technology, ability to manufacture the infrastructure around universities, which allows us which is allowing us to build a great company. What you saw in q two, I’ll get into some more details, is we have record revenue, a 122% higher quarter over quarter shipments.

Great performance by the operating team here. I’ll go into some details in in a couple of pages, but, like, really proud of our ability to scale the enterprise. And when you think about that 122% increased shipments, it was the with the same processes and labor that we had in the first quarter. So the team is finding ways to do things better, bringing efficiency into our own into our into our operations every day, and getting better output and throughput over the assets that we have. And we are continuing to scale operations.

You know, I will talk about the ramp and bringing on subassemblies, which unlocks the full capacity of our first state of the art manufacturing line. And at the same time, we announced, signing and ordering our second line as we start to position the company for the growth that we see flowing through the pipeline. What I would say before we we move to the next page is as it comes to the pipeline and orders backlog, things are moving. The operating dials and the steps that were worked through with customers to get to an order are progressing. There was a little bit of a pause here as as the OBB was was was approved.

I think we’re seeing, now an acceleration. That acceleration was no more evidence than what we saw here in Pittsburgh back at senator McCormick’s, Energy and Innovation Summit. So I think Nathan will walk through the progress that he’s making, but we see projects evolving. We see big hyperscalers and developers coming to EOS because of the things we’ve been working on for the last seven years of developing an American supply chain, coming up with a cost effective, reliable, and safe solution. So if we move to the next page, I wanna talk about that solution for a second.

So our systems are built for resiliency. You know, we’ve talked about the leadership team that we have in this company and my background. I spent half of my career in the oil and gas industry and the other half in traditional fossil generation. So you what you learn being in being in those those industries is the fact that the grid requires robust solutions that can survive the harshest environments and the things that you don’t plan for. So that all starts on the left hand side of the page at our Edison Proving ground where we test our technology beyond the operating conditions that you see out in the field.

What we’ve been doing over the past months is testing the z three, and we’ve increased our ability to get energy out of the product by 40% from the product launch and have a very clear road map of how we get better better energy efficiency out of the product and also developing the software. So when you look at our financials and see the line on what on r and d, what we’re spending on that r and d money is making this product that we have better and putting the software over the top of it so that it it gives the operability that our customers demand. In the middle pieces, we do abuse testing on this product. We had an event, at our at our Edison facility where we we had an overcharge on a cube that we were testing. That overcharge on the cube resulted in, smoldering of plastic inside of the cube.

Not wasting a crisis, We took over a thousand air quality measurements while that was happening. We wanted to be able to get the data to show customers, that that when that you do have a problem, and problems will always happen, that this is a safe nontoxic, product to put into your into your neighborhood or onto your job location. And we found no hazardous readings in any of the measurements that we took. These thousand measurements were taken all across Edison. We never closed operations at our facility in Edison, New Jersey, and we worked with the local fire department to use water to bring the to to get the the smoldering to stop.

And that water was tested at the end of the at the end.

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: We collected all that water, put it

Joe Mastrangelo, CEO, EOS Energy Enterprises: in a tank, tested it, and found that that water was as clean as it was when it went onto the the the the cube. So proved out the thought. That’s why we have the proving ground. That’s why we run the testing, and that’s why we look, to make a product that can stand up to the harshest conditions conditions that the industry can bring. On the third column, you may have heard about a cube winding up on the highway, as we were delivering it to a customer, which probably didn’t hear about it because nothing actually happened.

The picture you see is the cube sitting on the highway. There was an accident as accidents will happen. In one hour, that cube was picked up, delivered, and we were able to extract battery modules out of that cube, bring them back to Edison, and run them, and they performed as if they were new modules. So once again, proving that, we have a durable solution that’s safe and also at the end of all this recyclable. That incident that we had on the left hand side of the page, everything that was inside the cube was extracted and recycled using normal recycling methods to prove once again that EOS has a full life cycle to be able to deliver for customers.

On the far right, we, is a is one of our z three installations. We’ve been running the product out in the field and happy to report that we are consistently delivering between 87 to 89% round trip efficiency on sub four hour discharge cycles. Now we’ve always talked about EOS being a longer duration technology, but what we’re learning with the z three and what we’re learning with the software that we’re developing is that we can extract better performance out of the technology. So once we look and we see these shorter cycles that we’ve been running for this customer, we’re seeing, round trip efficiency that’s on par with any other technology in the market. And when you hear higher efficiencies coming from other technologies, you have to net out the cost of running HVAC on on the on the the parasitic loads, which we don’t have.

And you wind up where, like, as we talk, and Nathan and the team are out selling, you hear that that 89 you know, we topped out at 89.5% round trip efficiency on a four hour discharge cycle. That efficiency is in line with what everybody else is doing. So we really look at this and say, if you want something that’s America’s battery made in The USA with a US supply chain that’s had extensive testing and operating out in the field, we’ve abuse tested it and learned that it’s safe for the environment. We then have looked at it and said that if we do have an accident, nothing will happen. You clean it up, and you keep moving on.

