Cartesian Growth Corporation III Class A Ordinary Shares 2026 Q2 Earnings Call

Thank you, and good afternoon. With me today are Dr. Siyu Huang, Co-founder and Chief Executive Officer, and Richard Wei, Chief Financial Officer. Earlier today, we published our second quarter shareholder letter on the investor section of our website at factorialenergy.com. The company uses its website to disclose material, non-public information, and to comply with its disclosure obligations under SEC Regulation FD. Investors are encouraged to monitor the site and sign up for email alerts. Today's discussion contains forward-looking statements within the meaning of applicable securities law, including statements regarding industry trends, future performance, manufacturing capabilities, business plans, and milestones. Actual results may differ in a material way. Please review the risk factors described in the quarterly report on Form 10-Q for the quarter ended June 30, 2026, filed today, and in our registration statement on Form S-4.

Factorial disclaims any obligation to update forward-looking statements except as required by law. During this call, we will refer to non-GAAP operating expenses, a financial measure that is not prepared in accordance with Generally Accepted Accounting Principles. We define non-GAAP operating expenses as GAAP operating expenses, excluding depreciation and amortization, non-cash lease expenses, and stock-based compensation, all of which can be found on our consolidated statement of cash flows. Management uses these measures to plan and evaluate the cash cost of operating the business. It has limitations, should not be considered in isolation, may not be comparable to similarly titled measures used by other companies, and is not a substitute for the most directly comparable GAAP measure. A reconciliation to GAAP operating expenses is included in today's press release and posted on the investor section of our website. I will now turn it over to Siyu.

Thank you, Rodney. Good afternoon, everyone, and welcome to our inaugural earnings call as a public company. Eight weeks ago, our team rang the Nasdaq opening bell. That moment belongs to the people who spent the past decade building this technology and to the partners who believed in it early. Today, I wanted to show you what we have done with that trust. For those new to Factorial, our June 30 shareholder letter laid out who we are and our commercialization roadmap in detail. Today, I will update you on our recent advancement at our company and hit on two important topics I hear most often from investors and from people across our industry. The first topic is: when will solid-state batteries produce revenue? The second is: how does an American battery company win in an industry whose production base is overwhelmingly concentrated in Asia?

I'll discuss both within the context of our long health strategy and our recent achievements. Beginning with the first topic. Moore's Law, if it were applied to batteries, is not every 2 years. It is closer to every 20. Lithium ion, after 3 decades of development, is now approaching practical limits on energy density and safety. We spent the past 10 years building technology designed to move beyond those limits. At the simplistic level, a traditional battery runs on liquid inside, and as you push for more energy, that liquid can become the limiting factor on safety and performance. Solid-state technology replaces all or a portion of the liquid with a solid, making the system more stable and allowing performance beyond the reach of liquid-only systems. Our commercialization efforts primarily focus on 2 proprietary platforms, together protected by more than 150 patents and patent applications.

FEST is a high-power platform and built for flexibility, pairing a polymer with a liquid component. Solstice, our all solid-state platform, contains no liquid at all and takes this one step further, adding benefits for space and robotics that require high thermal stability and safety. Beyond the 2 platforms, our cell designs extend to full liquid advanced electrolyte systems, where customer requirements call for extreme high energy and high power performance. It is a range we can move across as demand evolves in the high-spec markets we serve. From the beginning, our strategy has been sequenced. High-spec markets such as aerospace, robotics, and supercars is our near-term revenue focus, where performance is decisive and adoption cycles are shorter. Automotive is our midterm opportunity. At longer term, we see significant opportunities in data center and energy storage. In recent months, we began converting that strategy into commercial momentum.

In May, we announced partnerships with leading drone battery integrators across 3 continents, including KULR Technology Group in the U.S., Tulip Tech in Europe, and JRES in South Korea. We showcased that work at XPONENTIAL Conference in Detroit. At that stage, these were only early relationships and engineering programs. In July, these relationships began producing results. Customer drone flight tests with Tulip demonstrated more than a 30% increase in flight range using our solid-state and lithium metal battery technology, and that was achieved before any engineering optimization. Last year, our cells powered a drive of more than 1,200 kilometers on a single charge on public roads. This year, the same platform performs in the air on a customer's aircraft on the strength of the drone flight test. Factorial and Tulip established a commercialization framework covering joint customer engagement and a pathway towards volume production.

