WEBVTT - Boeing Max Is Back, Cash Generation to Return in 2021: Ferguson 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Kind the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.440 and on Bloomberg dot com. Well, I know what keeps 0:00:21.440 --> 0:00:24.560 Boeing flying higher, and that is the Boeing Max, which 0:00:24.560 --> 0:00:26.400 has been cleared to fly by the f A A. 0:00:26.520 --> 0:00:29.720 George Ferguson, let's bring you in senior aerospace, defense and 0:00:29.840 --> 0:00:34.360 airlines analysts for Bloomberg Intelligence. You know what, twenty months 0:00:34.400 --> 0:00:36.480 in the making, and there were a few hurdles along 0:00:36.520 --> 0:00:39.480 the way. But twenty months is that good enough time frame? 0:00:39.600 --> 0:00:45.319 Is that sort of reasonable? Booing would have opted for 0:00:45.360 --> 0:00:48.440 a much shorter time frame, So I don't know. Hopefully 0:00:49.800 --> 0:00:52.839 things like the Max grunning don't become regular occasions, so 0:00:52.920 --> 0:00:56.600 we have I guess timing for it. I think Bowing 0:00:56.640 --> 0:00:59.640 again would have wanted to be much shorter. And frank 0:00:59.720 --> 0:01:02.360 I think if if they would have been more focused 0:01:02.360 --> 0:01:04.759 on the problem in earlier days, it wouldn't have taken 0:01:04.760 --> 0:01:07.119 as long, George, what does it mean from a cash 0:01:07.120 --> 0:01:09.959 respective here to get this thing approved? It's my understanding 0:01:10.040 --> 0:01:14.240 that Bowing doesn't get paid until they deliver the aircraft. Yeah, 0:01:14.240 --> 0:01:16.520 so you know, we think that what this UH could 0:01:16.560 --> 0:01:22.479 provide up is a chance for going to be cash positive. Uh. 0:01:22.520 --> 0:01:25.680 You know what we're anticipating as boone could deliver up 0:01:25.720 --> 0:01:28.560 the thirty matches a month, so probably deliver maybe three 0:01:28.560 --> 0:01:31.959 and sixty airplanes next year. I think you need to 0:01:32.000 --> 0:01:37.160 see China authorized the airplane and Chinese airlines be willing 0:01:37.200 --> 0:01:40.840 to take some airplanes because Chinese air travels bouncing back 0:01:40.920 --> 0:01:43.480 faster than any around the world. Bowing has four and 0:01:43.560 --> 0:01:46.360 fifty of these airplanes on the ground right now. We 0:01:46.480 --> 0:01:49.480 estimate the cash value of those airplanes, besides the deposit 0:01:49.560 --> 0:01:53.960 they've already received from airlines, is north of twelve billion dollars. 0:01:54.320 --> 0:01:58.080 So from a cash generation standpoint, this this really changes. UH, 0:01:58.200 --> 0:02:01.800 this changes the cash Outlooking Bowing, how many were ordered, 0:02:01.960 --> 0:02:05.640 how many will be delivered, and how many orders were canceled? George, 0:02:06.880 --> 0:02:10.840 So we've seen some cancelations. I don't have all those 0:02:10.880 --> 0:02:13.040 numbers for the right the tip of my fingers here, 0:02:13.040 --> 0:02:16.960 but we've seen some cancelations, but largely from less soars. 0:02:17.880 --> 0:02:20.280 Less oars are usually the people to cancel if they 0:02:20.280 --> 0:02:23.639 have any sort of out because less oars by airplanes 0:02:23.639 --> 0:02:25.440 in the hopes that there's not going to be enough 0:02:25.480 --> 0:02:28.040 airplanes in the world and they can come in when 0:02:28.040 --> 0:02:29.800 they when they buy speculative and they come in, then 0:02:29.800 --> 0:02:31.880 they offer those airplanes to airlines that are need to 0:02:31.960 --> 0:02:35.080 lift that world just doesn't exist for the next bunch 0:02:35.080 --> 0:02:36.840 of years. And so if you're a less or and 0:02:36.880 --> 0:02:39.400 he would a shot to cancel, you did. We're more 0:02:39.400 --> 0:02:42.920 concerned about deferrals right. Airlines will definitely ask bowing to 0:02:43.000 --> 0:02:47.520 slow down deliveries to the airlines. You don't see that um, 0:02:47.680 --> 0:02:50.200 you know, and sort of as cancelations because those are 0:02:50.280 --> 0:02:53.480 quiet discussions they're having behind