FLNC - Earnings call transcript Q1 2022

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Operator

Good day, and thank you for standing by. Welcome to the Fluence Energy First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. [Operator Instructions] Please be advised that today's conference may be recorded. to Chong, conference Investor Treasurer like speaker to Relations. now Sam today, and would hand over the your I Head of Please go ahead.

Sam Chong

for to our fiscal like everyone XXXX. the call year would of first I quarter welcome earnings to

Dubuc, our On Officer; Chief Chief Officer; Boll, Digital Dennis Manuel Officer; Products Financial Executive our Chief Officer. our Chief the our and are call Rebecca today Pérez Fehr, Seyed Madaeni,

of forward-looking this to the statements promises Act of nor made material you that begin, risks the provisions assumptions that to management current call I that XXXX. neither based statements make Litigation pursuant and we federal various include Before are of our and remind during within upon uncertainties statements Private are the guarantees estimates meaning Securities securities safe would subject The are will which like laws, Reform harbor and forward-looking and for could and in cause or and events these anticipated or the with We with discussion by you forward-looking Exchange September materially these risks those from filings XXXX, Securities ended Commission. fiscal XX-K other other our encourage to for differ actual filings on a to the year including of made results these our statements. are These XX, and the annual review implied SEC. our described report filings factors, to Form

Pérez available company's our comparable our assessing these page obligation company This non-GAAP CEO. any now as non-GAAP these ir.fluenceenergy.com. which information. Investor in GAAP speak statements, also I disclaims reference reliance the to earnings reconciliation materials of update performance only for measures forward-looking to measures of cautioned Manuel today, we are measures on the over You of and to view the will the call place the undue business. Relations turn not such will important Dubuc, call at on as that A most new to statements in is our

Manuel Pérez Dubuc

to like on our warm would who to investors, analysts extend call. I employees welcome are participating a and today's Sam. you, Thank

on on will update our call. Slide remains start found I our website. have earnings earnings of Relations progress presentation strong outlook, and an significant Investor Let's our since market last made which This X morning, on the demonstrate we the provide

a energy we products seen as in a demand contracting for solidifying energy the service recent itself During an tremendous and The at by digital our to quarter, continues increase market have storage applications stored our industry rapid evidenced activity. products leader. grow with pace as Fluence for

guidance our to despite demand headwinds. continue we XXXX year strong revenue $X.X this fiscal to expect to of $X.X and billion deliver We on billion are track recent some

Finally, initiatives, I'm some venture partnership announced Pexapark regarding of details our strategic with excited Power, including recently on with our collaboration battery solid-state our and through QuantumScape additional to our technology. ReNew with expansion you with digital ecosystem India joint our share

Moving on X. Slide to

We continued each of business our throughout X orders lines. continue XXXX. Industry for suggesting to robust, momentum applications increasing amount contract for storage of remained of energy megawatts appetite across

that during storage year future. clean a quarter for which report lower storage we exceeded our one historically of This energy first XXX% am key the as for energy energy ago. providing seen, expectations the amount a have a pleased from megawatts seasonally sustainable we contracting. been As first a quarter, I XXX increase is contracted to is to products, has

companies world. for around for renewables solutions challenges come the seek energy storage to and globe long-term grid across as continue grids We experience demand as online, for stability more and reliability countries products creating the very strong

contracted we As of December deployed XX, than gigawatts of X.X more energy products. or storage

quarter. contracts of our added Turning We business. during services to first Fluence megawatts XXX the

our application. for megawatts signed Fluence XX of also IQ bidding We contracts

ever. annual This our year our we ahead revenue the X.X importantly, schedule. have gigawatts 'XX IQ Energy, represents AES the IQ with achieved this, that highlights of additional single which an More signed fiscal contract Clean months order value already recurring after With quarter, X we for the can target IQ, largest end Fluence of deliver. Fluence Fluence

I the well X. last stem commissioning. to headwinds taking of like Slide discussed impact. X to the first This on product mitigate the cost we our result you we installations and on update our some overruns COVID-XX a of that and rollout steps disruption chain to their would earnings Turning supply from in are mostly call as as Generation as

corrective Our the provide plan. further on that us execute team implement has acted our actions swiftly confidence to to

forward-looking by effectively. our routes our Some provide supply more Gen our of customers meet the X and us us resources X-month better teams lessons X installation of time. the chain increased high-volume world teams we robust on size visibility our mitigation product these we can providing for to our to Furthermore, are manufacturing capacity see. and on with efforts demand giving a around commissioning shipping finally, XX% deliver to basis, to to And necessary include our securing have the they additional training learned the so deliver documenting from we product and

will were first up quarter. we in the on delayed quarter, continue of to the second catch the some During installations that

to increases. and respective today, in of our vast through installation, acceptance another that deployments countries and majority material testing speak. and I our a QX the concern of is we have already like raw landfall products pressures price also topic fulfill made for As address in commissioning a are will industry. Inflationary to required anticipated as their going many

contracts backlog our is price through we with fixed current and have Our suppliers signed customers. the hedged

or future we are I would supply the RMI-based the volatility both implementing to commodity future the By fluctuations. we to price commodity update on like a lending. are on RMI and demand Given provide substantial side, for side material further prices, exposure minimizing our in month also brief contracts. raw introducing pricing indices

to repair facility. that regarding with comment Although technical alleged the can the continue work findings January cannot on press the last late we Vistra by the issued event in we we overheating on September, about Vistra release this say of

we is once investigation update and still progress, will Our in an you has provide own it concluded. actively technical