And when you operate this technology, that flexibility gives you better performance than what you see from other technologies. It’s a compelling value proposition that we’re out selling to customers every day, and that’s why you see the pipeline growing the way it is. And that’s why you see things like our partner during The UK bidding twice the amount of our m r of our MOU into the cap and floor scheme in The UK because they know that this technology is built to last and has the resiliency that the industry requires. Now if we move to the next page, I do wanna talk about you know, we talk quarterly results here, but I wanna take a step back and really, you know, thinking of a company that you’re building for the long term in thirteen week increments. Sometimes you you lose the actual trends that are happening happening in the business.

So what we did on this page was really take the second half of last year and compared it to the first half of this year. So you could see three x revenue growth, four x factory shipments. Nathan will talk about, you know, why you have the disconnect there in revenue versus shipments. You know, we did ship what I would call a very important strategic project that was at a lower price point. You know, if you put that if you put in the the, the average the average price that we have in our backlog on those shipments, our our sales would have topped out over 20,000,000 for the quarter.

But the project that we’re installing is very important for us to prove out the technology and to show that the things I talked about the prior page work out in the field with with a with a blue chip, operator. If you look at gross margins, you know, we’ve talked about get more volume over the asset base that we have, and the margins will come. You could see that clearly as the team gets more throughput through the factory that gross margins are improving. We’re gonna be transitioning to Centimeters positive cubes here as we get into the fourth quarter and targeting gross margin positive in the first quarter of next year. It’s pretty exciting for us.

You know, we built in advance a facility that can handle two gigawatt hours of production. And as we bring online our subassembly automation, we’re starting to we’ll we’ll start to approach that as we get to year end, and you’ll see the company delivering the gross margins that are positive, for the product that we put out in the field. And our adjusted EBITDA, actually, when you look at that, that improvement is not just in line with the gross margin improvement. It’s actually better than gross margin because we’re getting leverage over the investment that we’re making in our base cost. You know, we’ve done some scaling in different areas to be able to manage the business.

That scaling will stand the test of time, particularly when you think about functions like finance and legal and other things that you need to run a public company. As we bring in the operating systems to be able to run the company, we’ll have a team that’s worked through the growing pains of scaling the company, and it’s gonna make us more efficient when we’re at scale. But the most important thing that we’re doing is we’re making investments in core functions that allow the business to operate better. Things like the sales team to get out and grow the backlog. Other things like bringing in engineering resources to help us be more efficient on the factory floor, to take cost out of the product.

Those are the things that we’re investing in when you look at that operating cost that we have in the model. And we’re getting two x operating leverage when you think about what we’re doing on on the EBITDA, adjusted EBITDA versus gross margins. So we’re gonna continue to ramp the business, and I wanna move to the next page and just walk through quickly how we’re doing on that ramp. You see some pictures of the new subassembly of the new subassembly, first station that’s been installed. We will have two of those stations up and running and producing with the target of having all stations up and running as we get into the fourth quarter.

That speeds up the production of this product, but not only speeds up cycle time. So one thing is to get more throughput, but the second thing is we’re getting better quality off of this equipment. You know, as we were building things on the semi automated line, you bring in human variation. We take that variation out. What we’re seeing on the parts that are coming off that line is a higher process capability than what we have before and a 64% improvement in the overall part flatness.

Part flatness is important because that gets performance out of the battery because you get consistency in how we operate. We’re seeing a three almost a more than 3% improvement in energy efficiency just by getting that consistency in the parts coming off the line. It’s something we’ve been very thoughtful about as we brought it online because you don’t wanna introduce a bunch of parts that don’t achieve the quality goals and wind up having a lot of scrap and rework. But we’re very happy with how the equipment is is performing, and we’re ramping up that production as we go through. And we’ll keep everybody updated as we go through, the summer here to bringing that online and getting to full capacity and delivering on our revenue range for 2025.

With that, I’ll turn it over, to Nathan to walk through a couple of pages and then come back on Q and A. Thanks for listening.

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: Thanks, Joe, and good morning, everyone. Echoing what Joe said, we’re gaining momentum in the second quarter with a lot more to look forward to in the back half of the year. First, I wanted to touch on the One Big Beautiful Bill Act and its impact to EOS and the broader long duration energy storage market as we see it. At a high level, the bill was extremely positive for us. It completely preserves the section 45 x production tax credits with full stackability and transferability through 2029.

