Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press the star one on your push-button phone. I would now like to turn the conference over to Erik Bylin. Please go ahead, sir. Welcome to ESS's 2023 third quarter financial results conference call. Joining me on the call today from ESS are Eric Dresselhuys, CEO, and Tony Robb, CFO. Following management's prepared remarks, we will hold a Q&A session. Earlier today, ESS released financial results for the third quarter of 2023. The earnings release is available on the Investor Relations section of the company's website. As a reminder, the information presented today will include forward-looking statements, including, without limitation, statements about our growth prospects, partnerships, financial performance, and strategy for the remainder of 2023 and beyond. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our risk factors set forth in more detail on our most recent periodic reports filed with the Securities and Exchange Commission, as well as the current uncertainty and unpredictability in our business, issues with our partnerships, inflation, the markets, the economy, and the current geopolitical situation. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and we disclaim any obligation to update any forward-looking statements except as required by law. During the call, we will also present certain financial information on a non-GAAP basis. Management believes that non-GAAP financial measures, taken in conjunction with U.S. GAAP financial measures, provide useful information for both management and investors by excluding certain items that are not indicative of our core operating results. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented within our earnings release. With that, I will turn the call over to ESS's CEO, Eric Dresselhuys. Thank you, Eric, and thank you all for joining us for our third quarter earnings call. Today, I'll review our financial results, Honeywell partnership, customer success, and additions to the leadership team. I am joined by Tony Robb, our CFO. We continue to make solid progress across the business, driving customer deliveries, signing significant partnership agreements, and efficiently managing our resources as we drive to profitability. While we came in somewhat light on revenue in Q3 due to a timing delay with one project, we remain confident in our ability to deliver on the projections we shared last quarter, namely achieving $9 million in revenue this fiscal year. As a reminder of the progress we've made, our year-to-date revenue of $4.7 million is an increase of about 700% from last year. We have sufficient product and demand to be able to deliver on a material increase in revenue in the fourth quarter and achieve our objectives. We are a burgeoning company with large customers and complex projects. Delays that may seem slight or insignificant at our customers can cause shifts in when we ship product and recognize revenue in the short term, as happened in the third quarter, but these should even out over time. In late September, ESS entered a transformational partnership with Honeywell, an industrial powerhouse with strength across technologies and markets that align tightly with those that ESS is pursuing. Recognizing the importance of long-duration storage and ESS's advantages with iron flow technology in solving for a clean energy future, Honeywell first engaged with ESS at the beginning of the year. After exhaustive diligence into our operations, customer relationships, and intellectual property, Honeywell became convinced that ESS has developed a truly differentiated technology to serve this market, and we are thrilled to enter into this synergistic partnership. The relationship is wide-ranging, but I will provide a brief recap of the highlights. First, Honeywell plans to incorporate our technology into their clean energy go-to-market efforts and have an initial target to purchase up to $300 million of our product in the coming years. They already put down a $15 million prepayment towards those purchases and have made a direct equity investment of $27.5 million at a 24% premium to ESS's then current stock price, adding $42.5 million to our balance sheet immediately. Through warrants, Honeywell can make further investments in ESS at an even more significant premium, which would add almost $40 million more to the balance sheet. ESS will integrate Honeywell's flow battery IP into our own extensive IP portfolio and will collaborate through a joint development agreement to further progress the technology. In total, we believe this to be an industry-defining relationship. Collaboration is already underway, and we can't wait to share our progress. While we are shipping Energy Warehouses today, over time, we see the majority of our revenue shifting to Energy Centers or ECs. Our EC solution utilizes the same patent-protected technology and design approach as the EW, but at much greater scale. Our EC solution is modular and designed to scale to tens of megawatts per installation, with greater flexibility and much more lower cost per kilowatt hour to enable the utility-scale solutions necessary to achieve a carbon neutral grid. We've been developing this product for some time, and we're excited that our operations and engineering teams have been hard at work with Portland General Electric, building the first Energy Center right here in Oregon. It's exciting to see this come to life, and we expect to be testing an operational EC this quarter. With full commissioning slated for the first half of 2024, we believe we are on track to begin shipping ECs to commercial customers in the second half of 2024. We're excited to be bringing the EC to life, a product that we expect will fuel our long-term