Energy Vault Holdings, Inc. (NRGV) Q2 2025 Earnings Call Transcript

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Overview

The earnings call highlights a significant revenue increase (126% YoY) and backlog growth, indicating strong demand. The company is effectively managing costs, improving EBITDA, and maintaining a healthy cash position. Despite some financing risks, the strategic focus on U.S. and Australian markets shows potential. The Q&A section reveals cautious optimism, with management planning to address concerns in future calls. The positive revenue growth, backlog, and cash flow improvements suggest a positive market reaction, likely resulting in a 2% to 8% stock price increase over the next two weeks.

Key Financial Performance

Revenue $8.5 million, up 126% year-over-year, driven by activity across Australian project portfolio and the first month of commercial operations at Cross Trails in Texas.

Backlog $954 million, up 47% quarter-over-quarter and 120% year-to-date, driven by new third-party projects, service agreements, and long-term offtake agreements in the U.S. and Australia.

GAAP Gross Profit $2.5 million, up 140% year-over-year, with a gross margin of 29.6%, driven by favorable geographic and revenue mix.

Adjusted EBITDA Loss of $13.7 million, improved 11% year-over-year from a loss of $15.4 million in Q2 2024, aided by improved gross margins and $6.5 million in cost savings initiatives.

Cash $58.1 million as of June 30, up 23% sequentially, finishing at the high end of the previous guidance range.

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Operating Highlights

Asset Vault: Energy Vault announced a $300 million preferred equity investment to fund the development, construction, and operation of energy storage projects under the Asset Vault initiative. This will enable over $1 billion in CapEx and project financing for 1.5 gigawatts of projects in the U.S., Australia, and Europe.

New Projects: The company placed its first two owned projects in Texas and California into service, generating nearly $10 million in recurring annual EBITDA. Additionally, the Stoney Creek Battery Energy Storage System in Australia, the largest in their portfolio, is expected to generate $20 million in annual recurring EBITDA once operational in 2027.

Geographic Expansion: Energy Vault is expanding its project pipeline to 3 gigawatts across the U.S., Australia, and Europe. The Stoney Creek project in Australia marks a significant milestone in this expansion.

Revenue Growth: Revenue increased 126% year-over-year to $8.5 million, driven by Australian project deliveries and the commencement of operations at the Cross Trails Battery Energy Storage System in Texas.

Cost Savings: Implemented $6.5 million in annualized cost savings while continuing strategic investments in Australia.

Cash Position: Cash improved 23% sequentially to $58.1 million, with additional project financing and tax credit proceeds expected in the coming months.

Focus on Execution: The company emphasized its strong execution capabilities, including supply chain management, project commissioning, and asset operation, to build investor confidence.

Non-Dilutive Financing: The $300 million preferred equity investment is non-dilutive to common shareholders, aligning with long-term shareholder value creation.

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Risk or Challenges

Market Shocks and Tariff Disputes: The company faced market shocks and delays due to a tariff dispute with China, impacting battery deliveries in the first half of the year. This could affect project timelines and revenue recognition.

Execution Risks: The company emphasized the importance of execution in delivering projects, managing supply chains, and meeting customer expectations. Any failure in execution could harm the company's reputation and financial performance.

Regulatory and Closing Conditions: The $300 million preferred equity investment is subject to regulatory and closing conditions, which, if not met, could delay or jeopardize funding for the company's projects.

Economic and Market Uncertainties: The company operates in a highly competitive and uncertain market environment, which could impact its ability to secure long-term offtake agreements and maintain profitability.

Dependence on Key Markets: The company's growth strategy heavily relies on projects in the U.S., Australia, and Europe. Any adverse changes in these markets could significantly impact its operations and financials.

Cost Management and Profitability: While the company has implemented cost-saving measures, it continues to invest in growth, particularly in Australia. Balancing cost management with strategic investments remains a challenge.

Project Financing Risks: The company relies on project financing to fund its initiatives. Any disruptions in securing financing could delay project execution and impact financial stability.

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Guidance & Outlook

Revenue Projections: Energy Vault estimates full-year 2025 revenue to be between $200 million and $250 million, consistent with prior guidance.

Cash and Project Financing: The company expects total cash at the end of Q3 2025 to range between $60 million and $75 million, including $18 million from the Cross Trails project financing completed in July and $27 million in net ITC proceeds anticipated in September.

Asset Vault Initiative: Energy Vault announced a $300 million preferred equity investment to fund over $1 billion in CapEx for 1.5 gigawatts of projects under development in the U.S., Australia, and Europe. This initiative is expected to generate $100 million in recurring annual EBITDA over the next 3-4 years.

Stoney Creek Project: The 125-megawatt Stoney Creek Battery Energy Storage System in Australia is expected to commence construction in Q1 2026 and be completed by 2027, generating approximately $20 million in annual recurring EBITDA.

