Electrovaya Inc. (NASDAQ:ELVA) Q1 2026 Earnings Call Transcript

Electrovaya Inc. (NASDAQ:ELVA) Q1 2026 Earnings Call Transcript February 12, 2026

Electrovaya Inc. beats earnings expectations. Reported EPS is $0.02, expectations were $0.01.

Operator: Greetings. Welcome to the Electrovaya Inc. Q1 2026 financial results conference call. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press. Please note this conference is being recorded. I will now turn the conference over to your host, John Gibson, CFO. You may begin.

John Gibson: Thank you. Good afternoon, everyone and thank you for joining today’s call to discuss Electrovaya Inc.’s Q1 2026 financial results. Today’s call is being hosted by Dr. Rajshekar DasGupta, CEO of Electrovaya Inc., and myself, John Gibson, CFO. Today, Electrovaya Inc. issued a press release concerning its business highlights, financial results for the quarter ended December 31, 2025. If you would like a copy of the release, you can access it on our website. If you want to view our financial statements and Management Discussion and Analysis, you can access those documents on the SEDAR+ website at www.sedarplus.ca, the SEC’s EDGAR website at sec.gov/edgar, or at our updated website at www.electrovaya.com. As with previous calls, comments today are subject to the normal provisions relating to forward-looking information.

We will provide information relating to our current views regarding market trends, including their size and potential for growth, and our competitive position within our target markets. Although we believe that the expectations reflected in such forward-looking statements are reasonable, they always involve risks and uncertainties, and actual results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, may be found in the company’s press release announcing the Q1 fiscal 2026 results and the most recent Annual Information Form and Management Discussion and Analysis under Risks and Uncertainties, as well as in other public disclosure documents filed with Canadian and U.S. securities regulatory authorities.

Also, please note that all the numbers discussed on this call are in U.S. dollars unless otherwise noted. And now I would like to turn the call over to Raj. Thank you, John, and good evening, everyone. It is a pleasure to speak with you today as we review our first quarter fiscal 2026 results. Q1 provided a strong start to the year. Historically, this has been our weakest quarter due to seasonality in our core material handling vertical. Despite that, we continue to demonstrate meaningful momentum. Revenue increased nearly 40% year over year,

Operator: Margins improved materially

John Gibson: and we maintained profitability

Operator: delivering approximately $2,000,000 in EBITDA

Dr. Rajshekar DasGupta: and over and about $1,000,000 in net income. I will begin by highlighting key operational developments during the quarter and year to date followed by updates on our product and manufacturing initiatives. During the quarter, we further strengthened our balance sheet through a combination of solid operational performance, support from our financial partners, and the equity raise completed in November 2025. We ended Q1 with the financial foundation to execute the next phase of our strategy, including expansion of manufacturing capacity in Jamestown, New York, expansion into new verticals, and continued development of next-generation products and technologies. Within our core material handling vertical, we continue to make strong progress.

Our new OEM integrated high-voltage battery systems developed over the past two years are now scheduled to begin commercial deliveries in March 2026. We also made deliveries during the quarter to an existing global defense contractor for our new vehicle platform, expanding our relationship to two distinct applications with that OEM. We expect defense to become a meaningful contributor to revenue this fiscal year and a strategic priority for the company over the long term. In robotics, we initiated commercial deliveries of our latest modular 48-volt battery system to a robotic OEM partner this January. We view robotics as a high-growth vertical aligned with our technological sense, and we expect deployments to accelerate. Testing of our initial airport ground support equipment battery systems continues across multiple locations and climate conditions at a leading U.S. airline.

