Good morning, and welcome to the Tantalus Systems Q1 2026 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star and two. Please note, this event is being recorded. I would now like to turn the conference call over to Ms. Deborah Honig. The floor is yours, ma'am. Thank you, operator. Thank you for joining us to discuss Tantalus Systems' financial results and operating performance for the Q1 ended March 31st, 2026. Tantalus issued these results, including their financial statements, management's discussion and analysis, and press release yesterday after market close, which are also posted on the company's website, along with an updated version of the company's corporate presentation. As a reminder, we will not be using an earnings deck for this call. Joining me today on the call from Tantalus Systems, herein referred to as Tantalus or the company, are Peter Londa, President and Chief Executive Officer, and Azim Lalani, Chief Financial Officer. During the call, we will make forward-looking statements about Tantalus's business. These statements are subject to certain risks and uncertainties, which could cause actual results to differ materially. Tantalus refers conference call participants either today or in the future to the company's forward-looking statements contained in the investor presentation on our website at www.tantalus.com. Statements made on this call reflect management's analysis as of today, May 7, 2026. Management does not assume any responsibility or obligation to update forward-looking statements made during this conference call unless required by law. Please note that the financial information referenced on today's call is stated in US dollars and in accordance with the IFRS, unless otherwise stated. The company is also presenting selected non-IFRS financial measures, including gross profit, gross profit margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, recurring revenue, and annual recurring revenue, referred to as ARR. Tantalus believes that these non-IFRS measures provide meaningful information to investors. They do not have a standardized meaning and are not likely comparable to similar measures presented by other issuers. I'll now turn the call over to Peter Londa, President and CEO. Please go ahead, Pete. Thank you, Deborah. Good morning, everybody. Our board of directors and employees, we are pleased to provide a business update for the Q1 of 2026. Before covering the details during today's call, I'd like to take a moment to thank our employees for their continued hard work and commitment which translated into another set of financial and commercial milestones for Tantalus this year. We'll attempt to keep our opening comments brief to provide as much time as possible for Q&A. With that in mind, I'd like to call attention to several highlights. At $15.1 million of revenue generated in the quarter, we set another milestone for the most revenue generated in a three-month period. Our revenue grew by 27% year-over-year, while also delivering positive cash flow from operations and positive free cash flow. The number of utilities placing orders for the TRUSense gateway increased to 70 as of today's call, and we continue to build momentum from this innovative offering that provides an alternative option to the traditional rip-and-replace model across the distribution grid. Our order conversion in the Q1 remained solid, reflecting a 1.3 book-to-bill ratio, despite broader economic and geopolitical uncertainty that surfaced at the end of February this year. ARR, or annual recurring revenue, grew year-over-year as our model continues to demonstrate an ability to deliver recurring revenue as an increasing number of our intelligent Connected Devices are deployed in the field. The constructive progress delivered during the quarter aligns to our recently released fourth annual Utility of the Future Survey, which reflects what we're seeing in the field. 86% of utility respondents stated that grid modernization continues to be a priority for the vast majority of utilities, only fewer than 10% feel fully prepared to address the challenges ahead. That gap between urgency and readiness continues to shape how utilities are approaching investment decisions. Utilities understand the need to modernize the distribution grid. They are just working through how to prioritize investments in a cost-effective and practical manner, which is where our data-centric approach becomes increasingly important. Overall, we are pleased with the trajectory of the business and the start to 2026. Azim will now provide financial highlights for Q1. Go ahead, Azim. Thank you, Pete. I would like to remind everyone that we report our results in U.S. dollars. In Q1 2026, the company generated revenue of $15.1 million, reflecting 27% growth year-over-year. Revenue from Connected Devices and infrastructure segment increased by $2.6 million or 33%. Revenue from our utility software, applications and services segment increased by $582,000, or 14% on a comparative basis to the prior year. The increase in revenue are a result of shipping more Connected Devices, tariff recoveries recorded in revenues, as well as revenue from the TRUSense Gateway, coupled with higher Software and Services revenue. Recurring revenue recognized in the quarter increased by 16% to $3.6 million. The strong quarterly performance was related to higher annual maintenance and technical support revenues. Our annual recurring revenue, or ARR, is reported on a forward 12-month basis and grew by 15% year-over-year. As of March 31, 2026, ARR stood at $14.8 million. This is a high watermark for us and demonstrates that our revenue model continues to scale. Our total gross profit margin was 52.3% and remained above our long-term target of 50%. Margins