Electrovaya Q2 2025 Earnings Report

Electrovaya EPS Results

• Actual EPS: $0.02
• Consensus EPS: $0.03
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

Electrovaya Revenue Results

• Actual Revenue: $15.02 million
• Expected Revenue: $15.95 million
• Beat/Miss: Missed by -$930.00 thousand
• YoY Revenue Growth: N/A

Electrovaya Announcement Details

• Quarter: Q2 2025
• Date: 5/14/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 14, 2025
• Conference Call Time: 5:00PM ET

Electrovaya (NASDAQ:ELVA) engages in the design, development, manufacture, and sale of lithium-ion batteries, battery management systems, and battery-related products for energy storage, clean electric transportation, and other specialized applications in North America. It offers lithium-ion batteries and systems for materials handling electric vehicles, including forklifts and automated guided vehicles, as well as battery chargers to charge the batteries; electromotive power products for electric trucks, electric buses, and other transportation applications; industrial products for energy storage; and power solutions, such as competencies in building systems for third parties. The company was formerly known as Electrofuel Inc. and changed its name to Electrovaya Inc. in March 2002. Electrovaya Inc. was incorporated in 1996 and is headquartered in Mississauga, Canada.

Electrovaya Q2 2025 Earnings Call Transcript

Key Takeaways

• Electrovaya reported Q2 revenue of $15 million, a 40% year-over-year increase, while maintaining over 30% gross margins and achieving a net profit of $800 thousand, marking its eighth consecutive quarter of positive adjusted EBITDA.
• The company secured a pivotal $51 million direct loan from the US Export-Import Bank and a $20 million working capital facility from Bank of Montreal to fund its lithium-ion cell manufacturing expansion in Jamestown, NY.
• Electrovaya received over $25 million in new orders this quarter, driven by material handling, emerging robotics applications, high-voltage battery systems for construction OEMs, and growing demand for energy-storage solutions.
• The Jamestown facility remains on track for mid-next-year cell production, with key equipment procured, North American/Japanese/Korean supply chains qualified, and strategic hires bolstering execution.
• Management reaffirmed its FY2025 revenue guidance of over $60 million, citing strong order visibility, the development of recurring revenue programs in energy services and software-enabled battery insights, and the competitive advantage of US-based manufacturing.

Presentation

[Operator]

Good day, everyone, and welcome to the Electrovaya Second Quarter twenty twenty five Financial Results. At this time, all participants have been placed on a listen only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, John Gibson, Chief Financial Officer at Electrovaya. Sir, the floor is yours.

[John Gibson, Chief Financial Officer at Electrovaya]

Thank you.

[John Gibson, Chief Financial Officer at Electrovaya]

Good afternoon, everyone, and thank you for joining today's call to discuss Electrovaya's q two twenty twenty five financial results. Today's call is being hosted by doctor Rajas Gupta, CEO of Electrovaya and myself, John Gibson, CFO. Today, Electrovaya issued a press release concerning its business highlights and financial results for the three month period ended 03/31/2025. If you want see a copy of the release, you can access it on our website. If want to view our financial statements and management discussion and analysis, you can access those documents on Cedar Plus website at www.cedarplus.ca or on the SEC EDGAR website at sec.gov/edgar.

[John Gibson, Chief Financial Officer at Electrovaya]

As with previous calls, our comments today are subject to the normal provisions relating to forward looking information. We will provide information relating to our current views regarding market trends, including their size and potential for growth and our competitive position within our target markets. Although we believe that the expectations reflected in such forward looking statements are reasonable, they do obviously involve risks and uncertainties, and actual results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward looking statements may be found in the company's press release announcing the Q2 fiscal twenty twenty five results and the most recent annual information form and management discussion and analysis under risks and uncertainties as well as another public disclosure documents filed with Canadian security regulatory authorities. Also, please note that the numbers discussed on the call are in US dollars unless otherwise noted.

[John Gibson, Chief Financial Officer at Electrovaya]

And now I'd like to turn the call over to Raj.

[Rajshekar DasGupta, CEO at Electrovaya]

Thank you, John, and good evening, everyone. It is a pleasure to address you today as we discuss our q two fiscal year twenty twenty five quarter. This quarter marks another key milestone in Electrovaya's maturation, not only in terms of financial results and achieving profitability, but also in how we are positioning the company for scale, margin expansion, and long term market leadership. With our eighth straight quarter of positive adjusted EBITDA, strong order momentum, and funding secured for Jamestown, we are laying the groundwork for the next phase of our profitable and sustainable growth.