While this process has taken a bit longer than initially anticipated, we remain optimistic and believe this product line represents a meaningful long-term opportunity. We also established a Japanese subsidiary during the quarter to support growing demand across Japan and the broader Asia Pacific region. We are seeing encouraging interest across multiple verticals and believe this presence will support long-term growth in the region. Turning to some product development activities. Demand trends in automation, robotics, advanced mobility, and energy storage for data center infrastructure are increasingly aligned with Electrovaya Inc.’s core strengths which include safety, cycle life, and high power capability. We are making strong progress on several key initiatives including the rapid charging version of our Infinity technology, and new energy storage systems focused on high power, especially 800-volt DC architectures.

Our ultrafast charging power cell development is advancing well. This product integrates a next-generation anode technology with our Infinity platform, including our ceramic separator technology, to deliver enhanced safety and long cycle life while targeting five-minute charge and discharge capability. We have seen significant application potential ranging from high-intensity robotic systems to data center infrastructure support, and we are targeting commercialization in 2027. In parallel, we are developing energy storage systems designed for emerging 800-volt DC data center architectures. These systems are intended to provide short-duration ride-through capability and manage rapid power fluctuations associated with workload shifts and generator transfers.

We are currently in early-stage discussions with potential partners in this area. To support these initiatives, we recently hired a head of energy storage, a new head of energy storage with extensive industry experience, to help guide our technical and commercial strategy for this key area. We are also advancing our next-generation

John Gibson: ceramic

Dr. Rajshekar DasGupta: separator technology, which is expected to further improve energy density and thermal stability beyond our current platform. We are already seeing strong results and are moving forward with plans to domestically scale up this strategically important technology. Closer to market, we plan to launch new products for class three material handling vehicles as well as next-generation software and analytics solutions at MODEX 2026 this coming April. Finally, regarding our Jamestown expansion, we have commenced both interior and exterior facility upgrades. Initial dry room equipment required for cell manufacturing has been delivered, and we have begun hiring key personnel to support equipment installation and automation activities. This expansion remains a critical component to our strategy to increase capacity and support domestic production. With that, I will now turn the call back to John for a detailed review of our financial results.

John Gibson: Thanks, Raj. Electrovaya Inc. continued its steady growth into 2026. As Raj mentioned at the top of the call, the company has historically had lower revenues in this quarter due to customer seasonality. However, Q1 showed significant growth year over year. We entered Q2 fiscal 2026 with a strong balance sheet and capital to continue our engineering focus on new market verticals and support organic growth. Revenue for the quarter was $15,500,000 compared to $11,100,000 in the prior year, year-over-year growth of 39%. Our gross margins for the quarter were 32.9%, an increase of 240 basis points over the prior year gross margin of 30.5%. As is the case with previous quarters, gross margins are primarily driven by product mix.

However, managing suppliers, prices, and tariffs continues to be at the forefront of our activities as we scale. Management believes the company is well positioned to maintain strong margins as we continue through 2026. Operating profit increased significantly year over year. Operating profit for Q1 was $1,400,000 compared to an operating loss of $200,000 in the prior year, and the company generated a net profit of $1,000,000 in the quarter, a significant increase from the net loss of $400,000 in the prior year. Q1 now represents the fourth consecutive quarter of net profit and positive earnings per share, and we believe we can continue this trend of profitability into fiscal 2026 and beyond. Our adjusted EBITDA was $2,000,000 for the quarter compared to $500,000 in the prior year, an increase of $1,500,000 or 300%.

EBITDA grew in the current year due to improved margins and managing operating costs. Adjusted EBITDA as a percentage of revenue was 13% for the quarter. The company generated positive cash flow from operations of $1,700,000 after accounting for net changes of working capital, compared to cash used in operating activities of $300,000 in the prior year. The company ended the first quarter with positive net working capital of $51,900,000 compared to $12,600,000 in the prior year. Our current ratio is 6.0 compared to 1.6, a clear indicator of improved financial performance, and management is committed to continuing this positive trend. At December 31, our total debt was $27,300,000 compared to $15,300,000 in the prior year. This debt includes both working capital debt and debt from the Ex-Im facility.

