We'll take questions toward the end.
All right, thank you, Michael, and thank you to Synodi for hosting. My name is Brian Schaffner. I'm the CEO and interim CFO for Expion360. We're listed on the NASDAQ, XPON. Our company has been operating in the clean energy battery storage space since 2016. I do encourage you to take a look at our investor portal where you could download the slide deck, listen to our May 15th earnings call. Our goal as a company is to replace lead acid with energy storage solutions that are compliant to UL 1973, the strictest lithium battery standard. Our current focus and footprint is in recreational vehicles, marine, light industrial vehicles, and we have just pivoted into home energy. We have current efforts to onshore the production of our battery cells, which we put together in a pack along with a BMS to make a whole battery in the U.S.
We serve our customers through our core values. The first core value is safety. Again, we have third parties that certify our batteries to the highest standards, UL 1973 standards. Quality, we back up the quality that we think we sell with an industry-leading 12-year warranty, 100% replacement for the first six years. Finally, service. If you buy a system from us, even if it is a Victron product along with one of our batteries and maybe a solar panel, we service the entire sale to make sure that our customers have something that is working. We are willing to help you figure out how to get the power where you need it and when you need it. One small caveat on our warranty claims. Our warranty claims are so low that our accounting firm that does the audit does not require us to have a warranty reserve.
That's a thing that I'm very proud of and able to say to investors and to customers as we continue to move forward with our strategic initiatives. A quick corporate overview. You can take a look at the stock price. Just as a note, our shares are trading. Our market cap right now is below our inventory level, and we have very little debt. We feel that there's some good potential there for people that want to be able to invest in us. Start first with the RV market. What brought us public was our experience in the RV market, and we have leveraged that to move into light industrial vehicle and home energy.
We see some good growth in the RV market right now, which again provides a basis for us, kind of a foundation, if you will, for us to be able to meet some of our other strategic goals. According to the RVIA, the RV market should be up 14% this year. That's helpful for us. Expion360 had more systems installed in recreational vehicles on display at Elkhart this last fall than at any time in our history. We came away from those shows with about $5 million annually in relationships, as stated in our press releases. Right now, besides just new OEM, there are over 10 million RVs on the road. Most of those have lead acid batteries that typically last less than three years. There is a big market out there related to replacement.
Safety, as I mentioned before, we use lithium iron phosphate, referred to as LiFePO4. We feel that it's the safest lithium chemistry that is available, and you see a less chance of thermal runaway. Sometimes you see the EV fires. Many of those are a different chemistry than ours, such as nickel, cobalt, manganese, or NCM. This is the growth history of our market, again, starting with recreational vehicles and overland, moving into boat, light industrial. Our home energy storage solution came out in January, and part of our growth in our sales in the first quarter was related to that. We wouldn't be where we are without our people. Paul Schaffner, who was my COO and is now the President and is also the Chairman of the board. Paul's an electrical mechanical engineer.
Some of the designs that I'm going to show you today, in fact, most of them were initiated by him, and we have our IP protected by 11 pending patents. He's really the driving force behind the safety, quality, and service initiatives that are, again, backed up by our 12-year warranty. We do have a fantastic reputation in the recreational and LEV markets, and that really has driven the development of our home energy solutions, which will also be a foundation for future growth. Speaking of the home energy market, the home energy market grew faster than what we had initially predicted. We pivoted in 2023 to develop that sooner. What is driving that growth? There are people who would like microgrid stability.
Federal and state regulations also give some incentive for people to put in little microgrids, something that can back up your house, such as California's new Net 3.0, which mandates not only solar with new construction, but an accompanying battery storage system. We have two home energy systems that are designed to take care of this, take advantage of this growth market by leveraging our reputation for quality with a price point that rewards our integration and installation partners with a margin of their own. I'll show you those in just a minute. Just to back up and talk about the technological advantages of lithium, two to three times faster charging, a much higher energy density when compared to lead acid, 95% recyclable, 50% lighter.
If you couple that with our mobile app, you're able to get a real view into either what one battery is doing, or if you have multiple batteries in your system, you can take a look at that as well. There is just the unprecedented lifespan. I don't know about you, but the battery in my boat lasted 1.5 years, and that was an AGM battery. Our batteries, we warranty them for 12 years or 3,000-5,000 charging cycles, which is in many instances 10 times longer than what a lead acid battery lasts. Moving forward, as I go backwards a little bit related to our cells, if you see the cell that is pictured on this slide, that is a standard 26650 cell. That is something that is very standard in the industry used in EVs as well.
