What you need to know: • BES reported Q4 and FY23 financial results that were mixed relative to our expectations; importantly, gross margins increased to 49% (compared to 20% in Q3) due to operational and technical improvements. • We are expecting revenue growth to resume in FY24 as Braille Battery expands into Europe as well as powersports. • Electrafy is now booking orders for its backup system and deliveries will begin in Q2. BES also announced that its lithium fire protection device is finishing its commercialization and plans to launch in fall 2024. This week, Braille Energy Systems (BES:TSXV) reported Q4/23 financial results for the quarter ending September 30th and released a corporate update. The financial results slightly missed our expectations on revenue but massively beat on gross margin due to factory improvements. The corporate update informed us that BES is making progress across its three segments and growth should resume in FY24 as Braille Battery, Electrafy, and Early Alert reach major milestones. We are tweaking our estimates for FY24 and FY25, and rolling our valuation year over to FY25. We are maintaining our BUY rating and $0.15/share target price on Braille. Key Highlights • BES reported $0.6M in revenue in Q4 compared to our estimate of $0.8M and $1.0M in Q4/22, representing -36% YoY growth. The full-year revenue came in at $3.8M (-8% YoY). 2023 marked a challenging year for Braille Battery as it worked to optimize operations while shifting focus to the Electrafy business. • Gross margin for the quarter came in at 49% compared to our estimate of 20% and 20% last quarter. The major improvement brings BES back to its historical gross margin levels seen in 2021 and tells us that its operational changes made significant improvements. • Adj. EBITDA for the quarter came in at ($0.5M) vs. our estimate of ($0.6M) and ($0.7M) last quarter. The beat was due to the improved gross margin. • Braille ended the quarter with $0.2M in cash & equivalents and $0.6M in debt.