Turning Slide now to X.

will position noted for long-term we ourselves continue our success. earlier, few business quarter I the plan execute cover I to examples. As a on to during

Let's one wins enhancement with of market. the start key in segment new the of transmission our

This have we This utilizing small in last were to successful costly program expense lines. pilot transmission storage to The be was may designed enhanced energy applications. virtual pilot pilot installing of and be a and to year, we to incur enhancement you transmission that Litgrid test advanced As concept of out were a than in market seen additional architecture X-megawatt lines. turn so selected transmission high-margin rather Lithuania. transmission outcome provide to the well an with other our distribution segment. The network distribution a the leader awarded requires megawatts resilient technical compared a order suggests this effort highly grid for to segments. This market and potential aligns XXX to supports forming the follow-on strategic that redundant

We segment the can this growing proud this benefit be the continue the from numerous to world market. we to be bullish bring technology are as among are that of there and first market it to to areas around companies

and Additionally, for locations. North American our we our manufacturer selected contract European

start our for fourth to track in on our facility American are quarter. production North initial seeing We

production contract location. initial single fiscal Both our to burden year For facilities see these quarter of will expect XXXX. manufacturing we manufacturing the the of in of European facility, first alleviate our a

were strengthened seeing. extraordinary during with deep our we us of development software full-time demand talent several we side, to the experience additions the further additions employees knowledge first keep quarter, are with key that the part the These providing made the the pool. On XXX added and pace

you provide partnerships. to like with on recently would I our announced strategic Now some color

which player IPPs to ship Turning the joint XX-XX Power of a to will our renewable collectively industry products to services. The market. venture in venture which has the XX stated in into Even storage more advantage this joint tremendous Slide we'll half outlet be a significant renewables well-respected that in of a energy X. In that currently leverage in largest government by this January, and opportunity term deployed. the gigawatts establishing India serve pilot a will XXXX, by ReNew leader from enter least Indian provides and comes primary Almost built XXXX. is Fluence sales at India venture, we pure just Fluence is the megawatts importantly, with we licensing as in signed one India our country. need Power, has XX first that in joint significant of affluence a mover market. ReNew we by

As our for a beginning a leading be significant XXX-megawatt first will contract also customer IPP, Power JV ReNew hours. recently the to announced with

recent would I X. highlight digital Slide to like to expansion of ecosystem. the turning our Now

recall, our to applications in-house app. application, are digital may you As the developing flagship several bidding we complement

with in PPA energy to and transactions platform. for will Pexapark, In for the large and Pexapark merchant utilities and We markets navigate parties third are better markets insights presence in investors, will advisory a risk own renewable our sales that EMEA Fluence IPP By long-term make as worth strategic trying help bring we with partnering award-winning of management. together a for paving partnership Pexapark, entered region. to decisions renewable of way the provider currently they we and while into XX-gigawatt are services maximize with unique XX January, IQ software applications build an the has supported their revenue.

turning this our milestone partnership, expect their entered platform. accelerate it technology QuantumScape, and coverage in In for This This vision partnership we stationary significant the services to finally, and in app And solid-state technology. via strengthens to to our digital help battery its In leader presence receive EMEA region. agreement that we to our applications. of will a addition, our And from significant collaboration battery storage commercially ecosystem. Pexapark for In will base X a referrals solid-state advancement for customer Pexapark. XX. for our bidding agreement corroborates Slide turn, apps Through with products also January, in our a into the we is introduce customer Fluence.

into the solid-state test will products. to QuantumScape's collaboration enter a stage QuantumScape commercialization is Fluence energy to smart for once a and This supply potentially storage still sets We agreement technology mine. large-scale influence

agnostic see and battery, providing with the I battery our economic specifically by our pandemic. send like efficient financial XXXX work around would opportunity Dennis encouraged We fiscal And customers will we to to committed people the passion, and commitment. to product in to Thank you to revenue are take performance. solid-state during for gratitude over most cover remain call year hard we admiration our possible. this density benefit the guidance. technology now and the performance turn your our and and I to and

Dennis Fehr

call. Manuel, morning good the on you, to and Thank everyone

As strong Manuel stated, we energy our of quarter a products. for storage delivered very new orders

to execute on were growth. continued which our In for strategic some of we us addition, initiatives, position able near-term

Turning Slide XX. to

support XXXX to and with the and detail. talent $XX investment buildup I to we chain focus year supply capital into our supplies. deploy In financially our supply XXXX In to calendar continue chain framework battery Pexapark, prepaid highlight in like in already acquisition. on quarter, We more capacity line strong into a with first we for as explained with ReNew, Manuel detail. QuantumScape agreements in January, And which calendar year entered and would million

capitalized is of our venture licensing will joint We projected XX-XX be the approach agreement self-funded that Our technology operational with will as amounts aligned to mostly JV. we to be anticipate nominal a paternal with support. ReNew our and JV with be

relationships with terms it for While and results collaboration expectations. be can with we expectations. on storage is yet that partnership be transactions to accounted our energy consistent is Upon disclosed, expect At this expected a future we contribute agreement this a expense targets. production, not R&D of solid The as previous until state-based achieving we line investment Pexapark product years a QuantumScape mass-produced, with the in our being long-term are validation margin the will publicly product expect previous a storage few have that battery. will juncture, our and commercial built solid-state are platform. The digital will of our

agreement have sales we share in applications place app for partnership, the of Pexapark our of part made As revenue through store. a

with income, we year the not As robust Furthermore, continue and to calendar revenue add demand any keep partnership 'XX to seeing. we our financials this previous resources are to expectations necessary did will such our from include pace talent onwards. accretive share be

our during quarter, supply such, chain by organization we XX%. As increased to the close