behind the scenes, and but 0:02:53.560 --> 0:02:56.600 we know those are going on. We've heard even companies 0:02:56.600 --> 0:03:00.359 like Southwest pushing out some of their deliveries and that's 0:03:00.360 --> 0:03:03.320 why we think, you know, if Boling could deliver thirty 0:03:03.480 --> 0:03:08.160 months of max is, that still would be a little 0:03:08.160 --> 0:03:11.480 bit less than sorry, a little bit more than half 0:03:11.600 --> 0:03:16.160 of what there toptic delivery rates would have been back 0:03:16.240 --> 0:03:19.600 inten when they're planning to go to fifty seven, so 0:03:19.639 --> 0:03:22.840 that the pain is still large, that the industry is 0:03:23.600 --> 0:03:28.640 nowhere near sort of those heavy days of night. But again, 0:03:28.639 --> 0:03:32.320 I think the real authorization gets them back into the 0:03:32.360 --> 0:03:35.840 business of delivering their most important cash generating airplane, which 0:03:35.880 --> 0:03:39.520 is which is very important. George, you mentioned China. Where 0:03:39.600 --> 0:03:41.760 are we in terms of or where is bowling in 0:03:41.840 --> 0:03:43.840 terms of getting approval to fly in China because you 0:03:43.880 --> 0:03:47.080 mentioned their air traffic is coming back more so than 0:03:47.120 --> 0:03:50.320 the rest of the world. So we haven't seen any 0:03:50.400 --> 0:03:53.280 reports out of the Chinese authorities about what they're ready 0:03:53.360 --> 0:03:56.680 to whether they're ready to let the Max fly again 0:03:56.720 --> 0:04:00.640 in China. And I suspect that this part of this 0:04:00.720 --> 0:04:05.200 question maybe wrapped around trade issues as well. Right you know, 0:04:05.280 --> 0:04:08.520 China and the US not really very happy with each 0:04:08.560 --> 0:04:11.520 other right now on the trade front, and so one 0:04:11.520 --> 0:04:13.400 of the things we're looking at is as a as 0:04:13.440 --> 0:04:17.320 a the president potential administration looks like it's going to 0:04:17.440 --> 0:04:21.280 change in Washington. You could have a Biden presidency. Is 0:04:21.360 --> 0:04:25.120 a potential approachment with the U S and China that 0:04:25.279 --> 0:04:28.920 could allow airplanes to start get delivered back into China. 0:04:29.520 --> 0:04:31.600 You remember, there's a there's a trying to trade deal 0:04:31.640 --> 0:04:35.000 that was signed by the Trump administration. The Chinese don't 0:04:35.040 --> 0:04:38.640 look like they were fulfilling the purchases that they said 0:04:38.640 --> 0:04:41.920 they would. Seems impossible for them to do it now. 0:04:42.279 --> 0:04:44.960 We also wonder if that trade deal might not get 0:04:45.200 --> 0:04:48.359 sort of re energized and pushed a year, and that 0:04:48.520 --> 0:04:50.960 as well could be could be a spur to get 0:04:51.200 --> 0:04:54.360 more airplanes delivered into China. The Chinese absolutely need to 0:04:54.360 --> 0:04:56.680 be taking gooing airplanes to meet the terms of that 0:04:56.760 --> 0:04:59.440 trade deal. But right now that trade deals in some 0:04:59.560 --> 0:05:02.840 sort of dove land. Sarah Pontac, who is still with 0:05:02.839 --> 0:05:06.560 Wilson Studio, the Chinese yuan is trading off shore at 0:05:06.600 --> 0:05:10.080 six fifty seventy. We've literally seen it full off a 0:05:10.120 --> 0:05:12.240 fifth in the last you know, a few weeks. It 0:05:12.360 --> 0:05:15.560 was at seven but higher than seven seven twenty at 0:05:15.839 --> 0:05:20.280 some point earlier this year. What's behind this water Stratagists saying, right, 0:05:20.320 --> 0:05:23.320 we really have the lowest sense about June. Just to 0:05:23.400 --> 0:05:26.680 put this in historical perspective, what strategists are saying is 0:05:26.760 --> 0:05:28.440 that some of this does have to do with the 0:05:28.520 --> 0:05:31.520 outcome of the presidential election. Sure, we are still dealing 0:05:31.560 --> 0:05:33.440 with the contested election, but the idea that you're going 0:05:33.520 --> 0:05:36.640 to have a Biden presidency and a return more so 0:05:36.920 --> 0:05:40.800 to geo