within our Connected Devices segment decreased by 2.2 percentage points compared to last year. The results in the quarter were primarily due to product mix within the quarter and the dilutive impact of tariffs being recorded in revenue as they are a pass-through in nature as we pass on tariff-related costs directly to our customers. As you recall, tariffs are only applicable to our Connected Devices segment. It should be noted that as we continue to ramp up production and generate an increasing amount of revenue from the TRUSense Gateway, we are managing through the impact of launching a new product offering that does not yet benefit from economies of scale, including volume pricing and full automation on the factory line. As we continue to expand the production of the TRUSense Gateway and have these devices enter their second full year in the field, this triggers recurring revenue moving forward, and we expect that gross profit margins will continue to improve. In addition to ramping production and volume of the TRUSense Gateway, we continue to witness rising costs for certain components such as SDRAM, semiconductors, wireless radios, and plastics. Some of the pressure is tied to global demand. While we believe the war in Iran and higher oil prices are impacting other prices in the near term, we are actively evaluating the impact to our bill of materials and the corresponding pressure on gross profit margins. In keeping with our comments during the recent Q4 earnings call, we are modeling an anticipated 150 basis point impact to our Connected Devices gross profit margin in the short term. As we are focused on building multi-decade relationships with our utility partners, we'll continue to evaluate the most effective way to address any sustained inflationary pressure. Our Software and Services segment delivered stable, consistent gross profit margin of 74.5%. It should be noted that our Software and Services segment is not impacted by tariffs. The company reported a lower loss for the period of $405,000, compared to a loss of $651,000 last year as a result of the improved operating performance. We delivered positive Adjusted EBITDA of $750,000 during the quarter, up from $317,000 last year. We generated $4.7 million of cash flow from operations and $4.6 million of free cash flow during the quarter. As at March 31, 2026, Tantalus had available liquidity of approximately $40 million, consisting of $31.9 million in cash and full borrowing availability of $8.5 million under our revolving line of credit facility. Based on the favorable results during Q1, we delivered several new corporate milestones over the trailing 12 months ending March 31, 2026. First, we delivered a record amount of revenue generated in a year of $57.3 million, translating into 22% growth year-over-year. The strong growth reflects the continued momentum in our market segment as utilities are focused on upgrading the distribution grid. Second, our recurring revenue increased by 19% to $14.3 million, which represented 25% of total revenue in line with the prior trailing 12-month period. As a reminder, our business model is designed to drive long-term recurring revenue as Connected Devices are deployed across the grid. Each connected device deployed, including the TRUSense Gateway, creates an opportunity to generate ongoing revenue through software licenses, analytics, and services over the life of that device, which is typically measured in decades. As we continue to deploy Connected Devices, we expect to see continued expansion of our recurring revenue base, which provides improved visibility into long-term revenue streams. The continued growth in recurring revenue further validates our model and ability to increase our ARR as we move through 2026. Our third financial milestone achieved over the past 12 months was tied to delivering $3.8 million of Adjusted EBITDA, reflecting a 6.6% Adjusted EBITDA margin. This new milestone reflects 75% growth over the prior year and demonstrates the operating leverage in our business model as we continue to scale revenue. Beyond the reported numbers, it's important to note that approximately 86% of the revenue we generated during the quarter came from existing customers. We view this mix as an important indicator of the durability of our business model and the quality of the long-term relationships we have with our utility partners. Finally, during the quarter, we completed a bought deal financing and raised approximately CAD 23 million. As a result, our balance sheet is in a very strong position, and we expect to start deploying the capital over the coming weeks in line with the use of proceeds outlined in the prospectus. Overall, we were pleased with the financial results for the quarter. I will now turn it back over to Pete to address a few remaining topics. Pete? Thanks, Azim. As referenced earlier, we continue to witness steady progress across our customer base and target market segment with an increasing amount of engagement tied to the TRUSense Gateway. Of the 70 utilities ordering this new offering, approximately 40% have completed their pilots and have moved into active deployments of the device. In all cases, these deployments are expanding over time, which is consistent with how utilities operate. They tend to deploy in phases aligning with budgets, internal priorities, regulatory processes, or specific outcomes. While the pace of adoption may not always be visible through formal announcements, the underlying activity continues to move forward and continues to validate the opportunity in front of us. A significant portion of this progress is being driven by our existing customer base, which represented approximately 65% of the 70 utilities deploying the TRUSense Gateway. These