growth trajectory. On the customer front, I would like to congratulate our Australian partner, Energy Storage Industries Asia Pacific, or ESI, on their expanded agreement with Stanwell Corporation, a major electricity generator owned by the Queensland Government. Announced by the Queensland Premier during her recent State of the State Address, Stanwell detailed its intent to develop what will be the largest iron flow battery energy storage system in the world. After deployment of the previously announced initial project, they plan to expand to a 150-MW installation and have already taken an option to buy up to 200 MW per year thereafter. This deal comes on the heels of Energy Queensland's announcement in August that it will deploy a 1-MW iron flow battery from ESI in the Wide Bay region to support in the development of lithium-ion alternatives. Stanwell and Energy Queensland are driving forward in the mission to fulfill the Queensland Energy and Jobs Plan that will call for 3 GW-3.5 GW of storage to achieve the state's target of 80% renewable energy in the grid by 2035. To follow up on our announcement last quarter, we're pleased to share that we finalized the agreement with LEAG for the first phase of our groundbreaking project to bring green baseload energy to Germany. As you'll recall, this project is intended to deliver a 500 MWh iron flow battery system at LEAG's Boxberg power plant site. The installation would create a repeatable building block to support LEAG's objective to create up to 20 GWh of storage to be paired with solar and local hydrogen production, creating the largest green energy hub in Europe. We continue to enjoy great validation from our existing customer base. We successfully commissioned our first deployment of six Energy Warehouses at Sacramento Municipal Utility District. These six EWs represent the first phase of an agreement that will deliver up to 200 MW of long-duration energy storage to support SMUD's aggressive 2030 clean energy vision. As another sign of the progress our customer success team is making, we recently commissioned an EW for Nevada Energy in just two and a half weeks, among the other projects we delivered this quarter. Four of these customers, Honeywell, ESI, LEAG, and SMUD, have signed agreements with ESS that could, if fully realized, result in shipping hundreds of megawatts of storage, which would translate to well north of $1 billion in total revenue. To realize this potential, we need to balance managing our cash position, optimizing our operations, and ramping the production of Energy Centers, which is the best form factor to deliver megawatts of storage most efficiently. To accomplish these objectives together, ESS expects to maintain our relatively modest rate of EW shipments early next year, and then to start delivering ECs in the second half of 2024. We have sufficient power module capacity in place today to meet our 2024 demand, and we'll look to add additional capacity late in 2024 to enable further ramping into 2025. As you can tell, we're excited about the great progress we're making as we ramp the business, but the progress is not always linear. I want to share that the collaboration we had with San Diego Gas & Electric at the Cameron Corners site has ended. The project was conceived several years ago, and as we built it out, the parties recognized a mismatch related to the specific technical requirements at the site, and we jointly agreed to move on at the end of the quarter. I will admit this is a disappointing outcome, but a reflection of the transformation of ESS as a company. We are now delivering EWs to customers, largely recognizing revenue upon shipment and seamlessly commissioning our technology at customer sites. We sincerely appreciate the collaboration with SDG&E and hope to find new opportunities to work with them in the future. We continue to build out and strengthen the ESS team. I am pleased to welcome Harry Quarls to the board and Jeff Loebbaka as our Chief Commercial Officer. Harry assumed the role of chairman and brings vast strategic, financial, and operational experience to help guide ESS in our continued progress. Jeff will run all of our go-to-market efforts and will leverage his experiences from numerous leadership positions running sales and marketing, including five years at Enphase, to drive our revenue growth. With that, I'll turn it over to Tony to cover our results. Thank you, Eric. Unless otherwise noted, all numbers we discuss today will be on a non-GAAP basis. You will find the reconciliation of GAAP to the non-GAAP financial measures in our earnings release, which is posted on our investor relations website. We recognized $1.5 million in revenue in the third quarter, and we still believe we can deliver on $9 million in revenue for the full year. As noted previously, the timing of activities for our customers can cause delays in the timing of shipments and revenue recognition. This happened in Q3, but this is something that we are working to improve, and as we grow, we expect that these variations will smooth over time on a collective basis. Beginning in Q3, we transitioned out of development accounting and into commercial inventory accounting. So we are now reporting our cost of revenue separately from our operating expenses and beginning to record inventory on our balance sheet. Our cost of revenue was $10.2 million in the third quarter. As part of this transition, in Q3, we are required to record a lower of cost or net realizable value, or LCNRV adjustment, to write down the value of inventory on hand at the end of the quarter to the amount we anticipate receiving upon customer delivery and after considering all future costs of completion. This is a significant adjustment to our cost of revenue