political status quo, and where we still might 0:05:40.960 --> 0:05:44.479 have some tensions back and forth with US and China, 0:05:44.560 --> 0:05:47.400 even on the trade front, it likely will not look 0:05:47.560 --> 0:05:51.960 like it did under the President Trump administration. So that 0:05:52.400 --> 0:05:55.240 is really coming to gear on this also just the 0:05:55.320 --> 0:05:58.160 fact that if we look at the Chinese economy, we 0:05:58.320 --> 0:06:01.240 have seen a lift late. They do seem to have 0:06:01.360 --> 0:06:05.960 gotten the virus under control more so than Western countries 0:06:06.080 --> 0:06:08.400 like Europe in the US as well, that could be 0:06:08.480 --> 0:06:11.240 playing playing a role to But mostly what I typically 0:06:11.320 --> 0:06:14.320 here is bringing it back to geopolitical tensions and the 0:06:14.400 --> 0:06:18.960 results of the election to hey, George. Longer term for Boeing, here, 0:06:19.600 --> 0:06:23.640 what's the hit to you know, their reputation in the marketplace, 0:06:23.760 --> 0:06:26.160 their competitive position in the marketplace. I mean, I know 0:06:26.240 --> 0:06:30.720 it's essentially a duopoly air Bus and Boeing, But as 0:06:30.760 --> 0:06:33.760 some permanent or maybe at least some long term competitive 0:06:33.839 --> 0:06:36.560 damage been done to the Boeing company and its products, 0:06:38.080 --> 0:06:40.320 I think for for sure for the next bunch of years. 0:06:40.480 --> 0:06:44.000 You know this hurts for reputational standpoint, I guess in 0:06:44.120 --> 0:06:47.080 time it sort of it seems like all things sade, 0:06:47.240 --> 0:06:49.400 you know. I think a bunch of years ago before 0:06:49.440 --> 0:06:52.360 the Max with the n G and the air Bus 0:06:52.920 --> 0:06:58.160 CEO for those of us that do inside baseball on airplane, 0:06:58.200 --> 0:07:00.919 that's the that's the immediate predecessors to the latest airplanes. 0:07:01.600 --> 0:07:04.719 The seven thirty seven looked like it had a slight 0:07:04.839 --> 0:07:09.080 advantage over the old Airbus CEO. They had a couple 0:07:09.080 --> 0:07:11.040 of extra seats and their efficiency seemed to be a 0:07:11.080 --> 0:07:13.200 little bit better, and so they look like they had 0:07:13.240 --> 0:07:16.640 a slight advantage. In the world we're in now, it 0:07:16.680 --> 0:07:18.920 looks like Airbus might have a slight advantage and the 0:07:19.040 --> 0:07:23.920 narrow body air aircraft arena with the three Neo, which 0:07:23.960 --> 0:07:27.440 had larger fan sizes, a little better efficiency, and it's 0:07:27.480 --> 0:07:30.200 prepared to take those bigger fan sizes in the future. 0:07:30.880 --> 0:07:33.320 So I think bowings at a point where they really 0:07:33.360 --> 0:07:37.040 need to think about the competitiveness of the seven thirty seven, 0:07:37.160 --> 0:07:40.480 and they need to guard their reputation, and so I 0:07:40.600 --> 0:07:42.320 think that they got to start thinking about how they're 0:07:42.320 --> 0:07:46.320 gonna come forth with a new narrow body seven thirty 0:07:46.360 --> 0:07:49.360 seven and one that can be maybe get another leg 0:07:49.440 --> 0:07:52.200 up on Airbus. Of course, Airbus won't let that go 0:07:52.360 --> 0:07:55.200 without a without a fighting shore. George, who is responsible 0:07:55.280 --> 0:07:57.440 for getting people into the plane. Is that the airlines 0:07:57.440 --> 0:08:00.880 who have already ordered and used the on Pready seven Max. 0:08:00.960 --> 0:08:03.120 Or is it up to Bowing to put a campaign 0:08:03.160 --> 0:08:04.920 into the works that makes it seem like it's a 0:08:04.960 --> 0:08:08.400 great airplane to write on. I think it will be 0:08:08.520 --> 0:08:11.600 both right. There's some airlines that are absolutely bowing customers. 