are long-term relationships where we have an opportunity to expand our deployments over time by increasing device density and introducing new software applications and data analytics that expand the number of use cases. We continue to see interest in areas such as power quality monitoring, transformer monitoring, and demand management. These use cases are becoming increasingly important as utilities look to manage growing demand and improve reliability across their systems. From a broader industry standpoint, electrification and resiliency of the grid continue to be major drivers for our business. Utilities are increasingly focused on solutions that can be deployed incrementally, generate measurable ROI, and work with existing infrastructure. We believe that trend aligns well with Tantalus' broader thesis that utilities need greater visibility to make data-driven decisions to prioritize capital expenditures for system upgrades. As the macro trends continue to be favorable, we believe our approach remains well-aligned with how utilities are choosing to invest. Rather than relying on large-scale replacement cycles, we are uniquely positioned to enable incremental upgrades that extend the life of existing infrastructure and deliver value over time, thereby providing Tantalus with an opportunity to gain market share and deliver sustainable results. Our data-driven approach and the ability to provide utilities with an alternative to a rip-and-replace model is becoming increasingly important, particularly given the current economic and geopolitical uncertainties. From our experience, economic uncertainty tied to inflationary pressures, higher fuel costs for oil and natural gas, the uncertainty of tariffs, and limited clarity on the direction of interest rates in the United States tend to impact utility buying decisions on a near-term basis. To provide some context, inflationary pressure, along with higher fuel costs, impacts operating expenses for utilities and simultaneously contributes to affordability concerns for their customers. Uncertainty on the direction of interest rates can lead to higher hurdle rates and favor projects with clear visibility into operating and maintenance savings, reducing outages and improving reliability. Similarly, when broader geopolitical events such as the war in Iran unfold, distribution utilities tend to take a conservative view towards decision-making on larger capital expenditures. Decisions may be phased or sequenced differently, but the need for grid visibility, reliability, and operational efficiency continues to grow. The combination of these uncertainties may manifest in the form of some pressure on gross profit margins and the timing of converting orders for Tantalus. These underlying issues also create urgency with utilities to modernize the grid based on a data-driven decision. Our unique approach provides utilities the necessary flexibility to upgrade at their own pace and strategically deploy a targeted number of devices to make informed decisions based on that data. We continue to see a large market opportunity for Tantalus, have developed a model that provides durable demand for our solutions, and continue to post strong financial and commercial results, demonstrating a repeatable process to scale our company. In the interest of time, operator will now open up the line for questions. Thank you. Hey, thank you, sir. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. At this time, we'll just pause momentarily to assemble our roster. The first question we have will come from Nick Boychuk of ATB Cormark Capital Markets. Please go ahead. Thanks. Morning, Pete. Morning, Azim. Morning. Curious if we can start with the TRUSense, just on the updated shipping dynamics. I know you called out that you're starting to see a little bit of a pace increase, and I apologize if this is a bit early to start reading some of these things, but are you starting to see a change in either urgency or how fast deployments need to happen? It's really utility dependent, Nick. I think we're seeing in some circumstances, especially with new utilities that are purchasing solutions from Tantalus for the first time, that they, assuming capital is lined up in their decision-making process, upon selection, I think the pace of those deployments is increasing. Once the utility is sort of determined their course of action and determined how to prioritize capital investments, they're moving. We're responding in that capacity, in some circumstances to meet the level of urgency for those deployments. With respect to our existing customer base that are deploying the TRUSense Gateway as an upgrade to their existing systems, the pace varies. Nothing that would give pause or concern. I think the pace that we see is indicative of our experience and understanding of our customer base. Most importantly, we continue to see an increasing amount of demand based on the success and the value that the device is delivering. I hope that answers your question. Yeah. Absolutely. I guess sticking on a similar theme, within those that are adopting it, and again, may be early here, but are you seeing any notable trends in either the product variant, fiber, ethernet, or cellular, or the use case that's giving you a little bit more confidence or visibility of new orders to come? Yeah, absolutely. I think as expected, the pace of the cellular version is going to move faster. It's applicable to all utilities, whereas the fiber and ethernet versions are applicable to the utilities that have deployed fiber to certain locations in the distribution grid or all the way down to their home. Or not their homes, excuse me, their customers' homes. As we think about the landscape of opportunities, the Cellular Gateway is the