[Rajshekar DasGupta, CEO at Electrovaya]

We're also seeing an early impact from our strategy to develop recurring revenue streams, including energy service programs and software enabled battery insights, which we expect to contribute more meaningful more meaningfully over time. I'll go through some of our key highlights and updates for the quarter that underlying the strength of our business and our trajectory for growth. During the quarter, we delivered strong financial performance with $15,000,000 in revenue, which is up 40% year over year, maintaining over 30% gross margins. Most importantly, we crossed the inflection point to provide a net profit of over $800,000 During the quarter, we closed a $51,000,000 direct loan from the Export Import Bank of the United States, a pivotal step towards expanding our lithium ion cell manufacturing in Jamestown, New York. This project was well received at the bank and received the deal of the year award for the Make More in America initiative.

[Rajshekar DasGupta, CEO at Electrovaya]

In tandem with the Ex I'm facility, we also closed a $20,000,000 working capital facility from the Bank of Montreal. This financing significantly reduces our cost of capital and improves our working capital availability. We've had a very strong order intake during the quarter with over $25,000,000 in new orders. This momentum has continued into the current quarter, and we have strong visibility and confidence of further growth into our next fiscal year. Outside of our material handling vertical, we have seen growing interest for multiple robotic applications for which we are actively developing products.

[Rajshekar DasGupta, CEO at Electrovaya]

We also continue to feel growing interest for our high voltage battery products. During the quarter, we announced we received orders from a second global construction OEM through our partnership with Sumitomo Corporation Power Mobility. This order is for high voltage battery systems for our leading Japanese headquarters construction equipment manufacturer. We remain on track for our cell production in Jamestown mid next year. We placed nearly all our key equipment purchases and have qualified the material vendors for all the input materials for our lithium ion cells.

[Rajshekar DasGupta, CEO at Electrovaya]

Notably, we have the foresight years back to avoid Chinese supply chains for this venture, including both on the materials and equipment side. This is going to protect us from potential future disruptions and is also something that many of our strategic customers are looking for. To support flawless execution in Jamestown, we have also added some key members to to our staff, including a senior battery engineer with over twenty years experience who has joined us from LG Chem and was also closely involved in the construction and commissioning of a recent North American Gigafactory. Our lab division continues to make progress with regards to our solid state battery efforts. Currently, we have cloud sales cycling consistently, and we are now working to scale our processes with larger equipment and further process optimization.

[Rajshekar DasGupta, CEO at Electrovaya]

With that, I'd like to pass the call back to John Gibson, who will go into the financial results in more detail.

[John Gibson, Chief Financial Officer at Electrovaya]

Thanks, Raj. Q2 marks a strong step forward in both our financial performance and operational readiness. We continue to build the financial muscle needed to support scalable, profitable growth. Positive cash from operations and a stronger working capital base give us further confidence in our ability to fund other key initiatives in the second half of the year.

[John Gibson, Chief Financial Officer at Electrovaya]

Revenue for the quarter ended 03/31/2025 was 15,000,000 compared to 10,700,000.0 in the prior year. Revenue for the six months ended March 31 was 26,200,000.0 compared to 22,800,000.0 in the prior year. The increase in year over year revenue was driven by the increased customer demand. Our working capital capabilities have also increased considerably over the past few months, which has enabled more efficient execution. Going forward, we expect to further take advantage of our strengthening financial position to effectively execute execute on orders.

[John Gibson, Chief Financial Officer at Electrovaya]

We continue to move closer to our breakeven $500,000 and maintain our 2025 revenue guidance with the ramp up continuing in Q3. Gross margin for the quarter was 31.1%, a slight decrease from the prior year margin, primarily due to product mix and the prior year having some high margin prototype batteries. Six months gross margin was 30.9% for 2025 and 31.8% for 2024. The company did experience some marginal increased costs on certain components due to recent tariffs. However, these have been offset by continued optimization of our supply chain and internal production efficiencies leading to an overall minimum effect on our gross margins.

[John Gibson, Chief Financial Officer at Electrovaya]

We don't expect further significant fluctuations going forward. Given this, management believes the company is well prepared to maintain strong margins throughout 2025 and beyond. Operating profit increased significantly for both the quarter and the year to date. Operating profit for Q2 twenty twenty five was 1,400,000 compared to $700,000 for the prior year, and the six month figure was 1,200,000.0 compared to 600,000.0 in the prior year. And this also includes approximately 340,000 of nonrecurring expenses from Q1 twenty twenty five.

