I own assets & chill. Investor in grid enhancing technologies. Prototypes are easy, production is hard ⚡️🔋
Manhattan, NY
Joined May 2021
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$EOSE 🧵
Was at a bach party this wknd and coincidentally sat next to someone very interesting in the casino… friend on the trip who worked for a PE firm specializing in financing renewable energy projects…. (with connects to Eos gen2.3)
I know lots of folks are upset with the q4 miss and relative quiet on the order front but let me bring up a few things nobody ever talks about.
Before a single Eos batt gets installed.. the developer buying it has to close project financing. This means getting a senior lender, a tax equity investor, and an offtake agreement all lined up simultaneously.
Every party does their own DD and anyone can kill the deal.
Here's who has a say before a project closes: Senior lender sizes the loan to contracted cash flows, tax equity investor claiming the federal tax credit, independent engineers certifying the tech works, offtaker signs l/term capacity agreement, insurer provider wraps project.
Everyone has to be comfortable. Independently.
The federal tax piece alone is huge.. under the IRA BESS projects can qualify for the 30-40% ITC depending on location + domestic content
On a $60M project..thats about $24M claimed in year1. The feds are funding nearly half a project on day1. That’s why it gets built.
The operational cash flows alone don’t justify it. The tax benefits are the engine.
Here's the catch..a tax equity investor will only participate if it’s certified by an independent Engineer.. engineers review field performance, OEMs balance sheet, warranty terms, chemistry etc… then sign off.
That’s the price of admission.. without it.. you wont close.
This is why the “eos tech doesn’t work” has a logical problem.
Mn8 energy is GS backed. The supply agreement is for 750mwh. They have institutional LPs, their own lenders, and a rigoruous DD process… goldman backed firms do not stake their reputation +capital on tech they think has no chance to be bankable.
Same with talen.. a $17B IPP. They would not put their CEO name in a PR for tech they don’t believe in IMO.
Talens play is pairing eos w existing generation in PA to serve AI DC. They have the land, the interconnection, and the hyperscaler relationships.
Doesn’t sound like a favor… it’s a calculated infra bet.
And then you have frontier power. UK developer that submitted Eos tech to OFGEM.. the UK regulator in a competitive bid for the cap n floor program. 11Gwh of projects to round two using Eos tech.
Under the program.. ofgem provides a rev floor..essentially the govt backstops the cash flow the lender will underwrite against
The 228mwh firm order isn’t just a sale. It makes eos look much more viable since it’s being considered within regulated lender-backed frameworks …
NYSERDA plays a similar role domestically.. when NYSERDA selects its tech thru competitive solicitation.. it backstops revs that senior lenders will underwrite against…
A govt backed offtake is the cleanest credit in project finance… that is in our pipeline.. 🔑
So why is conversion so slow?
Maybe bc the chain I just described – lender approval, tax equity, independent engineer certification, offtake, insurance can take 12-24 months from contract signing to commercial operation .. then layer in first of a kind BESS chemistry that has never been financed or deployed at scale… 🤔
These counterparties engaging tells me the tech has cleared initial DD hurdles, but scaling risk remains
Nobody signs a 750mwh as a favor.
Cerbs involvement likely improves access to financing counterparties.. but execution risk still exists. But adding a 3rd BOD member isnt a move you make from a company you are about to walk away from.
Talented finance execs tend to do DD before joining as well.
The risks are real. Mfg execution, runway, order conversion- not dismissing any of it. But the project finance complexities are under appreicated. Just trying to close that gap.
$EOSE ☕️
Talking with numerous investors.. the main concern is the dilution it will take to reach profitability… but less & less questioning around IF eos can make it to the other side which is key.. and important to recognize.
After one of the most brutal momo unwinds coupled w the heightened cost of capital many small cap unprofitable clean tech co’s have been taken to the woodshed..
Need to acknowledge the challenging capital env is not idiosyncratic but thematic & broad based.
This is exactly why Eos is emphasizing margins over revs.. the margin bridge is what they need to sell investors on.
To reiterate for the 100th time… this is how I think about the tailwinds to margins + two call options within the company that get glossed over when modelling out..