Just to remind you, we can generate over $90,000,000 on each one of our manufacturing lines annually when we run them at capacity. This is a direct result of all of the hard work that we’ve done over the past seven years to localize our supply chain and build an American manufacturing company. Continued stackability means we qualify for the full $45 per kilowatt hour for our batteries as well as the 10% credit for the electrodeactive materials. Ongoing transferability means that we can continue to monetize these credits as they are generated. The good news is that we’re seeing higher bids on larger volumes of credits, which means we should get smaller discounts than the 10% we’ve done on initial transactions.

We have generated $14,300,000 in credits since they came into effect, of which we’ve collected 6,300,000.0 in cash to date, and we expect to sell first half twenty twenty five credits later this year. Now shifting our focus to our customers on the ITC side of the page. While customers with wind and solar projects saw eligibility dates pulled forward compared to prior legislation, energy storage was explicitly excluded from these changes. We’ll cover pipeline in more detail later, but I wanna highlight that with most of our renewable coupled projects scheduled to come online in the next thirty months, we have not seen a meaningful impact from this change to date. Additionally, the FIOC language in the bill is yet another tailwind as it creates new demand for our American made product as we source, manufacture, and procure more than 90% of our materials domestically.

Overall, we view the bill’s passage as an important referendum on the need for American made energy storage systems to meet the country’s growing demand for energy. Moving to our commercial pipeline. Since our last update, we’ve continued to see important advancements across our commercial business. An emerging theme is the increasing scale and sophistication of opportunities, particularly with large counterparties. Q2 marked a strong growth period.

We ended the quarter with opportunities valued at $18,800,000,000 representing 77 gigawatt hours, a 37% year over year increase and a 21% improvement quarter over quarter as we added $3,200,000,000 Notably, we saw a 15% quarter over quarter increase in eight plus hour projects, validating what we’ve been saying for the past few quarters. Market fundamentals are changing, and there is growing demand for longer duration solutions. While many of our early projects were colocated with generation, 50 of our pipeline now consists of stand alone storage projects, reinforcing the need for storage on existing electricity grid infrastructure. As Joe mentioned earlier, the market is increasingly leveraging battery technology to maximize grid efficiency, which includes standalone storage near highly congested load zones where wholesale prices are more volatile and energy arbitrage is a real opportunity regardless of the generation source. One of the more exciting developments we are seeing for our flexible technology is the rapid emergence of data centers.

They are one of the fastest growing opportunities in front of us, representing over 20% of our pipeline today. Now

Joe Mastrangelo, CEO, EOS Energy Enterprises: how

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: you really need to think about this is in two main ways. The first is direct demand from developers, building fully integrated data center campuses. These projects combine multiple generation sources with our storage solutions to deliver reliable power. This approach reduces the time to power and can serve as a bridge to interconnection, accelerating revenue generation, reducing peak demand charges, and derisking the long term reliance on traditional grid infrastructure. The second is indirect demand where developers are building generation plus storage projects in utility regions serving data centers.

In this case, data center operators are supporting the addition of incremental capacity to the grid to offset their energy consumption, reducing their total energy costs and maximizing renewable credit capture. Last quarter, we announced a 750 megawatt hour MOU with a developer, which is a very good example of an indirect project. We have advanced this initiative and are currently finalizing contract terms for our first ten hour project supporting a well known hyperscaler in the PJM service territory. We’ve also made significant progress on several other MOUs discussed last quarter. In April, we signed a five gigawatt hour MOU with Frontier Power to deliver projects across The UK through submissions in Ofgem’s cap and floor program.

Frontier has now submitted over 10 gigawatt hours of storage projects utilizing EOS technology, more than double the original MOU, highlighting their strong confidence in our technology. And importantly, cap and floor requires eligible technologies to deliver a minimum of eight hour discharge, which is a strong fit with our capabilities. Additionally, we are actively codeveloping a broader pipeline with Frontier targeting data center growth in Europe and long duration storage needs in the Asia Pacific region. We continue to expand our presence in Puerto Rico and have identified several other storage projects that we are pursuing on the island with a local developer. The list of projects should significantly increase the 400 megawatt hours currently under MOU.

Transitioning to backlog. We ended Q2 with a backlog of $672,000,000 representing 2.6 gigawatt hours of storage. During the quarter, we delivered over $15,000,000 in revenue and booked two strategically important orders. The first was with a large regulated utility in the Southeast for a microgrid project supporting two schools in Florida, and the second was a repeat order with an existing customer for a renewable energy microgrid on California tribal land. As many of you know, the industry has been highly focused on the final outcome of the big beautiful bill over the first half of this year.

We saw several months of customer uncertainty as customers were waiting to see what was going to happen with the final language. With that uncertainty behind us, we feel really good about the increased activity we are seeing on a number of large projects as customers are reaching out to us as they try to navigate these new requirements. This shift towards larger project opportunities means we work with more stakeholders. This includes developers, off takers, project finance investors, lenders, technical experts, which sometimes increases time to order. While we saw a slight decrease in backlog from the prior quarter as a result of the things we’ve just talked about, there are strong demand signals ahead of us.