The working capital debt was $10,900,000 at the end of the quarter, a decrease of $4,400,000 over the prior year. This improved debt balance was driven primarily from cash flows from operations. At the end of the quarter, we had drawn $16,400,000 from the Ex-Im loan. We are still in a period of no cash payments with Ex-Im, with interest payments starting on 03/30/2026 and principal payments starting 03/31/2027. During the quarter, the company raised gross proceeds of $28,000,000 from an equity issuance. The company has utilized some of this cash for engineering and R&D efforts. At the end of the quarter, the company had cash on hand of $22,700,000 and availability within its banking facility of $9,000,000. We believe we have adequate liquidity to support our expansion into these new verticals and our anticipated growth as we continue through fiscal 2026.

Dr. Rajshekar DasGupta: The company made a solid start to fiscal 2026, maintaining disciplined progress across operations.

John Gibson: Which we see continuing into Q2. We would expect to build on this momentum as we continue through the remainder of the fiscal year and are reaffirming our revenue guidance of 30% growth for fiscal 2026. Finally, I wanted to elaborate on one of the items detailed in the AGM material relating to the redomiciling of the company.

Dr. Rajshekar DasGupta: After our equity financing in November,

John Gibson: and based on trading activity being substantially higher on the Nasdaq than the TSX, the company expects to lose its foreign private issuer status and be treated as a U.S. domestic filer under SEC rules. This change will subject the company to the full domestic reporting and governance regime, but absent a change in corporate domicile, the structural and legal advantages typically available to U.S.-incorporated issuers. In addition, the U.S. domestic issuer company will become eligible for inclusion in certain U.S. equity indices. Taken together, these changes position us to broaden our investor base, improve trading liquidity, and ultimately enhance long-term value for our shareholders. That concludes our financial overview. Raj and I would now be pleased to hold the question and answer session.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Once again, please press 1 if you have a question or a comment. Our first question comes from Colin Rusch with Oppenheimer. Please proceed.

Q&A Session

John Gibson: Thanks so much, guys. You know, could you give us a bit of an update in terms of the scope and scale of the customers that are moving into your sales funnel? And then how quickly they are moving through and how quickly they are getting qualified on the product. We are just curious about the velocity of some of that sales activity.

Dr. Rajshekar DasGupta: Well, thanks, Colin. How are you afraid to just in general or specific

John Gibson: verticals?

Dr. Rajshekar DasGupta: Yeah. Specific to material handling, just related to numbers. Yeah. Material handling, we are, so in terms of the end customers, there are, it is, it is dominated by a number of large Fortune 100 and Fortune 500 companies. The largest two buyers have given us very good of their demand over the next for the for the full fiscal year, which is partly how we determined our guidance for the, and they are large retailers. Generally, of course, like to take delivery in in

John Gibson: in the quarters outside of this reported quarter.

Dr. Rajshekar DasGupta: So there, we have very good visibility. At the same time, we have a pipeline of new customers in various stages. Sometimes they are just testing solutions. More often, they have already done that, and they are ordering small batches of systems to get to pilot and then

John Gibson: full full distribution scale. So there are various stages there, and that is a pretty

Dr. Rajshekar DasGupta: good place to be in in that segment. So we are seeing good from there. We have, we are also now starting to add some additional sales resources to broaden that pool. But in the other verticals, I will talk about robotics there a bit. So we already have a number of partners we have. And we are already now shipping growing numbers of batteries to a couple of these OEMs. Instance, if you visit our plant today, you will see quite a large number of smaller 48 battery systems under various stages of assembly, and that is for robotic applications. But in addition to that, we are, we are in discussions with approximately three or four additional OEMs in that space. Of course, you know, when you are working on OEM projects, it takes, there is a time quotient, which is a little longer than a standardized product, which is the material handling product.

