Give me a quick intro.
Okay, perfect.
Oh, it's DasGupta?
Yeah.
Okay. Afternoon, everyone. I'm Jeff Elliott with Three Part Advisors. For those of you who don't know me, pleasure to introduce our next presenting company, Electrovaya. The ticker is ELVA. They're out of Canada, Toronto, and with us here today from the company, we have Jason Roy in the back, Vice President of Corporate Development and Investor Relations, and Raj DasGupta is the CEO. It's their first time doing our conference, so we're really happy to have them here. With that, I'll just turn it over to Raj.
Thanks, Jeff, and thanks for hosting us today, and thanks for everyone for listening to me talk to you about lithium-ion batteries. Electrovaya is an exciting battery company based in both Canada and the U.S., in a place called Jamestown, New York, in Western New York and just outside Toronto in Mississauga. We are a lithium-ion battery technology and manufacturing company. We've been in the industry for a fairly long time, but what the company, what we're going to talk about today is our latest, one of our latest technologies, which we successfully commercialized a few years back and is propelling the company to a very interesting high-growth position. As you've probably seen this all throughout the morning, we're listed on both NASDAQ and Toronto Stock Exchange under the ticker ELVA, and we'll be going through some forward-looking statements today. Just us in a quick snapshot, who is Electrovaya?
We are competing in this very, very difficult segment, which is lithium-ion batteries. This is a segment which is highly dominated by Chinese, Korean companies especially, and the North American companies have often had technology but have been unable necessarily to succeed. I think we have crossed an interesting inflection point recently. We've now had two consecutive quarters of net profits. We're growing at about a 40% annualized rate, and we have both the technology differentiation, which I'll go through in a bit, but now we're also executing and commercializing that technology. What have we got? We've got a lithium-ion battery which has the longest cycle life and best safety in the industry. What is that? Cycle life, a lot of you probably don't hear that term, but you understand your phone dies after two years.
That's about 800 cycles, give or take, on the battery, and after it hits that point, it drops off a cliff. Batteries that Electrovaya make do about 10,000+ cycles. Safety, of course, you hear about battery safety incidents that make the news. We have a technology which makes the lithium-ion batteries much, much safer. To date, we have a perfect safety record in over 30,000 batteries deployed. In terms of markets we're going after, we are very, very laser-focused on markets which will pay a premium for that performance of both safety and/or cycle life. The initial application we went after in 2018 with this technology was material handling. There was a reason for that. If you go to a distribution center run by a Fortune 100 company, vehicles inside that distribution center are both electric. There are hundreds of them.
They operate 24/7, and they're not supposed to catch fire. That was the market we went after first. We've been highly successful there. We're now powering about 16 Fortune 100 companies, including the world's largest e-commerce retailers, companies like Walmart, Target, Dollar General, and others. We're now expanding our production footprint to meet growing demand. Most of that expansion is happening in Western New York at our Jamestown site, which we own. We are investing in that site, which will start manufacturing American-made lithium-ion cells using our technology next year. On the financials, we've had nine quarters of consecutive positive adjusted EBITDA, and now we're moving into that EPS position with two consecutive net profits. How do we, and I sort of went through this to some degree, how do we differentiate ourselves? It really comes down to now three core items.
One is safety, safest battery in the industry, longevity, best cycle life, which translates to lowest cost of ownership for heavy use applications or lower lifecycle cost. Finally, newest on that is the domestic supply chain is becoming more and more important, especially for strategic industries like defense. Made in the U.S. with domestic supply chains is becoming a more important item. When you compare this to competitors, they're more commodity-based. They're selling on a dollar per kilowatt-hour standpoint. Electrovaya's customers are buying on the performance aspects of our product. As a result, we garner probably the strongest gross margins in the battery space. Material handling got us going, and it's our largest market. It will probably remain our largest market for the next few years. We're using the success in this space to go into additional verticals, and I'll talk about a few of these.
First up would be defense. Why does defense care about our high-performance battery? A lot of these applications are sensitive to safety. I'll give you an example. Submarines, especially diesel submarines, they charge, the way they operate is they charge the batteries when they're on the surface using their diesel engines, and then when they're submerged, which is what they're supposed to be doing, they're running on batteries. They typically run on lead-acid batteries, which have an energy density of about a quarter of lithium-ion batteries, but they do so, they're still using this legacy technology because of safety concerns. Our technology is mitigating a lot of these concerns. This is an area we see an opportunity for this technology. Other areas we're going after: robotics. This is a segment which is growing very rapidly thanks to the advent of AI.