one that will be most applicable. Certainly as we really ramped production and started to see improving revenue contribution in Q1 of this year, the Cellular Gateway is what's leading the charge. In terms of use case, Nick, we've been very successful in incorporating the TRUSense Gateway as part of the networking infrastructure, and using the collector capability within the TRUSense Gateway. If you recall, the Gateway is designed to pick up reads from approximately 250 devices in surrounding areas. We don't design to 250 devices, meaning meters or other intelligent devices in the field. But the way I would summarize it is we are differentiating Tantalus by building out or upgrading the communications networking infrastructure for grid modernization that has a purpose well beyond just passing data from one point to another. The power quality measurement within the TRUSense Gateway resonates with utilities. We continue to see that. I think our commercial team's been very effective is upgrading existing customers and using the TRUSense Gateway as a component of our networking infrastructure, which is a clear differentiator for Tantalus today. Then couple that with the power quality measurement capabilities, so we have a network with a purpose. I think over time, that power quality measurement leads us down the path of incremental use cases, which leads us down the path of increasing device density, meaning the number of devices deployed at each utility. That's the way we're attacking it. Okay. That makes a lot of sense. I guess tying this all together to your point about tariff inflation, and you're addressing the increase in use and adoption of the TRUSense, is there anything that you're doing operationally or that you want to achieve from a production standpoint, a capability standpoint, to make sure that you can deliver on this? I'd say we're still have some work to do with our contract manufacturer today, in improving the velocity of production. I don't mean to convey that we have a bottleneck, or a challenge in the factory, with our contract manufacturer in any regard, Nick. I think when we introduce a new product, certainly as I've had the opportunity to do that in the capacity of CEO at Tantalus for some time now, ramping up the production of a new product takes a little time. This device is complex. Where our team is focused is really trying to automate certain processes and improve the pace at which we run our testing in the factory. That will lead to higher yields and higher production rates. You know, I'll give you an example that we've seen in Q1. The production time for the Cellular Gateway is a little bit longer than I think we anticipated. Not in a way that's problematic, but it took a little longer. In deciding whether to, you know, how to then deliver the Cellular Gateways to customer, we have a choice of ocean freight or air freight. Air freight, significantly more expensive, especially given what's going on in the world today. Our goal is to get these devices in the hands of as many utilities as possible, as quickly as possible. We made a decision to use air freight on some portion of the devices that we produced in Q1. It has a near term, right, immediate impact on cost of goods sold for us. Getting the devices in the hands of the utility outweighs that, in my opinion, on a long-term basis. You know, I think as we ramp production and really get to scale, build the supply chain and the inventory at our contract manufacturer's factory to ramp production, you know, that's where we're really trying to fine-tune the process. As I've said before, the goal is we gotta walk before we jog, and we gotta jog before we sprint. You know, I'd say we're certainly walking, probably at a faster pace and maybe at a jog. There's still some work to do inside that factory and with our supply chain to get to a point where we can sprint. Okay. That's really good, Color. Thanks, Pete. Look forward to seeing you next week. Yeah. Likewise, Nick. Thanks for the questions. Next, we have Daniel Magder of Raymond James. Morning, everyone. Congrats on the quarter. Thanks, Daniel. In terms of sales and marketing, you've been building out the function in recent quarters. Have you started to see a ramp in the knowledge base of the new hires? I guess said differently, has the learning curve been as you expected, delayed or quicker than you thought? You know, the team that we have in place and the folks that we've been able to add never cease to amaze me, Daniel. We're a small company. We compete against giants, right? They're more than 800 pound gorillas in this industry. Yet we've been really fortunate to both attract and retain talent. Fundamentally, the progress that we're making with the folks we're hiring and the ramp for sales and marketing, I think is solid and within expectation. You know, it's Hiring for us has to be a core competency. I'd say incremental and sort of layer deep towards your question. We're investing pretty heavily on improving how we assess candidates, how we evaluate their fit to our organization, and how well their core competencies align to the job description that they're filling. As we continue to improve that, we'll see that incremental ramp accelerate. I'd say the dollars being invested in sales and marketing, from my perspective, are generating the return that we would anticipate, particularly given the revenue growth and simultaneously growing cash flow in a positive nature. We're gaining market share. We're seeing an increasing number of utilities put the TRUSense Gateway into the field. Every time we do that, it further validates the differentiation that we have. I think the sales team is executing well in that capacity. That's great. Maybe just as an add-on, I noticed you made