The long answer to your question. No. That that that is super helpful. And then I am just curious about preparation

John Gibson: for a pilot on the stationary storage project. Or product. How those are proceeding, if you had any incremental interest since announcing the new product with a little bit different, you know, characteristics and performance specs. It seems like it is, it is really well tuned to what we are seeing on the data center side in terms of what the real needs are. So just curious about the timing on those pilots and growth in potential customers there.

Dr. Rajshekar DasGupta: Great question. So essentially, we are coming out with two products for the energy storage space. One is more of a standardized product, which is based on the existing cell that we currently manufacture. And it is a design for high power applications still, 30 minutes to one hour energy storage. And for that product, we have pilots scheduled. One is a government-backed U.S. government-backed project, which we will hopefully announce soon. And then we are planning some internal pilots as well before we put them at customer sites. The second product, which I mentioned in our prepared remarks, is that 800-volt DC system. And that is something that we have been in discussions with, with let us say, some electricity generation companies. So if you look at these data centers, they are often putting diesel gensets and turbines on-site for power generation, but those devices

Operator: need

Dr. Rajshekar DasGupta: when you are looking at the 800-volt architecture, they need an energy storage component to deal with the seconds, the minutes, of demand response there. And so that is the system we are, we are very excited about that is under development right now. And that system will utilize this ultra high power cell that we are developing.

John Gibson: Great. Thanks, guys. I will hop back in queue.

Operator: Next question comes from Daniel Magder with Raymond James. Please proceed.

John Gibson: Afternoon. Thanks for taking my questions here. Just curious as it relates to these new verticals,

Daniel Magder: given the announced deliveries in the defense sector, do you still expect robotics will be the second largest revenue driver in the near term or defense potentially leapfrog it?

Dr. Rajshekar DasGupta: We are expecting robotics this year to be larger than defense, but they will be, they will both be present in a material way.

John Gibson: Okay. Got it.

Daniel Magder: But the robot is delivering that just just started in the current

Dr. Rajshekar DasGupta: quarter, so there is zero deliveries in

John Gibson: in fiscal Q1.

Daniel Magder: And I guess just a follow-up here recognizing you have the Ex-Im loan and the New York State grant

John Gibson: incentives.

Daniel Magder: Given, obviously, the growth in defense and the current administration’s focus on it, are there other potential government programs you think you could potentially be able to tap into?

Dr. Rajshekar DasGupta: We, we think so. This is, that we are starting to look at. Currently, we are, our number one focus is, of course, getting the

John Gibson: partners, the right partners here.

Dr. Rajshekar DasGupta: So we already have two very good, well-established defense contractor customers. We are in discussions with another two. One of them is to finance test our products. So I think that is the route we are going at. It eventually is perhaps look at some of those opportunities you just mentioned.

Daniel Magder: Got it. And, I guess, lastly for me, given all the positive progress in other areas, is energy as a service still a key initiative for you? And just wondering if you could provide any color on how it is progressing.

Dr. Rajshekar DasGupta: It still is a key initiative. It is, we are, we have, what we have seen is some of the customers we thought were going down that route decided to make purchase orders instead, which is great, of course. However, we are looking at a couple partnership opportunities to support energy as a service. One route is partnering with a group who has a

John Gibson: a

Dr. Rajshekar DasGupta: large company who has a long history supporting similar type of activities. That is something we are considering pursuing. Got it. Alright. Well,

Daniel Magder: that is it for me for now, and I will jump back in the queue.

John Gibson: Thanks.

Operator: The next question comes from Eric Stine with Craig-Hallum. Please proceed. This

Eric Stine: jumping around between calls. I apologize if I am touching on things you already have. But maybe

Operator: just

Eric Stine: material handling, I know that is the lion’s share or the majority of your outlook here in fiscal 2026. But when you think about that growth and when you think about the opportunity going forward, how do you think of that between existing versus adding new customers? And, you know, maybe penetration level with those existing customers that you have currently got?