0:08:12.440 --> 0:08:14.960 They fly all bowing fleets. It's absolutely in their interest 0:08:15.040 --> 0:08:18.280 to get customers comfortable with the Max, their buyers of 0:08:18.320 --> 0:08:20.920 the Max. To even switch to the to an airbust 0:08:20.960 --> 0:08:23.040 product would would sort of, you know, create a lot 0:08:23.080 --> 0:08:26.720 of upheaval these companies, companies like Southwest, companies like Ryan Air. 0:08:26.840 --> 0:08:29.360 But at the same time, Boeing, even though they're one 0:08:29.440 --> 0:08:34.040 removed from the flying public, they really need to bolster 0:08:34.160 --> 0:08:36.960 the reputation of this airplane, and the airplane has really 0:08:37.000 --> 0:08:39.960 been reviewed extensively by the f a A. I think 0:08:40.000 --> 0:08:43.079 they've got to bring that forward to the consumer. And 0:08:43.240 --> 0:08:46.120 the training regiment for getting pilots back in the cockpit 0:08:46.679 --> 0:08:49.240 on the Max is a little more intense, and it 0:08:49.280 --> 0:08:52.720 would be for a typical what we call typewriting um 0:08:53.360 --> 0:08:56.760 type similar typewrated airplane, and so I think Bowing Boeing 0:08:56.960 --> 0:09:00.079 and the airlines need to bring forth this information to 0:09:00.160 --> 0:09:02.600 the flying public could be comfortable flying the airplane again 0:09:03.000 --> 0:09:06.760 and they don't suffer any demand problems because of that. Hey, sir, 0:09:06.840 --> 0:09:08.959 I just want to brought more broadly, what do you 0:09:09.040 --> 0:09:12.480 think are the kind of next catalyst for investors? What 0:09:12.559 --> 0:09:14.320 are the investors looking at? Now? We've kind of gotten 0:09:14.360 --> 0:09:16.760 through you know, some we've gotten through earnings, we kind 0:09:16.760 --> 0:09:18.520 of know where the FED is, where you've got some 0:09:19.240 --> 0:09:21.360 idea of the vaccine timing. What do you think the 0:09:21.400 --> 0:09:24.240 market's looking at? I'd say, as of right now, likely 0:09:24.480 --> 0:09:27.200 what's going to be the next catalyst for any maybe 0:09:27.280 --> 0:09:30.120 short term moves in the market would be the development 0:09:30.160 --> 0:09:33.319 in the trajectory of COVID nineteen cases and restrictions. We 0:09:33.400 --> 0:09:36.040 have not gotten to the point where restrictions have really 0:09:36.080 --> 0:09:38.319 been ramped up to the point where we're going to 0:09:38.400 --> 0:09:41.000 see a drastic effect on an economy like we saw 0:09:41.040 --> 0:09:43.679 back in March. But what's going to happen as we 0:09:43.760 --> 0:09:47.079 get into the winter months. Granted though you are able 0:09:47.120 --> 0:09:49.439 to look further out, knowing that there is a vaccine, 0:09:49.480 --> 0:09:51.880 there and on that front, that means there are very 0:09:52.040 --> 0:09:55.199 high expectations for a growth rebound, not just on the 0:09:55.280 --> 0:09:57.520 economic front, but when it comes to earnings too. If 0:09:57.559 --> 0:10:00.839 you look at expectations for one off its Q one 0:10:00.920 --> 0:10:03.920 Q two. Granted you have much easier comps because we 0:10:04.000 --> 0:10:06.240 saw numbers just fall off a cliff this year in 0:10:06.320 --> 0:10:08.719 the wake of the coronavirus in that first quarantine. But 0:10:08.920 --> 0:10:12.559 if we do not see markets, especially cyclical areas of 0:10:12.600 --> 0:10:14.800 the market, because that's where the most year over year 0:10:14.800 --> 0:10:18.319 growth is really expected, if that doesn't live up to expectations, 0:10:18.440 --> 0:10:21.679 that could certainly provide a catalyst for some volatility and 0:10:21.920 --> 0:10:24.400 some moving around here. At the point that we got 0:10:24.760 --> 0:10:27.800 inventories crude oil inventories that came in much much less 0:10:27.840 --> 0:10:30.600 than expected. The market was looking for one point two 0:10:30.640 --> 0:10:33.800 four million barrels. We got seven sixty nine, and that's 0:10:33.800 --> 0:10:36.000 giving another little boost to the price of oil zero, 0:10:36.080 --> 0:10:38.760 which is now you know, close to forty two dollars 0:10:38.800 --> 0:10:40.959 a barrel. But we're really just in this range, and 0:10:41.040 --> 0:10:45.320 I guess OPAK is the next catalyst there. Yeah. Absolutely, 0:10:45.600 --> 0:10:47.439 When we look at oil, it's pretty amazing to see 0:10:47.480 --> 0:10:48.920 we have a third day of gains today w t 0:10:49.000 --> 0:10:51.520 I crude oil up more than one also on track 0:10:51.640 --> 0:10:54.240 for a third week of gains. So we have seen 0:10:54.280 --> 0:10:56.160 this sustained move higher. Right now we look at w 0:10:56.360 --> 0:11:00.000 t I crude oil barrel that's the highest and September. 