Recurring EBITDA Goals: The company aims to achieve $100 million in recurring EBITDA within the next 3-4 years, supported by projects like Stoney Creek and other Asset Vault initiatives.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you share more details about the return structure, preferred dividend yield, or milestones tied to the equity participation in Energy Vault Holdings?

A:Management stated that they are scheduling a virtual call with investors post-close to discuss these details. For regulatory and compliance purposes, they did not provide specifics during the call but referred to Slide 14 in the deck for assumptions based on levered IRRs.

Q:What is the financing strategy for the $1 billion CapEx in terms of project-level debt, tax equity, and equity contribution from Energy Vault?

A:Management explained that much of the portfolio will be U.S.-centric with notable ITC-related benefits. For a $100 million project, approximately 50% would be covered through project financing, 30-40% through ITC mechanisms, and the remaining 20% split between common equity and preferred equity. They also mentioned using funds for early development phases and potential minority interests in projects.

Q:Can you provide more details on the development process for the nearly 1 gigawatt of projects planned for completion in 2027?

A:Management mentioned that projects are in various development stages, with some in mid-development and others nearing later stages. They highlighted projects in Australia, the U.S., and Europe, with durations ranging from 4 to 8 hours. They referred to past charts and announcements for additional visibility.

Q:What is implied in the exclusivity of the arrangement with the new preferred financing?

A:Management clarified that the exclusivity pertains specifically to the Asset Vault and the preferred equity funding for these projects. It does not imply a similar relationship for other projects or parent company operations.

Q:Can you provide a general overview of the process and timeline for landing the preferred financing deal?

A:Management explained that they retained Jefferies late last year to explore the Own and Operate segment. They started targeting infrastructure funds earlier this year, coinciding with project completions like Cross Trails and Calistoga. Factors such as project execution, customer feedback, and diligence influenced the timing and readiness for the deal.

Q:How does the Asset Vault business relate to the current business, and how does the $100 million EBITDA fit in?

A:Management stated that the $100 million EBITDA is specific to the Asset Vault portfolio and is complementary to the Energy Storage Solutions business. Additional cash and margin streams from EPC agreements, long-term service agreements, and management fees will flow back to the parent company, enhancing cash flow and liquidity.

Q:What is the timeline and process for the Stoney Creek project in Australia?

A:Management outlined that the next milestone is the Design Approval (DA) by the end of the year or Q1, followed by project financing. They expect the project to achieve ready-to-build status in Q1 next year, with construction through 2026 and operations starting in early 2027.

Q:Review of Unclear Management Responses

A:Management avoided providing direct answers to questions about the return structure, preferred dividend yield, and milestones tied to the equity participation in Energy Vault Holdings, citing regulatory and compliance reasons. They deferred these details to a future investor call.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

NRGV Transcript

Energy Vault Holdings, Inc. (NRGV) Q3 2025 Earnings Call Transcript

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The earnings call highlights significant revenue growth, improved gross profit, and a strong revenue backlog. Despite some execution risks and macro uncertainties, the company's strategic initiatives, such as the Asset Vault platform, show promising potential for recurring EBITDA. The Q&A session reveals management's confidence in maintaining guidance despite external challenges. Overall, the strong financial performance and optimistic outlook outweigh the risks, suggesting a positive stock price reaction.

Energy Vault Holdings, Inc. (NRGV) Q2 2025 Earnings Call Transcript

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The earnings call reveals strong financial performance with improved gross margins and reduced losses. The company is making progress in project financing and has a solid cash position. Despite challenges like U.S.-China tariffs and supply chain issues, management is optimistic about future bookings and revenue. The Q&A indicates analysts' cautious optimism, with over 80% of 2025 revenue already contracted. The long-term strategy with recurring revenue streams and EBITDA goals supports a positive outlook. However, regulatory and economic risks are noted, tempering the sentiment slightly.

Energy Vault Holdings, Inc. (NYSE:NRGV) Q4 2024 Earnings Call Transcript

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The earnings call reveals several concerns: missed EPS expectations, revenue below guidance, and cash balance issues due to payment delays. Although contract bookings have increased, the lack of a shareholder return plan and ongoing regulatory challenges add uncertainty. The Q&A section highlights unresolved financing issues and tariff impacts. Despite some positive aspects like margin improvement and new partnerships, the overall sentiment leans negative, especially given the missed earnings and cash flow challenges.

NRGV Slides

Energy Vault Q2 2025 slides: 126% revenue growth, launches $300M Asset Vault initiative

2025-08-07

NRGV Report

Energy Vault Holdings, Inc. 10-Q

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2024-11-12

Energy Vault Holdings, Inc. 10-Q

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2024-08-06

Energy Vault Holdings, Inc. 10-Q

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Energy Vault Holdings, Inc. 10-K

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2024-03-13

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