If you go into warehouses, a lot of them are forklifts, but there's a growing number of robots moving goods inside these buildings. Robots are also getting deployed outdoors and in a variety of applications. These are expensive devices that operate 24/7 as well, and they need the batteries to keep up with their load profiles. Electrovaya has the right technology at the right time to serve this segment, and we're actively growing. We have so far at least three OEMs using our battery technology in this space, and that's set to grow further. It's a very, very exciting segment. On top of that, we're also looking at energy storage, not necessarily the commoditized energy storage, but let's say you're a company building a multi-billion dollar data center and you need to have some backup energy storage there.
You're not necessarily going to put a fire hazard battery in that vicinity. You want the best, and you might go to Electrovaya for that. Applications are expanding, manufacturing capacity is expanding, and we have some of the world's best relationships you could have as a company, especially one of our size. Addressable markets, I never like to get too much into this, but they're large, and we're very focused on the applications which will pay premiums, pricing for our solutions. In terms of tailwinds, a lot of things are working in our favor, move to domestic manufacturing, both in the United States as well as overseas. A lot of countries want to buy more products outside of China, and we're seeing that benefiting us. Electrovaya, actually, just last week, we shipped batteries from our Canadian operation to Japan. That's counter to the normal direction lithium-ion batteries travel in.
Why are Japanese companies buying Electrovaya technology? It's because of that performance differentiation, that superior battery ultimately, and they do want to diversify their supply chains. We see Japan as a great partner both on a supply chain as well as an end market for us. E-commerce, if you look at my credit card statements, you can see the growth of e-commerce right there. Everyone is buying things online. That just benefits us. Those products get moved from warehouses. I'm not doing the buying. My wife is. The appetite for higher performance batteries as the sectors become more mature, especially after they have problems with their existing batteries and they look for a superior solution, they come to us. All this is working in Electrovaya's favor. Battery safety is becoming more and more valuable.
There have been warehouses that have burnt down due to battery fires, as shown in that one picture. Data centers can catch fire as well. These can be billion dollars and multi-billion dollar damage, in terms of having a fire in one of these sites. Logistics centers. Lithium-ion batteries are very important in our lives. We wouldn't be able to have our phone if it weren't for a lithium. That's why you call it a cell phone. It's named after the lithium-ion cell that's in there. Safety is very, very important, and it's hard to stop battery fires. Why are Electrovaya batteries safer? Take your cell phone, which you all have in your pocket. It has a polymer separator membrane. I'll go to this one.
The purpose of a battery separator is to keep the plus and minus, or cathode, anode, electrodes from touching one another, but also allowing the lithium ions to go through it. That's the purpose and job of a separator. The polymer separators, 99.999% of the time, work fine, except if they get too hot. If you've ever taken a lighter to a plastic bag, you'll notice that instead of expanding, as you might expect, it actually shrinks. Same thing happens to the battery separators in lithium-ion cells. If they get too hot, they will shrink. If they shrink, your plus and your minus are now touching one another, which is what happens in a battery fire. It can happen for whatever reason, external, internal, something goes wrong.
Cell gets too hot, separator shrinks, cell catches fire, neighboring cell gets too hot, it catches fire, separator shrinks, it catches fire, and so forth. This is why lithium-ion batteries are so hard to extinguish, because you have to get the temperature down. Yeah. That's exactly right. Once one cell catches fire, the neighboring cell hits that critical temperature, and that critical temperature, I'm going to go to Celsius, is about 100 °C , 110°C. For fire management, that's a very low temperature, and that's why it's so, so difficult to stop these fires once they start, because they just propagate one after another. In our case, our separator technology is, by weight, 90% ceramic. It's stable at high temperatures. Not only does it lower the chance of that cell catching fire, but it significantly lowers the probability of the neighboring cell catching fire and so forth.
This is why we can pass these very stringent tests at both the cell level and at the pack level. We've done tests where we purposely set fires on cells and battery packs, and they don't propagate. We were the first battery company to pass UL 2580 standards, which included fire propagation testing. It's an incredibly safe battery technology. It's more expensive, and we like to sell it for a premium, but that's why we're so focused on the applications which want that more than others. On the cycle life, this is third-party data. This has been testing that's been running at a lab in Rochester, which has been paid for by our OEM partner, Toyota. This testing has been ongoing, clearly demonstrating over 10,000 cycles for our lithium-ion cells, which is about a 4- 5x over competing technologies.
