Good morning, and welcome to Eos Energy Enterprises third quarter 2022 conference call. At this time, as a reminder, today's call will be recorded and your participation implies consent to such recording. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. With that, I would like to turn the call over to Joseph Crinkley, Eos Communications Manager. Thank you. You may begin. Thank you. Good morning, everyone, and thank you for joining us for Eos Financial Results conference call for the third quarter of 2022. On the call today, we have Eos CEO, Joe Mastrangelo, and CFO, Randy Gonzales. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call, including the Q&A portion of the call, may include forward-looking statements, including current expectations with respect to future results for our company, which are subject to certain risks, uncertainties and assumptions. Should any of these risks materialize or should our assumptions prove to be incorrect, our actual results may differ materially from our projections or those implied by these forward-looking statements. The risks and uncertainties that forward-looking statements are subject to are described in our SEC filings. Forward-looking statements represent our beliefs and assumptions only as of the date such statements are made. We undertake no obligation to update any forward-looking statements made during this call to reflect events or circumstances after today or to reflect new information or the occurrence of unanticipated events except as required by law. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to U.S. GAAP financial information, is provided in the press release. Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies. This conference call will be available for replay via webcast through Eos investor relations website at investors.eose.com. Joe and Randy will now walk you through the company highlights, financial results, and business priorities before we proceed to Q&A. With that, I'll now turn the call over to Eos CEO, Joe Mastrangelo. Thanks, Joe. Good morning, everyone. Thanks for joining us for our Q3 2022 financial results. What I'm going to do is walk through the framework around the results that we delivered in the third quarter, how we see that shaping up here as we look forward to Q4. Randy will walk through the financials after I get a little bit of context around the operating results, and then we'll open up for Q&A for some of your questions coming out of the filings. If we move to page three, just want to start off, I think, with one of the biggest things that we have in the business right now, and that's the IRA incentives, and how this ten-year program really creates an opportunity, not only for Eos, but also for energy storage as a whole, to really take its place in the United States' global energy mix. What makes me excited is that it is a ten-year program. It incentivizes domestic production, and gives companies like Eos an opportunity for its customers to gain investment tax credits and for Eos itself to gain production tax credits. I think when you look at the framework that's there and just how the team has delivered and how we've positioned the company looking forward, you know, we have demonstrated an ability to produce and deploy energy storage systems at scale. Walk through the operating performance here as we move forward, but it's important to note that we're now up to 258 Energy Blocks shipped. We finished shipping the Pine Gate Eastover project here through in the beginning of November, which is our largest project to date. We've also implemented a new version of our battery management system. We've discharged now 640 MWh of energy, which I think is very important. I think when we show the line graph later on that performance, you're just gonna see more and more field performance taking over as we deploy assets out in the field. In one of the most challenging supply chain environments of my 30-year career, the team has done a great job of not only expanding capacity in our factory, building the workforce, and diversifying our supply base while delivering those Energy Blocks and fulfilling on our largest project. Because at the same time, we'll walk through details around our Z3 battery performance, the design of it, and the testing. I mean, we feel really good about what we've been able to deliver here. I mean, this is our same proven technology in a new, exciting way of how we package it to deliver lower cost and higher performance to our customers. It's simpler. You know, there's 50% fewer cells in each battery module, and there's 98% fewer welds to assemble that battery module. From a customer standpoint, you'll get 2x the energy density per sq ft with the same safety and reliability that we've always talked about in our product. When you take those three things together, the fact that we have a long-term framework to incentivize the growth and penetration of Made in America energy storage, along with the fact that Eos has demonstrated over the last two years its ability to not only scale production but deliver at scale, and the fact that we're coming out with a new mechanical configuration of a proven technology, we get very excited about what the future looks like for the company. In the short term, as we discussed a week ago, you know, we've worked with our customers around that framework to push out orders that were going to be delivered in 2022 into 2023. We've revised our revenue expectation, which I think makes sense for both our shareholders, the company, and our customers. As a result of that, we've been able to conserve some CapEx while still positioning the factory to grow as the Z3 comes online at the beginning of next year. If we go to the next page, I just wanna quickly highlight a couple things around the IRA that I think are very important. You know, what's important here is this decade or ten-year program. You know, I've seen in my career both the uptake in wind and the uptake in solar, and what makes me excited about this program