Cheaper inputs (buying in bulk), faster lines (TH), cheaper installs (Cores), more output.. PLUS two high margin rev/income streams
Supply side- TTI just raised $100M to build the Arkansas Bromine plant.. 75M lbs/yr at Phase one for production in early 28. Domestic Bromine at scale once eos needs more of it. Increased levels of Felt Shipments relative to 2024 & 2025.
Suppliers that add capacity means more secure supply & better leverage on prices.
We are living through this right now imo. And its key bc you cant grow unless your supply base grows with you. -> Lower material cost
The Factory: 8 straight quarters of margin improvement even with TH only at 17% of Q3 production on a partial shift. TH will go live in Q4 as they hire.
L1 in TH will have 10-15% lower conversion cost.. rising automation, more redundancy, and faster cycle times.
I think 2gwh (in time) will prove to be conservative. Eos just needs to demonstrate 2gwh per line is low. Don’t make the cardinal sin of saying it before proving it. We have lived through that before.
With faster cycle times + redundancy.. each line could make 2.5Gwh/yr at just 80% utilization once demand is there/ cost model is solid.
2 lines -> 5Gwh and 4 Lines is 10Gwh.
Same fixed cost over more output means better margins.
Some of the cost pressure today is temporary.
Field commissioning and DawnOS upgrades on installed cubes.. those will roll off as retrofits end.
They aren’t structural for all the folks who look at cogs in a vacuum… which 80% of folks do. 🔑
Why Indensity should win…
Cheaper to build: batteries + controls are pre installed, wiring is built into the frame so its not done in the field, no auxiliary HVAC
Simple install: No crane, forklikft ready telehandler. Push to connect with no fasteners above head height
Better in the field: Each level has 12 cores; so one bad core is <1.5% of a six high system & its swappable. Six high = 500mwh or 12 high is 1gwh
Speed to power is the whole game: If Eos can pull of a 250mwh install within a week it’s a huge validation; but more importantly.. it proves speed to power which is the most critical trait in todays mkt.
Very scarce. Very valuable. Faster energization = faster revs
Field Data: Q2 pointed to 200mwh+ of z3s in the field. CU, Viejas, Lincoln electric.
This data matters a lot for the sharebase bc it’s the same data Eos will use to sell early indensity deployments if I had to guess. Dominoes..
Call option 1: nobody models service revenues. Long term service agreements equate to 20-25% of total project capex cost. So ~25% of ~300/kwh+ all in.
Probably higher than that (300kwh)
So each Gwh earns 3-4M in service revs… So 3.5Gwh shipped in 2027 plus 5-7Gwh in 28 puts 9-11Gwh in field by end of 2028… which will be up to 30-45M/yr in service revs. Add 7-10Gwh in 2029 and its 16-21Gwh live which is ~48-85M/yr at 50% margins.. itll compound with the fleet.
It will take time.. but it will be very accretive
Call option 2: FPUSA
~263M committed expected to deploy $1B into projects with 1.8Gwh under construction or near NTP.
Eos owns 36% so operating projects send cash back to Eos below the line.
The bigger level is selling & recycling.
Lets say a 1gwh project cost $333M about $88M of it equity.
Sell an operating project at 1.4x equity and get ~$123M back.
Reinvested as equity, that funds ~470M of new projects… equates to 1.4gwh.
Those new projects buy Eos batts: ~1.4Gwh x $220kwh = $310M of new eos revs plus 20 yrs of service on each.
Sell 1gwh fund 1.4gwh of new orders…😳
Equity keeps turning into more demand.
Some sell guy should try and model the fly wheel… even if it’s peanuts right now
Put it all together.. cheaper inputs at scale, faster and more automated lines, L1 consolidation, retrofit cost roll off this Q, easier to install product means lower cost per kwh.
Service + Recycle stack on top. Field data will validate product
The real risk is the ~$344M of cash and positive margin still ahead. But every input seems to be moving the right way. The street will be lasered in on margin bridge next week.
JordanSolace retweeted
Thoughts around AI
1) Given AI is the largest technology revolution in history at roughly 3.5% of GPD (larger than electrification, highways & internet combined); there is overinvestment due to the potential rewards for the eventual winners.