Now, does it matter for an electric car to have 10,000+ cycles? Not really. You do maybe one, two cycles a week on a car. Does it matter on a robot? Does it matter on a forklift? Does it matter in an energy storage system? Most definitely, because the more cycles you do on these devices, the more value you get from them. Now this is not just a lab story. These units are in the field operating across the continent today. We have well over 200 warehouses operating with these batteries, including over 50 with that e-commerce company, in three countries. We have batteries in South America, North America, Asia, et cetera, and these are operating in critical operations, moving food, moving pharmaceuticals, et cetera.
In terms of customer partnerships, we have a relationship with the Toyota Group, where we both have some OEM projects where we supply batteries, which get built into vehicles. We also have projects where our products are somewhat distributed through their dealership networks to major end customers. Recently, we also partnered with Sumitomo Corporation in Japan, where, through them, we're already supplying multiple, large Japanese OEMs in the construction space. Sumitomo has great relationships in mining, construction, and we think that's a great vertical for this technology. In terms of major end customers, which we have relationships with, you couldn't really have a better list. Now these batteries, they last such a long time. I'll give you an example. The launch customer of this product was Walmart, and we shipped them batteries in 2018.
Those batteries, and typically, the reason Walmart wanted to buy our batteries even to begin with, their typical operation would have, let's say, 150 forklifts in a distribution center, and for every forklift, they would have three lead-acid batteries. These aren't small lead-acid batteries. These weigh 2,000+ lbs. After every shift, they're physically swapping these batteries in and out of these vehicles, which is not just a logistical challenge. It's dangerous, and it also led to lost productivity in these warehouses. We said, "Hey, Walmart, we can give you one battery per forklift, and you don't have to swap them, and you can charge them quickly, 20 minutes during your breaks." At the time, Electrovaya was on the ropes. The company was nearly bankrupt. Walmart did testing at four or five distribution centers before giving us a contract, and they really saved us as a company.
Those batteries which were installed there not just saved them money then, they actually outlasted the forklifts they were installed in. They were installed into the next forklift, just recently. We're looking at systems which will last 10+ years in the field. Because of that longevity, we're thinking, how do we, you know, it's good for the buyer because they're getting a product which lasts, it's like the Maytag repairman commercials, right? We're not getting enough service revenue there. We're looking at adding some recurring revenue streams, including things like data analytics, which is already launched and is in use with major customers, demand response software systems, which are pretty complex and use a proprietary algorithm there to reduce energy use while maintaining productivity. We're also looking at some subscription models.
Instead of just selling these units, a certain percentage of them might go into subscription systems where we would sign up for multi-year contracts and provide energy as a service. We're looking to grow this to about, ideally, about 10% of our revenue. I'll skip this. The Jamestown plant is very important for our growth. We're starting to hit capacity limits in our existing operations. Expanding capacity is key, and we wanted to do so in our largest, most important market, which is the U.S. A few years back, we bought this 52-acre site, used to be used for electronics manufacturing. It was closed down, and now we're going to reopen it. The site has some advantages. It's got very low-cost electricity. We get a lot of inquiries from Bitcoin miners, but we tell them no.
We have a $51 million direct loan from EXIM to support all the capital expenses for equipment and construction costs. This facility is going to triple our capacity, and it's going to also look like we'll be able to get some production tax credits still under the recent BBA, 45X tax credit. Now, our Infinity battery is exciting technology. It's generating all our revenue, and it's a long way to grow, but we know a thing or two about ceramic separators. We're also developing a ceramic separator which will work with lithium metal. This is often referred to as a solid-state battery. We know a thing or two about commercializing our previous ceramic separator-based battery, so we think we're going to be in a good position here too. It's getting good results. We're investing in this. This would be targeting a totally different market.
In terms of cycles, it's not going to get anywhere close to the 10,000 we have in the Infinity battery, but it's going to be high energy density. It might be exciting for aerospace. It might be exciting for drones. We think we're going to continue pushing this technology as well. Growth is what we're after. We have the financing behind us. Recently, we refinanced our working capital line. We went from a very high-cost private lender to a much lower-cost major bank, BMO Harris, with a $25 million facility, the EXIM facility of $51 million to support manufacturing output in Jamestown. We're also expected to get maybe about $10 million per year in production tax credits. Overall, the company now is making net profits. We believe we'll be able to put cash back into the business. I'll skip these.