As we bring customers to the factory to give them an up close view of our manufacturing expansion, share our latest z three field data, we have enhanced our ability to demonstrate that we can deliver. With the recent positive momentum, I’m confident that we’ll be announcing some larger orders soon. Strategically, we’re working to make EOS the preferred solution for grid resiliency and sustainability on a global scale. Along these lines, we’ve significantly enhanced our competitive positioning by teaming up with a major developer and engineering firm to design an indoor racking solution that takes advantage of our safety and nonflammability, enabling us to significantly reduce the spacing requirements of indoor systems. As a result, this configuration can achieve over one gigawatt hour per acre in site density, which is three to four times greater than traditional industry layouts, making us more competitive in space constrained environments.

This is a big step forward in delivering high density storage. Turning to our financials for the quarter. Before getting into the numbers, a couple of key themes I wanna highlight from last quarter. Number one, revenue is up on greater volume. Number two, delivered volumes outpaced revenue, driven by lower pricing on a single project.

And three, margins improved as we continue to get more volume through the factory, covering our fixed costs. In Q2, we generated record quarterly revenue of $15,200,000 a 46% increase from Q1, accompanied by a 122% increase in shipments. This was the same amount of revenue we generated for the full year of 2024, demonstrating the continued scalability of our operations. As forecasted on our last call, Q2 revenue was impacted by lower selling price as 50% of the production volume was delivered to a single strategic customer. While this project affected near term revenue and margins, we see it as a significant growth catalyst.

Look. For everybody to know, we’ve been working hand in hand with this customer to design a cube with simplified field installation and commissioning. Our first installation of this improved design saw a truck to pad times of twenty five minutes and cube to cube connection times of thirty minutes, and we have seen those metrics improve on each subsequent project. If you take a step back and think of this from a customer’s perspective, we’re able to reduce the time and cost associated with getting projects online out in the field. Gross loss came in at $31,000,000, a 32 margin improvement from the prior quarter.

This improvement was largely supported by the increased production volumes we are getting through the factory. We spent $32,900,000 on operating expense, But when you exclude $5,400,000 in isolated onetime items, spent operating expenses declined quarter over quarter. While OpEx has increased year over year, approximately 28 of the increase stems largely from noncash items such as stock based compensation. The balance of the increase was tied to strategic headcount as we build the muscle that we need to scale this business. We continue to invest in building our software capabilities to position ourselves as a leading software business and expand our sales force to support the significant growth that we see in front of us.

Net loss for the quarter was $222,900,000 but this includes noncash fair value adjustments tied to mark to market associated with the 35% increase in our stock price as of June 30. The mark to market adjustments will continue to create volatility below the line. It is largely driven by changes in our stock price. Adjusted EBITDA loss came in at $51,600,000 showing a 75 margin increase driven by the improvements I’ve already discussed regarding volume, partially offset by lower selling prices. Although pricing on a single project weighed on Q2 results, we have clear visibility toward healthier unit economics as we, first of all, deliver projects more in line with our average backlog pricing and secondly, continue to drive labor and overhead efficiencies with higher manufacturing throughput.

With these two improvements, we expect to achieve positive contribution margin in the fourth quarter of this year and achieve positive gross margin as we exit the 2026. With $26,000,000 in revenue booked for the 2025, we see a clear path to our full year revenue range of 150,000,000 to $190,000,000 Look, We recognize this requires significant increase in the second half, but we expect to see meaningful increases in our production capacity as subassembly automation fully comes online as Joe has already discussed. Now moving on to our capital structure. Since I joined the company in 2023, I’ve been working relentlessly on securing the capital needed to expand our manufacturing operations and get this business to profitability. This culminated with the execution of two highly successful transactions in the second quarter that lowered our cost of capital, simplified our balance sheet and strengthened our cash position.

In June, we raised $336,000,000 with tremendous institutional participation on two offerings that were both oversubscribed. Working together with our existing lenders, we were able to complete a highly effective transaction, and we’ve used the proceeds to, first of all, refinance a significant out of the money convert that was coming due next June. You may have noticed that we’ve also received a $5,000,000 rebate post closing in accordance with the terms of the agreement. And secondly, to prepay $50,000,000 on the Cerberus term loan, allowing us to reduce the interest rate from 15% to 7%, defer the financial covenants to March 2027, and to spend their lockup period by another year, further aligning long term shareholder and strategic partner interests. And finally, we’ve added $139,000,000 of cash to our balance sheet, net of discounts and expenses, ending the quarter with 183,000,000 in total cash.