2) But much like during the Internet buildout, which had several large drawdowns including in 1997 (Asian currency crisis) and 1998 (Russian bond default), and then ripped higher, the question is whether this is THE TOP.
3) AI had 3 separate investment waves: training, inference and now Agentic
a. Agentic demands 10-100x more tokens than inference and started with OpenClaw in January for the tech savvy followed by Muse in late September for the rest of us.
4) Currently, the market is repricing two things
a. Financing costs are higher in both debt & equity mkts
i. Debt- $CRWV unsecured debt trading at 15%
ii. Equity- expected timing for AI related IPOs like OpenAI, Anthropic delayed earlier this year while filed IPOs of Firmus, AirTrunk, NScale, SB Energy delayed/ pulled
iii. Meta 8K “timing is important to secure capital before competitors saturate various funding options… in an increasingly challenging environment for raising capital.”
b. AI native growth rates slowing
i. Anthropic revs 145% q/q in Q2 to 45% in Q3
ii. Openweight driving ASPs down ~50% since May
5) Datacenter moratoriums seem to be the only thing both parties agree on
a. This could get worse after the mid-terms with a less AI-friendly political climate
In summary, because of the advent of Agentic, I do not believe this is THE TOP. But having higher cash levels and being circumspect as the market reprices has been important. This has been my advice for the past several weeks.
Unfortunately, my belief that it was time to start putting money to work for at least a short-term rally this past week due to oversold conditions in areas like semiconductors has been early so far. The SOX was down 3.2% last week vs the S&P down 0.5% but time will tell.
$MSFT $AMZN $GOOGL earnings this upcoming wk
1) I think much like with $Meta earnings this past week where I previewed concerns, the stock reactions for the above three will have a lot more to do with their comments around future capex investments, expenses, cash flow and financing needs.
2) I worry whether a datacenter moratorium causes an issue with cloud growth guidance for the December quarter despite very strong growth in the September quarter. NextDC in Australia cut their rev guide by 22% for CY27 due to local community pushback and the stock was hit for 39% last week.
Microsoft seems committed to being cash flow positive and I see them being an ultimate winner in enterprise AI. 1. They provide a safe environment to run Co-Pilot AI applications given almost all S&P companies run M365 already. Co-Pilot seats were 30M+ in the June quarter up from 20M+ in March and 15M in December.
2. One potential risk is their high margin PC business being impacted by the large declines being caused by surging memory prices.
3. Azure expectations vs their guidance of 45% y/y for September vs 43% in June have also picked up given the share gains being seen by OpenAI against Anthropic recently in enterprise.
Google should see accelerating cloud growth & be an ultimate winner in consumer AI through their Android distribution on smartphones. My short-term concerns are the following:
1. Cash flow was negative for the first time since being a public company in the June quarter.
2. A slight miss in search revs in the June quarter raise concerns around AI Agents not looking at ads.
3. More aggressive analysts expect GCP growth of ~100% y/y for CQ3 y/y (but this includes TPU sales) up from 82% in CQ2 and 63% in Q1. This is more than double the growth rate expected for AWS and Azure so I worry that these datacenter moratoriums may on the margin impact the revenue growth possible at GCP.
4. Google needs to get out their consumer Agentic AI product. This should be a catalyst for their stock given it should integrate with the 14 Google products that have over 1B users each.
Amazon should benefit from physical AI improving efficiency in their heavy asset e-commerce business.
1. I also think their e-commerce demand is solid as shown by them hiring more seasonal workers (+20% y/y) for the first time since 2023.
2. But as the biggest public cloud vendor and the one with the most capex, could they be too big to escape the data-center moratorium impact on their December quarter? As an example, Amazon last week abandoned its plans for a large 4 building datacenter in Loudoun County Virginia which has been dubbed "Data Center Alley." AWS grew 28% in Q1 an accelerated to 37% in Q2 with no formal guidance but hopes for a slight acceleration in Q3.
3. However, Amazon reports on Thursday so their AWS expectations will be reset by whatever results are from Microsoft Azure and Google GCP on Wednesday.
Best of luck in the week ahead.
$EOSE
They know they cant pitch on upfront capex cost..
