Heliogen, Inc. (NYSE:HLGN) Q3 2023 Earnings Call Transcript November 14, 2023
Heliogen, Inc. beats earnings expectations. Reported EPS is $-3.22, expectations were $-3.62.
Operator: Good morning and welcome to the Heliogen Inc. Third Quarter 2023 Conference Call. As a reminder, today’s call is being recorded. At this time, all participants are in listen-only mode. A question-and-answer session will follow the prepared remarks. I would now like to turn the call over to Louis Baltimore, Heliogen’s Vice President of Strategic Finance and Investor Relations for opening remarks and introductions. Please go ahead.
Louis Baltimore: Thank you, operator, and good morning, everyone. We’re glad you could join us today for our third quarter 2023 conference call. With us on today’s call are Christie Obiaya, Heliogen’s Chief Executive Officer; and Sagar Kurada, our Chief Financial Officer and Head of Strategy. Heliogen issued its results yesterday afternoon in a press release that can be found on the Investors section of our website at heliogen.com. As a reminder, our comments on this call include forward-looking statements, which are subject to various risks and uncertainties. These statements include expectations and assumptions regarding the company’s future operations and financial performance, including implementation of the company’s strategic plan and growth initiatives, plans to advance the company’s PV hybrid product and prioritize installation of commercial scale projects, the expected capabilities and usages of our Heliostat for Generation 3 through 5, expectations for scaling the company’s concentrated solar thermal technology, discussions with potential customers and commercial contract progress.
Actual results could differ materially from those contemplated in the forward-looking statements. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Factors that could cause actual results to differ materially can be found in yesterday’s press release and other documents filed with the SEC by the company from time to time. During this call, we may also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation release issued yesterday, which is available on the Investors section of our website and was furnished on Form 8-K with the SEC.
A replay of this call will also be available on the Investors section of our company website this afternoon. And with that, I’d like to turn the call over to Christie.
Christie Obiaya: Thank you, Louis. Good morning, everyone. Great to be with you. As you may remember from prior calls, upon stepping into lead the company earlier this year, I had outlined Heliogen’s top three priorities for 2023. Number one, close sales, number two, install our first project and number three, extend our runway and growth capital. Those goals have not changed, and I want to open my remarks by sharing some headlines which demonstrate the strong progress that we’ve made during the third quarter. We have significantly increased our sales pipeline, having grown prospects in the stage of qualified leads to 1.8 gigawatts and pre-FID activities stage to 65 megawatts. These steps are a necessary precursor to growing the booked revenue backlog.
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Q&A Session
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We’ve initiated our demonstration-scale facility as an operating plant rather than its historic use as a platform for future R&D and that will strengthen our basis for future performance guarantees. We’ve broken ground on a small commercial-scale steam unit in West Texas, which will likely become our first operating commercial-scale facility. We designed a hybrid power offering that combines concentrated solar thermal energy storage and PV together at a single compelling offering for dispatchable renewable energy with long-duration energy storage. We completed design verification on a critical component of our integrated Generation 3 concentrated solar power plant, which we were proud to announce in partnership with our customer Woodside Energy earlier this quarter.
We developed and executed a cost reduction plan that allows us to fully fund our business plans for 2024, and we recognized revenue of $2.3 million for the quarter, bringing year-to-date earned revenue to $5.6 million. These headlines show that our strategy is gaining steam in building operational momentum. Now, moving on to our agenda for the call this morning on slide four. We’ll spend a little bit of time reflecting on how this company is going to create long-term shareholder value and will provide an update on key elements of the business before transitioning to our financial update using the same format that we had last time. And then we’ll come back to closing remarks and 2024 priorities. Let’s dive in on slide five, where I will spend a few minutes talking through how we’re creating long-term shareholder value.
Our shareholder value is across four elements that are depicted in the orange arcs across the page. Core IP, the technology that comes out of that core IP, the partnerships that help us promote and deploy that technology and finally, the applications that we were able to use that technology in. If we first take a look at the core IP, we can break it down into four key buckets, our proprietary Heliostat design that can be produced at high volume and low cost, our closed-loop AI-enhanced software that enables a pointing accuracy second to none. Our plant integration and modular design, which brings significant flexibility across a wide range of applications, and our next-generation technology, which is leading the way in Generation 3 concentrated solar power innovation.
Within each of these buckets, we have established and are continuing to advance technologies that put our IP to work, as shown by the technology arc. And, we are leveraging the strength of a few key third parties, in many cases, through contractual relationships to perform scopes of work on specific projects and applications. Over the next two slides, I’m going to drill down into two of the sunrays on this page. Moving to slide six. First, to expand on our proprietary Heliostat design and manufacturing excellence. Ultimately, our goal is to have peak performance with the lowest cost to manufacture plus install. Performance is a combination of beam quality coming from the mirrors plus reliability. Our third generation heliostat was first deployed in 2019 at our demonstration-scale facility in Lancaster, California.
Those mirrors had a reflective area of 1.5 meters squared and were a helpful source of iteration and learning. Today, based on our lessons learned, we’ve been able to design and manufacture our Generation 4 Heliostat. Our Generation 4 Heliostat has further improved upon the beam quality with a 1.92 meter squared reflective area, and it is a best-in-class in terms of wind resilience. It has the lifespan required for our first commercial scale projects underway for 2024 and the first half of 2025. This Heliostat is produced in our Long Beach manufacturing facility with a high degree of automation. With the beam quality performance optimized in this generation 4 Heliostat, we’ve now turned our focus to the cost side with Generation 5, and we expect to achieve the next leg of cost reductions by reducing manufacturing costs and bringing automation to the installation process.
The design is looking very promising and is more or less at a point where we can say that we are a majority of the way there. We will selectively identify the right time to implement our transition from the Gen 4 production facility to the Gen 5. Now, let me shift gears and move to the third sunray focused on plant design and integration. So, if you move to slide seven, we summarize our road map to accomplish our goals for plant integration. You can see the summary of our definition of success outlined in the sidebar on the right-hand side. To that end, in 2023, we have begun operating our current solar field in Lancaster, California, in a way that allows us to deliver operating metrics that prove repeatability. What does that do? It helps us develop a very strong proof point on run time efficiency, further validate our software and plant controls, deliver constant energy to the receiver, and enable continued focus on measurement and improvement that will then feed into 2024 as we build out the balance of plant on our steam plant in West Texas, which will be installed and will be a showcase of the first commercial-scale application.