0:11:00.360 --> 0:11:02.959 So we have not been able to completely break out, 0:11:03.080 --> 0:11:06.120 but it does seem as though OPEC and its allies 0:11:06.320 --> 0:11:10.240 do at least they're aware of the issues right now 0:11:10.640 --> 0:11:14.680 on the table as it relates to demand. However, again 0:11:14.880 --> 0:11:17.600 there is just plenty of optimism and the focus really 0:11:17.640 --> 0:11:21.320 here on that is on the positive side. Okay, Sarah contact, 0:11:21.320 --> 0:11:23.120 thank you so much for joining us. We always appreciate 0:11:23.160 --> 0:11:25.960 your thoughts on the markets from a cross asset perspective. 0:11:26.200 --> 0:11:29.280 Sarah Pontac cross As reporter for Bloomberg News and George Ferguson, 0:11:29.640 --> 0:11:32.920 Senior Aerospace and Airlines Analyst for Bloomberg Intelligence. We get 0:11:33.080 --> 0:11:36.280 up to speed on the Boeing News. We appreciate you. 0:11:39.360 --> 0:11:41.920 We've heard a lot about Sparks this year. They've become 0:11:42.120 --> 0:11:44.960 the vehicle of choice for people to raise and then 0:11:45.440 --> 0:11:47.959 hopefully look for a company to go public with. Well, 0:11:48.360 --> 0:11:50.920 one of those companies that went public via a successful 0:11:51.000 --> 0:11:54.440 spak yesterday, it was EOS and it is trading today 0:11:54.520 --> 0:11:57.480 on the NAZAC. E O s E is the ticker 0:11:57.920 --> 0:11:59.880 and it's of more than eleven percent right now. So 0:12:00.000 --> 0:12:03.360 EOS Energy Enterprises is the full title and the CEO 0:12:03.559 --> 0:12:06.240 is Joe mastra Angelo. So Joe explained to what first, 0:12:06.320 --> 0:12:10.400 what EOS Energy Enterprises does. Yeah, so thanks for the 0:12:10.440 --> 0:12:15.040 time today. We're we're a stationary energy storage company that 0:12:15.280 --> 0:12:19.000 focuses on helping take out the intermittency of renewables and 0:12:19.120 --> 0:12:22.880 the power grid, micro grid applications and eventually a residential 0:12:23.120 --> 0:12:25.800 um system. Just to clarified, do you mean it like 0:12:25.880 --> 0:12:29.000 a battery company, Yes, we're bad. We're battery company that 0:12:29.280 --> 0:12:35.920 we build zinc bromean based batteries for stationary energy storage. Alright, 0:12:36.040 --> 0:12:39.719 so zinc based energy storage battery. That's different from what 0:12:39.880 --> 0:12:42.439 I think most of the markets used to, which is 0:12:43.120 --> 0:12:46.040 um you know, a lithium ion battery. Tell us the 0:12:46.120 --> 0:12:49.360 difference between the two and maybe the advantages of your 0:12:49.400 --> 0:12:53.920 product versus the traditional I guess lithium ion batteries. Yes, so, 0:12:54.080 --> 0:12:56.599 so first off, you start off with the with the 0:12:56.840 --> 0:12:59.200 with the raw materials that go into the battery, which 0:12:59.240 --> 0:13:02.880 are all earth abundant no conflict materials, no rare earths, 0:13:02.920 --> 0:13:06.080 no toxic materials in the battery widely available so very 0:13:06.160 --> 0:13:10.320 limited um supply chain constraints. The battery is not only 0:13:10.840 --> 0:13:14.720 sustainable throughout its lifetime, where it can operate from temperatures 0:13:14.800 --> 0:13:18.320 as low as minus twenty degree C up to fifty 0:13:18.360 --> 0:13:21.680 degrees C, so very wide operate upbrating range without any 0:13:22.000 --> 0:13:25.000 um incremental heating or cooling. And then lastly, at the 0:13:25.080 --> 0:13:27.120 end of its useful life in fifteen to twenty years, 0:13:27.559 --> 0:13:30.320 the battery is fully recyclable back back to its original 0:13:30.360 --> 0:13:33.920 components to be reused in something else. Sounds pretty phenomenal. 