Eos needs to pitch every dev on LCOS.
LCOS = a projects cost over its life/ every Mwh it delivers over its life.
Equipment, install, land, fire protection cooling, maintenance, augmentation, energy lost.. all of it.
Per Mwh.
Why does LCOS matter.. devs sell Mwh not just batteries. Devs returns depend on each mwh costs to deliver over 20+yrs.. not just the initial capex.
Capex is the sticker price, but LCOS is the cost of owning the system.
Lithium wins on sticker price & its cost keeps falling. If the conversation ends at capex it’s over. The job of the sales team is to move the discussion to everything capex leaves out.
What does it exclude?
Augmentation- and the batts the devs need to buy over the life of the project.
Fire suppression, spacing, setbacks, HVAC, land (li ion cant stack), permitting delays from fire concerns.. noise etc.
Now the duration argument… li ion cost about the same for every hr you add. An 8hr project is basically two 4 hr systems. No discount for going longer.
And every one of those hidden cost scale with the duration of the project.
2.5x the cooling, the fire protection, the cells, the land, the augmentation etc (for a 10hrproject relative to. 4hr)..
Meanwhile.. each Li ion hr earns less.. the first hr will sell into peak prices. Then the 8th & 9thsell into flatter ones.. li ion pays full price for hours that earn less and less. That is why the math bends away from li ion…
So when you are at point of sale you gotta harp on having cheap abundant materials, little degradation, no augmentation, no flammability, for projects that wait for peaks or grid events.
You almost don’t even need to sell zinc hallide.. you need to sell the cost it deletes from your project… 🔑
On the other hand…I think will see a pattern of pairing li ion and zinc halide to begin with
And.. if eos can prove they can stack non flammable cores up to 6 levels.. 500mwh/acre, roughly 2x typical li ion with a target of 12 high in the future (at 1gwh per hr). That is a MASSIVE cost advantage the competition cannot touch. 🔑
Literally play the game where the competition cannot compete.
Indensity can also attack the construction cost: prefab frames, cores shipped pre loaded, a telehandler, general labor instead of crews, and no cranes.
Fast builds = lower soft cost & earlier revs. Time to power…
Uptime: one battery string per core, so a single failure takes out less than. 1.5% of a large install and can be swapped with a spare. Much easier than a cube
More uptime; more mwh delivered; lower LCOS
Bring me in coach.
$EOSE
"Asked why KCE wouldn’t just jump ahead to zinc bromide technology which is less likely to cause fires, Yu said: ...If we use zinc batteries it won’t be economic for us"
newsday.com/long-island/poli…
Chamath & Elon back n forth laying out bear case for AI/DC boom… fascinating
Chips aren’t the bottleneck anymore. Power & cheap capital are…
Grid queues are jammed, hyoerscalers will feed themselves power first Ik the crunch, and 2027 we will see GPUs paid for but sitting idle… (waiting for power)
Stranded compute
On top of that.. debt mkts (per Elon) are shut down for anyone w/out but non AI revs.. most Neo clouds cannot say that 👀
Hindsight this is obvious.. but you see why Neoclouds funded with debt backed by there own GPUs are under pressure
OR .. developers without secured power/land and of course anyone with a bit maturity wall in 27 is fucked
Every month you wait on the grid = interest ⬆️ + aging chips
Many of the Neo clouds also promise perfect availability/uptime but if there are outages at all… oh man. Customers will walk or there will be HEAVY penalties
A good deal on paper can flip real fast.
Who does this look good for when power is the bottleneck…
Battery + storage components (faster grid hookups & bridge power)
On site generation like fuel cells & turbines
Transformers & switch gear
Owners of powered land
IG Hyperscalers of course
Energized megawatts & cheap capital. Whoever has those will set the terms
2027.. maybe a shakeout for neoclouds & tailwind for selling power.
Just interesting to read exchange below.. nothing new
As someone with a portfolio of energized land assets here is what I am seeing:
1. Neoclouds are disorganized and poorly capitalized. Some are definitely better than others however.
2. Hyperscalers are intractable, bureaucratic organizations that take 3 months to do an NDA and want 18mo escrow periods. We built our portfolio by competing against these terms because of our speed and simplicity. The more future assets orgs like ours win, the bigger the problem for the hyperscalers downstream (see 3).