Our line key steps talent service approximately and our organization plan. are our software to important in strengthen model executing development by and our team. additions for are XX% with acquire These

Slide XX. Turning to

products, in fiscal we Northern mostly operational approximately of the revenue, our summer our patents for recognized to results, and our like to order to have of seasonality Before is time XX% second we to This desires everyone I in on for intake. QX of aligned Historically, half. intake. remind with our would seasonality the revenues This due and our order customers' move Hemisphere.

As second our a usually lower first result, fiscal half results compared are to half.

there and fourth Therefore, the fiscal However, in the of caveat a we QX. QX, to for be of typical revenue fourth delayed the recognized fiscal will seasonality 'XX as the mentioned, higher quarter during portion a than quarter that the from year expect of and Manuel leading revenue to current is 'XX quarter. our contribution second year

Slide storage increase from to we starting an year product, on the slide. of energy In XX, on Moving fiscal the XXX% table QX, of of 'XX. contracted QX XXX-megawatt was top of which with

We by the sold levels was of rate did storage XXX-megawatt products least typically QX which Energy products at from QX. of year customers, for in We QX seasonally last for quarter. of utility are added to products XX% encouraged a sold decline higher service expect as demand a date, XX% the in later in 'XX. attachment they high year. do acquire which at an fiscal of We services contracts, slower the

Finally, we IQ XXX QX, fiscal 'XX. QX which for of our a Fluence megawatts year XX% in applications of decline bidding contracted from was

we However, months gigawatt into IQ revenue January, AES X time. annual about Energy. of Clean achieved 'XX ahead in order, entered we already year With recurring have a fiscal Fluence contract our this with target, X.X

to chain, sequentially energy our we to Now impacts megawatts that on the for products X% Despite due second number fourth strong increased backlog grew megawatts quarter. supply table of our the this from slide. contracting moving on our Contract XX% results. deployed storage the

stood tailwinds XX,XXX almost Gen and for product driven It megawatts Our end product. from X is market QX. pipeline by at proprietary at being our of the the strong demand

Turning to Energy Storage Services.

contracted of at QX. to our pipeline megawatts backlog services under XX% management and products, storage robust, the standing grew QX. grew X% almost Assets from Similar our remains XX,XXX end at

while Fluence Moving assets megawatts management due to almost QX, our and In declined XX% to to contracted transitioning from grew IQ under QX, XX% backlog to digital X,XXX digital platform. successful assets management. under

end almost achieved pipeline digital QX, from of of increased X,XXX high which Our new a by at megawatts megawatts QX. the X,XXX

to XX. Turning Slide

year as year grew revenue largely new QX $XXX headwinds. Our temporary, was 'XX. expectations, million up fiscal QX year the driven to revenue versus the already fiscal recognition 'XX. of We fiscal to fiscal this by catch delays discussed year QX 'XX view million $XXX XX% 'XX within revenue QX below for expectation

$XXX XX the total months in QX. last On versus to basis, million revenue X% grew QX

QX charges COVID-XX our $XX costs. the included In $X.X $X and by these forecasted nonrecurring of $XX shipping positive about of QX, gross and million. In we to earnings excess shipping at million profit million other $XX driven fiscal Turning This to million was nonrecurring $XX half costs least nonrecurring fiscal to the expenses decrease negative million to of In COVID-related other other the related year call, versus related last compounding 'XX. million first QX costs 'XX. year totaled to expenses nonrecurring in year pandemic, Page of items $XX.X $XX was XX. quarter, first attributable project million fiscal million to and in effects in which 'XX, related expenses

impact 'XX versus our product. in 'XX. profit in first QX positive associated of year $XX time forecast items, in adjusted for in we $X of million fiscal half. Adjusting to to year million fiscal with generated these $XX million million to was X an nonrecurring deploying million continue Adjusted the QX $XX loss QX gross We $X first gross due of Gen costs negative

we noted, have corrective significant taken actions. Manuel As

the of record some expenses EBITDA expenses trailing Adjusted EBITDA stock-based successful over to additional in $XX.X gross have QX costs Continuing excludes nonrecurring largely our started impacted in these we on the expect we nonrecurring same However, was and IPO. million which see to to compensation, by profit. month Slide the in in QX. XX. as

entry includes XXXX. quarters expense. stock-based the million $XX.X since will see However, significantly April lower future Therefore, catch-up compensation

Moving on to Page XX.

about Our of December in $XXX IPO the equivalents XX raised offering total Immediately million October, proceeds as $XXX and million cash of a net was cash We we IPO, in of repaid million. debt. $XXX in costs. following

in Our working $XX the prepayment in by recognition revenue shift and to capital the negatively capacity. was secure the affected short-term by battery quarter million

in to cash expect year. on catch later we flow the up However,

sheet to ecosystem. pace enabling for balance now robust entire see strong is with our demand we the us Our keep

investment to will developing forward, economics, to deliver unit in enhancing Going of our our expanding for value structured offerings capital framework we continue and recurring deploy line our revenues with attractive shareholders.