The overall transaction is expected to result in approximately $400,000,000 in total interest savings over the terms of the company’s debt. In addition to these transactions, we also made advancements in other areas of the cap stack. Post quarter end, we announced we received our second loan advance of $22,700,000 from the Department of Energy. With this advance, we have drawn the maximum amount under the first tranche in connection with our first manufacturing line, and we expect to request an additional draw on the second tranche before year end as we continue to expand our manufacturing capacity and build out line two. And then yesterday, we also announced an amendment of our 26.5% convertible notes.

The maturities on these notes have been extended to 09/30/2034, while the interest rate is reduced to 7% effective June ’26. The amended notes have redemption terms allowing for optional pro rata conversions excluding the affiliated holders. And with this, we expect to redeem approximately 85% of these notes in the third quarter. The combination of strategic equity and debt refinancing along with continued DOE support has significantly strengthened our balance sheet to support the growing scale of domestic battery manufacturing. So for me personally, I feel like this is mission accomplished.

Before we move into Q and A, I’d like to revisit what we announced yesterday regarding our final cash performance milestone under the Cerberus term loan. Given Cerberus’ confidence in the opportunities in front of us, along with the efficiencies we are seeing with project execution, they have granted us an additional no penalty extension through 10/31/2025, allowing time to see this growth come to fruition. With that, I wanna thank everybody for joining us today, and I’ll now turn the call over for questions.

Joe Mastrangelo, CEO, EOS Energy Enterprises: Thanks, Nathan. Before we turn it over to our sell side analysts for questions, I’d like to Nathan and I are gonna answer the first the top four questions that came in through SAIT Technologies from our retail base. I’m gonna start off with two, and then Nathan will wrap up with two, and then we’ll go over two questions from sell side. First question, when is line two expected to be fully operational? Will this include the subassembly line?

Yeah. We’re forecasting line two coming online in the first half of next year. Line two will share some of the subassembly capacity that we have for line one, and then eventually, we’ll add to that subassembly capacity as we ramp up capacity on line two. On the on on the what lessons from line one are being applied to line two, and are those improvements resulting in meaningful changes to line design throughput or cost? And what we’re planning on, when we did line one, line one is designed in a u because that’s what fit into the building that we had.

As we look to line two, it’ll be a straight line where, material will come in one side raw materials will come in one side, and a cube will go out the back end of the other side. So we’re really designing the line two for total throughput efficiency of the facility. As we think about what we’ve done, like, we’ve learned a lot about operating line one over the last year, and designs are being incorporated to get, better quality, better reliability and availability of the line and and improved throughput. So so we have some things that we’ve learned about where, we had some single point areas that when we do maintenance, we have to slow the line down that we’re gonna put in backup backup capacity in in in in specific stations. And at the same time, you know, we’re gonna deliver that that cost of that the cost of that line in line with what we did on on line one.

So we’re pretty happy with how we wound up there given the environment that we’re in from an inflationary standpoint and also from the changes that we’re making. But what we’re really excited about is doing this line in a straight line so that we get the get the full efficiencies and fewer material moves of what we’re seeing right now, in Turtle Creek. Second question for me is in the q four twenty twenty four earnings call, in March 2025, it was mentioned that eight states were bidding for Factory two point o. What is the current status of finalizing the site for Factory 2? We’re still in negotiations with multiple states.

We’re not gonna negotiate that in public. The response to, people wanting to have a facility like EOS is has been tremendous. We’re working through, to get the right facility with the right long term landlord that we can partner with over time. And then as we’re as we get through those discussions with the you know, you gotta remember, like, you’re doing this not just on a state level, but on a county level and in some instances, the town or city level to really get the best position factory workforce, cost for EOS and long term partnership that we wanna have. Not something that you do, rushing through.

We’re happy with the progress that we’re having, and we’ll update people when we have news to share. Thanks, and I’ll turn it over to Nathan.

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: For the next question, last quarter, tax uncertainty was cited as delaying deals. Post BBB law, how have customer time lines or urgency shifted? And are there any major barriers still preventing deal commitments? Alright. So we’ll break that down one piece at a time.

Martin Malloy, Analyst, Johnston Rice and Company: I think we spent quite a bit

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: of time earlier in the call talking through the impacts of the big beautiful bill. Just to recap, I mean, I think we did see some delay as customers were working through the uncertainty before the final language was adopted. Now that we have the final language adopted, I think with some of the accelerated timelines around solar and renewable credits on the customer side, we are seeing some of those customers wanting to move very quickly to make sure that their projects get placed in service. So to the extent that we have co located storage, associated with those projects, that can accelerate things for us. So overall, I think getting rid of some of that uncertainty is really, really good for the industry.