The typical cell that you can purchase in the U.S. is 3.4 amp hours. Our cells are 4.0 and 4.5 amp hours, which can put up to 32% more energy density into a battery with a minimal increase in weight. That's a very big advantage. That is what we are leveraging right now with the Department of Energy and the Department of Commerce and our private investors to work with our manufacturing partner in Asia that we've worked with for 10 years to purchase the IP, to build the high-density cell, and move that IP to the United States. Of course, we'll have more information on that as things develop. That's the inside of a battery. You can see the high-density cells there. They're welded to copper plates, fire-rated, dust and water egress-rated with a long warranty.
We have added something interesting, again, as part of our 11 patents, vertical heat conduction. Why would you need heat in a battery? Many times, batteries are operating in climates where it is cold and where that temperature could take it outside of its advised operating range. What a lot of companies will do to solve that is to put a blanket around the battery. If you can imagine, that would mean that the center of the battery most likely is a different temperature than the outside of the battery. That is not good for the cells. That is not good for energy performance. We came up with vertical heat conduction.
The pink color that you see on the outside, and then there's a little real thin pink line color in the middle, that is a heating element that is attached to the negative and the positive terminals on every single one of those batteries and heats them uniformly and at the same time. That not only does it use less power because a battery uses its own power to do its heat management, but it also heats it quicker than just wrapping a blanket around it. Here's a look at our battery line, our full battery line outside of home energy. Again, we certify all of our batteries to UL 1973. Our proprietary cells can have up to 4.5 amp hours of power versus a traditional 3.4 amp hour, which that increased energy density could be up to 32% in the same footprint.
You can imagine if I'm the price leader, meaning I'm the most expensive battery on the block, but you can put two of my high-density batteries into your golf cart where you might have to put three of the competition. I'm price competitive, even though if you look at my battery one-on-one against the competition, it may cost more. Where do we market and sell our products? Besides our integration partners that sell directly to consumers and do the installation for the home energy side, we have a dealer direct, 300 dealers and growing. We have our distributors such as Interstate. We have Camping World. We're also in Blue Compass through our relationship with Meyer. Then our OEMs. We have batteries that are being installed in powered RVs and in trailers.
One of the neat things about that is sometimes they'll send out systems that I consider to be decontented, meaning they may put in the electronics to manage the system, but they may only put in one of our GC2 batteries or one of our 132 amp hour batteries. That allows the customer to increase the storage capacity of their system at the dealer, and it allows our valued partners like Camping World to make some additional money related to the sale. Of course, we like the fact that it sells more batteries. Here's our home energy solutions. Typically, something that you would see that's like a Powerwall. However, we offer two different types of solutions. The one on the left, which you would couple with your own inverter, is a rack-style system.
You could put that into your home and have a backup system in your home that just had 5 kilowatt hours of backup. That system there can be, then you can add three different bricks to it to make it 20 kW, and you could add another one of those racks to bring it up to 40. Why do I stop talking about it at 40? I stop talking about it at 40 because in many states, you then get into it's a commercial application, and the infrastructure tied to that is usually more expensive. Things like the circuit breakers and panels have to be brought up to a commercial code. The AC all-in-one coupled on the right, that is more like a Tesla Powerwall. Ours is 10 kW. You can put four of those together to get 40.
Our prices as far as MSRP on the 10 kilowatt system are comparable to our competition, but we build in a profit margin for our installers and our integrators, which we believe provides us with a, it's definitely been well received. They like being able to make some money off of product that they're selling. I'd like to talk for a minute about our global reach to work with our Asia partners about onshoring our cell manufacturing. If you remember back to the battery and all the components in the battery, most of that is engineered and designed in the United States and then built in Asia. There is one piece of that that we do not own the IP to, and that's what goes inside of those cylindrical cells. In the industry, it's called a Jelly Roll.
These 26650 high-density cells are currently not made in the U.S., and we're leveraging a 10-year relationship with our manufacturing partner in Asia to be able to bring the equipment over to build those cells. I was in Washington, DC, last week, and it was very, very encouraging to see the efforts to partner and walk alongside companies that want to do that. Again, if we didn't have a 10-year relationship with them, we might not be able to leverage that. The demand for energy storage just in those cells is going up at 20.7% a year, year over year, according to Grandview Research, with the global market demand for the LiFePO4 or for battery storage expected to exceed $200 billion by 2030. We're a little company. How are we going to afford to put up a $150 million-$250 million plant?
What I didn't say at the beginning is that we just happen to be an engineering and design company that makes and sells batteries. We will be brought on as a design and a project management partner. We are looking at a combination of government and a combination of private investment to come up with the $150 million-$250 million. We don't expect any of that to put financial pressure on us. In fact, it helps because we'll be earning fees during the development process, which then switch over to royalties, which get paid for us for successful delivery of products that meet the spec of the customers that we are serving. Wouldn't be anywhere without my management team. My co-founder and President and Chairman, Paul Schaffner, is an electrical mechanical engineer.