Dr. Rajshekar DasGupta: So today, Eric, we are already supplying at various stages of penetration level the world’s largest companies. So you could not have a better pool of end customers than we have. They all are relatively early in adoption rates. Right? So if you look at the addressable market within our existing customers, it is massive. Right? So the need to bring in new end customers is actually not, you know, it is important, but it is, the larger opportunity is selling more to the folks who are already buying the product. In terms of penetration rates, I would say we are still early days. The largest operator of our system has a very large number of distribution centers

John Gibson: globally. So

Dr. Rajshekar DasGupta: I would say we are, we are early innings with the existing customer base.

Eric Stine: Got it. And maybe following up on that, you know, I know that your thought process has been that your solution is really applicable to, you know, all sizes of facilities for those existing customers, and has it, has that come to fruition? You know, are you thinking any differently about the opportunity? And I guess that speaks to the size of the overall opportunity.

Dr. Rajshekar DasGupta: Yeah. The number of solution battery systems we deploy at a typical distribution center can vary widely. There does not seem to be limit to how large a site we can support.

John Gibson: I mean, there is, so I would say that is not really a

Dr. Rajshekar DasGupta: a factor. Yeah. And we would, we would say, Eric, with

John Gibson: over 300 batteries deployed. In vehicles. Yep. I was actually getting at it the other way,

Eric Stine: there are some solutions out there that are, you know, it is tougher to go to the medium and smaller sizes, which is obviously a big part of the market. Whereas that is an area where, you know, I would think that you do quite well in?

Dr. Rajshekar DasGupta: For sure. So, you know, there are plenty of sites operating our solution with probably under 10 systems. So

Eric Stine: there seems to be a broad range that we can service.

John Gibson: Okay.

Eric Stine: See. Maybe last one for me. Just on the side. So just so I am clear. So what you are, what you called out is just, you know, expansion with one of, I think you currently have two defense contractors that you have been working with. So I guess, first, just confirming that, and then secondly, when you talk about the two plus two additional you are talking with, I mean, are these, I know it is hard. You cannot disclose a whole lot, but are these similar applications with those contractors? Or is it using your solution in a wide range of things?

Dr. Rajshekar DasGupta: It appears that, you know, we only know so much, but it appears these are different applications. So with the defense contractor we discussed in our prepared remarks, they had initially, and they continue to use our solution for an autonomous land-based application. And the second application, which we just made initial deliveries for, is for a hybridized

Eric Stine: vehicle system.

Dr. Rajshekar DasGupta: The second defense contractor is submersible.

John Gibson: Application.

Dr. Rajshekar DasGupta: But in general, you know, we see defense as a good vertical for this technology given the safety and high power of our technology. Yep. Absolutely.

John Gibson: Thank you.

Operator: The next question comes from Craig Irwin with ROTH Capital Partners. Please proceed, Craig.

Dr. Rajshekar DasGupta: So, Raj, I have a bunch of small questions around Jamestown that would be really, you know, important to understand as we shape the future. So the first one is the CapEx outlook for this year. Can you maybe shape that as far as the quarterly tempo and what your expectations are in this fiscal year? And then, associated with that, you know, where do you stand on the hiring and training of the workforce that would be necessary sort of in tandem with the installation and commissioning of that equipment? Yes, Craig. I will let John answer the first part, and I will jump on the second.

Daniel Magder: Part. Yeah. Hi, Craig. So

John Gibson: essentially, where we were at the end of the quarter was we had drawn $16,000,000, over $16,000,000, of the full $50,000,000 Ex-Im loans. So we expect

Eric Stine: to

John Gibson: spend that money before the end of the fiscal year, or at least,

Dr. Rajshekar DasGupta: you know, 90% of it

John Gibson: kind of before the end of the fiscal year. So from a CapEx perspective, you are going to see an increase strongly within Q2 and Q3. The majority of it will be within Q3 and Q4, though. So, yeah, fully spending or at least spending 90% of that loan and including that CapEx within the fiscal year.