[John Gibson, Chief Financial Officer at Electrovaya]

Our adjusted EBITDA was 2,000,000 for the quarter compared to 1,500,000.0 in the prior year, with the six month figure being $2,600,000 compared to $2,000,000 in the prior year. We have now recorded eight consecutive quarters of positive adjusted EBITDA. This gives us a strong capability to continue our growth plans and support operations going forward. The company generated a net profit of $800,000 for Q3 twenty twenty five, a significant increase from the net loss of $800,000 in the prior year. Furthermore, the company generated a net profit for the six months ending March 31 of $400,000 compared to a net loss of $1,000,000 in the prior year.

[John Gibson, Chief Financial Officer at Electrovaya]

Management believes this financial performance this quarter represents a true inflection point in our profitability going forward. Any further revenue growth, which we have laid in step forward for the rest of the fiscal year, will contribute to increased overall profitability. The company generated positive cash flow provided by operations of $3,200,000 and net negative changes in working capital of $7,900,000 compared to an overall positive cash flow from operations of 300,000.0 in the prior year. The movement in net changes in working capital is purely a timing issue as tariff uncertainty during the quarter meant the majority of invoicing happened towards the March. To date, we have received over two thirds of the total accounts receivable balance in cash.

[John Gibson, Chief Financial Officer at Electrovaya]

Company ended Q2 twenty twenty five with positive net working capital of 26,200,000.0 compared to negative working capital of 200,000.0 in the prior year, a significant increase, and this demonstrates the continued improved financial and operational performance of the company, and management is committed to continue this positive trend. At 03/31/2025, total debt was $13,100,000 compared to $18,400,000 in the prior year. The company has availability within its bank facility of over $10,000,000 Management continues to manage cash conservatively, and through the recent financing, we'll reduce our overall finance costs and provide us with additional working capital headroom as we increase production in 2025. We believe we have adequate liquidity to support our anticipated growth for the remainder of our fiscal year 2025. That concludes the financial overview.

[John Gibson, Chief Financial Officer at Electrovaya]

I'll now turn the call over to Raj for concluding remarks.

[Rajshekar DasGupta, CEO at Electrovaya]

Thank you, John. In closing, q two reflects the beginning of a new growth phase for Electrovaya, one defined by consistent execution, profitability, and increased visibility into long term scale. Our strategy to develop U. S.-based manufacturing, coupled with supply chains that are primarily North American or from Japan and South Korea, appears to be a prescient decision today.

[Rajshekar DasGupta, CEO at Electrovaya]

I believe this provides Electrovaya an additional significant competitive advantage going forward. Electrovaya has all the pieces in place to achieve our vision of becoming the leading lithium ion technology and manufacturing company for the heavy duty and mission critical applications. This includes our highly differentiated lithium ion battery technology, a talented team, strong financial partners, profitability in our base operations and leading customers and partners. In closing, we remain on track to exceed our $60,000,000 in revenue for fiscal twenty twenty five. And with Jamestown advancing, we're confident in our path to becoming a leading North American manufacturer for mission critical battery applications.

[Rajshekar DasGupta, CEO at Electrovaya]

That concludes our remarks this evening. John and I would now be pleased to hold a question and answer session.

[Operator]

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time.

[Operator]

Thank you. you. Your first question is coming from Daniel Magdal from Raymond James. Your line is live.

[Daniel Magder, Managing Director at Raymond James Financial]

Hey, Raj. Hey, John. Congrats on a great quarter.

[Rajshekar DasGupta, CEO at Electrovaya]

Thanks, Daniel.

[Daniel Magder, Managing Director at Raymond James Financial]

As it relates to the $25,000,000 in new orders, are those all coming from the Material Handling segment? Or are there different verticals that are in there?

[Rajshekar DasGupta, CEO at Electrovaya]

It's 25,000,000 from just material handling, and on top of that is further orders from other sectors.

[Daniel Magder, Managing Director at Raymond James Financial]

Got it.

[Rajshekar DasGupta, CEO at Electrovaya]

Material handling still is the bulk of our our business, and that's where most of the regular orders are coming from.

[Daniel Magder, Managing Director at Raymond James Financial]

Got it. And I guess, given what's happened in The US and the new administration's policies, You know, how has that impacted, I guess, the the type and cadence of discussions you're having with customers?