for energy storage is the fact that it is ten years. So you're not gonna see the ups and downs that we've seen as wind and solar have ramped into the energy mix. At the same time, we're incentivizing made in America technology. I think what's very important about this legislation as we move forward is the fact that we really wanna make sure that domestic battery module producers receive this domestic content credit. This is not about packaging batteries made in another country. This is about revitalizing and relaunching a supply chain in the United States to take the lead in this next phase of the development of the industry value chain. It both occurs, if you look at the left-hand side of the page, on customer benefits, and at the same time, if you look at the right-hand side of the page, as we scale, there's significant direct pay portions for the first five years that are gonna help us with our capital requirements, but also over 10 years allow us to have a tax credit as we move forward. You know, I'm pretty excited about what this can deliver because as we've seen time and time again in the industry, this has worked for both wind and solar. What makes this different is the duration of the program and the fact that we're incentivizing domestic production to have a U.S. supply chain around this critical asset in our energy mix. With that, let me now move to our operating performance. Let's now move to page six and go through our operating highlights. You know, our opportunity pipeline stands at $7.3 billion. I'll walk through some of the details on this later on in the presentation. Now that represents 28 GWh of opportunity. Booked orders and orders backlog relatively flat in the quarter, but I think you probably saw at the end of last week we announced what I think is a key order for us with the California Energy Commission and Indian Energy in California as they start to launch their long-duration energy storage program in California. I think this is a leading indicator of Eos's ability to be able to deliver this technology in the near term, which is scheduled to happen in 2023. Also the fact that the safety reliability that we bring to the market is going to be a key enabler of the energy goals, not only in California, but across the United States and around the world. You know, as I talked about earlier, you know, our discharge energy is up 18% versus the last time we were together, which is great as we continue to operate the assets both out in the field and test in our facility in Edison, New Jersey. Revenue is $6.1 million, you know, which is a 15% increase in the core Energy Blocks that we recognized revenue on versus Q2. Randy will walk through some of the details on that. Cash on hand at the end of the quarter stood at $38.4 million. Again, Randy will give a bridge to that number as we get to the financial section. Once again, you know, we continue to show and prove that we are an operating company. Now, the next page 7, talks about some of the challenges that you have as an operating company. You know, we are demonstrating our capability to provide product to the market, to our customers in a very challenging environment. You know, we were able to stabilize our production at a run rate of 2 Energy Blocks per day with 33% welding capacity than we originally planned. Now, that wasn't done without its challenges as we worked through the summer. I really wanna explain what happened and how we expanded this capacity and the challenges that the team was able to overcome. We started off on our capacity expansion, if you look on the left-hand side of the page. You know, that's a picture of what our facility looks like today in Turtle Creek. That was an empty building back in January, and today is producing product. You know, as we were doing this, we were bringing more and additional capital equipment online while relocating capital equipment from another building in the same industrial park into this facility. We had some delays in receiving our capital equipment and bringing that capital equipment online, you know, particularly around infrared welder deliveries. You know, we had 8- to 12-week delays, which delayed our ability to transition into the new building. As we started doing this, what the team was able to do, you know, you know, you know, never waste a crisis, was to streamline our operating processes and increase our output over the current asset base, which allowed us to avoid $3 million in CapEx reduction as we hit our Energy Block production run rate towards the end of the quarter. Now, as we move to Z3, I think if you go back to what I talked about before, this core process that we have will reduce the number of welds in a battery by 98%. You know, we'll go down from 41 to basically one weld as we get into our new production. At the same time, on our supply chain, we've talked about, you know, expanding our supply base and qualifying lower cost components into the mix to take cost out of the product. We're able to do that, but because of the delays in the capital equipment, a lot of the testing that we wanted to do and qualification around those components we did on production runs. Which, you know, you never really wanna do, but we wanted to keep the factory running and be able to deliver our projects out in the field. What we saw was the timing of the expansion plus the new material coming in, particularly around battery frame molds and the new resin supplier that we qualified, resulted in a couple of months of lower yield and higher scrap and rework, which would be reflected in the cost of goods sold numbers that Randy will talk about later in the presentation. At the same time, what we're able to do working with our suppliers is overcome the challenge by deploying our manufacturing engineers, it's a small team, but a great team of manufacturing engineers that went and worked with our suppliers to improve that component quality and then bring that capacity expansion and supply chain diversification into harmony and allow us