initial investments in sales in Canada. Can you touch on the opportunities you see here in Canada? Yeah. We plan on digging into that in more detail at next week's Investor Day as part of our users conference, Daniel, but we'll foreshadow a little bit on that. We've hired our first regional sales manager, who's based up in Toronto. A great addition to Michael Julian's team, who runs our sales and marketing organization. In addition to that, we've added a consultant who has decades of experience selling into utilities across Canada to supplement our full-time RSM, regional sales manager. We've also brought to bear some consulting organizations to make sure we truly have our fingers on the pulse of what's unfolding in Canada, as well as understanding the regulatory environment. You know, the market up in Canada is a little bit different than what we see in the United States. It is certainly even at the local distribution company, the LDCs, what we would refer to as a municipal utility here in the U.S., unlike the utilities here in the U.S., they are tied into regulatory drivers and a regulatory review. We've engaged a consulting firm to get our team up to speed on that as quickly as possible. In terms of where we see opportunity, we see a number of very favorable drivers in Ontario, especially with the LDCs, across the province. We're looking a little bit further east of Ontario, where we see some utilities and drivers responding to some really difficult weather, and, you know, some extreme events that unfolded over the last 24 months. You know, based on headquarters in Burnaby, I think we're paying an increasing amount of attention in what's happening in British Columbia, where we think the TRUSense Gateway is very applicable, given the population growth and some of the stress that we see, certainly in the Vancouver metro area. I think that's, you know, we're beyond putting toe in the water. We're now putting dollars behind it. I look forward to sort of mapping out that in much more detail, when we've got dedicated time during the Investor Day next week. Excellent. I'll pass the line, and, looking forward to next week. Thanks, Daniel. Next, we have Baltej Sidhu of National Bank of Canada. Hey, good morning. With orders booked in the quarter driving a book-to-bill of 1.3x, could you just elaborate on the dynamics there, just given the seasonality that exists? How comfortable do you feel with sustaining these levels and/or beyond through the remainder of the year? Baltej, thanks. You know, I'd say at the highest level, we try to manage looking over a 12-month horizon, the trailing 12 months is important for us. That obviously gives us some perspective on a rolling forward 12 months. Within our sector, certainly within public power and electric co-ops, where we have truly focused our time and attention, the quarter-to-quarter stuff fluctuates. With overarching, you know, I think we're very comfortable with where orders landed in Q1 of this year. I think we're very comfortable with where our pipeline is and the trajectory of conversions and the rate of those conversions that we're seeing out of the pipeline looking to the balance of this year. If I take a step back on the metric, you know, there are a couple elements that weigh into that. Activity in Q1, It's really a function of what happened the six months prior to. What we witness routinely is we'll get into review with utility, we'll go through selection process, especially if it's competitive, we'll be selected, and then we go into contracting process. And sometimes our quarterly results don't necessarily align to the utilities timeframe. We're trying to constantly look at the number of opportunities that are pipelined and qualified to formal sales process, to assessment, to selection, to negotiation, to contract. The Q1 results this year, just as point of reference for everybody, it's the third-highest conversion dollar amount we've ever seen in a quarter at $19.6 million-$19.7 million. It's a really good number for us. It also coincides with the most revenue we've ever generated in a quarter. When I look on a year-over-year basis, if I look back two years as an example, 2024 book-to-bill ratio I think was all-time high for that quarter. On a relative basis, revenue was under $10 million. I think it sort of ebbs and flows. The 1.3 ratio that we report on is a good barometer for us relative to what we see across the industry of a lot of companies focused on a 1.0 or book-to-bill of 1. When I look at some of our peers, partners, and competitors, our ratio consistently is outpacing. For us, anything north of one means we're building backlog, we're building visibility, and that's the most important thing for us. I, you know, there's a number of moving pieces to it. High level, I think our team is very comfortable where we sit, pleased with the performance out of the sales organization and the sales conversion ratios for Q1. You know, back to the geopolitical risk, it's hard for us to pinpoint decision-making and the impact of oil being above CAD 100, that has a cascading impact. you know, with that said, we got a number of utilities in contracting, so I think we're very comfortable with where we sit going into the balance of this year. Very good. Thanks. Thanks, Pete. That's great color. Now just flipping over to the TXG commercialization. How would you characterize customer traction today? Are you continuing to see elevated and/or similar levels of interest? Could you comment on the recent addition of the four utilities, just directionally towards their platform or sizing of these customers? Yeah. Not to necessarily sidestep your question. We'll have a lot more detail for you next week, again, where we just have that much more time to walk through