[Rajshekar DasGupta, CEO at Electrovaya]

It's accelerating interest in our products. It's making us more competitive as well. We're a premium offering right now. And with uncertainty on pricing from some of our competitors, it's making us a more attractive option just just from that. But also, what we're finding is customers are looking for long term partners, and price is just one of those aspects, but we're able to provide that that stability, especially with Jamestown coming online.

[Rajshekar DasGupta, CEO at Electrovaya]

Our financial position also helps with consistent and growing results. So I think all this is filtering into providing customers with with added confidence to order more. So we're seeing we're seeing quite a bit of that. We're also seeing interest from other sectors more so than we had previously, one being the energy storage space where we're getting a strong pull. Of course, it takes a bit of time for us to get our products ready for that, but that's another area where we are well underway to launching systems for.

[Daniel Magder, Managing Director at Raymond James Financial]

Okay. That's great. And congrats again. I'll jump back in queue.

[Operator]

Your next question is coming from Eric Stine from Craig Hallum.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

So just going back to the orders and the $25,000,000 just material handling. Can you just drill down into that a little bit? I know one of the themes here in the first half of the year is the recovery in orders or the resumption from your Fortune one hundred customer. You know, I know you've had some repeat orders from from logistics in in cold storage, etcetera. You know, I'm just wondering if you could talk about how that kind of breaks down between that customer who's kind of resumed at higher levels, new customers, etcetera?

[Rajshekar DasGupta, CEO at Electrovaya]

Yes. It's a combination of all of the above. So that Fortune one hundred customer placed fairly significant orders during the quarter. However, they're continuing to order in the current quarter, and we expect that number to grow substantially. So they're a big part of it.

[Rajshekar DasGupta, CEO at Electrovaya]

What we've also seen is our one of our OEM partners, we launched a leasing program with them last year that's generating a lot of midsized orders for us. That's that's great to see that momentum. So that's smaller orders. So those are very helpful to fill in the gaps on with with regards to production planning. And then other major customers, we have a leading discount retailer who has been ordering consistently and will be a major part of our fiscal twenty twenty five revenue.

[Rajshekar DasGupta, CEO at Electrovaya]

And then both Raymond Toyota are steady steadily providing us other customers as well. We're we're breaking into some other major end end users as well, potentially with energy services. So looking at energy as a service as opposed to just selling the batteries. That's something that's currently not very significant for us, but it's could become quite significant for us, especially in fiscal twenty twenty six. So it's a it's a smorgasbord really of of interest.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Okay. Great color there. Maybe then just turning to some of the emerging applications. I know so now you've got a second construction OEM through Sumitomo. When you think about those new applications, I mean, would think that Sumitomo opens up a significant number of potential customers in end markets.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

But do you think about that as you potentially add other trading house partners? Or is, you know, Sumitomo getting gets you the market reach that you want?

[Rajshekar DasGupta, CEO at Electrovaya]

Well, in Japan, it's very much a relationship business, and we have a great relationship with Sumitomo Corporation. I think we'll maintain that. We will not be looking to work with other trading partners.

[Rajshekar DasGupta, CEO at Electrovaya]

Right now, today, we have the two construction OEMs, which have been we've press released, but there's a great deal more of activity in the background. And we are we're very enthusiastic about the momentum that's we're gaining out there in Japan. We will probably be setting up a operation there eventually as well to support some of that growth that that we're seeing. So we're we're very, very pleased with that relationship that we've built up. And things move, you know, in in the battery space.

[Rajshekar DasGupta, CEO at Electrovaya]

It takes time, of course, to get yourself qualified and in in into production programs. It doesn't happen overnight, but you have to feed those those positions. And then once you have, it turns into a garden eventually.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Yes. And I guess just a follow-up, and then I'll jump back in line.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

But the as you said, great deal more activity in the background. Is that is that more construction equipment, or has that broadened out to other applications?

[Rajshekar DasGupta, CEO at Electrovaya]

It's construct there's these two in construction. There's a third in construction as well we're talking to. There there are other robotic applications that we're looking at in Japan as well. That seems to be the the general focus.

[John Gibson, Chief Financial Officer at Electrovaya]

Yeah. The batteries themselves are are very similar to each other. So application wise, we can kinda fairly easily pivot towards a different size of vehicle.

[Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Okay. Thank you very much.