year Slide outlook. XX fiscal Turning and our 'XX to

Our backlog contracted as December was billion. of $X.X XX

expect full Our HX guidance revenue energy recognize line the for range our fiscal 'XX. into $X.X Despite $X.X billion QX uncertainties related a seasonality fiscal ability our a on in and our of from of delayed of to QX, million consideration with revenue year historic products storage year revenue majority HX 'XX be of revenue risks in 'XX. our year to billion revenue to fiscal fiscal basis the plus in $XXX to 'XX the we timely challenging year from XX% takes

As previously $XX of of million discussed, nonrecurring expenses to shipping $XX we forecast effect. compounding related also COVID-XX confirm and our million to

Lastly, time we our objectives I to At IQ digital like time, to annual partnership. created and the fiscal back year Pexapark already our ahead to Fluence of have Manuel. revenue would with recurring turn 'XX have achieved upside this call plan

Manuel Pérez Dubuc

Thank Dennis. you,

way mission exciting execute The to we proved sustainable be to future. first as transform on world a power for quarter our more we to the our continue

implement to solutions more demand services our Fluence. see for as society for unique products, and opportunity and fuels, providing robust on renewables its reliance continue continues We digital reduce to fossil

months the at we more better improved and seeing. to are were we now more that are resources meet growing with demand place capabilities a we ago that or X We X visibility, deploy can

deliver for Fluence to stages future now still transition, energy our we are as shareholders. are say the in we the very value for bright the I and ready of to questions. look clean attractive take Operator, We looks early can

Operator

question West with first James Evercore. comes [Operator Instructions] from Our

open. is line Your

James West

for of order had AES January. the at intake in that the came order so down Curious, year-over-year. QX course, looking in, But you

at Should a Is of how seasonal. quarterly and lumpy at kind So think we looking intake? it order on basis? should we that of Or rolling be kind look a we basis? XX-month about should

all concern it just thinking I should a like commentary, we so basis? to or quarterly guess monitor but kind as be sounds at from the are how And that we curious robust, of things on spark From doesn't seem very business your about guys. you it

Manuel Pérez Dubuc

Good morning. your Thank you very for much question.

platform backlog. IQ overall you're the First see the not is looking I Fluence at more and

are First is and to is plan, our best that expanding in that Fluence basis. months that we goal our market in that to there of ahead which for us. X we markets. market share, We're The It's other achieve are presence of projects inroads our extremely the product California. incorporating Australia. California. a making a happy that an enter additional It's We fantastic. We in is XX% with excited rolling open solidified into IQ see market way on we Australia,

you the the and the incorporate for a significant the just in contract revenue do uplift also coming. energy first, also would the the parallel, but -- will potential. take the do see we are we market standard so more some portfolio the is renewables usually more and significant, what in and And for growth market. you you -- IQ We So megawatts of you more addressable it because into a product then until that is significant months fact becoming the a you amount Fluence the the upside modeling for market make some platform. using test not storage, sign that Sometimes customer. it's And few We can model see the they

benefits, see they that people, start us. they The people will So more testing the more they coming. keep the

Seyed, we developing that keep very anything? to say the applications. share would forward want excited. happy I Extremely you and new about moving and So outcome,

Seyed Madaeni

think that No, answers I the question.

over had mentioned, great months. past Manuel we the last As XX momentum

if want super about think basis, about So a of rolling application. you the to the excited it as we're progress

mentioned, Australia, to in Manuel As penetrated California. deeply in we're grow continue very

adjacent been has markets the in the here You'll And landscape see us U.S. great into us. for growing

happy questions, take any Manuel, if think, So it. to there but covered further you them, are I

James West

for to time an seems airplane guess, And maybe we of in the strong speak right an is then I this on X, you developing? similar the today how kind being a exceptionally airplane to business now. to the the of momentum a we grab X, been has land of describe versus you're or mean, type What where kind are customer every market in the ago? storage be stands customer. and or the understanding of XX necessity I where acceptance kind Manuel, Could -- months heading and

Manuel Pérez Dubuc

of very deliver. in you Yes, the some supply customers you they that see the orders We there. test Thank The chain they question. for compound Because headwinds about -- recurring at their But the more back it's is looking all growth. effect and in exceptionally of I applications. repeating the we a is to the more and market the capacity a consider some market it. if and is the mean, us the strong. additional technology, this Even coming like see much to lot a concerns markets on

and bigger has benefit. are First, they sites the bigger see becoming understood been really and because the the technology

So and companies, traditional out fossil they and renewables now utilities, they generation more see you energy storage, combining IPPs storage. fuel with replacing with energy also there but more

getting capacity, also sites the bigger sites in in the then but getting are megawatts bigger So hours. are in

architecture, compound happens is concept. complex the at on us say, very, a top is there pilots. we -- of that XXX and So megawatts." understand for we hours did times XXX which very a the have do So of what how need pile back is when time megawatt. unique extremely operational, very, are "Well, is they the immediately that megawatt the both. We And just very X came the on they a that to total really that, -- saw test little a to developed and combination some that. been But the We transmission working of with line look people Belton

transmission you know places the line to be build that new transmission to onshore say that, energy don't have transmission without with wind are something? Germany, So Rebecca, bottlenecks to the delivered that equation see and then margins, in -- many low centers we do There you cannot how to segment where offshore we world, everywhere because so line, Chile, without our difficult constraints. Vietnam. and problem, take solve advantage If can that a and extremely that. of building we uniquely know, is a whole want higher all are I transmission positioned you lab the

Rebecca Boll

Again, grow would Thanks. covered market lot it that think Manuel. and that the kind to I buckets does of of Sure, I you example and the transmission continue a of it. opportunity the of summarize growth segment. an are in segments is

Another segment centers. is data

segments is So movement upward that available total more of more market.