things. The average size of the 70 utilities, and I'm gonna not include the one IOU that we're working with there, the very large utility in Connecticut that we've referenced previously. The average size within the public power and electric cooperatives is about 13,500-14,000 meters. That's sort of indicative of the market segment here in the U.S. In the aggregate, I think those 70 utilities are close to 2.4 million meters, 2.3 million-2.4 million meters. Precise number, we can fine-tune that for next week. Order of magnitude, you know, when we think about ratios of TRUSense gateway gateways to meters and TRUSense G ateways to feeders and TRUSense gateway gateways to transformers, that's how we start to stack what the order of magnitude is for us. The order of magnitude across those 70 utilities is in the hundreds of millions of dollars for us to execute on before we add one more utility to that list. And I'd say where we've gained the most traction is getting the device out as part of either an existing AMI system to upgrade communications networking infrastructure, or in the case of new utilities, a combination of delivering a communications network for their upgrades to AMI and power quality sensing across the entire distribution grid. Our goal then is from networking to feeders and tracking power quality at the circuit and feeder level, from there down to the distribution transformer. The ratios on a TRUSense Gateway-to-meter basis only improve for Tantalus. I hope that addresses your question. Yep. Yep, it does. Just one last one for me before I turn the line over. In your prepared remarks, you had hinted on elements of this and in the theme, you noted the 150 basis points contraction that you're modeling. Are you seeing any other pinch points or supply chain items, you know, that could look at pressuring margins? You know, they don't have to be apparent right now, but are there items that you are looking or, and, or considering or watching carefully, just given, just given the dynamics that we're seeing, broadly? Yeah. I'll give you my two cents and then, Azim would welcome any incremental color you'd like to add. Baltej, we are, where we see the most pressure is on SDRAM. I think that it's a cascading impact from the rise of data centers. I mean, we're at a different level in terms of memory and the type of SDRAM that goes into our device. That is a global constraint at this point. As a result, pricing lead times, not working in our favor. We're seeing pressure on the wireless radios that we put into our devices. I think that's a function of an increasing number of intelligent devices globally, and the demand for them, so not unique to Tantalus. We're also seeing pressure in plastics. I think that is very much a function of what's going on in Iran right now, and the bottleneck that's been created in shipping lanes. I think that one will get resolved, but we're tracking it. Then, you know, for everyone in Canada, you know, copper is at an all-time high, or close to it, as are some other minerals and metals. That has a cascading impact on some of the components we put in. Example, the fuse clips that go into the TRUSense Gateway are impacted by copper and other metals pricing. You know, that's another area of focus for us. Less of less so, but an area that we certainly are tracking in our supply chain and with our contract manufacturing team. Azim, anything else you wanna add to that? Probably the only one I would mention is we are monitoring shipping rates. Because there are, there's some discussion about surcharges coming down the pipeline if oil prices stay high for an extended period of time. That's the only other item that we're monitoring. Yeah. Excellent. Great. Yeah. spot on. Thank you, Azim. Thanks for the color, Pete and Azim, and look forward to seeing you and the team next week. I'll turn the line over. Thank you. Thanks for the questions. Next, we have Jeffrey Osborne of TD Cowen. Hey. Thank you. Just a couple quick ones. I was wondering, Azim or Pete, if you could just do a sequential gross margin walk, and then, you know, how to think about the second half of the year in light of all the things that you just mentioned. Like how much is flowing through the P&L today versus the second half? I know you talked a bit about that as it relates to memory, specifically last quarter. It sounds like the wall of worry or laundry list of issues is becoming more acute. I'll take a first stab at it and then certainly turn it over to Azim. Jeff, we have a couple levers to pull. With our contract manufacturer and key vendors, our team has been ahead of this for some time, locking down inventory and most importantly, locking down continuity of supply. I think the 150 basis points, 200 basis points that we've conveyed is still in alignment with what we would expect through the balance of the year relative to if I look back at 2025 or 2024. I think we have, our model can certainly absorb that without too much cascading impact on our ability to invest in the growth of this business. If oil prices remain above, and natural gas prices too, if oil prices remain above $100, the cascading impact of that is a little bit harder for us to get our arms around just yet. I don't see it, and partly because of the blend from Software and Services being as high as it is on a percentage of our revenue, I don't see any disruption to our plans. I don't see disruption to our balance sheet. I don't see disruption to the continuity of our model. Frankly, if there continues to be inflationary pressure, our focus is long-term relationships with utilities. We tend to be very mindful of price increase. If the world has just a step function change on certain components like SDRAM chips and the metals that go into