[Operator]

Thank you. Your next question is coming from Craig Irwin from Roth Capital. Your line is live.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Hi.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Good evening, and thanks for taking my question. So, Raj, can you maybe comment a little bit about the forklift battery shipments in the quarter? Proportionately, were most of them into preexisting installations, any greenfield facilities out there? You know, how would you how would you explain the mix within the the the forklift batteries?

[Rajshekar DasGupta, CEO at Electrovaya]

I'd say it was approximately a fifty-fifty mix, which is new for us.

[Rajshekar DasGupta, CEO at Electrovaya]

Most in previous quarters, it's mostly new vehicles, new sites. This was a pretty diverse mix With the discount retailer, we've been supplying that's mostly into existing distribution centers. With the Fortune 100 other customer there, it's, I would say, new sites. And then on this on the leasing program with Toyota, that's probably mostly existing distribution centers, smaller numbers, but adding up adding up to becoming a significant sum.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Excellent.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Excellent. And then maybe can you can you update us on the the progress diversifying your markets, diversifying your your served markets outside of the lift up markets. You mentioned robotics. You know, there's there's a long list of of different things that you are addressing everything from rail to military opportunities. Where do we sit right now with the the different customers that you're you're working with there?

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

You know, you shared the the second construction customer with Sumitomo that that that's that's online now. But, you know, any additional color that you could share with us as far as repeat orders or test packs as far as, you know, where the customers are in their evaluations for for follow on orders and and expansion to other opportunities?

[Rajshekar DasGupta, CEO at Electrovaya]

So with the one of our defense customers, they've placed repeat orders and placed another repeat order just, like, last week. So, again, it's small numbers, but it it really demonstrates that the relationship is building and that we're tracking to something more meaningful. So we're seeing that type of activity on robotics.

[Rajshekar DasGupta, CEO at Electrovaya]

We have we've had a a long history with a a group called Jabil. They had been a relatively minor part of our revenue over the last few years, but started to scale things with us. Now we've received more meaningful orders and are expecting to get into additional platforms with them. So that's exciting. Then there's group called Fashion Solutions, similar idea there.

[Rajshekar DasGupta, CEO at Electrovaya]

So we're seeing some more activity in the robotics space. Airport ground equipment, again, feed orders in that space as well. That's one which is a fairly adjacent market to material handling. And what have I missed there? So that that's about it.

[Rajshekar DasGupta, CEO at Electrovaya]

Construction, of course, we've mentioned that. So those are the areas that we are seeing fair bit of activity, and I would expect those to scale up in next fiscal year.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Excellent. Excellent. And then last quarter, we talked about the potential to maybe pull forward pack production in Jamestown.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Can you say whether or not this is a priority at the moment? Is this something that helps you strategically given that this facility will be producing sales in the not too distant future? And does this maybe improve the potential for customer capture as you're as you're looking at growth markets?

[Rajshekar DasGupta, CEO at Electrovaya]

So we we have started that operation already, Craig. So we have a team there, and they're already working.

[Rajshekar DasGupta, CEO at Electrovaya]

So the plan is that we'll have that the Jamestown operations will will support our growth. So they will be taking care of a certain portion of our targeted manufacturing goal over the next twelve months. That gets the the team there very familiar with with lithium ion batteries in our specifically our batteries and well prepared for what happens afterwards, which is what we make when the cell and module production starts up. So that's already in place. I think it benefits Electrovise significantly in the fact that it provides us added capacity.

[Rajshekar DasGupta, CEO at Electrovaya]

So instead of maybe adding a second shift here in Mississauga, we can have operations in both both plants meet our growing targets, and and it it really benefits So we're seeing that. In terms of it attracting additional customers, I'm not sure just yet. I think the cell and module production that's scheduled next year really is an piece that is attracting a lot of interest because we'll we'll be one of very few lithium ion battery plants that can support customers in North America.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Great.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

And then and then lastly, if if I could ask a financial question. So your total debt was down, I guess, around 3,800,000.0 sequentially. But the the BMO facility is going to also deliver you, I believe, some substantial interest. Can you can you update us on the the interest rate on on the BMO facility to how this compares to your legacy facility? And, you know, should we expect you to be using that for growth working capital so that, you know, the the net net interest can actually trend up?

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Or is this something where, you know, you're gonna continue to have a very tight balance sheet and we'll see actual cash interest, you know, tightly controlled possibly going down over the next few quarters?