line and has a corresponding decrease to our inventory value. This is very similar to the accounting requirements impacting other energy storage and EV manufacturers. As we have discussed previously, we have moderated our production volumes this year to mitigate our cash usage while we advance our extensive cost reduction initiatives. While this achieves our objective regarding cash conservation, operating our manufacturing lines at a fraction of our 800 MWh of annual capacity creates an impact to our cost of revenue and inventory values. Lower manufacturing throughput, and therefore lower capacity utilization, results in overhead designed to support much higher production volumes being spread over fewer EWs. In the near term, as we increase our shipments to our customers, scaling the business toward the current full capacity of our factory and personnel, our purchase commitments and inventories on hand will increase as well. Because these factors impact the value that would be subject to the LCNRV inventory adjustment, we expect this LCNRV adjustment will continue to occur in the coming quarters and anticipate that this adjustment will serve as a material headwind to our gross margin in the near term. However, as we expect to further ramp up our production towards the back half of 2024, increasing the utilization of our fixed manufacturing overhead and eventually achieving scale and continuing to reduce our unit production costs while driving operational efficiencies, we anticipate that the total charge per unit will decline over time. We expect this effect to accelerate once we achieve adjusted gross margin breakeven on our EWs in the second half of 2024. Our non-GAAP operating expenses for Q3 were in line with our expectations at $7.5 million. With that, we reported Q3 adjusted EBITDA of -$14.2 million, a significant sequential and year-over-year improvement. With the cash infusion of $42.5 million in Q3, we ended the quarter with $124.5 million in cash and short-term investments. We will continue to effectively manage our cash burn rate in the coming quarters, and the cash on hand should last us well into the first half of 2025. While not pressing, we will continue to opportunistically look to strengthen our balance sheet through dilutive and non-dilutive means to provide the necessary capital to give us operational flexibility to respond to market demands. The bottom line is that we feel very good about our cash position and liquidity and the extended runway we now have to push towards our longer-term goal of getting to cash flow breakeven. With that, I'll open it up for questions. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is now open. Hey, good afternoon, guys. Thanks for taking my question. Could you try to talk again about the, the timing for the revenue recognition, and how now is it flowing through? I think you have been improving since the last two quarter, but just wanted to get a sense as we go into 2024. And then maybe the second question would be if you can speak, like, high level or, you know, how much detail as you feel comfortable, but what we should be expecting through 2024. Thank you. So hey, it's Tony Robb. Thanks for that. Relative to revenue recognition, things are continuing in the same manner that we described before, where we are able to recognize revenue in a fairly normal manner once the product, the energy warehouses, are transferred to control the customer. And that is either happening once it leaves our warehouse here or once it arrives at a customer's location, depending on the contractual terms. But generally speaking, once all the obligations are met, that's how we're recognizing revenue on a fairly regular basis. Hi, Corinne, it's Eric here. I'll take the second one. We've, we've not set a firm goal for 2024 at this point. We do see substantial growth, but we have not locked in on a number. It'll be a many multiples growth of where we're gonna land on 2023, but we have not set a final target at this point. Okay, thank you. And I think, as we said in the prepared- Mm-hmm. Yeah. Well, and just to add. Yes. Just a little color to that. As we said on the call, well, we, we expect the EW shipments to stay relatively modest in the first half of the year in terms of the rate, kind of at the run rate or, you know, plus or minus from where we've been. And then, as we hit the second half of the year, as our costs flip over, and we start to hit unit profitability, we'll start to ship more EWs. Plus, as we said on the call, in the prepared remarks, we'll start to ship ECs on top of that. All right. Thank you. I appreciate it. Thank you for your question. Next question is from the line of Leanne Hayden with Canaccord. Your line is now open. Good evening, everyone. Thanks so much for taking my question. Just to start from me, can you talk about, you know, when you're being approached by a potential customer who's evaluating your solution, which technologies are you primarily up against? You know, is it lithium- ion? Is it hydrogen? Who do you view as the primary technological competitor, and has this changed at all over the past, let's say, six or nine months? Sure. Eric here, I'll take that. It's really primarily lithium- ion today still, so and that really hasn't changed much. I think what has changed is that, more and more people are coming to us very, proactively, intentionally seeking a lithium- ion alternative. So a year ago or more, we would've been having a conversation of us trying to convince someone why they needed a non-lithium alternative. Whereas today, a lot of the contacts we have are people who have specifically decided to seek a non-lithium alternative, and are looking for something particularly around longer duration, which has led