to produce a quality product throughout the quarter. The same time we were doing this, we increased our production workforce by 40% in 90 days. Now we, because of the capacity expansion delays, weren't able to do the training that we wanted to do. I think what happened to us was the ramp-up of these new employees occurred at a slower rate than we originally anticipated, but it did allow us to come up with the right training program to bring new employees onto our team. Now, this is gonna be critical as you look to the Z3 program, because what we were able to do is use this to set up a program. You hear a lot out in the marketplace around being able to hire people. You know, there was a point in time where we were onboarding 25 new employees a week, and we've come up with partnerships and ability to recruit, train, and scale up employees to be productive members of our team. That's gonna help us here as we ramp up the Z3 in 2023. At the same time, if we move to page 8. You know, page 8 is a critical page for us because this really shows the commercial viability of our product. You know, you look at the discharge energy, you know, 639.8 MWh in total energy dispatch, 329 MWh in the field. We had another almost 170 MWh through factory acceptance testing and 143 MWh in our lab on testing. You know, if you look at the right-hand side of the page, excuse me, you can see that field line just growing at a much faster rate where the other lines look like they're flat just because of the growth that we see in the field as we start to bring more and more systems online at customer locations. We talked about the Pine Gate Eastover project, and that's the bottom of the page. It's an 80 MWh project, 184 Energy Blocks delivered to the customer. You can see that middle picture, solar plus storage. Those are the Energy Blocks installed out in the field at the Eastover project. We're pretty proud here, you know, in the beginning of September to ship the 200th manufactured Energy Block out of our Turtle Creek facility to the Pine Gate Eastover project. Some great performance when you look at this and continuing to show the robustness and the ability of our technology to be able to deliver across multiple operating use cases and continue to show that the product out in the field is performing, not without its challenges. You know, when I talked about earlier, you know, bringing out a new BMS and introducing a new battery management system, that was critical because we had some challenges on our earlier systems of being able to balance out those batteries and be able to run cycles and extract and maximize the energy that comes out of an Energy Block. With this new BMS, we're now able to improve the performance and reliability of the Energy Blocks out in the field. Those are things you really don't learn as a company until you get assets out in the field and up and running. With that, let me shift over now to talk about our progress on the Z3. Let's move to page 10 and talk about our Z3 battery and how this will deliver a simpler and lower cost system to our customers. It starts off with the same chemistry that we validated with over 2.5 million cycles, and that discharge energy that I've talked about before, with a simpler, more scalable mechanical design. That's the picture that you see on the left-hand side of the page. That's the battery as you look at it today, the battery modules you look at today. You know, when we've talked about the Gen 2.3 product, we've talked about it being a 40-cell product that's about the size of a window air conditioner that weighs 250 pounds. What you see in front of you is a module that's 20 cells, that's the size of a computer server that weighs around 50 pounds. So fewer cells. We've taken titanium out, which allows us to reduce the weight and the cost. We've enhanced the performance of our proprietary zinc electrolyte, which gives us higher discharge voltage and increases the energy density of the battery. It makes everything simpler and improves the performance. You see that in the center of the page, which is how we're gonna build this battery. This is the first time in the history of our company where we've been able to take our chemistry and mechanical design concepts and think about how we wanted to build it at scale. The resulting output now is that we can deliver a much more automated battery manufacturing and a semi-automated containerization process. We're taking 98% of the welds per battery out, which takes our cycle time from 55 minutes today to less than a minute when we launch this product. If you go back to some of the challenges that I talked about earlier, a lot of the things that we've talked about around scaling our processes have been around bringing that welding process up to scale. We've learned through building the batteries that we've built and deploying the systems that we've deployed out in the field to come up with a better way to design and build and deliver our system, which basically, when you look at the far right of the page, allows us to deliver a lower cost structure to the market. What does this mean? You know, what we did was we took our cost curve for the Gen 2.3 battery and moving to Z3, we basically take that cost curve, and it's like you've taken 50% of the cost out of the product when you launch it into the marketplace. You combine that with the benefits of the IRA that I talked about earlier, and you have the ability to take our launch systems and deliver that to customers at a cost position that will significantly improve the cash burn of our company as we go through and scale moving forward and get us to cash flow positive, as we talked about in our last earnings announcement, and Randy will talk about later in the presentation. I'm pretty excited about the work that the team has done, not only in our engineering and R&D department, but what our supply chain manufacturing team has been able to do to take those two things, combine them together in a way that we're gonna deliver a product