[John Gibson, Chief Financial Officer at Electrovaya]

Good question, Craig. Interest savings are are over five points from our previous lender. So what I'll say there is that is a specific working capital loan. We're always gonna manage that tightly and save our saving our our finance cost.

[John Gibson, Chief Financial Officer at Electrovaya]

There's no point having millions of dollars in in the bank if we're paying the interest on it. So you're always gonna see that. It will fluctuate based on timing as as these things always do in cash receipts and payments come during the weeks and the months. Essentially, the the this facility will will allow us the the room we need to grow and grow quickly. And that's what we were looking for in a banking partner, someone who is flexible.

[John Gibson, Chief Financial Officer at Electrovaya]

From an interest rate perspective, obviously, there we have we can split our loan within Canadian and US dollars as we see fit and as our suppliers require it. So you're you're gonna get different rates north and south of the border, but we we're able to manipulate where the money money sits to save our on our interest cost.

[Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC]

Understood. Well, congratulations on the solid EBITDA number. It's it's impressive. Thank you.

[John Gibson, Chief Financial Officer at Electrovaya]

Thanks.

[Rajshekar DasGupta, CEO at Electrovaya]

Thanks, Craig.

[Operator]

Thank you. Your next question is coming from Sameer Joshi from H.

[Operator]

C. Wainwright. Your line is live.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Hey, good afternoon, guys. Congrats on a good quarter.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Just following up on sort of previous questions. Will just let us know if whether the bank loan is going to be drawn down upon as you order and pay suppliers? Or is this already in your bank and you will be paying interest starting now?

[John Gibson, Chief Financial Officer at Electrovaya]

So this is it it it's a draw based facility. So what we've done is we've issued all the purchase orders.

[John Gibson, Chief Financial Officer at Electrovaya]

And when those are due for payment, we'll draw from from Exxon and and pay. There's not really much point in us drawing it before it's due because otherwise, we're gonna incur interest on that. So we're just gonna target the the due date draw down and from that moment on, that's when the interest accumulate.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Makes sense. In terms of operating expenses, you have started initial assembly at the GameStone facility and probably and are targeting mid next calendar year for a full commercial operations.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Should we expect to see uptick in operating expenses or any expense additional expenses will be sort of COGS item?

[John Gibson, Chief Financial Officer at Electrovaya]

Yeah. Majority will be COGS.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Okay. And then the last question from me is you have maintained your guidance and but how come they strong in the second quarter.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Historically, third quarter is relatively flat to second and the fourth quarter fiscal quarter is quite a jump. If you do that, then you think you might exceed or will exceed the 60,000,000 guidance. Is that what you're looking at, especially looking at your 25,000,000 orders received this quarter? Should we expect that kind of a ramp?

[Rajshekar DasGupta, CEO at Electrovaya]

Yes.

[Rajshekar DasGupta, CEO at Electrovaya]

We wanna be conservative. However, we are expecting Q3 to show meaningful sequential growth, but we're halfway through the quarter. So we'll most definitely exceed the Q2 result. And we hope to maintain growth into the Q4. So, yes, we potentially can exceed our guidance by a strong margin, but we don't want to put it on we don't wanna have it.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Yeah. No. It's fair.

[John Gibson, Chief Financial Officer at Electrovaya]

There's a lot of volatility in the market right now, so I think it's a prudent thing to keep it at six.

[Rajshekar DasGupta, CEO at Electrovaya]

Absolutely.

[John Gibson, Chief Financial Officer at Electrovaya]

Yeah. We'd rather have continued growth in a hockey stick for the year.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Nice. Just I I I would like to squeeze one more. You mentioned some of the applications, and it seems that these could be newer applications, I mean.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

These could be come these could command higher prices and could be higher margin. Should we think of it that way, or is it going to be the same form factor and pricing and margins for everything?

[Rajshekar DasGupta, CEO at Electrovaya]

So we we wanna main we we don't wanna go after any verticals where we can't get at least 30% margins. Of course, some of those verticals will be higher margins, especially on defense, for instance, the volumes will be lower.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

So Great.

[Rajshekar DasGupta, CEO at Electrovaya]

I on margin on margin wise, we will most definitely continue to exceed 30% threshold. Now with with all the uncertainty on material prices as of late, it's hard to harder to predict things, but we expect that the Jamestown cell and module production are going to enhance modules enhance margins whether, you know, IRA exists or not at that point.

[Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC]

Understood. So but generally speaking, you know, when it comes to mining or construction or robotics, they're all strong margin applications. Got Thanks for taking my questions, and good luck.

[Rajshekar DasGupta, CEO at Electrovaya]

Thanks, Samir.

[Operator]

Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from Jeffrey Campbell from Seaport Research Partners. Your line is live.

[Jeffrey Campbell, Senior Analyst at Seaport Research Partners]

Thank you, and congratulations on the strong quarter. Raj, I want to start with something that's probably a little off the track, UPS recently announced a 20 k head layoff, said they were closing 70 plus facilities. And somehow they tried to blame Amazon for for the cutback. I just thought to ask how your leasing business, which I assume UPS will be most relevant to, continues to progress.

[Rajshekar DasGupta, CEO at Electrovaya]

So, you know, I you know, there are always gonna be fluctuations with regards to these third party logistics companies.

[Rajshekar DasGupta, CEO at Electrovaya]

Some do better, some do worse. But generally speaking, the industry as a whole is growing, and the need to repower lead acid batteries is increasing. So that's what we're seeing. We're seeing that transition from lead acid to demanding better batteries, and that's driving growth in orders for us. Previously, we've got very little in the way of orders from third party logistics companies, primarily because they get five year contracts.

[Rajshekar DasGupta, CEO at Electrovaya]

And now with this program that we have with Toyota material handling, they're getting quite a bit of interest from that sector. But I wanna speak about UPS specifically, but we're seeing demand going up, and that's all we can really comment on.

[Jeffrey Campbell, Senior Analyst at Seaport Research Partners]

Well, that's all we really care about, so that that's fine. You mentioned the possibility of setting up an operation in Japan. I just wanted to as you think you have, does this mean an assembly facility or might the country want a Jamestown type facility as the want to order No.

[Rajshekar DasGupta, CEO at Electrovaya]

No. It would start out at you know, if if volume goes dramatically upwards, we would consider an assembly phase. But the first phase of it would be to support customers there. So that's more like service, sales support, that kind of thing. And then as demand it would follow demand.

[Rajshekar DasGupta, CEO at Electrovaya]

So if demand reached a certain threshold, we would consider assembly there as well. As you noted, is an early point of activity for electric bed, but it sounds like this is ready for a new phase. I'm just wondering if you could provide some color on what sort of robotics applications are really driving the potential growth. So it it's a variety of things. There's there's material handling robotics.

[Rajshekar DasGupta, CEO at Electrovaya]

There's automated cleaning. There's automated monitoring, all sorts of new products by exciting companies that are getting launched, and what's common to them is they need good batteries. So and we'll be there to support them with that.

[Jeffrey Campbell, Senior Analyst at Seaport Research Partners]

K. And finally, regarding battery storage for energy service, what battery modifications are you needing to make relative to material handling, if any?

[Rajshekar DasGupta, CEO at Electrovaya]

Not not really needing to make any modifications. We have software to support that, which we we have already developed.

[Jeffrey Campbell, Senior Analyst at Seaport Research Partners]

Okay. And is that software similar to the things we talked about in the past with monitoring the energy consumption of the batteries in a a warehouse type environment?

[Rajshekar DasGupta, CEO at Electrovaya]

Or is it something Exactly. Down those lines. Yes.

[Jeffrey Campbell, Senior Analyst at Seaport Research Partners]

Okay. Great. Alright. Thanks a lot. I appreciate it.

[Rajshekar DasGupta, CEO at Electrovaya]

Thanks, Jeffrey.

[Operator]

Thank you. Your next question is coming from Aaron Martin from A Investment Partners. Your line is live.

[Aaron Martin, Analyst at AIGH Investment Partners]

Hi, Raj. Hi, John. Congratulations on those continued progress. A lot of the questions have been covered.

[Aaron Martin, Analyst at AIGH Investment Partners]

But it's going at a slightly different way. You've very large amounts of orders in the first half of the year, and that's didn't really even went into the year with some of the greenfield opportunities that we were expecting to happen in the last fiscal year that, you know, due to the time that the customer got pushed out to this year. Are you are those still on track with the orders from, you know, that we thought were gonna be in fiscal twenty twenty four? Are they still on track for 2025?

[Rajshekar DasGupta, CEO at Electrovaya]

Well, some of those got delivered.

