Fluence Energy (FLNC) Investor update summary

Production and supply chain challenges

• Fiscal 2026 guidance was reduced due to significant supply chain issues and delays at the Houston manufacturing facility, mainly related to underperformance of automated welding and skilled labor shortages.

• Corrective actions included switching to manual welding, hiring additional skilled labor, engaging subcontractors, and restructuring planning, but implementation is taking longer than expected.

• Production in August averaged under one unit per day, improving to three units per day in early September, still below the targeted 11 units per day.

• Additional delays in delivery of balance of plant equipment and supplier logistics have shifted some revenue out of fiscal 2026.

Financial impact and revised outlook

• Fiscal 2026 revenue guidance was reduced by $600 million to approximately $2.4 billion, with over 80% of the decrease due to U.S. production issues.

• Adjusted EBITDA loss is now expected to be about $200 million, compared to a prior loss of $10 million, mainly due to missed project milestones and penalties.

• Two-thirds of the increased loss is from missed project milestones, with $65 million in gross margin and $65 million in penalties shifted to FY 2027.

• Additional costs include $60 million from new product rollout and extra expenses to achieve production volumes and quality at Houston.

Action plan and operational changes

• Structural management changes include appointing a new COO with turnaround experience to address process weaknesses and improve execution.

• A comprehensive plan is being developed to strengthen supply chains, production systems, and integrated planning, with updates to be provided in November.

• Quarterly reporting of U.S. production levels will begin in November to enhance transparency.

• Corrective actions at the contract manufacturer have already increased daily production levels.