that's going to deliver lower cost and higher performance to the marketplace. If you go to page 11, you know, the initial performance data of this product has been outstanding. You know, it's been right on the specifications that we've had for the product. We still have some things we have to work through as far as how we wanna assemble at scale and how we wanna deliver the yields that we want, but the product that's on test. If you look at the picture there in the middle, that's an actual production configuration battery on test in our facility in Edison, New Jersey. We're seeing voltage, temperature, and energy output being repeatable across multiple modules. At the stage we are in the development, we haven't seen this in the 13-year history of our company. It's exciting to think about what this product will do once we finalize the manufacturing process and start ramping up production next year. The output of this is on the right-hand side of the page. You know, we're gonna deliver that higher discharge voltage that we talked about and 33% increased output to our customers. Those two results, combined with how we wanna build and the mechanical design of this product and the change from titanium to a conductive polymer, gives a significant cost reduction and shifts our cost curve down 50%, as I talked about earlier. We've still got a lot of work to do, and really one of the reasons why we made the decision that we made to shift product into next year was to allow the team to really focus on getting this right at launch. You know, we are a company, you know, when you look at the size of Eos, we're around 300 employees. One of the biggest things that I found in my four years here with the company is that when we are able to focus, we are very good. We're gonna take our resources and focus it on doing this right and delivering and testing this product and launching its manufacturing in early 2023. Pretty excited about the work that the team is doing and the results that they've delivered as we've developed this product and started to put it on test in Edison. Okay, shifting gears to our commercial pipeline and our orders backlog. Let's move to page 13, the page that we have in every earnings announcement. You know, lead generation. Lead generation is when the customer comes with a project idea, it's a feasibility study. We've got to come up with a project, a project plan around it. We also need to come up usually with a technical use case. You know, that has gone up half a billion dollars in the last quarter. We're pretty excited about this because, you know, when you think about how that translates into lead generation becomes current pipeline. Current pipeline now stands, we talked about before, it stands around $7 billion. You know, it's up over $300 million versus Q2. We're pretty excited about the customers that are coming into that current pipeline and that active proposals and the size of the projects that we're talking about. One of the advantages that we're gonna be bringing to the market as we talk about that current pipeline is that capacity that we're gonna be putting in place for the Z3, which will allow us to deliver product, you know, throughout 2024 and 2025. We're very excited about how this current pipeline lines up with the investment program and the Z3 product launch that we talked about on the prior page. Again, on booked orders, we talked about, you know, the quarter, you know, a lot of activity around the active proposals and people looking and working through and trying to understand the IRA legislation and how that plays into order booking timing. Saw it not really translate into a lot of orders in Q2 or Q3, I'm sorry. You know, we did, as I talked about earlier, close that $13.5 million order with the CEC in California, which is a great launch commercialized order for us to do with the CEC in California. Pretty excited about that. Now, when we look on page 14, the current orders backlog, you know, not much has changed versus last quarter other than the customer shipments, you know, the $50.2 million that are translated through into our sales number. You know, we have 1.8 GWh of backlog that comprises itself of three multi-year sales arrangements. We have 24 projects and 14 different customers. You know, when you look at how that 452 splits out, 419 is equipment deliveries, an additional 33 is in long-term service revenue. Continue to work with customers to grow this. I feel really good about the opportunity pipeline and how that's evolving here over the next few months. If we move to page 15 and just wrap up here on transitioning the strategy of the company. You know, the IRA legislation is improving not only the market, but also the economics for Eos and its customers beginning in 2023. You know, we've demonstrated an ability to manufacture and deploy energy storage systems at scale. We've come up and done that. While we were doing that, we came up with a better way to package our technology and bring it to the market faster in a lower cost position. It allows us to better allocate our capital and focus our resources on bringing that Z3 product to market against the backlog we talked about on the prior page, which now looks at our revised strategy of focusing on reducing our output and focusing ourselves on the launch of the Z3 in 2023 to better utilize the IRA benefits of both ourselves and our customers. Pretty excited about where the company sits and the shift in the transition in the strategy or focus inside the company. With that, I want to turn it over to Randy, who will walk us through the financials here this morning. Thank you, Joe. We sincerely appreciate everyone participating this morning and being part of this energy transition journey with us. We believe the radically changing energy landscape has only accelerated with recent geopolitical events and now against the backdrop of the Inflation Reduction Act. It's our premise that Eos long-duration energy storage technology invented in the U.S. and made in America