them to the conversation with us. Okay. Relative to your hydrogen question, I don't, we don't see that as really competition at all. I think we've talked this in the past, but as a reminder, our view is that there is a short-duration energy storage market that will probably continue for some time. And there is an ultra- long category within the world of energy storage, which there are different technologies, including hydrogen, that are intended to become this seasonal or multi-day storage. The part that we're absolutely laser focused on is the intraday or the intraday, kind of eight- to 12-hour range, which we see as the fastest growing part of the market right now. Right. Right. Okay, that's great. Thank you so much. Just as a follow-up from me, do you have any updates on the Honeywell transaction? I understand they've had a recent change in corporate structure. What does this mean for you? How do you expect to fit into their solutions? Any color you could provide on that would be great. Yeah, sure. No, we're, as we said in the prepared remarks, we remain very, very excited about the potential of this relationship. We just had a whole group of people from Honeywell out, starting to kick off planning and targeting specific customer projects and development projects just last week. You're right, they did a reorganization that is actually, I think, fantastic for us. Joking aside, the new group that we work with is called ESS, which is kind of funny, but it's Environmental and Sustainability Solutions within the Honeywell world, and that's what we are. We're ESS. So I think Honeywell made some really smart moves to help align their business to really maximizing the energy transition, and I really hope we're gonna be the beneficiaries of that. All right. That's great. Thank you, guys. Thank you for your question. Next question is from the line of Brian Dobson with Chardan Capital Markets. Your line is now open. Yeah, thanks very much for taking my question. Just a follow-up on Honeywell as well. You know, so it's been a few weeks since you inked that agreement, and it may be too soon to comment on early results of the deal. But what have you heard from other potential partners and clients as far as seeing such a marquee client? No, that's a great question. I'd say we've heard a couple of things. The first is, I think people have appreciated that a group like Honeywell, maybe they don't move that fast. It's a big corporate organization with a lot of, you know, a lot of people and a lot of different groups. But that has really helped validate the diligence and the work that they did. We tried to work it into the prepared remarks because some people asked us after we announced the deal, like: "Did this come up in a hurry? Did this come up in the last 30 or 60 days?" And of course, as you would expect with somebody like Honeywell, this is a process that kicked off in late January of this year and has gone through an extensive amount of diligence on the customer front and the technology front and operationally. And so, the probably single biggest thing we've heard is that the validation that it's given to ESS as really being the right technology and the right market space is the number one thing we've heard. From specific customers, of course, there's definitely a feeling that says, "Wow, if Honeywell did diligence on this..."... and they've given it the stamp of approval, you know, that's a that puts you in a different category than all of the other non-lithium alternatives that are coming to market today. And then the third thing that I think is interesting is, and we've talked about this on previous calls, at a project level, the projects that people are undertaking are increasingly complex. They might be putting in renewables, plus storage, plus green hydrogen production, and our business at ESS is just to provide the technology for long-duration storage. So having a partner that's got the kind of scale and breadth that Honeywell has, I think is gonna open up market segments that go beyond just standalone storage or storage plus solar, into these more complex use cases that we see great opportunity for in long-duration storage. Excellent. Thanks very much. Thank you for your question. Again, if you would like to ask a question, press star then the number one on your telephone keypad. The next question is from the line of Colin Rusch with Oppenheimer. Your line is now open. Thanks so much, guys. You know, as you start to ramp here and start to approach pretty significant volumes for the second half of next year, can you talk a little bit about your working capital needs and how your supply chain is starting to mature to support that? Yeah. Yeah, Colin. Hey, it's Tony Rabb. Thanks for that. I think that we've made quite a bit of progress in terms of enhancing and improving our supply chain, both the process and in terms of the vendors that we're working with. You know, that being said, we're still working through a number of different changes with a number of our vendors as we continue to you know, scale and grow the product and as we work through the Energy Center development. But in terms of working capital needs, I anticipate that obviously with volume, the overall dollar of working capital is gonna go up. But the amount of actual working capital in terms of from an efficiency standpoint, I see that the weeks of inventory or weeks of working capital and the percent relative to sales, that's something that we believe we'll be able to improve over time. Today, you know, we're carrying quite a bit of inventory and working capital relative to our sales, but we expect to get more efficient with that as time goes on next year. Thanks so much. And then, Eric, as you look at, you know, the potential