Amprius Technologies Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 9, 2023

There are 9 speakers on the call.

Operator

Good afternoon. Welcome to Amprius Technologies Third Quarter 2023 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Doctor. Gang Sun and CFO, Sandra Wallach. At this time, all participants are in listen only mode.

Operator

Following management's remarks, we will open the call for questions. Please note that this presentation contains forward looking statements, including, but not limited to, statements regarding future product commercialization, new customer adoption and the timing and ability of Amprius to build its large scale manufacturing facility, expand its manufacturing capacity, scale its business and achieve a sustainable cost structure. These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward looking statements. For a more complete discussion of these risks and uncertainties, please refer to Ambreus' filings with the Securities and Exchange Commission. Finally, I would like to remind everyone that this conference call is being webcast and a recording will be made available for replay on the company's Investor Relations website at ir.amprius.com.

Operator

In addition to the webcast, the company has posted a shareholder letter that accompanies these results, which can also be found on the Investor Relations website. I'll now turn the call over to Amprius Technology's CEO, Doctor. Chang Sun, for his comments. Sir, please proceed.

Speaker 1

Welcome, everyone, and thank you for joining us this afternoon. On today's call, I will report our progress and accomplishments at Amprius in the Q3 and our CFO, Sandro Wallach, who will discuss our financial results for the period. After that, and will share some closing remarks before opening the call for questions. The Q3 was an exciting quarter for us. Before I give the quarterly report, I would like to briefly introduce Amprius to those who may be new to the company.

Speaker 1

Amprius develops, manufacturers and the markets, high energy density and high power density batteries with application across all segments of electrical mobility, including aviation and the EV Industries. As a pioneer of silicon anode battery technologies, Amperes has spent the last decade developing various silicon anode structures and robust manufacturing processes as well as a strong patent portfolio of over 80 patents. Ampere's silicon anode batteries provide industry leading performance today, including 4 50 hour per kilo specific energy density and the 11 50 hour per liter volumetric energy density available commercially since early 2022, and the 500 our battery perform up to 10 C power capability, extremely fast charge rate of 0% to 80% stay of charge in approximately 6 minutes a wide operating temperature range of minus 30 degrees to 55 degrees Celsius and the safety design feature that enable us to pass United States military benchmark nail penetration test. Amprius has been in commercial battery production since 2018. So the company has many years of experience manufacturing high energy density and high power density lithium ion batteries.

Speaker 1

It's our belief that there are no other commercial batteries on the market that can perform at these levels. Ampere's high performance batteries have attracted market attention and customer demand. Company's priority today Is to build additional manufacturing capacity as quickly as we can to meet the increasing demand for our products. Our production capacity scale up activities in both California and Colorado are moving along well. This quarter, we delivered new technologies and the new batteries, engaged with and sold to additional customers and move the closer to completing our battery production capacity expansion in our California factory.

Speaker 1

I would like to take this opportunity to note a few highlights of our progress. In August, we unveiled a breakthrough Battery Cell Chemistry and the Design that enables 400 watt per kilo energy density with a simultaneously 10 C power capability. The energy and the power delivered by this cell make it ideal solution for electric mobility applications such as aviation and EVs. For EV Tours. This battery is designed to provide the necessary proportion power and energy for taking off, Kruzan and Lending.

Speaker 1

We're also expanding our flight range by as much as 50 customer evaluations this year and to have commercially available sales in early 2024. Also to enhance our customers' product performance. Amperes has developed and delivered 3 additional formats of 4.50 hour per kilo of sales. These customer sales were developed in collaboration with MPS' strategical customers to address their unique high altitude super satellite qualification requirements and enable them to operate in highly challenging environments. With a greater energy density and the longer cycle life that previously 400 bar per kilo platform.

Speaker 1

We believe that the new 4 50 hour per kilo cells are the only known commercially available batteries for their cans NetEcan provide enough power and endurance for HEP's overnight stratospheric flight. Recently, we announced that we had signed purchase orders with 3 premier electric aviation manufacturers for customer sales from the company's 450 Whirl Per Kilo Ultra High Energy Density Platform for battery pack development and of qualification. In addition to high energy drone applications, these new customer cell Form factors are positioned to improve performance of high energy storage applications for the military as well. We expect the first cell to be commercialized and that we will begin shipping this year. Another exciting accomplishment is the performance that our batteries delivered at the Bridgestone World Solar Challenge last month.