3. There are delays in the existing pipeline that will catch people off guard in 2027. Hyperacalers will (obviously) react by focusing on their own internal compute needs over any third party. If the third party is a model company, they will tell them to go through their model router where they will also take a non-trivial vig. Them telling Ant they have no compute for them (rumored in Ant’s S-1) if true is a huge tell that this is already happening.
All of this is to say that it does look like there will be a lot of partially stranded compute and compute sitting in inventory in 2027 than is currently forecasted. This is bought and paid for but effectively underearning (below total cost of capital) or collecting dust. We see this as true for everyone - model companies, hyperscalers, neoclouds except ONE (you can guess which one).
This dislocation will benefit two kinds of orgs: the non-bureaucratic big scalers who can build industrial scale quickly and the nimble, well capitalized players feeding them.
2027 will be a turbulent year because it will clear out a bunch of wrong/bad bets. It will also be a consolidation year for a few.
$EOSE
This is the last quarter before the team is officially in the state of the art facility in TH
It’s a race between margins, burn, and cash… but once they are in the new facility early next year…
1) the margin profile will be way different
2) the mfg efficiency has never been as good as it’s been now
3) they will have a competitive product they can bid with into larger
procurements
4) another quarter of discharge data that is melting higher
5) likely more news on the commercial front whether it’s 3rd party or fpusa related bc they can’t go into 2027 with a $670M backlog
By the time various parts of the story are de risked.. the mkt will be ahead of you
Invest from this point moving forward.
4 lines of indensity production at scale in TH doesn’t equate 8gwh imo
This is why we do what we probably shouldn’t be doing… 🦃
$EOSE quick take: 🍺
This is why the incremental margin gains are crucial.. and why I think it will bring institutional capital back to the name in the coming quarters…
Imagine an 800mwh – 8hr contract. Li ion bidders price near $240kwh
Eos also wants the job. What happens depends entirely on which product it bids with. (This is just a hypo..)
Lets say Eos bids on the cube economics: so they guarantee output at ~78% RTE.. Eos needs to oversize ~18% (944mwh).. at $340kwh to build it.
That will cost $321M against $192M of revs. If Eos wins the bid they lose $129M
The alternative is pricing at cost plus margin which is ~$500kwh and losing to li ion on cost…
For cubes.. the economics on these large projects might just be to challenging.. we have felt that over the past couple years is my guess…
You lose the bid or you lose money.
Does not make sense.
Same bid on Indensity… Economics- less oversizing (~840mwh) and a lower build cost… ($200kwh) turns the same bid into +~$24M and about a 12% margin.
Same customer, same price. Different outcome here. 🔑
After all these years.. this is THE bet.
This is why indensity is the product Eos needs to take to mkt. It uses the same z3 tech + DawnOS but in a stackable, forklift serviceable design for the auto assembly.
The density/indoor setting, and cheapness to transport + install allows it to ACTUALLY play where li ion struggles… and make money. 🔑
Why not just bid bigly on indensity today? Because we still need the field data.. so I think eos will prioritize getting these cores into the field (not on massive projects) but ones that (as they have said in whitepapers) can deploy + commission quickly.
Get the discharge figures higher as well as leverage DawnOS cube data….then start bidding on some bigger projects next year (and winning in the niche mkt I think they can carve out).
That right there is the gap FPUSA will bridge… will supply the volume while indensity proves itself out. The 2gwh reservation can help 2027+ any re-ups when you consider what is in the FPUSA pipeline…
The FPUSA cap stack can support additional gwh beyond the 2 right now ($1B+ Project capital) total so frontier doesn’t need more $ in the immediate term.
TH is the finish line.. Q3 rose from 1% to 17% ( L2 production) and eos has improved margins for 8 Q’s in a row.