Projects are starting to move forward, and we’re very excited about that. So the second thing that we talked about is as we work through some of the larger deals, we’re getting a lot of inbound calls from folks that say, hey. I was thinking of using a different technology, but because of the FIOC restrictions or some other, challenge, they’re reaching out to us asking if they can, you know, change their interconnection, change their permits, go with the nonlithium technology. We’re working through some of those. As we talked about, those take time because there are always multiple stakeholders, and we’ve got to work through with all of the stakeholders.

But as we bring customers in for factory tours, show them that we are scaling up the business, as Joe has talked about in detail, and then also walk them through some of the latest Z3 data that we’re getting from field installations. As Joe highlighted, I think we’re building a lot of confidence with these customers, and I’m confident that this is gonna move these deals forward quickly. And for our final question this morning, as EOS scales, how is it building a partner ecosystem across integrators, developers, and channels to support broader adoption? Look. We talked a lot about this in the commercial section earlier on the call, giving more details on some of the MOUs and the expanding relationships that we’re seeing out in the marketplace.

But I wanna focus a little bit more here on the second half of the commercial process, which is getting projects fully commissioned up and running out in the field. I think this is where we’re really focusing on developing these strategic relationships, making sure that we find the right partners, whether those be integrators or other equipment suppliers, particularly in some of these project sites that have complex site integrations with multiple components to them, you know, make sure that we’ve identified the preferred technology and the preferred partners, go through simulations before we agree to work with a certain technology, you know, whether that’s balance of plant equipment like inverters, you know, EMS providers, working through some of those and make sure that we can go out to a customer with those partners and say, look. We’ve done projects with this technology in the past. We know it works, and execute a flawless project for those customers going forward. So I think as we think about, strategic partnerships, it’s as much on the commissioning, and the the projects out in the field as it is on sales channels.

So with that, I think we’re going to wrap up and take questions from the sell side analysts.

Conference Operator: Thank you, sir. At this time, we will conduct a question and answer session. And I show our first question comes from the line of Stephen Gengaro from Stifel. So

Stephen Gengaro, Analyst, Stifel: two things for me. The first, you touched on a bit in the prepared remarks. But when we think about the bridge to the second half revenue, and you did a good job, I think, talking about production growth versus revenue growth in the second quarter. But that’s clearly a topic that’s come up pretty frequently. Can you add some color to how we sort of bridge the revenue?

And I don’t know if you’ll go into this much detail, but I thought you guys were pretty clear about what the second quarter was going to look like, although I think some people may have been a bit higher than that. But could you if there’s anything you could talk about in the third quarter, would be helpful too.

Joe Mastrangelo, CEO, EOS Energy Enterprises: Dave, thanks for the question. Yes. You know, when you look 4Q to 1Q, 1Q to 2Q, if you look at the page that we had in there where we tried to mute out the the thirteen week quarterly movements, we’re doubling production quarter over quarter for the last nine months. Double it again, double it again, and you’re firmly in the middle of our guidance range. And that’s what makes us feel like we’ll get there.

Now inside of that that doubling, I think there’s a couple of things everybody has to realize is, like, we doubled that production with the same production processes, the same supply chain, and the same headcount. And we’ve been talking about this for quite some time that as you double production and get more throughput through the factory, you start to see margin rates improving. You see the margin rates improving. We’re going to continue that trend as we get through the year. But I think that’s really what we have to do is we have to just keep doing what we’ve been doing, which is a doubling effect of production out of the factory.

Now what gets you from, like, I think, you know, you you can get intimidated by the by the bump up of saying, wow, doubling from where you are is not gonna be tough. You know, we’ve been doing it without the benefit of the automation of our subassemblies, and that is starting to produce and feed the line. As we look at the capacity of the line, the capacity of the line has always been limited by the flow of parts that have come from our semi automated sub assembly process. Now I’m very encouraged by the results that we’re seeing off of those sub assemblies as we talked about. Parts are flatter, throughput’s faster, that’s resulting in better output out of the batteries that we you know, we build batteries and then test them before we to make sure everything works.

And you start looking at that, you’re saying, better output battery, higher quality, higher throughput, run the line at its capacity. We’ve doubled, doubled, doubled, doubled again, and you’re in guidance. And that’s what we’re shooting for.

Stephen Gengaro, Analyst, Stifel: Great. That’s helpful. The other thing I wanted to ask about is when you talk about incremental production lines and you addressed this, I think on one of the questions from the retail side. How do you balance and I know the opportunity pipeline looks very good, but how do you balance sort of order flow and visibility on order flow with expansion?

Joe Mastrangelo, CEO, EOS Energy Enterprises: Yeah. So we you know, Steven, we we we talked this on the last call,

Ryan Pfingst, Analyst, B. Riley: and I think

Joe Mastrangelo, CEO, EOS Energy Enterprises: I I wanna reiterate this. Like, the the customers that Nathan has talked about in his remarks come in and they like what they see, but they wanna see more. So line two, it it built with what we think is going to be happening here over the next few months from the demand side that we’re seeing as we move through our production capacity. What I said in the beginning was I myself was very conservative on how we made those investments of wanting backlog in place. But when you start looking at the size of the projects we’re talking about, you’ve got to build it and have it ready to go when those projects come in.