0:13:34.120 --> 0:13:36.680 Why did you decide to go public via a spack 0:13:37.040 --> 0:13:40.839 and you know who's involved in the spat Yeah, so 0:13:41.000 --> 0:13:43.560 so so it's a great question. So we um were 0:13:43.640 --> 0:13:47.400 were We worked with b Riley Financial. We went through 0:13:47.480 --> 0:13:48.840 the you know, we were we were in the midst 0:13:48.880 --> 0:13:51.320 of a fundraising round and had met with the team 0:13:51.360 --> 0:13:53.679 from b Riley and we really found a good, a 0:13:53.720 --> 0:13:56.160 good mesh up in what they saw the strategy of 0:13:56.200 --> 0:13:58.199 our company, in the capital that we could get to 0:13:58.440 --> 0:14:00.920 to grow the company. So as we looked the options 0:14:00.920 --> 0:14:03.079 in front of us, this was the best way for 0:14:03.200 --> 0:14:05.160 us to get the story out about how we're going 0:14:05.200 --> 0:14:08.080 to grow the company for the future. Have a partner 0:14:08.120 --> 0:14:10.680 and sponsor who believed in the strategy of the company 0:14:11.040 --> 0:14:12.679 and coming out of this back now we have enough 0:14:12.720 --> 0:14:14.640 capital to grow the company over the long term and 0:14:14.679 --> 0:14:17.880 take it to profitability and casual positive So, Joe, when 0:14:17.880 --> 0:14:20.280 people think of, you know, battery storage, sometimes I think 0:14:20.320 --> 0:14:24.680 of Tesla. Is Tesla a potential customer of years or 0:14:24.760 --> 0:14:27.040 a competitor of yours? How did they How do you 0:14:27.120 --> 0:14:30.480 kind of position yourself visa be Tesla? Yeah, so, so 0:14:30.680 --> 0:14:33.720 when you think about Tesla UM, we we both compete 0:14:33.760 --> 0:14:35.960 in the same space. It's a it's a very wide 0:14:36.040 --> 0:14:39.280 space when you look at the applications UM that we 0:14:39.400 --> 0:14:41.320 go after. You know, when you think about lithium IAM, 0:14:41.400 --> 0:14:43.600 which is the core of the of the of the 0:14:43.680 --> 0:14:46.880 Tesla product, and other and other competitors out there, very 0:14:46.920 --> 0:14:50.239 competitive when you when you're under two hours of discharge 0:14:50.240 --> 0:14:52.960 from from the system, So using the system to charge 0:14:53.040 --> 0:14:55.000 up and then putting that power back on the system 0:14:55.320 --> 0:14:58.120 in zero to two hours beca my entighly competitive. The 0:14:58.200 --> 0:15:01.080 way our company was founded and the way our technology 0:15:01.200 --> 0:15:03.120 is developed over the last twelve years. Is we do 0:15:03.280 --> 0:15:06.480 longer duration discharge, so we can do anything from three 0:15:06.560 --> 0:15:09.760 hours up to twelve hours of energy usage. And when 0:15:09.800 --> 0:15:13.280 you get above the four hour mark, we're highly competitive 0:15:13.280 --> 0:15:17.000 against any other technology out in the marketplace. It's a 0:15:17.080 --> 0:15:20.520 sort of it's almost like a series of churches, right 0:15:20.680 --> 0:15:22.720 You you belong to one or you belong to the other. 0:15:22.920 --> 0:15:26.480 You sort of pick your poison and that's it. Right. Well, 0:15:26.680 --> 0:15:29.800 I mean, look, the energy the energy industry is always 0:15:29.800 --> 0:15:31.840 going to have a mix of technologies to be able 0:15:31.920 --> 0:15:34.040 to deliver the demands that you know that we all 0:15:34.320 --> 0:15:36.760 that we all expect from modern life. And we're one 0:15:36.800 --> 0:15:39.480 of those technologies that fits into a very large segment 0:15:39.560 --> 0:15:41.600 of the market. So I think you could see both. 0:15:41.640 --> 0:15:43.400 I don't. I don't think it's it's a it's a 0:15:43.680 --> 0:15:47.920 it's an either or at an end. So Joe who 0:15:48.120 --> 0:15:51.680 gives a sense of kind of who your customers are? Right? So, 0:15:51.920 --> 0:15:54.240 so we we we we have systems in the field 0:15:54.360 --> 0:15:58.360 now with some of the um per eminent utilities in 0:15:58.360 --> 0:16:01.840 the United States. We have test systems with energy. We're 0:16:01.880 --> 0:16:05.160 working with PFC and g so we work across utilities landscape. 