Generally, it looks like it's going in the right direction. Our break-even point we think was about $50 million per annum, and now we're trailing 12 months at $55 million. We expect to do well over $60 million in the fiscal year, which ends at September 30th. We expect, you know, we're maintaining great relationships with our big buyers. We're going to get into new verticals, sometimes with those existing customers. Ultimately, we have an exciting technology which doesn't have much in terms of rivalry. There's a lot of attention going for, you know, I'd say there are three buckets for lithium-ion battery. If you want to simplify it, three main buckets. Bucket one would be companies focused on the automotive and bulk energy storage space. These are companies like CATL out of China, Samsung out of Korea.
These companies have massive numbers of plants, huge vertical integration, and they're focused on end markets which want the lowest cost per kilowatt-hour, and that's what they're delivering. We do not want to compete in that space. We previously had, and that's how you lose buckets of money. Bucket number two is companies who are after this high energy density, next-gen batteries, to some degree, solid-state batteries. These are looking at applications which are quite niche, but exciting, like electric aircraft, drones. The market size is hard to say how big it is. We have our fingers in this pie a little bit with our solid-state battery efforts, but there are companies like Enovix, Amprius, and others who are focused entirely in that segment.
Our main breadbasket is bucket number three, which is this mission-critical, heavy-duty applications which do multiple cycles, need safer batteries, and hasn't really had a technology dedicated to that. That's what our technology does. There's a very slim number of competitors with technologies that apply to that, and we think we're in an exciting space with huge growth prospects. With that, I'll stop for any questions. Sorry? We have plenty of patents. I think it's around 100 patents, 30 of which are on separators, and we're filing about two to four per year. Patents are, you know, like when you're working against Asian conglomerates, patents don't necessarily protect you. The know-how is actually even more important.
On the cells, do you have, is there any kind of like a sensor that would alert you or the owners that your battery that's not yet at a critical level that you click on? Secondly, does the separators, the ceramic stuff, do they help to mitigate the heat at all, or do they just basically prevent the adjoining cell?
On the first one, we don't make any sensors that do that. There are companies who have developed technologies. I don't know if they work that well. It's like once it's on fire, it's in a chain reaction. Knowing that it's on fire, you can sort of look at it and see the smoke. Perhaps down the line, they'll improve. On the second question, the ceramic separator does some thermal, the thermal conductivity of the ceramic, of course, is better than a plastic material. Its main job is to remain intact, and it's basically not shrinking when it gets hot, which is why the alternative catches fire so easily. Yeah. That's right, yeah. No, it's great.
My question is, like that one, like Walmart, they use it for the forklifts. Maybe the forklift isn't the right, you know, like you guys have a ticket patent for a forklift, but for a mission-critical, what's the backlog look like? How many years is it in? What industry or more batteries do you need for? You said milliliters.
If you go to companies like Walmart or Amazon or others, they don't make anything, right? Their bread and butter is moving goods efficiently and selling goods efficiently. If we're able to provide a technology which helps them move more pallets per hour, for instance, that is dollars and cents for them, even if it costs a bit more. Those types of companies will invest in better technology, and they do. For instance, these types of companies are also the ones to invest in fuel cell technology because they can move more pallets per hour. I think material handling, we think, even with a higher CapEx, companies are clearly buying them and are going to buy them and more. What will lower the sticker shock is leveraging the performance, and that's precisely what's starting to happen.
Toyota, a conservative company, has taken a look at, you know, now we have five years of data in the field. You can see that the batteries don't really degrade. The way, if you're an Amazon, Walmart, someone like that, you've got an engineering team who can work out lifecycle costs and say it's better to buy an Electrovaya solution that's going to save us money, it's going to give us a return on investment. If you're, let's say you're General Motors, you make cars, you need to buy forklifts, but you're not so interested in the power in those forklifts. They would typically go and lease forklifts from companies like Toyota, but the batteries could not be leased because the residual value on a battery after five years is zero, right? They would buy a lead-acid battery and replace it every four or five years.