Dr. Rajshekar DasGupta: Yeah. And on the second question, Craig, we are hiring people right now. So about six months ago, we hired a senior individual from LG Chem who was closely involved with one of their large-scale giga plants. And more recently, we have been hiring other employees, some will be located at the site, who have or have experience with other battery manufacturing sites in the United States.

John Gibson: Some of which may have been closed down.

Dr. Rajshekar DasGupta: We also hire great talent. Hope that, you know, there is a long list of folks we are in process of giving offers to. And it seems to be an opportune time to bring in these types of individuals. If we were building this plant a year ago, it would have been much harder to find this level of talent that we are seeing in the market today. Understood. That is, that is, that is a good thing. So, next question is, can you maybe give us some color on the revenue contribution out of the Jamestown facility this year. I know your manufacturing is supposed to start at the end of the year. If you could just confirm the timeline for that. But do you expect any cell revenue in 2026 from the Jamestown facility? And, you know, roughly what percentage of revenue would you expect this facility to contribute?

Yeah. Craig, all along, we were anticipating Jamestown, especially at the cell level, contribution starting from fiscal 2027. So fiscal 2026 for us ends September 30, and there will be no cell contribution to revenue. Battery systems, on the other hand, that is different. You will likely see some revenue generation out of that plant in our fiscal fourth quarter, both probably on a module and system side of things. Sorry. I meant calendar year. So I am assuming that all of the cell manufacturing equipment will be in place in your fiscal year before September with commissioning work underway. But do you expect cell production in that facility in the first quarter of your fiscal 27, the last three months of this calendar year? Potentially. Correct.

Potentially, yes. Of course, it is going to, it does not start out. We will, we will make sure the output of the plant is matching what we need, of course. Right? There is a bit of a start-up period associated with that. But we could most definitely see some contribution in that quarter. Understood. Then last question, if I may. Can you update us on 45X, what you think the benefit will be on equipment purchases, whether or not you are seeing tariffed equipment impacted, and what do you think the potential contribution is once you are manufacturing your own cells in Jamestown in fiscal 27. So there will be, there is two parts of 45X that we, $10 per kilowatt-hour associated with module production, and then there is $35 a kilowatt-hour associated with cell production.

And under the new rules, under the Inflation Reduction Act, you can only get one or the other. So what we anticipate is we will start off with the $10 a kilowatt-hour as we manufacture modules, and when the cell production hits a certain speed, we will transfer to the $35 a kilowatt-hour.

John Gibson: And for the cells. And sacrifice the modules.

Dr. Rajshekar DasGupta: Excellent. Thank you for that. Congrats again on the progress. Thanks, Craig. That is great.

Operator: Up next is Amit Dayal with H.C. Wainwright. Please proceed. Thank you. Good afternoon, everyone. Most of my questions have been asked,

Amit Dayal: But just with respect to the outlook for the year, you know, the backlog still is at $100 to $125 million. So the, you know, the top line guidance seems a little conservative. You know, can you maybe provide any color on what could drive upside to the 30% growth you are targeting this year?

John Gibson: Yeah. So the growth is based on not just the backlog, but the front log as well. So that number you quoted as backlog, plus front log. So essentially, we are taking purchase orders we have received, purchase orders that we know are coming in, confirmation from customers of demand, and then our, you know, our estimates of run rate. And then what we do is we take that number and discount it back based on historic experience with customer delays or purchase order changes, etcetera. So, yeah. And, Amit,

Dr. Rajshekar DasGupta: you know, 30% growth is not a bad number. I think there, as you can see in our Q1, right, and some people forget this, there is some seasonality on our core material handling vertical. Sometimes distribution centers open a little later than they plan to if they are new sites. So there is some of that activity you have to take into account. But, of course, there is some upside. You know, we have not taken into account meaningful revenue from the airport ground equipment space, which could most certainly come into the current fiscal year. But overall, we are very focused on maintaining growth, maintaining the profitability, and these new product developments and new technology developments, in addition to the Jamestown setup.