Speaker 1

In this race, the 4 teams that were powered by Ampere's batteries swept to the top four places out of 32 teams. As reported by customers during the race, Ampere's power pack provide around 30% better energy capacity for roughly the same amount of weight of units used by other competitors. And I expect to be the standard across all teams by the time the 2025 event rolls Laurent. All of the competing vehicles are not commercial vehicles. Their performance requirements test our battery in very challenging driving conditions.

Speaker 1

Moving to our customer contracts from the quarter. Ampere's silicon anode batteries continue receiving strong attention from the customer as well as the industry. In the Q3, we shipped to 38 customers, up from 27 in the Q2. This group include repeat customers who continue to place new orders such as auto, AeroVironment, Teledyne Fleer, as well as 18 new accounts, up from 10 last quarter. In addition, we received a volume purchase order from a premier EV tall OEM during the quarter, which signal our existing technical engagement and our moving to the internal qualification process for our Customer Sales.

Speaker 1

Ampere's Advanced Sales now serve the UAS, UAN and the EBITDA segments of the growing aviation market for electrical mobility. The pipeline of new customer projects remain strong as well, with the 3rd quarter progress across several areas. First, for example, we successfully completed the U. S. Army RCCTO program, where we demonstrate our technologies capabilities for the nano and main aircraft assisting market.

Speaker 1

This is a new market segment for our business and now that we have proven our viability In the Nano UAS market, we have transitioned to the commercial production. Secondly, another example is our partnership with Tenegy to utilize our high energy density sales in their rechargeable battery packs. The combination offers a significant performance benefit, including both a 31% weighted reduction and a 6% energy boost over other comparable rechargeable Patrick Pecks. We believe this partnership will open multiple opportunities for our high energy and high power batteries. 3rd, recently, we also received a forecast customer demand to serve the large aviation segment that are tens of megawatts of the production through 2025 and beyond.

Speaker 1

With this demand in mind, we moved to a long term supply agreement with 1 of the 2 battery pack manufacturers to which we started shipping samples in Q4 of 2022. Overall, we are still facing demand that greatly outstrips our supply and our confidence that we are building toward enough customer commitments to fill our increasing capacity in the coming years. As I mentioned earlier, expanding our production capacity is our main priority. Currently, we have 2 expansion projects under development. First, our megawatt scale production capacity with Ampere's silicon anode technology.

Speaker 1

We plan to deliver 2 Megawatt capacity initially in 2024, which is about 10x of our current production capacity. The additional capacity at our California factory is critical for Ampeus to serve both as a production facility for increased customer orders and as a pilot facility for Large Scale Manufacturing Process Optimization. Our 2024 capacity in Frama is already sold out and our list of customer commitments for 2025 continues to grow. To look at how we manufacture our ultra high energy density silicon and or lithium ion battery, Please check out the overview video posted to the technology section of our website. Also, we look forward to hosting institutional investors and analysts in Fremont, California for our open house event on December 14.

Speaker 1

When we will showcase Ampere's high Performance Silicon Anode Battery Manufacturing Facility. Our other production capacity build up is in the state of Colorado. The manufacturing facility In California is a pallet facility for our gigawatt hour scale factory in Colorado. While we have at least 700 and 74,000 Square Feet of the Production Space with an additional five 125,000 Square Feet available for expansion. The initial production capacity is expected to be 500 Megawatt Hour annually and we will focus on aviation Petri, in this stage, we plan to have this phase operational in 2025 and to then increase capacity over time with 5 gigawatt hour module production expansions to keep up the demand.

Speaker 1

With that, I will now turn the call over to our CFO, Sandra Wallach, to review our financial results for the quarter. Sandra?

Speaker 2

Thank you, Kane. I would now like to spend a few minutes covering some key financial updates. As a reminder, our detailed financials can be found in our Shareholder Letter. We finished the 3rd quarter with $2,800,000 in revenue, a $2,000,000 There were 2 main drivers of this increase. First, our product revenue increased by $1,700,000 from the prior year period to $2,200,000 largely driven by shipments to 38 customers in the quarter, a 2nd consecutive quarterly record for Amprius.