with a lot of these customers, obviously, you're gonna get through kind of the first hurdle with some of these customers from a diligence perspective because of the Honeywell relationship. But then, you know, what's your expectation around your ability to move those folks through the funnel to contract and, you know, the delta in terms of the pace of, you know, how that can happen here over the next several quarters? Yeah, that's a great question, Colin, and something we spend a lot of time talking about. I put it into two different categories. I think that for, you know, commercial and industrial applications, so behind-the-meter-type applications that are typically smaller projects and maybe a little bit more one-off, I think those have moved relatively quickly. We've had sales cycles as low as a couple of quarters, and the transaction from, you know, the buy decision to implementation can go more quickly. That's, I think, in part, driven by things that are connected to the low voltage network tend to have a little less challenge on permitting and, you know, grid access and things like that. Whereas I think the large utility- scale projects are gonna continue to be a little bit more plodding in terms of their total process to go from contact to implementation. That's some of the big projects we've announced and why we've liked some of the projects, like SMUD is a good example, is that it lays out a roadmap that goes over multiple years, and I think will help accelerate the time to convert from implementation to operations. With a Honeywell on board, I think that takes out a big chunk of the kind of the bankability, and are you gonna be around kind of questions that are always come up when you're a new company in a space. Having the endorsement, the ability to buy the product through Honeywell, I think will accelerate that for some number of the customers. Fantastic. Thanks so much, guys. Thanks, Colin. Thank you for your question. The next question comes from the line of Chris Kapsch with Loop Capital. Your line is now open. Yeah, good afternoon. A couple of follow-ups. Just on the Honeywell relationship also, while you said, which makes sense, that the diligence process on their behalf sort of validated your technology, I'm curious if that also that diligence process sort of validated your commercial strategy to transition to EWs, and if there's specific examples of that in terms of Honeywell's commercial strategy. And then also just sort of following up on the, you know, the transition to EWs, Tony mentioned, you know, some efficiencies with respect to working capital as you scale and that transition from ECs to EWs. Just wondering if there's also an opportunity to once you cross that Rubicon, to, you know, to maybe deepen the sense in terms of gross margins, and is there also some capital efficiencies that come with that transition? Thank you. ... Yeah, I'll take the first part of that, Chris, and then Tony can chime in as need be. And don't, don't, take this the wrong way, it's we're EWs today, we're transitioning more to ECs, so the reverse of what you said, but- That's- That's on us for the- That's what I meant, right? ... naming convention we've come up with. Don't, yeah, don't, don't feel bad about it. Yeah, we talked a lot about EWs, NDCs with Honeywell. I won't try to preempt anything that they're thinking about in terms of their strategy, but very, there was a great meeting of the minds between us and them on the need to get to, to greater scale and to lower costs on a per kilowatt hour basis, and the EC really drives our ability to do those two things. The thing that's really valuable for us, as it gets into some of these capital questions, is that the core technology, the way we build a stack and the proton pump, the electrolyte we use, those are the same across any form factor. So you're really just looking at the balance of system and trying to consistently, you know, constantly find better, more efficient ways to build the balance of system, to lower total cost and to improve performance. But the core technology underneath it, if we make an improvement to a stack, it affects the EW, it affects the EC, it affects any way, any place that we deploy product. Yeah. Thanks, Eric. This is Tony. So essentially, you know, we're producing these on the same manufacturing lines, ECs and EWs, from a battery cell and battery stack standpoint, and the materials are the same. So if I'm producing—as I transition to producing ECs and scaling those up, the vendors that I'm using and the amount of material that I'm buying for the battery cells and the stacks, it's all the same. And so it just helps in terms of efficiency from an inventory standpoint, from a volume standpoint, and the leverage that we have with those vendors. So all that, I think is a positive as we scale the business up. The key for us is gonna be make sure that we're qualifying the best vendors, and we have the ability to work down the lead times that we have with our vendors today. Got it, and apologies for my dyslexia. I'll blame that on the earnings season slog. But the follow-up was, you mentioned, you know, sort of a collaboration in around your IP and their IP. I'm just wondering if, if there's some opportunity, when, you know, collaborating, that will lead to a more discernible competitive advantage when addressing the long duration energy storage market. And, is it right to assume that, you know, the most attractive piece of your IP portfolio still is the proton pump technology? And if you could provide any color on what they're bringing to the table from an IP standpoint, that would be interesting. Thank you. Yeah, sure. Yeah, well, I think—certainly, I think that the proton pump is a very appealing part of our