Amit Dayal: Understood. Thank you. And then on the solid state side, any, you know, important milestones you are targeting to hit this year? Do these include maybe any pilots that could begin with customers?

Dr. Rajshekar DasGupta: Yeah. Good question. I did not discuss the solid state battery much in the prepared remarks, but we had reached a certain level of developments, I think, back in the summer, which was looking good. But we were somewhat hamstrung by equipment in terms of to get it to a pilot scale. We ordered the equipment several months back. It has arrived at our lab site already. It is being installed. So we will start scaling up cells using our solid state battery technology really from April onwards. And at that point, if things look good, we will start looking to sample them as well. So there is definitely activity there. We have added a couple key researchers to our team. Most definitely, we have not forgotten about that technology. On the IP side as well, we are close to being awarded some patents around our solid state technology, but, you know, we are in the back and forth with the examiners at the moment.

Amit Dayal: Okay. Thank you, guys. That is all I have.

Operator: Next question comes from Jeffrey Campbell with Seaport Research Partners. Please proceed.

John Gibson: Good afternoon, gentlemen.

Dr. Rajshekar DasGupta: Raj, my first question is, I assume the OEM integrated high-voltage batteries refers

John Gibson: to Toyota heavy duty MHE, but you can correct me if I am wrong. But if so,

Dr. Rajshekar DasGupta: can you give us some color on how many models are integrated at present and what it might look like the next couple of years? Yeah. You are probably correct. You are correct, Jeff. The model I referred to is the high-voltage system, which is going into, there are a couple models of batteries and is going, we believe, into two distinct vehicle systems. And so there are orders for those vehicles already. The reason production is starting in March is it coincides with certification. Okay. Great.

John Gibson: My next question was regarding the solutions. You mentioned I think you are going to have a place where you are going to display your solutions targeting class three MHE. I was wondering, is this going primarily

Dr. Rajshekar DasGupta: to robotics applications, or will you also support more traditional class three equipment? Because I believe in the past, you have tended to identify class three as generally unable to support your margins. It is the latter, so it is already expanding in the material handling vertical with a class three product, which we normally had shied away from. We believe we can maintain those margins. The reason we are developing that product is it has been customer driven. And, but we will be able to maintain the margins with that product. It takes advantage of some aspects of the robotic battery systems that we have developed. So there is some overlap in the design of the system.

John Gibson: Okay. Yeah. That is very interesting.

Dr. Rajshekar DasGupta: And I guess my last question

Eric Stine: for today is

John Gibson: kind of a more open ended one. Regarding the generate the

Dr. Rajshekar DasGupta: next generation ceramic separator

John Gibson: development undergoing. I was just wondering what are the specific areas

Dr. Rajshekar DasGupta: that you see demanding improvement here. I am not

Operator: trying to be coy, but the existing tech is class leading. So I am interested in your insight here.

Dr. Rajshekar DasGupta: Yeah. So that is definitely a valid question. So the current technology is working well. Very well validated. Of course, you want to continue to improve that technology, and that is one aspect of what we are doing here. Improvements will be to make it

Amit Dayal: thinner.

Dr. Rajshekar DasGupta: Make it even higher thermal stability, use new novel materials, which we are working on. And also, the current separator is working very well. It is being manufactured under contract in Japan. This one will be manufactured domestically. So that is another

John Gibson: I would say, benefit is just in addition

Dr. Rajshekar DasGupta: but it supports some activities, like, for instance, a super high, ultra high power cell. It has a benefit there. Potentially, this new material can also be utilized in other cell formats. That would be a major breakthrough for us. But that is too early to say.

John Gibson: We will stay tuned for that. That sounds provocative.

Dr. Rajshekar DasGupta: Thanks very much. I appreciate it.

Eric Stine: Thank you.