Mgmt pointed to 70pts+ on the q2 call and Q3 was on pace
L1 consolidating in early 27 will lower conversion cost by 10-15% 🔑
The race is $344M of cash vs the time it takes to get GM+.. if you exclude the $87M DOE advance cash fell ~$107M.. but every Q we get margin progress the risk of massive dilution shrinks…
And if you are the one screaming for orders… just keep in mind… a money losing contract would make dilution way worse
So the strategy … Indensity makes the economics work.. FPUSA fills the volume as data comes in, TH builds it cheaply at scale.. margins are gonna be how we know it is working. Anchor to trend… not absolutes especially not the q3 margin figure in isolation bc it means nothing
More to come on what I wanna see on 11/5.. but I want mgmt. to continue magnifying the path to BE.. any indensity milestones, harp on the field data bc we need more of that, and if possible why cash is sufficient for the time being.
But again.. it’s the margin story that will get institutional dollars flowing again
$EOSE
Annualize $83M and they are squarely at the midpoint of there guidance 🔑
Much more comfortable place to be relative to Q3 25. Annualized Q3 25 rev and they are at $120M which is $30M below the low point…
This year Eos just needs to avoid a mess up relative to last year trying to hit a triple
Cash looks solid. Margins trending the right way.
They need to work on backlog & conversion.
No negative surprises contra to the bear takes on here.
👏
More to come
$EOSE
Patience is really tested in small cap/micro cap/ shit cap land… that’s for sure.
For the folks who have been around for 3+ years the round trip has been absolutely insane…
Obviously the team is either gonna execute on the plan & meet revs.. come in around $300m with margin improvement or we will get continued delays… more talk, excuses, dilution, 6 months away etc…
But given the mkt backdrop and the lack of risk appetite they don’t have the leash with investors this go around.
Permanent impairment or big disconnect. We will know in the months maybe even weeks to come
All you can really do is be laser focused on what they say for Q3… are things on track, are they not, do they continue converting pipeline, fpusa .. etc.
The price action sucks yes.. that’s an understatement. I don’t think it’s all idiosyncratic… some of it is. Some of it’s not.
Mgmt needs to earn back credibility which is why you see the constant lag in equity vs peers the last few weeks
Mgmt cannot control the algorithmic selling/mkt selling… but they can control comms… so again- let’s see if we get a better cadence into YE…
Objectively imo, think things are better underneath the hood than the equity price is showing… field data will be coming online, plants are active, commercial traction not as dire as it seems, no massive setbacks but it’s a moot point.
Let’s hear from the company directly…
Soon enough…
Deep breathes yall
Agree with this theory. Definitely seeing a flight to safer assets leading up to the election.
Assuming oil doesn’t spike higher I think rates will stabilize.. inflation is structurally higher but not rising from this point.. 5-6% 10yr seems fair.
Nominal growth lands us in this higher rate regime but that’s not the end of the world
My working thesis is that the market, particularly across AI and data center infrastructure, is increasingly pricing in the probability of a Democratic sweep in November. If this plays out I suspect much of the political and regulatory uncertainty will have already been discounted by the time we get to the midterms.
My base case is that we establish a bottom ahead of the election, see some consolidation as the results and policy implications are digested, and then enter a much more constructive environment heading into 2027.
The underlying demand for compute and power infrastructure isn't going away, irrespective of who controls Congress. I think the market is conflating near-term political uncertainty with a structural impairment to the LT investment thesis.
Once that uncertainty begins to clear, attention should shift back toward fundamentals, execution, and capital deployment. Assuming liquidity conditions are supportive, I think smaller-cap infrastructure names could be among the biggest beneficiaries of that rotation.
In other words, I suspect the political cycle is influencing the timing of the opportunity far more than its underlying economics. Yes I know yields are higher too...but guess what? Get used to it that's the environment we're in and until economic productivity deteriorates it won't really affect the market as bad as you think (otherwise indexes wouldn't be at ATHs)
$EOSE
Execute.
Solar and batteries are not only becoming the biggest energy sources, they are also becoming hugely lucrative markets.
We will see a consolidation in solar and batteries that will be similar to how Nat Gas consolidated in the late 2010s.
Many new big energy companies will be birthed over the next several years.