We also see in regions. new growth geographic

So associated as regions the and that. previously storage and they regions ready are adopt that an didn't didn't -- energy now and digital, that to like example, services India, adopt

our on and as other into. of countries that well top actually with in we're story, that India we're clearly, moving So some

the from about solution. regions Something is that short they to move long-duration duration

said, of course, Manuel us And then, helps well. renewables. market total summarize that the penetration to available as that as So just grow of

now market to we the make I pair energy with need the renewables so... think in storage, it's clear work, battery right that to story renewable

Manuel Pérez Dubuc

renewables -- sample me generation are make so Allow story. of in XX% are in a the the and renewable system very, very of short all-time last of this so weekend. Last record Ireland, we part this proud happy of they broke to just because that is weekend, we

a response market. storage energy in solutions ultrafast During our storm, that

We only market. that are the in ones

of the site generation on absorb which only of and the now, and centers. the know Ireland lights Xs the supported we reliability that ups the availability. market of reliable, we XX% our of keep and downs close in is load -- with market. right the the of of performance And the you need the that and in the how data is If of And the is to ultrafast, wind load you XX% see end one or that X

way. system -- If and a sustainable enabling to high way in are the the statistics we penetration renewables if really reliable really, at you you and operated, the you look go the of that look

Operator

Credit Mandloi Maheep Our Suisse. next question with comes from

is line Your open.

Unidentified Analyst

is impact of about headwinds a talk seeing. on help flow near-term through and a margin you're This Could you behalf cash [Indiscernible] directive -- you the little Can through Maheep. bit you think bit little talked the us that the year? on

Dennis Fehr

absolutely. Yes,

Let this. speaking. is me This take Dennis

first financial we we X parts. especially So stemming the ahead of confidence, look confidence. that's about half all, year, we say think second When of when the with from

First Manuel them outlined actions seeing them of it's and have about to which prepared we in taking that remarks are measures all, -- traction. the his take the

Second and wave overall, down. are seeing we is Omicron that the going

So that from why seen stronger we headwinds declining. before, have that's means pandemic the

in cash. margin development So in looking means But the and of confidence. regard, that ahead that with now terms the we're

XX of side, So on improving the to have months, half. first profit the to we on back that, level what gross that basis increasing a on expectations year debated be side, basis, by margins in to are full and rolling able be recover the we we considering profit a on to are seeing be won't gross a our on come basis. previous profit quarter-by-quarter But also year-end the clear full just to on the

an in our capacities, important calendar have demand side, secure secure step year to made until of backlog us the is the On the cash quarter, flow the which XXXX. battery the prepayment end for to the and first we

addition to also In first cash the been into from shifting the revenue impacted that, and the flow has in the quarter. second by delays quarter recognition the

forward and year. the with also on working catch cash in side looking on recognition, side As the up of that, catching we part on this and we capital confidence later up will revenue are on the the

Unidentified Analyst

changes metering expecting perhaps bit, California, Switching which significant the see we're for policy gears residential net a in to batteries. in could demand potentially drive

to manufacturing much would your capabilities faster bring of pace, at grows be potentially increase Fluence market it that to market? As modular residential a to and batteries

Rebecca Boll

thing for evaluating So the market residential. is we're that in say we I same would there shortly see the that it. potential

it. we're not evaluating in we're but market So the today,

Operator

you. Thank

comes Our Mark from JPMorgan. next question with Strouse

is line open. Your

Mark Strouse

in market, need that so? might potential India market? that does aware any that, planning impact are And there orders that you to see how of? if we the that about are local we for thinking how in manufacturing requirements the When ramp be And

Manuel Pérez Dubuc

that the first XXXX. India Yes. to moment excited the India. with Thank to partner Very, be to have found ramp just have several be right in of We we XX even do production right the our also right we leaders the able to you know such a fulfill no localizing, really, that first we requirement demand there's months not that We JV and the projects see We is. it's and partner. you. India, market India. about very capacity to market for that but the pure megawatts right the pilot with There's established up we wait penetrate of few reliable how to the the years competitive big ReNew technology, ready resources enough very for renewable in market. and Initially, really the time, happy a in might very, Power, find -- Because in a -- there. or it's

So letting technology. eventually, time the is are right, our the local when you localize will we know we to But production. to to starting fully about be and just use to target publishing is suppliers be how the going complement

right is will will -- manufacturing, that demand. amount -- They We of this those now, XX subsidy thing We advantage. see for of on did mover is to of first already multi-gigawatt tremendous the in -- to The India good have coming. a And a manufacturing. all of want them battery already in gigawatts energy local Imagine energy tender India. that price a small. operating very pilot we what giving government who very, of establish energy the represent for actual up storage that our do XX% battery is

equipment that. them. in about to So the inverters are We're -- government to some of is already talking There is will going the there for the thinking come most In India. short abroad. be term, already manufacturers

exchanging very, with already are supporting. We specifications I know, about government economic strong want us some you don't some Rebecca, partner, economic political There's technical right very them. if give Very support, -- some and exciting color political the incentive. right that. time, is to

is time that for the that us think I enter into right market. So to

Mark Strouse

about And earlier transmission this kind the opportunity upgrades touched for on then time. you of over more

you Do of of kind have projects any kind pipeline? similar-sized curious, more looking term. kind though, out in Just just your near late-stage of is