Operator: We have a follow-up coming from Colin Rusch with Oppenheimer. Please proceed.

John Gibson: Thanks so much, guys. You know, I was missing asking around the ground service equipment opportunity.

Dr. Rajshekar DasGupta: And how we should think about the cadence of that moving forward, going from

John Gibson: piloting into a more substantial order?

Eric Stine: Kind of the order of magnitude of that opportunity set for you guys right now.

John Gibson: So the what we are looking at is

Dr. Rajshekar DasGupta: to go to that more substantial order. We have already received some pilot orders, which have essentially already been delivered, or some of them are mostly been delivered. But this would be to go to scale right away. And so the opportunity we are looking at with this first airline is for reasonably large-scale deployment.

John Gibson: Okay. Great. I will take the rest offline. Thanks, guys.

Operator: Once again, if you have a question or a comment, please press 1. The next question comes from Graham Tanaka with Tanaka Capital Management. Please proceed. Hi, guys. Thank you. I am just putting this all together. You have a lot of moving parts. And I just wonder if you could summarize for the next two years what are the main areas that can increase gross margins and operating margins versus decreasing.

Graham Tanaka: And on the decreasing side, if you could address your semiconductor content and what kind of cost increases you are getting in semiconductors? Thank you.

Dr. Rajshekar DasGupta: So overall, in this current quarter, margins improved, going from about 30% to about 32%. We expect to maintain that level of activity, that level of improvement in the coming quarters. Sort of what we are anticipating. So I would say relatively modest improvement in margins, but

John Gibson: comes with

Dr. Rajshekar DasGupta: you know, it correlates to improved financial results. The bigger change in margins will occur following Jamestown cell production coming online. That will be due to, a, you know, the vertical integration, but, b, the ability to leverage the 45X production tax credits. And the second part of your question on, I guess you mean semiconductor

Eric Stine: materials.

Dr. Rajshekar DasGupta: We are, you know, Electrovaya Inc., our batteries are generally more expensive already. So input material price variations have an impact, of course, but probably have a more nuanced impact than it does on our commodity-driven rivals.

Graham Tanaka: So I just want to make sure that if there are any issues on supply or cost increases in semiconductors we are seeing across all the Silicon Valley companies, whether you can cover any cost increases and can secure all supply that you think you might need in semiconductors. Thank you.

Dr. Rajshekar DasGupta: So in terms of material inputs, the one that has fluctuated is lithium carbonate pricing, but it has not fluctuated enough for us to have any noticeable impact on margins. We, of course, can also update pricing to our customers if we have not needed to, if those prices do go in the wrong direction enough. The only materials which probably are common with the semiconductor space is maybe alumina. But there again, it is not substantial enough in our bill of materials to have a major impact.

Graham Tanaka: Right. That is great. I do not know if you have added up, but what percent of your business is going to be coming from military spending? You addressed defense, but it kind of goes into a few different areas. I am just wondering if that is going to rise as a percentage of the mix and that the margin is going to be lower in defense? Thank you.

Dr. Rajshekar DasGupta: So I will start on the last part. Margins in defense would be expected to be higher. Now the defense space, at least from our experience, it moves slowly in terms of qualification. And they are very, very careful. A lot of testing goes

John Gibson: a lot of testing validation goes into this. There is also a certain

Amit Dayal: certifications.

Dr. Rajshekar DasGupta: I do not want to get too deep into it, but there is MIL and Navy certification levels that you have to change sometimes. So it moves. It is a sticky space. Once you get designed in, you are designed in. But in terms of how quickly it scales in volume, my anticipation is it scales slowly.

Operator: We have no further questions in the queue. I would like to turn the floor back to management for any closing remarks.

Dr. Rajshekar DasGupta: That concludes our call. Evening, and thank you for listening. We look forward to speaking with you again after we report our second quarter 2026 results. Have a wonderful evening.

Eric Stine: Goodbye.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.