0:16:05.400 --> 0:16:09.840 We also do work with renewable renewable power companies company 0:16:09.920 --> 0:16:13.240 called pecka t. We just announced a large agreement with 0:16:13.360 --> 0:16:15.320 them a couple of weeks ago. And then we also 0:16:15.360 --> 0:16:18.000 do micrograde applications. You know, we're we're doing a micrograde 0:16:18.000 --> 0:16:21.760 application working through the Shell Foundation in Nigeria where we 0:16:21.880 --> 0:16:24.800 really see the technology being great in that application because 0:16:24.800 --> 0:16:26.800 of the safety and operability of it to be able 0:16:26.840 --> 0:16:29.640 to power remote villages and be able to bring power 0:16:29.720 --> 0:16:31.840 to the people in the world that don't have it. Joe, 0:16:32.000 --> 0:16:33.880 final questions, we don't have much time, but what will 0:16:33.920 --> 0:16:35.360 you do with the money where I eased in particular, 0:16:36.320 --> 0:16:39.560 so uh go from a company that has a proven 0:16:39.600 --> 0:16:42.160 product in the manufacturing process to a scale company. So 0:16:42.680 --> 0:16:45.680 a lot we'll go into scaling up our factory in Pittsburgh, Pennsylvania, 0:16:45.720 --> 0:16:49.200 where we're gonna we're gonna increase the throughput of that facility, 0:16:49.240 --> 0:16:52.280 building out our team both on the commercial side and 0:16:52.520 --> 0:16:56.120 also on the project side, and then lastly financing projects 0:16:56.160 --> 0:16:58.600 where we look at this is a big opportunity to 0:16:58.720 --> 0:17:01.680 be able to accelerate the application of energy storage in 0:17:01.720 --> 0:17:06.199 the marketplace by bringing our own financing to the projects. Hey, Joe, 0:17:06.240 --> 0:17:08.560 thanks so much. For joining us to really appreciate congratulations 0:17:08.640 --> 0:17:12.560 on getting public Joe Master Angelo, CEO of EOS Energy 0:17:12.840 --> 0:17:18.359 Enterprises that went public yesterday via US back Dog Duncan 0:17:18.720 --> 0:17:20.720 almost a funny amail to talk a little bit about 0:17:20.760 --> 0:17:23.359 these housing numbers which have been on fire today and 0:17:24.080 --> 0:17:27.440 also most recently, so Doug talked to us, how do 0:17:27.560 --> 0:17:31.440 we continue to have such demand when people are, you know, 0:17:31.960 --> 0:17:34.080 out of a job to the tune of ten million 0:17:34.160 --> 0:17:37.760 of them. The job loss has been heavily concentrated in 0:17:38.920 --> 0:17:42.919 work categories which are hourly wage workers in the service sector, 0:17:43.640 --> 0:17:47.399 particularly in areas that are discretionary spending by middle and 0:17:47.520 --> 0:17:52.000 upper income households. Those UH workers tend to be more 0:17:52.080 --> 0:17:57.119 heavily concentrated in apartments as opposed to ownership. So if 0:17:57.600 --> 0:18:01.879 you are a person with a salary UH and that 0:18:02.119 --> 0:18:04.760 job has been stable, you're not in the service sector. 0:18:05.160 --> 0:18:07.480 With the interest rates where they are, this is a 0:18:07.600 --> 0:18:10.680 great time to consider locking in a long term, very low, 0:18:10.960 --> 0:18:15.960 historically low interest rate and and buy a house. So, Doug, 0:18:16.000 --> 0:18:19.439 are we revising up our view of or your your 0:18:19.520 --> 0:18:21.800 view of kind of just housing starts and and just 0:18:22.200 --> 0:18:24.200 the whole housing market, because it just seems to be 0:18:24.760 --> 0:18:30.200 an extraordinarily bright spot and an otherwise very difficult economy. Yeah, 0:18:30.240 --> 0:18:33.320 there's two or three things going on. One is the 0:18:33.359 --> 0:18:36.680 millennials are at peak home buying and they tend to 0:18:36.760 --> 0:18:40.040 be more in the salaried space, so they're younger, they've 0:18:40.080 --> 0:18:43.840 been a building families. They're now thinking about buying homes 0:18:44.000 --> 0:18:47.800 moving out of apartments. Second one is that to the 0:18:47.920 --> 0:18:50.240 extent that you live in an apartment in a densely 0:18:50.400 --> 