And that’s why we started and placed the order for Line two. And we’re timing that we’re timing that, you know, like I I know people say, well, you know, when is line two coming in? You said before that it was gonna be late this year, now you’re saying first half next year. It’s all it’s all timed to when we think orders are gonna come in and when we need the ramp and how we utilize capital as effectively as we can, and that’s when we need that capacity. And what we really want to do, I mean, you’ve personally been here to see the factory.

It’s inefficient because it’s on multiple floors. Getting everything running on a straight line reduces the material moves, reduces the overall cycle time from raw material in to cube out the fact out the door. And that’s what gets us really excited about how we can ramp the business going forward.

Stephen Gengaro, Analyst, Stifel: Great. Thank you for the color, Joe.

Joe Mastrangelo, CEO, EOS Energy Enterprises: Thank you.

Conference Operator: Thank you. And I show our next question comes from the line of Martin Malloy from Johnston Rice and Company. Please go ahead.

Martin Malloy, Analyst, Johnston Rice and Company: Good morning. Congratulations on all your accomplishments.

Joe Mastrangelo, CEO, EOS Energy Enterprises: Hey, Martin. Thanks.

Martin Malloy, Analyst, Johnston Rice and Company: Yeah. I wanted to ask, you know, you’ve got a significant improvement in the round trip efficiency. You know, it sounds like the lower cost and time to install. Is there any way to quantify the improvements that are going on in terms of an LCOE or IRR for the customer?

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: Yeah. I mean, I think those efficiency we’re still working through that with customers on individual projects. But what we’re seeing here between the reduced cost on the commissioning and the improvements in the performance should translate into a couple percentage points on IRR on a typical project. Every project is going to be different, but it’s a meaningful difference in the amount of upfront CapEx, both from the installation side as well as the cost of the equipment. So I think that’s going to translate into better economics for customers.

And we’ll we’ll provide more detail on that as we go forward and have more granularity on that.

Joe Mastrangelo, CEO, EOS Energy Enterprises: You know what, Marty, the one thing I just would would put on top of of Nathan’s comments is like, you know, when we talk about anything that has to

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: do in in and I

Joe Mastrangelo, CEO, EOS Energy Enterprises: and I’ve seen this throughout my career, many different technologies. We try to simplify the way we talk about things to give people that headline, and it’s only gotten worse as, you know, we’ve started living in a in a society where we have thirty second attention spans at best. So we try to come up with headlines that make people understand, but there every project has its own calculus to it. And every project has its own operating, and every project has its own cost curve, and we work through project by project. That when we see and what we’re seeing on the performance out in the field, how we’re driving down the cost curve of the product, how we’re putting software on top of the battery itself to get better performance, that absolutely improves LCOS.

But there is no headline number that we can give somebody. There’s no TikTok answer to this. It’s a project by project basis that you work with customers to make sure that you give them an advantage. And by the way, I’ve said this many times, I’d love to say 100% of the time EOS has the advantage over other technologies. We don’t 100% of the time.

So we prioritize around where we do and giving the customer the benefit of an asset that delivers them higher returns.

Martin Malloy, Analyst, Johnston Rice and Company: Okay. Thank you. And just for my second question, just wanted to ask about the second line and the ramp up time. And you did share that the the second line is gonna share some of the some assembly some of the subassembly automation. You’ve got multiple suppliers on the containers containerization side.

Could you maybe talk a little bit about the time to ramp to that full two gigawatt hours of annual capacity with the second line?

Joe Mastrangelo, CEO, EOS Energy Enterprises: So so so, Marty, what we said was we’re gonna bring the line we’re gonna bring the line in. I would assume that we are gonna have lessons learned from bringing in the subassemblies. As I said in in in the prepared comments, we’re gonna share, we’re gonna share subassemblies to start and then bring on from there. But it’s also going to be dependent upon what we need to do and the capital we need to allocate for customer demand. So we’ll update everybody on when that’s going to happen, but it depends on when the orders come in.

And as the orders come in, it may accelerate or we may slow it down depending on what’s happening. So don’t have a very specific date, not going to give a date or commit to a date here, Marty, on the call, but we have a plan to be able to do this that it will ramp into production in the first half of next year.

Martin Malloy, Analyst, Johnston Rice and Company: Okay, great. Thank you. I’ll turn it back.

Conference Operator: Thank you. And I show our next question comes from the line of Ryan Pfingst from B. Riley. Please go ahead.

Ryan Pfingst, Analyst, B. Riley: You gave good insight into what it will take on the EOS end to achieve guidance for the year. Wondering if there are items on the customer side or otherwise that are somewhat out of your control that we should be aware of that could impact second half sales here?