In July, we also reached a major milestone, our first commercial battery order from a separate leading U.S. drone manufacturer, moving us towards commercial deployment in airspace. A flight test demonstrate what the technology can do. A commercial order demonstrate that a customer values it. We expect this to be the first of additional orders in the aerospace end market, and we see it as an early step in building the foundational energy layer that will underpin our near-term revenue objectives. Moving from partnership announcement to commercial order within a few months reflects years of preparation. Our intent is to repeat the pattern in markets beyond aerospace, validate in the field, formalize the partnership, and earn the order. Now to the second topic: how Factorial can win as an American battery company. Our answer has 3 parts. The first is performance. We're focused on producing the highest quality solid-state batteries for the most demanding application.

We deliver technology that lithium-ion cannot reach in end markets where performance determines outcomes. In these markets, the customer's need depends on range, payload, and endurance. Energy density sets the ceiling on all three. The second is capitalized scalability. Our FEST platform is compatible with up to 80% of existing lithium-ion manufacturing equipment. We design it that way deliberately so our partners can adopt our technology using the industry's installed manufacturing base rather than building new infrastructure. So we can scale through partner capacity rather than our own capital. Our recently announced Memorandum of Understanding with SK On, one of Korea's top global battery manufacturers, reflects this strategy in action. Together, we're evaluating how our solid-state technologies can be manufactured at scale using SK On's existing global manufacturing network.

Identifying cell manufacturing partners is a critical step ahead of any significant production program. SK On is our second manufacturing-focused partnership with a global battery producer, which expands our optionality, and we will continue to work with others across the industry. The third element is our strategic alignment with U.S. supply chain priorities. We're headquartered in Boston with manufacturing in the United States and South Korea and partners with deep roots in the U.S. national security community. U.S. policy is moving towards securing battery supply chains, particularly for drones and aerospace platforms. Our footprint and partnerships align directly with that direction. Putting it all together, we do not believe this industry is winner take all. Asian manufacturers account for virtually all global battery cell production today, creating a significant opportunity for differentiated suppliers serving the U.S. and European markets. We intend to be one of them.

Before I hand the call to Richard, I'll hit on two additional items from this quarter. In June, working with Stellantis, we achieved the first automotive integration of solid-state battery technology in North America. Our FEST cells are in a Dodge Charger Daytona development vehicle. The integration required a patented new mechanical pack architecture that Stellantis designed specifically to accommodate solid-state cells. We believe this is the first solid-state battery vehicle running on American soil, and it makes Factorial the first solid-state battery maker to achieve successful vehicle integration with two top 10 global OEMs. The Mercedes drive demonstrated performance at the high end. The Stellantis program integration creates a platform to reach a larger share of the market. Our announced automotive partnerships represented 26% of the 4.4 million EVs sold in the U.S. and Europe in 2024 in a market projected to exceed $200 billion by 2030.

Following the close of our business combination, we were also honored to welcome Dieter Zetsche, former chairman of Daimler AG and head of Mercedes-Benz Cars, to our board of directors. His experience guiding vehicle programs from concept to production has already been invaluable to us. I will close my section by connecting the pieces. In drones, we have shown our playbook coming together end to end from platform partnerships to technology demonstration to commercial orders within months. That same playbook is already underway in mobility with strong product synergy between the two. A demonstration vehicle on the road today serves the same purpose as a drone flight test, providing real-world proof of performance that builds towards commercial orders. The much larger mobility market simply moves on a longer timeline. The broader picture supports both paths.

According to IEA and McKinsey estimates, global battery demand is projected to grow roughly five-fold by 2030 to 5 terawatt-hours. Much of the fastest-growing demand comes from machines that must carry their own energy, including drones, autonomous flights vehicles, and robots. We have spent a decade preparing for this environment. I will now turn the call to Richard to walk through our financial framework and outlook.

Thank you, Siyu, and good afternoon, everyone. We enter this next phase with a strong capital position and disciplined approach to how we deploy it. I will provide an overview of our financial framework and outlook. It has three parts: our capital-light model, our capital resources, and how we track our progress. First, our capital-light model. We recorded operating expenses of $13 million for the second quarter and $19.5 million for the first half of 2026. For the six months ended June 30th, 2026, our non-GAAP operating expenses, which excluded certain non-cash operating expenses, were $14.5 million, with spending directed primarily at R&D and the operational infrastructure behind the milestones Siyu described. For the same six-month period, capital expenditures were $0.6 million. These results were in line with our expectations. For the full year 2026, we expect non-GAAP operating expenses of approximately $40 million.