overall portfolio. I think the other thing that I would, that I'd say, not to put words in their mouth, but they were incredibly complimentary of our, of our stack, the stack design, and our manufacturability of the stack, and to do that with quality. And it's something that I think people take for granted, but building a really high-quality stack is not a small thing, and we got a lot of really positive marks from them on that. In terms of the collaboration, I think you hit it on the head. The goal here is not to, you know, to always find ways to move things forward. So I don't think it's gonna result in any radical changes to our approach. They came to us in part because they liked iron flow. They absolutely appreciated the, the inherent advantages of iron flow technology in terms of performance, safety, hitting, hitting cost points. But they've got a ton of expertise around, you know, advanced materials. So, whether that's, you know, separator materials, or different power electronics, or anything that we can do to improve, the, the cost and, and the performance of the system, I think are all things that are on the table. I would tell you that, after the first meeting, there was no shortage of ideas of things to go collaborate on together. They've done a lot in their IP portfolio around things like separator materials and things like that. As you would probably appreciate, they've been, you know, a major player in that space, across everything from petrochemicals to plastics, to fuel cells, to you name it. They bring a wealth of experience on how to maximize those kinds of products, and we're really looking forward to tapping into that. Appreciate the color. Thanks. Thank you for your question. Next question is from the line of Thomas Boyes with TD Cowen. Your line is now open. Thanks for taking the questions. I joined the call a little bit late, so apologize in advance if some of these were already asked. But I just want to get a better sense of maybe where we are in the continuum of transferring to regulatory accounting this quarter. I know that, you know, some inventory items, based on the timing when they were purchased, you know, kind of present themselves differently as they flow through the P&L. You know, can you maybe just talk about that mechanism broadly? And then, you know, should we expect this to kind of be free and clear in Q4, or is there any lingering effects into 2024? Yeah. So we are fully transitioned into a standard inventory accounting this quarter, so that's good news, and we're extremely happy to have transitioned out. And as part of that transition, you know, we're gonna have to deal with a couple of components of transitioning into it. Number one is that we do have inventory that was previously expensed, obviously, and some of that inventory will take a little bit of time to work through. It doesn't all get worked through in one quarter. But more importantly, I think the thing to recognize is that we have to make an adjustment to our inventory, where we're basically adjusting it down to lower of cost or net realizable value. Which is the same accounting that, all companies in standard inventory accounting have to deal with. But companies that are scaling up, like ours and other energy storage companies and other EV companies, are all dealing with this as they're scaling up, and their manufacturing volumes are low relative to the amount of overhead that they have. And so until. We've got a lot of capacity in the facility today. We've got 800 MWh of annual production capacity. We're operating well below that. So the fixed overheads that we have, that you have to apply into inventory against the low number of units that we're producing, that's going to continue to be a headwind, and we'll be making this LCNRV adjustment until we start to get up closer to our full manufacturing capacity. The other component that we've described previously is that we anticipate on Energy Warehouses getting to what we call adjusted gross margin or non-GAAP gross margin break even, but not until the second half of 2024. And at that point is when we'll actually start scaling up, because that's when your selling price is above your direct cost, and that's when you want to start ramping up your volumes to start covering all of those overheads. So both of those components are going to impact this LCNRV valuation, and we anticipate that on a per unit basis, it will start coming down over time. However, as we start producing more units as we scale up, the absolute dollar value will be increasing until we get to the point where we can really start scaling the business up. It is going to be of a material help- Got it. For us going forward. Yep. No, appreciate, appreciate the insight there. And then, maybe just... Obviously, great to see the, you know, the progress for, on the energy center front. Can you just remind me kind of what the time frame is, you know, in general terms, to deliver on a project of that scale? If, say, production starts in 4Q of this year, is that a late 2024 event? Is that more early 2025? Yeah, thanks. I'll take that, Thomas. Eric here. So, the first units that are being built are being built here for our project with Portland General, which are here in Oregon. So those are actually coming right off of the manufacturing floor and onto the job site. We kind of view that as the pre-commercial units that we've done in collaboration with Portland General. And then we'll start shipping true commercial units in the second half of 2024. So we'll have a 2024 impact, and then ramp up, you know, further as we get into 2025. Great. Appreciate the color. I'll hop back in queue. Thank you for your question. This concludes today's conference call. You may now disconnect your line.