Manuel Pérez Dubuc

working this if more so -- working bidding opening exactly that we know first-mover Yes. I us, but get already follow, -- America. past. but We developed you are and we was are in applications. applications want advantage taking to in we're but we will so be a will only do many there in there disclose mean, very, and the segment we companies -- and good place this keep Europe one, We'll developers creating energy that Rebecca, and and transmission? are far, good in have something up are I we margins, more about having more with, for keep innovating. There world-class participating others yes, cannot right, certainly, with the the say are actively we with very who processes

Rebecca Boll

Again, we There I on think you summarized and now. Europe, bids certainly that well. are in going exist, opportunities have it currently particularly right

Operator

Our next Goldman question Dred] with comes Sachs. [Brian from

line is Your open.

Unidentified Analyst

pressures like some of should But there's margins. they steady-state the ease to back going know margins should moving just by one, back first I sounds expect fiscal term. the we sort here It of like sounds it near year. the through the Maybe year-end.

Dennis, let's model, prior I it, on call gross margins think adjusted mid-single-digit positive fiscal based So by, like would QX. imply your that

expansion First, fair? the basis I is point bit over can us about of of bridge a that's today's next just level you here, give quarters? from then couple then a And the maybe a follow-up. And have X,XXX that

Dennis Fehr

for the thanks Brian, question.

think that where like regard, we in QX. So I you in started

as been nonrecurring call. by has QX we the which as impacted cost expenses overruns, well in the on the So disclosed by

thinking second have our to outlook of you're will a trailing And $XX $XX million. said small still if forward quarter, amount of reconfirmed where will expenses portion of we a have still we then cost the we we into million some that overrun. nonrecurring had So off the amount,

regard, into as a in that nonrecurring quarter the half means year, quarter see we And cost this that had discussed. in in quarter. expectation So of digits expenses the as into back entering in moving the fourth the second as previously the we are or previous are while second we in that the we seeing reduction and the into will levels mid-single well third we are towards then

Unidentified Analyst

to bit bridge away? it nonrecurring there's the the all that. a going like Or just seems it's than But more

Dennis Fehr

Yes.

we before put I On guidance we a the a Nevertheless, end, half. stated high had of like mentioned $XX first that quarter in $XX million for out. side, let's this, measures which the confidence say, nonrecurring have At million we one to the as the just through year. this

earnings So on update an nonrecurring potential the our call. -- and -- therefore, give you expenses we will next on in

Unidentified Analyst

AES. this a of the second IQ just scale on Congrats around with Fluence question that. contract then And

gigawatt. year. recall the you wondering, big done for this Just a deal, clearly, sounds this one have guys business million $X a million revenue like ever X over the like, had I or you it is $X target digital biggest

$X business. the under is scale into kind revenue million So the that gigawatt you're of to XX% of million IQ a back to think piece right X that it the about assets Is since time the $X every of way of getting I management into this or maybe if opportunity the about deal annually gigawatt worth segment? like adds your kind business for

Seyed Madaeni

Yes. Dennis to of us, terms to deal the to about details rate of I great some been a I targets. I'll it's pass in for can our All it you, California. going adoption energizing very more see Fluence in of IQ tell mean,

gigawatt. that about ARR building of to proud we of if base, customer over have and excited ahead IQ. As the want Obviously, Dennis deal mentioned, our customer this with is way but I have targets contracted X we're expected base. already you the helping and for utilities, diversity that Fluence At of we've have and a choice aggregators, schedule, lot our very with AES momentum. community achieved the I'm of communities we we really note look diversity at also our the year, exciting. we're a It's gigawatts the

We have IPPs.

have We renewable developers.

have We in managers. And Fluence have most banks investment IQ. asset involved renewable we importantly,

want more revenue lot to of a momentum. Maybe targets? if great pass speak you to the about Dennis, it I'll So

Dennis Fehr

take that, Brian. me let Right,

so So things. attractive X us deal are for this what makes

has of this a first all, So high share of storage. battery

means regard, it it ASP in of then makes also sharing as but revenue have And been share a attractive the second Fluence the out is which, that discussions, model. attractive portion typically it, that includes our has also storage, you first. to after the That energy conservative kilowatt. performance has side. going a renewables may have how the into we IQ mean, terms that we in highly of very put portion on renewable, previous So year recall higher from of a high that it brings to This dollar also with per I which go

so side. And upside are here digital seeing we therefore, an our on

Manuel Pérez Dubuc

that percentage with the include same Something with revenue sharing is are not remember so but XX% market And for And when that storage and are add is the energy that XX%. the I you because up I add to you in markets to are mean And XX%. -- just know that by important uplift just They have points. would linear. between renewables There is the to like you is goes that every it's price markets potential increase. of storage, They it have revenue number you higher I the XX%, contracts portfolio is volatility. or renewables. not energy uplift if proportion There are think just is higher renewals. not that different. they

or an have dynamics have also but market. actually revenue the capacity by a possibility exponential mean, the exponentially of uplift, sharing for the when the you -- I higher You revenue higher software, of AI system

