Bloom Energy Corporation (NYSE:BE) Q1 2024 Earnings Call Transcript

Page 2 of 2

And as we move beyond that, and as we grow the company, there’s going to be a focus on using our cash wisely at the right time and growing the company profitably.

Operator: Your next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead.

Martin Malloy: Thank you for taking my question. And Greg, best of luck in your future endeavors. First question, I just want to ask about progress in terms of the development of the carbon capture technology. Could you maybe give us an update on that in conjunction with the field service?

KR Sridhar: Yes. So look, if you if at our pipeline, both domestically and internationally, we are working with several partners and where we are at the stage on that is technology qualification. We have developed great partners, who can take our gas and process it to the specifications required to put that in a pipeline to meet their standards for it to glow, go into a classic slot number one, okay. Number two is PR talking to large utilities that have been playing in this field already in the U.S., and who have tried other techniques and now believe that we have the better mousetrap that we are working with, with the number of states figuring out who has domain dominance issues to getting classic wells approved to the pipelines coming on board, to everything else that needs to happen.

This also has a longer sales cycle. But the way I would characterize where we are on that is most people are getting extremely comfortable our technology and saying that we would like to baseline your technology. Now it’s about the next step. It will take time, but this is a huge opportunity. And thanks for asking that question, Marty, because I want to emphasize something to you. This world cannot decarbonize by 2050 without carbon sequestration. There is no possible way that we can, this is huge. And we have one of the best available technologies anybody has shown to take natural gas and create a concentrated stream of carbon dioxide to sequester, which means you have the dual issues of needing more power. And to decarbonize, we are about as good as it comes as a solution.

Operator: Your next question comes from the line of Noel Parks with Tuohy Brothers. Please go ahead.

Noel Parks: Hi, good afternoon. Just had a couple. I wondered and as generally, specifically, as you feel comfortable. The Intel relationship is such a long standing one. And I was wondering to talk a little bit about the evolution of the relationship. And I’m curious even sort of what model of the BEF they originally run and just kind of what it’s been like, as far as it’s going through upgrade cycles and so on with such an established customer?

Noel Parks: Sure, Noel. That’s a very good question. Look, we have always prided that, if you look at historically, about two-thirds of our business comes from repeat orders from customers, multi $100 million orders, and to us, there is no better validation of us taking care of a customer’s pain. At the end of the day, you’re solving their problems. And if you solve them well, they come back to you. And that’s the — there’s no better indication. And I would like to grow even more new customers, but it’s always the land and expand strategy that we have. And Intel would be a very good example of that. Our first installations for Intel, they’re in California, important the Bay Area and in Folsom, for their facilities, where they wanted to try us out.

And this was in 2014. So it was our second generation technology. And then I still today remember vividly, the CEO at that time sitting in my conference room, evaluating it and seeing if you really want to solve my pain [indiscernible] Bangalore, India. And we are building a new building, we have no power for it. And the old building we have loses power three times a day, I cannot run the kind of labs and data centers I want to run in Bangalore. If I lose power three times a day. And I said you’ve for the long relationships we want with you. We are happy to go try. We have never installed anything in India at that time. We had to run three kilometers of gas pipelines for them working with the Gas Authority of India to bring the gas and we had power for them before they finished the building.

And I’m proud to say that that pretty full A 2014 system that’s been upgraded along the way with field replacement units. We don’t drop load for them. They never have to worry about losing power. So we have a long established and proven relationship with them. And we are extremely grateful for them to have taken that early step and we applaud them for being a leader. And a huge thanks to them for again, trusting us and trusting us with the expansion of their data center in Santa Clara.

Operator: Your next question comes from the line of Pavel Molchanov with Raymond James. Please go ahead.

Pavel Molchanov: Thanks for taking the question up. Let me start with a conceptual one. When you speak with data centers, and they want to reconcile base load generation and sustainability targets, how often do you hear hydrogen and RNG feedstock entering that conversation?

KR Sridhar: Pavel, this is a very good question. Look, they and us and everybody on the planet would love to have a zero carbon fuel and be able to power the datacenter. With that we all know that that’s aspirational for the foreseeable future in the short-term. We all also believe that definitely in the future, that renewable molecule whether it is green ammonia, green hydrogen, FRNG, biogas, all of the above, should become available, so our children and our grandchildren can have a great planet. But don’t forget, one additional option is large scale power generation from natural gas with carbon capture, because Mother Nature does not care about renewable sources. Fossil, it cares about the carbon dioxide molecules in the atmosphere, they get the same effect.

So with our solution, what they see is it’s the best available option of anything that they can possibly do. In real terms for the atmosphere, yes, they can go and buy green credits and racks and build solar farms, that is not displacing the dirty, highly power intensive power that they use wherever they use it. Whereas here, they are actually producing power with the least amount of carbon footprint, and with no air pollution. Then, as these green molecules become available, from zero to small blends to 100% pure green fuel, they can use our same existing systems without stranding it. So we are future proofing them. And if as a country, we figured out carbon capture and have pipelines, or and sequestration available, they can use natural gas until such time and to be able to do it.

With all those they are convinced that this is a great option.

Operator: Your next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.

Andre Adams: Hi, there. This is Andre Adams on for Colin. As you’re quoting micro grid opportunities. Can you just speak again to those customers desire for zero emissions versus natural gas solutions? And whether you’re trying to integrate additional solar wind or chemical storage on site?