with a near source supply chain is a clear differentiator. With that said, I wanted to reiterate a few critical points about the tax credits framework that we believe are a strategic advantage for Eos and for which we think improve the long-term prospects of the company. First, the investment tax credit and production tax credit framework for standalone storage is a 10-year program for energy projects placed in service after December 31, 2022. Besides the base tax credit, the IRA offers an extra 10% credit if an energy storage project satisfies domestic content requirements, which will be further defined and set forth when the implementing regulations and guidelines are finalized. We currently anticipate that projects utilizing Eos energy storage systems will qualify for this domestic content bonus because of the domestic content of our systems. The 10% is applied to the entire cost of the project, not just the cost of the energy storage system. For the production tax credits applicable to Eos as a manufacturer, the IRA directs the Internal Revenue Service to pay manufacturers the cash value, also known as direct pay, of production tax credits for making battery components, and therefore these credits may be a new source of cash flow for Eos. The direct pay option is valid for up to 5 tax years, after which any such tax credits can be sold to other companies for cash. Now turning to slide 17. Revenue for the quarter was $6.1 million, which is primarily the result of the Energy Block deliveries on the 80+ MWh Pine Gate Eastover project. As of November 2, we completed manufacturing and shipped the final Energy Block for this project, our largest ship project to date. Revenue in the quarter increased 3% sequentially, while our corresponding unit volume increased 15%. As a reminder, there can be variability in our revenue quarter-over-quarter because of the DC and AC scope mix. Quarter-over-quarter, Energy Block or DC scope revenue increased 20%, which was partially offset by an 82% decrease in AC scope. The large decrease in AC scope revenue is a result of timing of project execution. Most of the AC scope for the Eastover project was delivered and revenue recognized in the second quarter in preparation for Energy Block installation on the site. Cost of goods sold was $50 million, a $13.2 million increase from last quarter, $4 million of which was attributable to the 15% increase in unit volume. The remaining $9 million increase was related to higher logistics costs, plus inefficiencies, including scrap and rework, that resulted from the challenges Joe highlighted earlier. We invested $4.5 million in research and development in the quarter, a $1 million decrease from prior quarter as the Z3 battery program moved from component development and prototype testing to building the first battery modules in their scaled manufacturing configuration. Non-cash items in R&D were $400 thousand, including stock comp expense, depreciation, and amortization. SG&A expenses for the quarter were $14.7 million, a decrease of $4.5 million sequentially, resulting from reductions in outside services and legal fees. Non-cash items in SG&A were $3.3 million in the third quarter, mainly stock comp expense. The resulting operating loss was $63.7 million. We also incurred a $900 thousand loss on debt related to the early repayment of the HI-POWER note payable to Holtec, which was below the line. Turning to slide 18. We had $38.4 million of cash on hand as of the end of third quarter. We received $3 million of customer inflows as we executed on project milestones. Our net capital raise in the quarter was $87 million, which included $4 million of capital equipment financing under the facility with Trinity Capital. In addition, we added a new source of financing for the company in the third quarter with an at-the-market, or ATM, equity offering program through Cowen. This allows the company to offer and sell shares of common stock of up to $100 million at its discretion and was a takedown from the company's up to $300 million S-3 shelf registration. During the quarter, we raised $29 million in net proceeds on the ATM with an average share price of $2.49, leaving $70 million of capacity under this facility. Net cash to the balance sheet was $54 million from the senior secured term loan that we closed in July and announced in Q2 earnings. Gross proceeds were $94.7 million, of which $15 million was utilized to pay the outstanding balance on the HI-POWER note mentioned on the previous slide. $11.7 million for an insurance wrap, $11.7 million for escrowed interest, and $1.8 million for transaction fees. Our liquidity strategy remains to use the existing financing facilities on an as-needed basis. Remaining cash flows were $68 million, with the detail on the right-hand side of the slide. Now turning to slide 19. As we announced last Monday, the passage of the IRA has changed the economics for both Eos and our customers. As a result, we have shifted our strategy and revised our outlook for full year 2022. We continue to increase our opportunity pipeline and are in active discussions with multiple parties regarding large-scale individual projects and multi-year supply agreements. For example, we believe the recent win in California that we announced last week demonstrates how the market is shifting to longer duration alternative storage technologies. As a result, we are maintaining our $500 million booked order target for 2022. Next, we've revised full-year 2022 revenue expectation in the range of $17 million-$20 million, shifting the remaining revenue originally planned for 2022 into 2023 to better realize the potential benefits of the IRA for both us and our customers. We're extremely proud of all the work that the entire Eos team has done to get us to 600 megawatt hours in annualized capacity. Given the new revenue profile and the progress on the Z3 program, we determine that the current investment level in our manufacturing capacity for the Gen 2.3 product is sufficient at this time. This decision allows us to focus management attention and capital resources on the Z3 launch. With that, I want to thank everybody for their time and for listening in today. I would now like to turn it over to the operator for questions. Operator, will you please open up the line for Q&A? Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. Again, that is star one one to get in the queue. One moment while we compile the Q&A roster. All right, our first question comes from the line of Chip Moore with EF Hutton. Your line is open. Hey, good morning, Joe and Randy. Thanks for taking the question. Morning, Chip. Morning. I guess first, just maybe you can expand on, you know, great to see you navigating the challenges. I guess finalization of the manufacturing process and ramp up of Z3, it sounds like there's some acceleration on that ramp up. Just help us think about that as we look into next year. I guess would be a great starting point. Yeah. Chip, the way I would think about this is, we've got three phases. We're building production configured batteries to learn the manufacturing process right now as we speak, and those are going on test. We'll do that through year-end, then we'll go to a limited release, low rate production for the beginning of 2023, which will basically be our individual or discrete manufacturing processes. Think about how you build your bipolar electrode, how you integrate those electrodes into its container, how do you close the battery module and then integrate it into the Energy Block. We'll do that without automation, and then as we get to the second half of the year, we'll automate that process and ramp up into our first manufacturing line with subsequent lines to come after that. Okay. Got it. That's helpful. In terms of, you know, finished goods inventory and just existing products out there that maybe you haven't recognized yet, is there any way to help us just with that sort of, near-term stuff? Chip, this is Randy. Good morning. I don't know if the question is regarding incremental revenue from Energy Blocks that we've shipped, but you know, in quarters past, we've talked about the performance obligations and recognizing revenue. You know, it's not just the Energy Blocks, it's also the installation and commissioning primarily that are, you know, revenue recognition performance obligations. You know, we'll see most of that come through in Q4. That's contemplated, I think, in the revenue target that we've given for the year, the $17 million-$20 million. Got it. No, that's perfect, Randy. Okay. Maybe I can sneak one last one in. Just any update on DOE loan and due diligence process there, and maybe just update us on that process? Yeah. We're, you know, as we've announced before, we're in the formal due diligence process with the DOE active engagement. You know, I mean, timing to be determined, but, you know, we're confident in where we're at with the engagement that we have with the DOE. Got it. Okay. I'll hop back in queue. Thanks very much. Thanks, Chip. Thanks, Chip. Thank you. One moment while we get our next question, please. It comes from the line of Chris Souther with B. Riley Securities. Please proceed. Hey, guys. Thanks for taking my question here. Maybe just yeah, maybe just a little more color around like a breakdown in the cost of goods sold. You know, could you provide a reminder of how we account for inventory within there, and you know, breakdown between material costs, what that kind of scrap impact is, fixed overheads, you know, and what the visibility on that number for the fourth quarter is would be helpful. Then, you know, as we ramp up Z3, can you get a sense of what volume run rate we should expect, you know, before we hit positive gross margins when we bake in that 50% immediate cost down opportunity? Chris, with regards to the cost of goods sold, you know, I think the breakdown of the increase was of volume and then an inefficiencies aspect of the challenging environment we faced in Q3. You know, I would say that, you know, of the, you know, I think it was $9 million increase as a result of the inefficiencies, you know, a portion of that, of course, was scrap and rework. You know, with regards to the Z3 profile, right? You know, as we've talked about before, the guiding principles of the program were around design for cost, design for manufacturability. You know, I think you can see just looking at the pictures in terms of the simplicity, especially relative to the Gen 2.3. You'll remember on the Gen 2.3, we're building up a 40-cell battery, one cell at a time, with an infrared welder on each one of those cells. The Z3 design is a tub. It comes in as, you know, one piece in terms of the shell, and then you insert the bipolars in there, right? You know, we also talked about other big cost reduction aspects, you know, not just the automation cycle time, et cetera, but with regards to alternative materials, and so going from titanium to conductive polymer. All those factors are, you know, what lead to the, you know, much reduced cost profile and being able to reduce the cost, you know, by 50% at launch from where we are now on the Gen 2.3. I think, Chris, the only addition I would make to Randy's commentary around the Z3 would be, you know, what I've learned here the last couple years with scaling up the factory for the Gen 2.3 is, you know, there's gonna be a ramp up and a learning curve. Now, what we're seeing in the first units that we're building here in Edison right now is, you know, it is a much simpler, as Randy said, configuration to be able to manufacture. I would assume as we go through, we're gonna have, you know, scrap and rework and ramp, and ramp adjustments, just like we talked about here in the third quarter, although I don't think they will be at the same level because you're starting off on a, on a slower or on a lower cost base as you, as you think about that scrap that you'll incur and that training and ramping up of the facility. At the same time, I think what I would say is that