$INV
Anyone nibbling yet? Was gonna toss on Bucs +8 Thurs but maybe I’ll buy a few thousand shares of Inv instead
Someone has gotta have a pro forma somewhere telling me they hit contribution margin positive in 2029
$EOSE Q3 Preview. 🧵
Here is where I land.. really trying to put the optimistic hat on…
The way I look at it.. Revs will get the headline.. but the real test is if throughput, margins, cash burn, and commercial traction move in the right direction @ the same time.
Mgmt targeting adj. GM + exiting Q4 and 10% + by Q2 27.. a 72pt improvement in 12 months…
Recent trend is an improvement of ~40 pts in 4 quarters.. on one line. The detail that matters is product only adj. GM was -40% in Q2 vs -62% total adjusted ( GAAP was 71%). The 22pt gap ($15M) is field and project work; commissioning plus DawnOS upgrades on the legacy fleet.
Mgmt expects it to shrink significantly by Q4.
The factory is also improving… 26 matched all of 25 production in 164 days.. (2.2x) the daily rate with scrap down 63%, so scrap per Mwh fell ~80%+
2025 was the learning year. Q4 25 was a “learning experience.” Utilization is still low.. 1.5Gwh in June vs ~4 Gwh of TH capacity once both lines run.
Absorption upside.
Eos doesn’t need another chemistry breakthrough to improve economics they need to run the assets they already built harder with better yield, fewer stoppages, and more shfits.
Field data step change. 200+ Mwh of new projects online by YE26. The entire fleet added .5Gwh of discharge last quarter. 200mwh cycling near daily adds 1Gwh per week once fully online. 25x today’s pace. Bankability gets underwritten on that data.
Don’t sleep on that.
I expect Eos to continue building up inventory for the Q4 move of L1 into TH… Continued incremental progress from L1 bumping revs to low – mid 70s… and L2 in TH contributing ~50mwh worth of rev to the top line equating to ~$12M in revs @ ~$240kwh. 🔑
Q2 B/S backs up raw materials and WIP build up (nearly double) and FG just at $.6M. Nothing has been piling up unsold.
The bogey the street wants to see is $82M… I think Eos could come in above that # depending on L2s % contribution… but also they could be building lots of inventory for the move since (based on what we know now..) Q4 can be noisy while the line moves.
Revs are 85% recognized on shipment and 15% on commissioning, so shipments drive the print.
Production > shipments in a quarter is not automatically bad if that data is sitting in WIP/inventory ahead of the L1 move.
What I do not want to see if FG stacking up bc customers are not taking delivery
FY $300M+ less H1s $125M means H2 needs $174-$224M with Q4 above Q3.
An $85M Q3 leaves $114M for Q4 at the midpoint.
Felt imports support ~400mwh of production for the Q…(record 406t; Eos tends to use 1.0-1.1t per mwh over a yr) but again not willing to say they will grow revs sequentially >20% until they prove they can.. point is they don’t need too… yet.
Revs follow shipments, not production; the gap goes into inventory for the move. Felt likely sits for 5-6 weeks as raw materials so late Q3 delivs re a Q4 signal
L1 ran at ~1.5Gwh annualized in June and Joe mentioned John has the line at nameplate in August 🔑 .. and L1 ran all of q3.
L2 will add ~50mwh…
L2 has redundancies L1 lacks (fewer full line stops) plus 10-11% faster cycle times.
Again incremental improvement in L1 and slow ramp up of L2 until we have full shifts, redundancy, and much higher utilization as they work down inventory..
From the sept analyst tours takt 9s vs 10s, footprint -40%, materials handling cost -30%, lid welder uptime +30%, bipolar uptime +20%, TC shuts down in Oct and restarts in Jan.
This is why capacity is the wrong thing to obsess over today. The equation is lines x shifts x utilization x cycle time. The 4gwh theoretical # matters much less than how quick push utilization higher without yield or reliability falling..
Q3 Margin adj will be -45%- (-50%).. key question will be what is headwind for DawnOS investment, tariff rebates, and materials cost.. For references Truist cut its Q3 GM estimate to ~-53% to reflect running two factories… they still have a $7 Buy (fwiw)
Context: Q2 material cost per cube fell 10% but only 1% ex tariff rebate (refunded duties).