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: Yes. Ryan, thanks. We talked about some of them on the call, right? I mean, I think some of the uncertainty around the bill has been alleviated. There are some customers that are trying to accelerate.

Other customers are trying to raise financing. So I think we are every again, like Joe said earlier, every customer, every project is different. We are working through them. We talked about a number of different large opportunities that we are working on, that we’re progressing, that we’ve got confidence on. We just got to work through those project by project.

I don’t know that there’s one single thing that’s holding back orders at this point. I think we’re delivering on everything that customers need, and they’re working through their timelines and their financing in order to be able to place firm orders. So we’re excited about what the future holds on that front.

Ryan Pfingst, Analyst, B. Riley: Great. Appreciate that. And then service revenue increased to over $1,000,000 in the second quarter. How should we be thinking about that piece of the business maybe both near term and then longer term as installation scale?

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: Yes, service revenue, if you think about it, it’s really tied today, it’s really tied to our commissioning efforts and balance of planned equipment. As we grow portfolio of assets in the field, that will have more long term service revenue coming from legacy projects, right? So that should grow as a percentage of the total revenue mix over time as we get a larger installed base out in the field.

Ryan Pfingst, Analyst, B. Riley: Great. Appreciate the color. I’ll turn it back.

Conference Operator: Thank you. And I show our next question comes from the line of Jeff Osborne from TD Cowen. Please go ahead.

Martin Malloy, Analyst, Johnston Rice and Company: Hey, good morning. Just a couple of questions on my side. I might have missed this, but the strategic customer, was the majority of the revenue for that project attributed to 2Q? Or is that going to linger into the third quarter?

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: No, the majority of it was in Q2. We’ve talked about this on previous calls. If you think about our revenue recognition, a large portion of the revenue is recognized at the time of delivery. There’s a portion related to final commissioning, but the vast majority of it occurs at the time of delivery, which is shipments are

Joe Mastrangelo, CEO, EOS Energy Enterprises: behind us Yeah. On that project. It’s it’s it’s out it’s out in the field. It’s beautiful sight to see all the cubes lined up and getting ready and and going through hot commissioning to start operating. But from a shipment standpoint, we’re we’re we’ve delivered that project.

Martin Malloy, Analyst, Johnston Rice and Company: Got it. And then now that the capacity in Pittsburgh is is ramped up or ramping, how do we think about the the typical lag from, you know, to to delivery? Like what are you quoting, Nathan, as it relates to that? And then how does that relay for investors thinking about the backlog?

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: So we work with a customer and their delivery windows. And customers in some cases have some flexibility, and we can deliver to a storage yard while they get their final site preparations ready. But we will work together with the factory to figure out what capacity do we have, what’s the delivery window for the customer, and how do we bring those together? So every customer has got an agreed upon delivery window at the time that we sign the order.

Martin Malloy, Analyst, Johnston Rice and Company: Is it fair to say that those are within From

Nathan Kreger, CCO and Interim CFO, EOS Energy Enterprises: a quoting stand from a

Joe Mastrangelo, CEO, EOS Energy Enterprises: quoting standpoint, you know, I would also say, like, this is somewhat slots in the factory and selling seats on an airplane. And we work with customers. You know, going back to the earlier question around what’s out of our what’s out of our control. I mean, you know, the the good thing with the good thing with EOS is we’re a single SKU company. We’ve designed the product so that we build to a single spec to meet the requirements of every customer, and we can move things around.

So we have a lot of flexibility around that. And depending on customer needs, we can do trade offs as we go.

Martin Malloy, Analyst, Johnston Rice and Company: Got it. That’s all I had. Thank you.

Conference Operator: Yeah. Thank you. I’m showing no further questions in the queue at this time. I’d like to turn the call back over to Joe for closing remarks.

Joe Mastrangelo, CEO, EOS Energy Enterprises: Thanks, everyone. Thanks for listening. Thanks for the questions from both retail side and sell side. Again, when I if you take a look back over the past nine months, operational team delivered doubling output in the factory over the prior three quarters, continue to double. We’re solidly into our revenue guidance.

That’s the path forward for the company and what we’re focused on. I think Nathan’s been clear on the movement as we move things through pipeline and continue to work with customers to pull together the alchemy to get orders closed and turn that into subsequent revenue. We’ll keep everyone updated as we go through on the capacity expansion. And again, from an overall ability to deliver, excited about seeing good product come off the automated sub assembly that’s higher quality that delivers better performance, which we will continue to iterate not only the physical product, but the software around the product to give people to give customers the performance that they need to power America’s energy future. Thanks for listening, everyone.

Conference Operator: Thank you. This concludes today’s conference call. Thank you for attending. You may all disconnect.

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