we hold with what we said last quarter with that, you know, we're looking for the Z3 to become gross margin positive as we get into the second half of next year. Got it. Okay. No, that's really helpful. Just, you know, do we have any more clarity on the size of the DOE loan potential? You know, you mentioned 3 GWh, I think in that press release back in September, but just wanted to get a sense of, you know, what kind of a size range is that we'd be looking at with that, you know, potential program. Yeah, Chris, we haven't disclosed it and I don't think we're prepared to at this point while we're working with the DOE. Okay. That's exactly the process that we're going through with the due diligence right now with them. Okay. Makes sense. Maybe just the last one. When we're looking at kind of the backlog, you know, can you give any sense of, you know, what percent is for 2023, you know, expected orders, you know, given the push of quite a few of the 2022 orders? Just wanted to get, you know, any sense that we have there. You know, obviously we're getting a little bit more revenue in from Gen 2.3 in the fourth quarter, but wanted to see if we, you know, would also see some Gen 2.3 revenue within 2023 as well. Yeah. Chris, what I would say is the current backlog, you know, 30, I think $35 million or close to $35 million is long-term service agreements revenue. The balance of that is product revenue. Most of that is, you know, kind of multiyear master supply agreements. With regards to the question on, you know, the Gen 2.3. The customers that we worked with to push out from 2022 to 2023, we're still working with them to determine, you know, whether that should be Gen 2.3 product or Z3 product. Those are active discussions that are ongoing now. Okay. Makes sense. I'll hop in the queue. Thanks, guys. Thanks, Chris. Thanks, Chris. Thank you. As a reminder, to get in the queue, press star one one. One moment for our next question. Our next question comes from the line of Joseph Osha with Guggenheim. Please go ahead. Thanks. Good morning, everyone. Just a few questions. First, to follow up a little bit on the timing of the manufacturing transition next year. Can you maybe just step us through what the cadence of that looks like? I seem to recall, Joe, you'd said before that you anticipated coming out of next year with all of the line output at Z3. Are you still comfortable with that viewpoint? Yeah. Joe, what I would say is we're manufacturing product now. The goal is to get Energy Blocks on test by year end, then go into limited release, non-automated production in the beginning of 2023, and then ramp into the first automated line coming online in the second half of next year, and then the ramp-up into what will be the output of the facility in Turtle Creek by the end of the year. All right. Just Joe, to clarify the last part of the question. So your question is like by the end of the year, we'll only be shipping Z3, is what you're asking? Yeah. Maybe even making Z3, I guess. Yeah. I know there's obviously a. Yeah. Right. Yeah. There's a little bit. There'll always be some Gen 2.3 product that we'll be manufacturing as we go through this mix, just for the service on the installed base that we have. This is what we're working through now. There'll always be the majority of the new production going out the door for new unit shipments, that will be Z3 by year-end. The vast majority of production going out the door by the end of next year should be Z3. Yes. Yes. Okay. Second question. I know it's early days yet, but I'm wondering how your sort of price discovery conversations are going with your customers, given the IRA, right? You've got the selling module credit, you know, they get the extra 10%, et cetera, et cetera. How is that manifesting in terms of the sort of early pricing conversations you're having with customers? From the standpoint of how the discussions back and forth, it's still forward. What I would say, we still see discussions focused on forward market pricing. Depending on the years that you're talking about, when you look at really what we're talking to customers about is mostly deliveries as you look for second half of 2024 into 2025 and beyond. If they're discrete projects, they might be early 2024. For longer-term framework agreements, you're talking about longer-term deliveries, which is pricing to a forward curve. Really, like, when you look at the credit on the ITC side and the PTC side, they kinda wash out in the negotiation, is what I would say, and then you're at market pricing. I think what everybody is talking about, it's less about, you know, the way that I'm seeing it evolve right now in the early days is it's accelerating discussions and people wanting to talk about how to bring online and the benefits that you get. At the same time, I think we are and they are both saying, "Look, let's price this to the market of what we get a return on, and then what the ITC and PTC will be, will be. Okay. That makes sense. Then just the last one, Randy, for you. Obviously, you've got these production credits coming, and they're direct pay. My understanding is you gotta file first, though. There's a fairly substantial lag between when those credits are, you know, obviously recognized, and when the actual money shows up. Is that true? If so, do you have any thoughts or strategies you have in place about how you might sort of pull forward the actual monetization of those credits? Joe, your understanding is the same as our understanding in terms of the pull ahead, not yet. But you know, just to put context around it, you know, Joe showed the slide 4, which demonstrated, you know, the illustrative Eos customer impact and the illustrative production scenarios. You know, at 500 MWh, you know, with just the $45 per kWh, that's $22.5 million of credits. It's gonna be higher than that when you add on the 10% for the electrode active material costs. It's a good question, in terms of the ability to pull ahead. But you know, as of now, you know, kinda