Operator

Dumoulin-Smith of next with our And comes question America. Bank from Julien

is open. line Your

Julien Dumoulin-Smith

quick it make here. I'll

two questions, if Just follow-up can. I

in how future overall also backlog but evolving do IQ, about both both the you quarter? call, with percent about and backlog exposure Obviously, with your from you talked think and that the then the frame AES. elevated. already that the things your to AES, AES about the for 'XX of lot But in And in right? And fairly business, We've context on on as a this future otherwise? how backlog it know terms think were would First, instance, counterparty of in what here, how onwards from you a IQ. do you you see your

Manuel Pérez Dubuc

concentration for you Yes. I we had and this highlighted a call we high question. AES. your on in -- on you impressions. IQ rolled saw our first yes, Julien, Fluence And about quarter, that morning And this -- thanks your

solid one They're they a First, that but of have very of renewable shareholders, let's our they that very expanding ramping are And one and say targets. our we're their done very, important that sponsors customers, main AES aggressively way. extremely happy as also up. in

to one we're happy to So very linked be That's them. element.

AES such keep that we no in California will There's important and in the the we the world. be AES, that that in they not be for there. I way California. will with have capturing share the Second, market we mix. portfolio And have over fact will mean, customers all is Well, an market California, huge

that the number But will the go ecosystem that's that, the we So X we element. expansion see, that in last one we overall in back process the expecting AES are contribution have to years and from we on is that seen achieving. what and are populating platform terms X of traditional numbers will long-term or

very as to excited on proportion But other change. in obviously. IQ, very, we're we that AES, well Fluence and -- So about expand will them markets California, and we see might

Julien Dumoulin-Smith

of run good clearly the right. company All on that. to AES. No [indiscernible] the doubt about always like Yes, expanding

Manuel Pérez Dubuc

that. you will follow, Other know Julien, companies

Julien Dumoulin-Smith

I'm last XQ of the can, Yes, totally, certainly when about will? get actually, curious -- think year, year of Can totally. as million this balance back, just from here. some if $XXX talk about you so Well, talked you some you from you I on if delays the about

Manuel Pérez Dubuc

Yes.

Let me I and to send want you level. the customers high of to message take this our there. rest a out investors and

seen in to technology the of projects. our the gaps. that each developed close for We're X. those happening demand is our first customers already to one First We We've many very very of working strong. close Gen that time, the to delays, our the overcome is

that you that you things need find. will it's some see So normal to

-- company. the the leaders. are and We new like in talent. talent that the in we sites have up have really in of mission, need attract mega You They fine-tune. is The brought that these they mega is significant very, difficult, step the like times our to size to very good we we been able a which

direction. right in going the that things are So in sense,

And good you any had want very, cancellation, add a which haven't is We do Dennis, very something? sign. to

Dennis Fehr

Yes, Julien, question. to your

our $XXX million being historic seasonality we 'XX QX back from shifted our majority over recognize the half annual of with of plus expect first So XX% revenue in line the to in guidance. of of which our

Operator

And George with question next our Gianarikas Baird. comes from

open. is line Your

George Gianarikas

rate and you service First, your at went Some improving that XX%? attach the about your over that of that time? of talk into dynamics can confidence

Manuel Pérez Dubuc

Yes.

that have we that stable, it's past seen you very we going are the rate forward. attachment in that First, is -- the First confident is

-- lag there. of products a for as the And you systems stay So smart the metrics. will incorporating know, the the then take it our and on some Fluence general, and those We and you -- the time contracts solutions. energy storage to the after into signing they it's to going bit get services, Fluence in get up sign

You saw XXX%. increase last our that an of had that in we call earnings

going So probably -- is the that But you stay look our attachment XX%, at coming. is will to way we around we that see those see rate levels. XX% it that

George Gianarikas

hit guidance? Or it. sure do disruption? and all you'll supply to that the understand a from you you chain sure guidance world for year make context it to make better, to how and the continued the look assuming I just just that's follow-up, around for understand continues COVID we perspective, your assume one around what understand get and just want improve your disruptions to the all to And it. that Are context we that

Manuel Pérez Dubuc

you and Yes. see cautiously locations States, products commission My in majority and optimist in install where first congestions, our United have -- the your question. reaction, suiting in as the A we QX. the different example, have country port most We we we Coast variant of Omicron for we less and thank to already for West of as see vast for

year. an are delay the little their we a -- cautiously that we it will things are of improvement But half will see second And get still get places But for are there do optimistic. might to both. we accounting some we to So also be process normal. back the where considering

Dennis Fehr

Right.

as as So of level normal. the high reliability. bad That not supply as call means calendar pandemic/post-pandemic maybe would of like of levels as kind last That with considered also of over like especially not end good we seen year internally means we new the pre-pandemic, the chain but Omicron. a that have

Manuel Pérez Dubuc

supply add to the fact like our that for and the That U.S. on also contract would also are logistics. Europe and the chain manufacturers already we us that selected help I will

Operator

comes question Graham Price James. Raymond next Our with from

line Your is open.

Graham Price

side coverage Just on maybe IQ market if wondering app how the newly of that platform and addressable talk was expands that? the bid the I partnership. for Pexapark for announced you about for what could a the does bit little specifically that

Seyed Madaeni

Yes. Thank you. Great question.