Mgmt. expects more improvement as old, high cost inventory works through cogs, so savings will show up with a 1-2 Q lag. Mgmt has 90+ active cost reduction initiatives and is moving from transactional buying to long term supply agreements 🔑
Indensity should also help the other side of the equation bc more of the system gets integrated into the factory.. structure, busbars, fusing, cable, junction boxes etc… less bespoke integration happens in the field. Tailwind for margins. 🔑
Cash: Q3 burn before DoE loan will range from $100M- $130M… Operating burn already fell from -$119M in Q1 to -70M in Q2. Operating burn assuming it tracks closely with Ebitda again could fall in the -$65M range and capex has averaged around $35M… but with the $87M infusion they will only reduce cash by $20-$50M this Q… so that’s a positive as they continue to step toward GM+…
Started Q3 with $364M in total cash.
Redbird = ~$96M and Blanquilla =$100M. Both fall under FPUSA 2Gwh rez (40% now firm). Blanquilla booked in Q3 so not in the backlog yet.. Q3 probably has them finishing Redbird deliveries and starting Blanquilla.. maybe they finish $35M of Redbird and begin Blanquilla… if they have a couple microgrids they are working on those range anywhere from $6-$12M depending on if they are 25-50mwh… my guess if they have a fair amount of these in the backlog.. “Rule of thumb” 50mwh ~$12M whether its 4, 8, or 10 since duration changes MW not Mwh.
They still have yet to PR 60% of capacity reservation…
One risk everyone is watching for is growing non FPUSA linked revs since it was 80% of Q2 and 49% of backlog volume.
Joe mentioned the goal is to grow the entire pie but this is something that matters a lot. Early signs of broadening: Google/MN8 (100mwh- googles first eos project), Otter Tail utility demo in Minnesota, and Golden Dome…
Eos has been shipping to Germany as well.. 750mwh with a pathway to 2Gwh.. Binding supply agreement with CAPAC; only to call-off orders hit backlog; first projects are late 26 operation.
You can also count on some portion continuing to ship out to Europe for Q3/Q4..
TurbineX targeting up to 2Gwh over 36months.. first deployments in 27… that is up to $480M where the orders “should” begin rolling in q4 if they actually want to deliver anything before Q3 of next year… one would like to think.
It’s a JDA, not booked orders so the first POs are the tell.
Why do orders matter for margin? Mgmg says steady backlog conversion loads the factory and enables longer term supply deals, the 25pt materials lever.
Lastly, the demand backdrop for DCs went from de minimis to 32% of Eos $25B pipeline ~36 Gwh.
About 3/4s of pipeline growth over 3 Qs. Grid interconnects now take 5 yrs at the median, and states like PA are making DCs pay for grid upgrades. On site storage wins on speed.
Policy EO 14421 (8/26) names BESS in bulk power security with DOE rules due 12/24 and a possible pre qualified US vendor list. The FY 26 NDAA adds foreign content limits for Batteries.
Domestic sourcing is becoming a requirement not a slogan imo
Defense: Fortress America wants every major base to generate its own power. Eos has a golden dome prototype, and FPUSA was selected at Tobyhanna Army depot. Both are early but the directionality speaks for itself. Ha!
NY: Round 1 went to Li ion on price.. but the contract allows non li terms up to 25 yrs vs 15 yrs for li ion.
Zinc halide is the only non li chemistry with its own cost calculator. Two more rounds are coming and indensity will have field data next time…
So the scorecard: $80M+ in revs, Adj GM continuing toward Q4 exit target, Evidence L2 ramps without blowing up yield reliability, Burn bending lower, repeat books/ some non fpusa deals, field data acceleration… hit most of that and the the convo can change toward how quickly can they scale…
JordanSolace retweeted
The smaller the better
The more illiquid the better
The less institutionally owned the better
The less talked about the better
You make money by driving through the fears of other investors.
Always enjoyed @biancoresearch commentary. Nominal growth rates DO means yields shouldn’t higher…
Fixed income investors will nibble and duration gets very attractive w the 10y > 6
Rates stabilizing should improve the conditions for high beta.. inflation isn’t soaring the level is just higher
The Fed Got It Wrong and the Bond Market Knows It youtu.be/4kdVLLaNkEI?is=wte7… via @YouTube