What's changing now is we got the cycle life data. We are able to, Toyota is able to lease our battery with a strong residual value, which is making the cost for those customers much smaller and competitive with the alternative technologies. That's one way we're doing it. On the backlog front, we've had order intake higher than we've been able to deliver lately, which is partly why we're adding capacity in Jamestown. Our core customers provide us a pretty good 12-month forecast, and then order off of that. We have pretty good visibility at least 12, 18 months out. Thanks. Whoever wants to go first, yeah.
Your big break came through Walmart. Retail. It seems like you have to go through Walmart [crosstalk] . What is high-end expected?
Yeah, so Walmart gave us the first break, and if we went to the OEM, they would have said, "Hey, that's great. I'll buy this, and you can have a 15% margin, and I'll sell it off to so and so." Walmart brought us in. They forced the OEM to approve this battery and put it in their forklifts because Walmart's Walmart, right? They're the big gorilla. After that was successful, all the major OEMs wanted to partner with us. At the time, we could really only partner with one of them, and so we chose to work with the largest group, which was the Toyota Raymond Group, which controls over 50% market share in North America. We are very cognizant that you don't want to be an OEM supplier, right? OEM suppliers get thrashed in this space.
Keeping that relationship, keeping it more of a hybrid between a distribution model where the end customers are really selecting our technology and perhaps buying it through the OEM, but they know what they're getting. That setup's been working well. We're starting to see customers, like there's a Fortune 500 company, for instance, I'll give you an example, where they were introduced to our battery technology through the OEM for a new distribution center. They saw how much return on investment it was giving them, and they say, "Hey, I want to use this throughout my fleet." Now they're going and using it throughout their fleet in multiple OEM forklifts. It's an Electrovaya sale more or less directly to them, and then they put it in whatever they want.
Now they're big enough to force those OEMs to say, "Yeah, put this in my vehicle." Gross margin's been, we've kept it around that 30% mark, and it'll increase further when we start a vertical integration in Jamestown. Yeah.
Jamestown, is it legal in the area? Some people want to go up from Chad.
Jamestown is an interesting town. It's got a rich manufacturing history. The site that we're, the site we bought was previously owned by a German company who made electronic parts and then closed it down in 2018. There used to be about 250 employees in that site, and then there were zero. When we announced that we were taking this over, we got inquiries from a lot of those former employees. The current Plant Manager we have used to be the Quality Manager at that same site up until 2018. We still, and that individual has been bringing us a lot of good candidates. So far we're at about 10. We've added, we brought in some people from LG Chem as well, who've recently built much larger battery facilities in Ontario and Michigan.
We have a pretty good, we have about 120 people in Canada, of which 40 of which are highly technical, including myself. Jamestown is actually a two-and-a-half-hour drive. We're there a lot, but we're going to be building up that local expertise. We also have a relationship with New Energy New York. We're working directly with some training programs there. I think we're going to get great people. Tariffs are, you know, it's a bit like the weather. It does change. For the most part, we have a supply chain which has been, in terms of all the core components, they're not from, haven't depended on Chinese suppliers so much. The Jamestown plant, in fact, has zero Chinese suppliers. On a relative standpoint, we're much less affected from tariffs.
Of course, there's certain parts that go up in price, but compared to some of our competitors, their prices might be hit harder.
You don't manufacture the ceramics every time.
We do manufacture that separator. We used to make it in Germany, and then we shifted it to the partner who is making the actual materials for us, and it's in Japan. They're exclusively making it for us. However, we're also going to be manufacturing it in either Canada or in Jamestown, as we scale. We're also going to actually work with another partner to actually make the actual ceramic material that goes into it. That'll be made domestically too. Future catalysts, you know, you mentioned defense. That was a good one. I think defense is a segment right now. It doesn't make much of our revenue, but we have some partners we're already working with. It's a space we think is advantageous for this technology. I think that's one. The other is on the energy storage product.
It was a segment that we would get asked about many times, and we'd say, "Hey, we want to make 30% margins. We don't really like the look of that. We don't want to compete with CATL." Because of the existing relationships we have with some of these big end customers, we think that could be a large opportunity for us. It depends who you ask. If you now ask an accountant and look at our financials, it's not that much, but we're getting most of our, the reason, but over a third of our staff are engineers and scientists, right? That is the R&D. Most of the projects we work on pay for development, right? That R&D is really paid for by the customers. This thing is flashing red, so yeah. Perfect. All right. Thanks.