components, then we'll have to evaluate that and consider at some point, do we have some type of surcharge to Azim's comment for shipping to offset some of that exposure. I think we can absorb things for the time being, and we'll monitor any incremental inflationary pressure moving forward. Azim, anything you wanna add to that? Yeah. I would just echo Pete's comments that we do have levers available. You know, clearly scaling on TRUSense Gateway, optimization of our bill of materials and as Pete mentioned, you know, pricing increases, which we could also look at in certain circumstances. Yeah, really just echo Pete's comments. Got it. That's helpful. Just last question. Can you remind me of what, just given the ramp in the business and the backlog with the book-to-bill above 1, can you remind me of what the manufacturing capacity footprint is today and thoughts on expansion? I think you touched on that maybe six months ago about possibly expanding, just to remind us where you are. Yeah, Jeff. Yeah, we're actively evaluating expansion, capacity and geography with our current contract manufacturer. The geography question is gonna be a function of what unfolds with USMCA and the negotiation between Canada, Mexico, and the United States. Incremental to that, we've been evaluating diversifying contract manufacturing with additional vendors. I'd say we've made good progress towards that evaluation, which in normal course is the right thing for us to do in terms of diversifying risk. We've made, I think, steady progress. It is a very important decision for us and one that we're being incredibly deliberate about as if we are to expand to another contract manufacturer. We've got to make sure we're picking the right one and that they have the ability and commitment from their organization to support us. In terms of current capacity with IMI in the Philippines, we do not have a constraint today. There is the ability to run another shift. There is expansion capability to open up another line as appropriate. I'd say the, you know, I think close to 15-year relationship, if not longer, with IMI enables us to be in regular contact all the way up to their CEO level and help plot things out as we continue to see growth of our business. Perfect. Thank you so much. Yep. Thank you. Next, we have Gabriel Leung of Beacon Securities. Good morning, and thanks for taking my questions, and congrats on the progress. I actually just have one follow-up question for you, Pete. Just wondering if you can provide an update on your, you know, on M&A initiatives and/or aspirations, you know, what targets you're focused on and what you're seeing out there in terms of private valuations, especially on the software side. Is it getting more favorable, sort of neutral, less favorable? I'd say the areas of our focus, Gabe, are how do we enhance the capabilities around power quality based on the granularity and precision of data that we're capturing through the TRUSense Gateway. I think the opportunity for us is substantial there and a build, buy, partner strategy very much in place there. The, the second area of focus is enhancing our capabilities behind the meter as we think about capacity constraints unfolding across an increasing number of states and regions in the U.S. and how do we then enhance that portfolio of our capabilities through the TRUSense Gateway to get behind the meter and really help utilities, first and foremost, forecast load, and then secondarily manage that load. That's, that's similarly built by partner evaluation, as we think about the landscape of our capabilities from substation to EV charger, the way we kinda like to lay that out for folks. You know, in terms of valuation, it really varies based on the circumstances that companies in the market, and their access to capital. We see some really well-capitalized businesses that have lofty expectations, and we see some companies that are struggling to access capital, and that potentially creates opportunity for us. You know, as we think about valuation metrics, the recent take private of BlackLine is relevant. I mean, completely different sector and certainly different focus, but model is very similar there of a hardware-enabled software company. You know, the hardware leads to recurring revenue, and I think we're validating that every single day. That was awesome. I really appreciate the feedback and congrats again on the progress. Thanks, Gabe. Next we have Gianluca Tucci of Haywood Securities. Good morning, guys. Congrats on a great quarter. Pete, just on the book-to-bill, it's healthy at over one. Could you share any color or insight as to how big the pipeline is from a qualitative or a quantitative perspective at this point in time? Thanks for the question, Gianluca. I don't think we can give you a precise number. I would say the pipeline continues to improve for Tantalus, and the number of opportunities that are presenting themselves continues to increase. That's the market opportunity and the demand for our solutions is something that we continue to reaffirm and continue to see opportunity to scale the company. Giving you a fixed number is hard. You know, we've had over the years, some data points in our investor deck, that pointed to, you know, at the TRUSense Gateway level, half a billion dollars of opportunity. I'd say, we continue to see improvement in terms of the opportunity for our sales team to execute. I appreciate that, Pete. Thanks for the color. I think you spoke about this a tad bit earlier, in your customer conversations, are you seeing any, like, budget holdbacks given the price of oil and fuel and how it's as elevated as it is? I'm just curious as to how your core customers are thinking about the world these days and their budgets. Yeah. I'd