nothing further. Okay. All right. Thanks very much. Thanks, Joe. Thanks, Joe. Thank you. One moment for our last question. Comes from Tom Curran with Seaport. Please go ahead. Good morning. Hey, Tom. Just trying to connect the dots here on the key milestones you've shared on the expected path to profitability. As you've reiterated that for the Z3, you would expect to become gross margin positive at some point over the second half of next year. Does that mean that crossing into positive territory is predicated on achieving some level of automation in phase three? If so, could you share some detail around where exactly you would need to get to with automation to reach that threshold? Yeah. Tom, I'll start and then Joe can jump in. Yes, you're absolutely right. You know, the gross margin positive is assuming, you know, you have an automated process and that you're producing at scale. You know what gives us more confidence is, you know, now with the production tax credits as well, about the path to gross margin positive. Yeah, I mean, kinda full-scale production. We've selected an automation partner. You know, that's going well. I don't know if you have anything to add, Joe. Yeah. The only thing I would add to Randy's comments is, you know, even building by hand, building a Z3 without automation is faster cycle time than the welding process on Gen 2.3. Now the output of Z3 in the second half would assume a fully automated battery manufacturing, so battery module manufacturing. Making the bipolar, integrating the bipolar into the tub, closing the tub and filling with electrolyte, that would be fully automated and some of what we've already developed for the Gen 2.3 will flow into the Z3. Then we're assuming a semi-automated process of integrating the battery modules into the enclosure prior to shipping, which today is 100% manual. Got it. Thank you for expanding on that. That's helpful detail. Then Joe, in sharing an update on the current pipeline, you mentioned that you are excited to see some of the new prospective customers. You've been engaging on technical proposals or non-binding quotes. Right. Could you just expound on that as well? Share some color around whether it's more about the nature of the customers and maybe some granularity around who they are or is it about the use cases or a combination? Yeah. It's a combination of both. What I would say we're seeing is, more and more projects coming in with longer duration discharge beyond six hours. I mean, you look at, I think the order that we announced a week ago with the CEC, I think is the start. I think you see more and more people looking for longer duration and flexible duration, which we deliver on. At the same time, you know, the customers that are coming to us and the timing and the size are very encouraging. Now, early days and a lot of work still to do there. You know, what we're seeing is those customers coming in who now with the, you know, and I think this builds off of Joseph Osha's earlier question, now with the IRA legislation there, them coming to us and saying, "Okay, how do we put together a multi-level sales agreement, multi-year sales agreement that then allows us to get, you know, secure capacity with you, and then allows us to go after projects that have longer duration flexible source?" The combination of those things along with the regulatory framework is very encouraging from what we're seeing. Early days, and I think like names at this time, not ready to disclose those, and neither are the, I think the counterparty that we're talking to. Understood. Last one for me. You know, here we are early November, and you're reiterating the target for booked orders of $500 million. It sounds as if we're still just sitting at, let's round it to $340 million. Could you give us, you know, a better indication of what's underpinning the confidence about securing, you know, that additional $100 million here before year-end? Do you expect it to consist of a few big projects or a lot of little ones that maybe have some seasonality or Other factors that will lead them to kind of rush in here before year-end. Yeah, Tom, in my prepared remarks, you know, I mentioned that we're in discussions with various customers on you know, large individual projects or you know, framework agreements in the you know, master supply agreement type arrangement. I would say, you know, it's the former to your question, just based on, you know, where the market is and, you know, the recognition by customers that, you know, they need to probably, you know, lock up energy storage here for the long term, just given the dynamic supply demand and, you know, the recognition that, you know, customers shouldn't have, an over-reliance on a single technology. Got it. I appreciate the color and discuss. Thanks. Thanks. Thank you. Showing no further questions in queue, I will turn the call to Joe Mastrangelo for his final remarks. Thanks, Maria. Thanks, everybody, for listening today. You know, I sit here, you know, having been with the company now for over four years and feel really good about where we are with the backlog that we have and the product that we're developing and the team that we built. Feel like we've got to navigate through, you know, the liquidity of the company, continue to work with the DOE to get to a conclusion on the LPO loan. Really then position to capture what I think continues to be one of the greatest secular changes that I've seen in the energy industry in my 30-year career. I really feel much more positive about all those things, given the fact that we have a 10-year framework of which we can operate under as energy storage. I think energy storage will become a more and more important mix of our global energy mix. I think that we continue to position the company to capture that growth as it comes. Thanks again for listening, and we'll continue working to build a better company. With that, we conclude today's conference call. Thank you for participating, and you may now disconnect. A good day.