0:18:54.840 populated area and you have concerns about the continuing related 0:18:54.880 --> 0:18:57.119 to the virus, this might be a great time to 0:18:57.200 --> 0:19:02.080 be moving toward the suburban markets and less density. And 0:19:02.119 --> 0:19:05.200 then the third is if you're an older household that 0:19:05.359 --> 0:19:08.800 already owns a home and could conceptually sell that house, 0:19:09.200 --> 0:19:11.639 you might not be so anxious to do that today 0:19:11.720 --> 0:19:14.720 because people would come to visit the house walk through 0:19:14.800 --> 0:19:16.720 carrying the virus, and you might be on a higher 0:19:16.800 --> 0:19:21.000 risk category. So to supply in the existing homes is 0:19:21.119 --> 0:19:25.399 actually at historic lows, leading to very strong starts and 0:19:25.560 --> 0:19:28.800 construction of new homes to meet that shift in demand. 0:19:29.760 --> 0:19:32.800 Are we beginning to see that slowed down? Was today 0:19:32.920 --> 0:19:35.200 the first sign of that where we saw building permits 0:19:35.280 --> 0:19:37.800 come in flat for October, much less than the one 0:19:37.840 --> 0:19:43.120 pot anticipated, and September's number was revised lower to four 0:19:43.200 --> 0:19:46.480 point seven. So building permits obviously the first sign of 0:19:47.240 --> 0:19:51.840 future building. Yes, I think that's that's an accurate assessment. 0:19:52.160 --> 0:19:55.600 One thing to recall is that the virus really hit 0:19:55.680 --> 0:19:58.840 the economy in the March April time frame, which is 0:19:58.920 --> 0:20:03.119 typically the peak homebuying season in the year. So we 0:20:03.359 --> 0:20:07.040 moved what's the normal cyclical peak back in the year 0:20:07.200 --> 0:20:11.480 to the to the late summer and early fall. So 0:20:11.640 --> 0:20:16.280 we've been writing that shift of the of the demand cycle, 0:20:16.800 --> 0:20:18.880 and now I think we're starting to see the work 0:20:18.920 --> 0:20:22.160 off of that. To your point about the flattening out 0:20:22.280 --> 0:20:27.240 of permits, Doug, how's the mortgage original origination market today? 0:20:27.400 --> 0:20:31.439 Are lenders writing mortgages? How tough is it to get 0:20:31.480 --> 0:20:36.360 a mortgage? How's that looking? Well? The criteria to qualify 0:20:36.440 --> 0:20:40.760 for a mortgage have been tightened with the concern about 0:20:40.880 --> 0:20:47.480 employment characteristics, but not not dramatically tightened, and the volumes 0:20:47.560 --> 0:20:49.840 of business that are being done are going to be 0:20:50.000 --> 0:20:53.520 all time records. From a nominal dollar perspective, we expect 0:20:53.640 --> 0:20:59.119 in four point one trillion dollars of mortgage production uh. 0:20:59.200 --> 0:21:02.040 And of course lot of that, about two point six 0:21:02.160 --> 0:21:05.960 trillion of that will be refinancing activity. That is, people 0:21:06.000 --> 0:21:08.240 who already have a mortgage who have taken advantage of 0:21:08.320 --> 0:21:11.159 these historically low interest rates to refinance it at a 0:21:11.240 --> 0:21:14.640 lower rate. That will continue into next year. The total 0:21:14.720 --> 0:21:16.800 numbers will fall up, but they will still be at 0:21:16.920 --> 0:21:19.840 very high levels. And one thing to bear in mind 0:21:20.119 --> 0:21:23.439 is even if pen your treasury rates were to move up, 0:21:23.480 --> 0:21:26.760 which they have a little bit recently, the spreads in 0:21:26.880 --> 0:21:30.879 that market suggests that lenders could narrow the spreads and 0:21:30.960 --> 0:21:35.200 hold mortgage rates where they are, which would continue the 0:21:36.080 --> 0:21:39.920 benefits to consumers and through next year. Doug, what's happening 0:21:39.960 --> 0:21:44.680 to credit quality out there? Well, the one question on 0:21:44.840 --> 0:21:51.000 the credit quality front is relates to the forbearances for 0:21:51.119 --> 0:21:54.320 those who do have a mortgage and did lose a 0:21:54.400 --> 0:21:58.400 job or saw a serious truncation of their income through 0:21:59.040 --> 0:22:03.040