Greg Cameron: So yes, the answer is, we believe in all of the above, we are big fans of solar, we’re big fans of wind and as they grow, they are going to need to store it and hydrogen is one option and that we have a play on both sides of hydrogen. Both hydrogen electrolyzer, as well as using hydrogen as a fuel in our fuel cells. So, we encourage people to do all of the above. And obviously, our customers will in their mix have as much solar invent because that industry especially the data center, industry, and Information Industry is in the leading edge of any other industry in terms of reducing their carbon footprint. So, the great thing about Bloom is we integrate beautifully with any of those micro grids. And we are firming up that base load without dirty diesel, and all the air pollution associated with that.

Operator: Your next question comes from the line of Ben Kallo with Baird. Please go ahead.

Ben Kallo: Hey, guys, thanks for taking my question. Dan, just welcome. I know you got a lot of questions, and kudos to you jumping on this early starting. I’m not asking about the guidance that you guys put out there, not yet. But it was out there for ’26 before, but what do you — since you’ve been here, how’s your visibility? Look, it seems good for this year. But there was guidance out there a couple times point six. Just as you think about all that.

Daniel Berenbaum: Yes. Ben so, thanks for the question. It’s a bit difficult for me to comment, lack not having the full perspective on that. I will tell you that, I’m just going to reiterate, I got pretty comfortable pretty quickly and what the commercial pipeline looks like, and what our revenue will look like for this year in our path to increase profitability, as we talked about. I won’t really talk about things beyond that. I will say that my focus is on making sure that we’re ready to scale profitably, it’s on obviously, the first things that I’ve jumped into. We’re looking at the balance sheet, some of the concerns that I know we’ve heard from investors in the past, the receivables, the cash flow, we have optionality on the convert, that’s due in August of ’25.

So that’s where my focus has been more immediately, to get to get comfortable and confident in those things. And as I say, the commercial pipeline gives me a significant amount of confidence for that. I’m going to have — you’re going to have to give me maybe another 90 days to be able to comment on anything further than that.

Operator: Your next question comes from the line of Jordan Levy with Truist Securities. Please go ahead.

Unidentified Analyst: Hi, all. [Indiscernible] on for Jordan here. Thanks for squeezing me in. Congratulations, Greg and Dan, for joining the team. Just a quick one. As we look to the rest of the year, can you help provide some detail on the walk from this quarter to hitting that operating income guidance for the remainder of the year. And what we should kind of be looking at as the quarters progress.

Daniel Berenbaum: So the only real comment we made, I talked a little bit about, in general terms, how to think about maybe a revenue profile first half, second half. And I would just say that, I would expect gross margin to improve sequentially every quarter as we move through the year.

Operator: Your next question comes from the line of Chris [indiscernible] with Wolfe Research. Please go ahead.

Unidentified Analyst: Thanks for taking my question. I wanted to just clarify in the prepared remarks on the part of ASPs [ph] being weighed down from international sales. Are those the sales to SK [indiscernible] and should we expect the rest of the sales under that preferred distributor agreement to reflect the ASP?

Greg Cameron: Hey, it’s Greg. The ASPs that we’re getting from our partners in Korea this quarter are very consistent with the prior quarter. So as you look at our mix of ASP during 2023, and you think about them for the quarter, and you think about as they go-forward, yes, mix worked against us a little bit on timing from the quarter not because those were down materially versus where they been, but just other shipments weren’t there. So I would expect ASPs to continue to increase in the course of the year as we have other sources of volume moving in. And that’s consistent with the way we thought about putting the brain work together for the year.

Operator: That concludes our question and answer session. I will now turn the conference back over to KR for closing remarks.

KR Sridhar: Thank you. Thanks, everyone for your participation on the call and for your support of Bloom Energy. As I close, I just think there are three things I want to emphasize. The first one is I think we laid it out to you even in the last call and we want to confirm this again to you that we are reaffirming our guidance for the year. And also reminding you that we said it’s going to be a heavy loaded second half of the year and not the first half of the year. And that’s how it’s going to turn out. And that’s just the rhythm of the business, as we say, based on the orders we have at hand and how we can prosecute. Second. And on that issue, again, what we have within that guidance where we will be on those numbers, as Dan pointed out, I want to reiterate.

We have the sites, we have the orders, we have the customers, we have the products we can make, it is purely about timing of when those things fall here or there is what’s going to decide where on that range we fall. We’ll know more as the year progresses. And we’re working hard to see what we can pull. On the second point, the Intel agreement, the Quanta agreement, continuing orders from existing customers, and a strong commercial pipeline, they all are showing that we have the right product at the right time for a market that very badly needs the solution. This is what we are offering is not a product for somebody to buy is a solution that enables them to protect their business and take care of their business and grow. The market dynamics are very clearly in our favor.

People want low carbon solutions right now, they know that there is no miracle switch to a zero carbon solution overnight. And so our low carbon solution has the right market dynamic from that perspective. People want power now and the utilities are not moving at the speed. The data center industry and the utility industry are operating on two different timescales. And that helps us provide either to the utility or to the customer. We are agnostic in front of the mirror, or behind the mirror, a solution so we can help businesses, the local economy and everybody. Clearly the data center and AI space not only has opened up an opportunity for us in the data center space, but the entire AI ecosystem space as you saw with supply chain. And with all that opportunity, we have to execute and hopefully you’re seeing quarter-over-quarter, what we say and what we do.

And I’ll let you be the judge of figuring out are we doing what we say? I feel very good that our entire team functioning as one team at a very high-level. We are adding quality people into our leadership team as well as in our employee base. They’re deeply committed to the mission. And I feel very good about where we are as a company. I’m excited about our future and I’m confident about our future. Thank you.

Operator: This concludes today’s conference call. Thank you for your participation, and you may now disconnect.

Follow Bloom Energy Corp (NYSE:BE)

Page 2 of 2