So conversation. let what during Analyst back to Day and me take show you shared our road all we

Fluence us we to that additional into and third application with an integrate parties our the with being but IQ, So flagship in we as been contemplating or applications, have applications. of also new But application. is opportunities partnerships for for noted process get the create developing for bidding upside to us

built into into gives get Now Europe, that that the have this By fact was with a in creating I announced schedule ahead terms partnership, actually that us way of market relationships. of of momentum that note, upside. deeper financial we none insight models our applications. allows to revenue the in market also of should the and we're with in that Pexapark presence around European of European greater third-party their Obviously, customer us terms

in momentum pause let say of the ahead schedule. And there's any me it's direction. great, should if there positive I all So follow-ups. But very right

Graham Price

X the guess saw I quickly product then Gen cost And overruns the for that installations. on you

kind Or it to logistics those typical are a inflation, the of to? just can there one is point wondering, combination? largely Is you price issues? kind thing commodity of due Just

Rebecca Boll

take I'll that. Sure,

of cost the commissioning. So on installation with overruns, overrun issues. And are the and the they are associated cost they and of we've some logistics separated kind temporary,

manuals to that those right way of now. So or our have issues quarter. in or operational our the that in closer ensure either are we the addressed in to that end implemented fixes factory, root zero overruns We've have either done installation get to play analysis and of field cause that issues is we optimize this we those cost those technical could

able and So a to also commissioning. hired of fixes. more we've to handle be identified the issues installation and number we've We've significant the people implemented the

the updated that those people installation we trained more needed installation lessons procedures is our was have the that of one in learned we and So and people, manuals.

Operator

Our from next Citi. question comes Levine with Ryan

Your line is open.

Ryan Levine

AES-Fluence versus material differences any sign? existing duration And the to that agreement you term the IQ in that contract contracts compared Has there other are portfolio?

Seyed Madaeni

the So which actually more on it's in exciting. length, the side terms more longer duration contract of is

market. with I the California gives side. adapt us IQ that like really of the the longer further it's momentum more said, duration So on And to dynamics

Ryan Levine

force your throughout ability both hiring ability And organization? trends. Can engineering and of your you then update new us on to in the hire the or to people, sales side terms

Manuel Pérez Dubuc

Yes.

and like a come, pleased more And that presence a doing global and labor that want As I world. the they renewables -- is especially that want all very a They mission to to and be has what and professionals. enabling us around we're mentioned, been part our the they to the know nice and we market, that I more mean, our They we're -- in like purpose. tight. our that surprise are of to Fluence for truly, quite story. is want and they truly engineers such It's we high-qualified people very difficult it number market of

and engineers. commissioning tremendous. teams control demand of supply our a Honestly, manufacturing, in increased we hired chain the logistics amount been by engineers We engineers So and XX%. has significant and

pains. growing call volume, We it, might have extremely high we

We have. the demand by are we surprised amount that of

simultaneously, being big So it effect all simultaneously those that and the was a challenge. -- commissioned and installed having sites at

I think a very, people market tight remarkable. that very almost that added by we is the XXX in

much an them us asking. of thank all for to you welcome all their So -- opportunity we And for work. for and very hard mean thank I them

Ryan Levine

around or single-digit quarter, GAAP is sales have the revenue to on fourth basis that incremental achieving that incremental, Is organization? just contracts that your an a comment signed basis? given Or referring a throughout then you clarify to on And recognition margin.

Dennis Fehr

level. to in-quarter on on an adjusted a the numbers referring that's So gross profit

Ryan Levine

you'll to achieve do be you able GAAP think basis? single-digit When on a

Dennis Fehr

same We adjusted GAAP that as will see the trend basis an basis. on on

a more one that concrete we'll the the are, before, we earnings are bit year, mentioned next and on in therefore, you we call. in answer give As early a

Operator

And from Research. Fleishman Steven comes Wolfe our with question last

open. line is Your

Steven Fleishman

consider environment? kind on versus a just what in degree guess thinking to and how that the to stay like, inflation shipping of higher kind I of Just the are costs ongoing the as move about on, you we onetime we

Dennis Fehr

Yes.

that. take me Let

So we cost And market. pushing stabilized higher fiscal 'XX, are since have been in in level general, or including customer on prices think into our we shipping have year seeing logistic into we the market. have QX high the them, that that a that this And -- therefore, been prices. been

are we in end subsiding of at light So And that kind expenses year. the means the seeing tunnel. fiscal shipping cost that seeing this of actually this throughout overall, type the of are nonrecurring terms of a side, a

Steven Fleishman

Okay.

out So we get shipping year? should have in costs nonrecurring the assume shouldn't we pulled we those costs, as later

Dennis Fehr

correct. is That

Steven Fleishman

And Moss disagree ? that you you could then clarify was And report the are just that you And the made implying on Landing? comments you Landing that may there? lot with you a there. issued Moss build to plans going the are more storage on on what's like running just more in not? that there's you clarity or are Or Like for I about

Manuel Pérez Dubuc

that Yes. want we I stated is repeat what my I can -- initial are conducting. to I remarks just in

that installations. and we back fixing facility First, we're operation with working Vistra, are putting the in and helping

It's We exactly too the are conducting we we the to our is. And once say share own early, final market. it results, have early that well, what will with investigation. too it's

informing And so the we you on be happens. will when that market

Operator

I'd closing call have the to the like today. to And Sam Chong remarks. we for any turn questions back that's all for

Sam Chong

call like our Thank to earnings would to you. We thank everybody listening before today.

you. have investorrelations@fluenceenergy.com. please questions, you Thank at any further If us contact

Operator

Thank This call. participating. concludes today's conference for you

You may now disconnect.

Fluence Energy (FLNC) 10 Feb 222022 Q1 Earnings call transcript