The beauty and the quality and the safety that's been built in our systems are laid directly at his feet. Carson Hagan, our Chief Operating Officer, who's been with the company for quite a while, stepped into the position that Paul stepped out of. Just one of the finest people that I know as far as asset allocation, asset acquisition, and being able to run a NetSuite to make sure that if my customer wants it four months from now, that it's sitting there ready for them to purchase. Finally, I'd like to just talk a little bit about our financials, and then we can get to some questions. We began a process in the fourth quarter last year of bringing up our inventory levels so that we could have a little bit of a buffer.
We didn't know what was going to be happening with China, and that's been a good thing for us. Why we've had to make minimalistic purchases here or there just to meet demand curves that exceeded our projections. In general, we have been able to keep the impact of the tariffs down on our company. What statistics would show you that? I can tell you there's a couple of pretty good ones. The first one is that our contribution margin or our gross profit for the first quarter of 2025 was 24.5% compared to 22.9% a year ago in the first quarter. And last year, we were at 20.5%. That's a great financial result for us. This is our fifth quarter of sequential growth, and we said in our earnings call that we expect that to continue.
We'll have to see where those numbers are for a sixth quarter of sequential growth. Revenues grew up 111% from a year ago's quarter. We also worked really hard because, as you know, covering fixed costs can be tough when you're a little company. Our SG&A expenses, we reduced those by 24.7%. How did we do that? Legal fees, professional fees, and then most importantly, we reorganized and added some efficiency to our warehouse situation. We were able to drop one of our locations. That was a big help to us. Kind of as a recap for you, strong sequential growth, five quarters. Our market cap is less than our inventory on hand, and we currently have a little to no debt.
We are, again, a strong contender to benefit from current incentives to move manufacturing to the US and can do that without a lot of stress on the financials. Michael, I think that I might be right on there for some questions. What do you got for me?
That's terrific. Thanks very much, Brian. Very informative. You guessed right. You generated a lot of questions. Since you spoke most recently about the gross margin, let me bring in the question that someone asked about that. Five quarters of expansion, are we now at a steady state, or do you think you'll see continued margin expansion?
For the margin, I think the margin expansion at this point is really going to depend on the cell manufacturing and acquisition.
If we are able to get tariff relief, not only to bring over the equipment, which it would take a couple of years to build US cells, that would also come along with we're asking for tariff relief for bringing in those high-density cells. If you can imagine, I mean, those cells are a significant component of our battery. If I can bring them in and do that tariff-free, then you would see some positive movement in the margin. We also have not really raised our prices a lot in the last couple of years, so there might be a little bit of benefit there. We like to, in general, provide as fair of a cost for what we offer for quality service and safety as we can to our customer.
Great.
Oh, there's another thing, Michael, that I forgot, and that is that once that plant's up and running, we'll be able to buy from it at a cost plus, and it'll significantly reduce the cost of that cell. That would have the biggest impact on our margins. Again, we don't want somebody to think that I could be building those today. That's a couple-year process.
Sure. Okay. A bunch of questions here about the effort to penetrate the residential market because obviously that's huge, and you're competing against some big guys. How is that going so far?
It went well. We brought over our first shipment of home energy. We had an integration partner that we were working on in the Pennsylvania area, and they ended up purchasing everything that we brought in.
They liked enough what they were seeing with the sales penetration and the customer satisfaction, the ease of installation, and the quality of the product that was coming across to really help us move that first batch. As far as integration partners and developing additional large-scale relationships, we're actively looking at that. We're what I would consider a really good mid-cap competitor. Likely, if your volume is big enough that Tesla will deal with you one-on-one, we may not be able to get into that market right away. Where we go really well is the little guy that wants to be that where an additional margin on the sale of that battery or that battery inverter system is very, very helpful to them, and it provides them an incentive to choose us over someone else.
Are you able to release how many residential units you've shipped or installed so far?
No. We keep our market segment really very, very simple, and we just tell people that we are in the battery storage market. As we continue to mature and as our sales continue to grow, we would be able to start to give out that information, but not as of this first quarter.
Sure. Looking then at the line of business that got you started, the RV market, as you described, those are OEM relationships. Are those long-standing relationships? How long have you been working with most of your OEM customers?
Most of them we have relationships with that exceed four years.
Obviously, we brought in, because we sent this in a press release, we brought in about $5 million worth of new annualized revenue with the relationships that we garnered and brought to fruition with our road shows in Elkhart in September and October. Some of those are completely new relationships with the parent RV line, and some of them are just new lines within a Forest River where we had not been selling into that particular manufacturing site before. We have a lot of them that are old, and they are kind of our bread and butter, the rock that we stand on. We also have quite a few of those relationships that are new and that are rapidly expanding our orders, which is why we can say that we are very confident that we are going to have another sequential quarter of growth.