[Rajshekar DasGupta, CEO at Electrovaya]

Actually, one of them has moved to 2026, but it's not going to affect our our revenue guidance at all because we're getting other orders. So when it comes to new buildings, the the timing sometimes is a bit unpredictable. But generally speaking, the trend, I would say, is we're we're seeing the order rates being sustained. It's not just happening in the early part of the year. I would expect it to continue that type of based on what we hear from the from our pipeline.

[Rajshekar DasGupta, CEO at Electrovaya]

Right? So there's orders that are issued, and then there's orders that, of course, are discussed and then placed, which I understand.

[Aaron Martin, Analyst at AIGH Investment Partners]

Yeah. I guess that's really leading to my next question. Are we you know, as we think about the pipeline for 2026, is that starting to build now whether as orders or as, as you said, you know, pipeline, the heads up we're getting to the customers? How should we start thinking about that?

[Rajshekar DasGupta, CEO at Electrovaya]

Yeah. So we we already have orders in hand, are, you know, significant numbers of orders in hand, which are due for 2026, and then pipeline on top of that that's been communicated. Now for instance, with the Fortune 500 discount retailer, they've given us a fairly strong indication of what they are looking to do in 2026, so and it would be probably larger than what they would be in 2025. Similar kind of communications from from other major end users, including the Fortune 100 customer we have.

[Rajshekar DasGupta, CEO at Electrovaya]

So we're we're getting a the visibility for 2026 is is getting better by the day. And it's good timing because we we really want to ensure that 2026 and fiscal twenty twenty seven numbers, we can maximize the production out of Jamestown. So that that's what we wanted to see, and that's what we're headed towards based on what we're based on information at hand right now.

[Aaron Martin, Analyst at AIGH Investment Partners]

Got it. Switching gears a little bit towards gross margin, you've done a great job there.

[Aaron Martin, Analyst at AIGH Investment Partners]

When it comes to tariffs, I wanna differentiate in the, you know, the short term and the longer term. Obviously, the Jamestown facility and, you know, that act of having sell production there, you know, is incredibly interesting to the customers. But in the shorter term before Jamestown is up and running on the sell side, you know, how should we think about tariffs and and your, you know, cost of goods?

[Rajshekar DasGupta, CEO at Electrovaya]

Yeah. So so tariffs are affecting some material prices, and they're they've gone up.

[Rajshekar DasGupta, CEO at Electrovaya]

At the same time, we've managed to get some material prices to go down. And then we've had optimizations in our own assembly process. Remember, 15,000,000 in revenue is still, I would say, on a quarterly basis, a relatively small number. We hope to get to much larger ones. And so our buying power is growing, and that's offsetting any of these cost increases due to tariffs.

[Rajshekar DasGupta, CEO at Electrovaya]

So I would expect us to maintain margins where they you know, probably where they are, maybe grow them a little bit. And then when we start gaining count, of course, I would expect margins to grow more sharply.

[Aaron Martin, Analyst at AIGH Investment Partners]

Got it. And and does any of that involve, you know, passing on price increases to your customers, or that's really hasn't been necessary?

[Rajshekar DasGupta, CEO at Electrovaya]

It you know, we it really has not been necessary.

[Rajshekar DasGupta, CEO at Electrovaya]

What we have noticed, though, is most of the competition has been increasing prices. So there's an opportunity to do so if we thought we should. But right now, we're not seeing the need to do so, and it's making us more competitive as a result.

[Aaron Martin, Analyst at AIGH Investment Partners]

Okay. Great. Congratulations on progress again.

[Rajshekar DasGupta, CEO at Electrovaya]

Thanks, Aaron.

[Operator]

Thank you. There are no further questions in the queue.

[Rajshekar DasGupta, CEO at Electrovaya]

That concludes our call, and thank you for listening.

[Rajshekar DasGupta, CEO at Electrovaya]

We look forward to speaking with you again after we report our third quarter twenty twenty five results. Have a wonderful evening.

[Operator]

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Participants

Executives

• John Gibson, Chief Financial Officer
• Rajshekar DasGupta, CEO

Analysts

• Daniel Magder, Managing Director at Raymond James Financial
• Eric Stine, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Craig Irwin, Managing Director, Senior Research Analyst at Roth Capital Partners, LLC
• Sameer Joshi, Senior Equity Research Analyst at H.C. Wainwright & Co., LLC
• Jeffrey Campbell, Senior Analyst at Seaport Research Partners
• Aaron Martin, Analyst at AIGH Investment Partners