say, we certainly are looking at it, through not only mine, but the collective experience around the table, in selling into utilities, and then we have the incremental benefit at our board level, with former CEOs and general managers of utilities that have lived through decades of changing macro environments. The Instead of speaking for everybody else, from my experience, when oil prices escalate, that immediately leads to, especially you gotta keep in mind public power and electric cooperative utilities, they don't have the benefit in the United States to go back to regulators and ask for modifications or increases to their rate case to cover unforeseen expenses and unforeseen circumstances. Public power and electric cooperative utilities is natural gas sourced for peaker power plants for them, fuel. Right? Those hit operating expenses quickly. It also has a cascading impact on their communities from an affordability perspective. Right? When affordability rises, or concerns surface, that translates into some people in communities not being able to pay power bills. What we see is utilities, and certainly in my 12 years here at Tantalus, when there's been disruption in oil price, inflationary pressures in general, utilities tend to look at their decisions and their allocations of capital more discerningly. In all circumstances, Gianluca, where there may be some short-term disruptions to spending, the uncertainties tied to higher fuel prices, as a discrete example, means utilities have to be more efficient. They have to automate and reduce truck rolls, and that's where our technology and the ROI for our technology increases. I think we're very conscientious of that. We're conscientious of, you know, impact to our customer base as their costs rise. You know, back to that earlier question on gross profit margin, what do we do about it? You know, if we start increasing our prices to offset some minor pressure that we think we can manage through on the gross profit margin, that has a cascading impact on budget for utilities and long-term relationships. You know, I, you know, it's when missiles started to fly, tough to get utilities to commit to things. I think as that starts to normalize and oil prices kind of bounce around a little bit, I would anticipate that has some disruption to buying patterns for utilities. Nothing that I think compromises us long term, nothing that compromises the trajectory we're on for 2026 at this point, but something we certainly are monitoring and managing. Congrats again. Thanks. As a quick reminder, to participate in today's Q&A, please press star then one. The next question we have will come from Daniel Rosenberg of Paradigm. Hi, Pete and Azim. Thanks for taking my questions. I know we're at the top of the hour, so I'll leave it to one. I just had a follow-up. You had mentioned the pace of deployments is picking up for TRUSense to some degree. Maybe if you could just provide an update to your sales cycle, what that looks like from, you know, the time of first engagement, first discussions, whether it be direct or partner-led. Just any changes you're seeing there in terms of that sales function now that TRUSense is a little bit more mature as a product. Thanks. Well, Daniel, thanks for your patience in hanging in for the question. The average sales cycle from our experience in selling to utilities, we kind of use the bell curve of 18 months. Where that varies, certainly for the TRUSense Gateway, is presenting the capabilities to an existing customer. There is not a competitive analysis there. There is not a assessment of other technology. It's an assessment of the solution, sort of getting comfortable with it through testing it or trialing it, and then from there, conversion. We're seeing an increasing number of the 17 utilities place incremental orders, meaning, you know, they've gone. Their first order was a handful of devices for testing. We're starting to see utilities place an increasing number of orders, not just the number of utilities placing orders. It's hard for me to pinpoint what that sales cycle or duration of that sales cycle looks like. You know, some utilities get comfortable with new technology quickly, meaning three, six months. Some utilities are dogmatic and very deliberate in bringing on something new into the distribution grid, and they may test it over multiple seasons. That could extend up to a year, if not longer. I think for us, the reason why 70 is so important, and that's why we focus and certainly convey publicly that number, the increasing number of utilities placing orders means regardless of what the cycle is within each individual utility, we have broader visibility to maintain the trajectory of growth for the company. I'd say there's, if anything, the continued progress, the continued case studies, the continued references for utilities that are at the leading edge of putting the TRUSense Gateway into the field only helps us accelerate our sales process with both new and existing customers. Thanks for taking my question. Thanks for the patience there, Daniel. Okay, this will conclude our question and answer session. I would now like to turn the conference call back over to Mr. Peter Londa for any closing remarks. Sir? Thank you, operator, for shepherding us through this with a number of questions. Apologies that we've run over the top of the hour, truly appreciate everybody's interest and time and attention today. I hope everyone has a productive balance of the week. Thank you. All right. Thank you, sir. To the rest of the management team for your time. The conference call is now concluded. Again, we thank you all for attending today's presentation. Have a wonderful and blessed day. 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