You mentioned the replacement market of somebody's battery giving out and needs a new one. Do your OEM relationships let you penetrate the replacement market, or is that kind of a different market where you would need batteries?
Yeah. So that's your Interstate battery relationship. It's your Camping World and your Meyer distributing relationship. That's where those customers are going to either buy a battery and do the system work themselves, which they can work with our online service staff to do that themselves if they want to, or going to somebody like Camping World where we provide regular instruction and service education to make sure that they can, in a safe manner, put a new system into an RV that did have a lead-acid house battery system and desires to upgrade that to lithium.
Okay.
Just coming back to that guarantee, 12 years is a long time to guarantee anything. Yet you mentioned that you haven't had to maintain a reserve for that warranty policy. That's correct. Which is extraordinary. Pardon me for editorializing, but I don't run across that very often. Can you just kind of speak to how often or what % of units do come back?
No, we don't publish that or make that public, but you can be rest assured that it's low enough and it's insignificant and immaterial enough that our auditors, I mean, we talk about it every quarter, whether we are having a review or a full-blown audit.
At this point, they haven't recommended us doing a full-blown warranty review because when a battery comes in here or there, we either repair it or we send them a new one and test and try and figure out what happened. It's a very, very small number.
Okay. Good. Turning to the sort of technical side of it, and I know we're not in a physics lecture hall, but it seemed to me like you were relying on some unique properties of your battery chemistry. Do you feel your patent protection is a really powerful moat that would keep away competitors who say, "Well, I could do that," or are you at risk there?
I think so.
I mean, you're always at risk for things being stolen and having to, you can have a patent, but you would still have to fight with somebody over whether they were using it in a reasonable manner or a legal manner or not. I do believe that our 11 patents have provided us with a lot of protection. The one piece that we don't have protection on is with the way that that Jelly Roll is put into our cylindrical cells and creates that high-density product, which isn't available anywhere else. It isn't available manufactured here in the U.S.
Now, we don't own that, but we intend to, and we're working with our partner in Asia to appropriately purchase that from them, move it here to the United States, and then hopefully be able to build and provide for the huge demand that we see with those 26650 cells, with those prismatic cells. It is a big, big benefit to be able to have something that puts out the same, that puts out 30% more power, and it's essentially the same size and weight as a standard 26650 cell. We are excited about that. We think that we will be the first in the US to build those high-density cells, which means that most likely we would be the first to have 100% of our battery, including the BMS and the packs built here in the US.
That opens a lot of military and federal contracts for us that may or may not be closed at this point because of percentage of content in the U.S. rules and regulations. Yes, that's why we protect it.
Good. Earlier in your talk, you talked about seeking a loan to build a battery factory, which clearly would be transformational. You're working with a company called Neo Volta, as you described. Could you describe your relationship with them?
We've been working for some time with Neo Volta to do a joint venture. If you're familiar with offtake agreements, I mean, they have home energy systems of their own that they build, and they were looking for somebody to help with those prismatic cells so that a part of their product was less expensive to build.
Obviously, there's a financial benefit, economic and equity benefit to building a plant with somebody. That is where we are with Neo Volta right now. We believe that there is going to probably be a combination of a private and government involvement to bring the big dollars to the table to build a plant. We do not know exactly what that is going to look like, but we are confident that whether it is 100% private, 100% government, or whether there is a combination of the two, and they just step in and complement each other as you work two different strategies forward for the capital for that plant. One of those three combinations is going to be successful. I think that I could say that it is going to be successful because of the demand, $200 billion a year global demand by 2029 or 2030. I forget.
I'm not on that slide in the deck. That is a massive demand. Just to give you an idea, I mean, the original plant that we're going to build doesn't even come close to meeting that demand. If somebody gave us the fund and said, "Hey, here, you can do the first 10 phases," we still wouldn't meet that demand. I think that there's going to be a lot of people in this space that are scrambling to catch up with that. Who knows, maybe that has a positive push on the prices that we could sell for excess capacity at the plant. However, what we're really interested in is being able to get a cost-plus model for the cells that we put into our batteries.
That gives me a competitive advantage to be able to walk in with a quality battery and be less than my competition and still be able to offer things like a 12-year warranty. I mean, that will be truly transformational, not only for ourselves, but for the customers that we serve.
Great. Brian, thank you very much for an informative webinar. I certainly got a lot out of it. Unfortunately, we're out of time, and we didn't get to all the questions. Folks, if you didn't get your question answered, please be in contact with your Synodi representative, and we'll run down an answer for you. Much appreciated. Thanks everybody for joining us, and thanks again, Brian.
Okay. Thank you.