Speaker 2

Although our product revenue remains largely driven by customer purchase orders that can arrive at uneven times throughout the year. We have shown consistent new customer growth and diversification in recent quarters. In the Q3, we even limited the number of customers that account for greater than 10% of our revenue to only 4 customers in the quarter compared to 5 such customers last quarter. Second, our development services revenue was $600,000 a reflection of our successful completion of the CCTO program for the U. S.

Speaker 2

Army, as Ken previously mentioned. Moving to our profitability metrics, Our gross margin was negative 152% for the Q3 compared to negative 185% in Q3 2022 and an improvement from negative 186% in Q2 2023. As we've discussed in prior quarters, we see significant gross margin variation as our product and service revenue mix fluctuates. Also, we anticipate that factory startup costs will ramp up as we start Colorado construction in earnest. Longer term, we are confident that our GAAP gross margin will begin to normalize as we approach our capacity expansion goals.

Speaker 2

Now on to our operating expense management. Our operating expenses for the Q3 were 4,900,000 we've maintained a lean operating structure to date even when accounting for G and A fluctuations and the previous two quarters for transaction related expenses and targeted staffing increases and R and D in Q2. Our GAAP net loss for the Q3 was $8,500,000 or a net loss of dollars 10 per share. As of September 30, 2023, our weighted average number of shares outstanding was 86 point 4000000. Also as of September 30, 2023, there were 76 full time employees, up from 72 in the second quarter, with those employees primarily based in our Fremont, California location.

Speaker 2

Our share based compensation for the quarter was 1,100,000 Turning now to the balance sheet, we exited the Q3 with $53,400,000 in cash and no debt. The key drivers of our cash activity for the quarter were negative $8,700,000 in operating cash flow. Although excluding transaction costs, Our run rate remains at approximately $2,000,000 to $2,500,000 per quarter, a negative $8,900,000 related to the build out of The usage of our committed equity facility. Considering our business achievements and ongoing projects, we believe we are efficiently using capital to drive Amprius forward. Before I turn the call back over to Kang, I would like you to take a moment to discuss our outlook.

Speaker 2

We expect to be capacity constrained until the end of 2023 when our new 2 megawatt capacity is expected to come online. That project and our build out of Ampria Stad in Colorado remain our top capital allocation priorities. As we project our capital expenditures for the rest of 2023 and the beginning of 2024, we expect to spend another $5,000,000 to $7,000,000 over the rest of the year to complete the build out of the Fremont facility. Also, we estimate that we'll spend another $20,000,000 to $30,000,000 over the balance of 2023 and the beginning of 2024 on the start of construction for the Colorado facility and on procuring long lead time items and production equipment. As part of our ongoing business planning, we filed a shelf registration on October 2nd and included a new at the market facility for $100,000,000 in that filing.

Speaker 2

We have terminated the committed equity facility concurrent with the effectiveness of the shelf. Overall with the strength of our balance sheet and multiple vehicles to generate additional funding through both equity issuances such as warrant exercises and sales under our ATM and non dilutive sources such as grants, loans and incentives, we believe that we will have enough cash to continue executing on our Strategic Plan. With that, I will conclude the financial discussion and pass the call back to Kang.

Speaker 1

Thanks, Andrew. I would like to reemphasize a few key points before closing. 1st, Ampere's silicon nanotechnology continues to demonstrate unmatched performance in our industry. Ampere's best to command a firm lead with their combination of safety, energy, power, charging time and the temperature performance and are uniquely positioned for the electric and mobility market. 2nd, Ampere's battery are commercially available today.

Speaker 1

We have been shipping commercial products since 2018 and our technological advancements Continue to bring in significant customer demand. This quarter, we not only delivered To repeat the customers and expand our technical engagements, we add 18 new customers as well. Our demand pipeline is robust and we look forward to further building out our customer book in the coming quarters. 3rd, we are scaling our manufacturing capacity to serve significant demand ahead With our 2 megawatt hour production line nearing completion, we are expanding our footprint and the capacity at Ampeus Lab in California. We also remain on track to build out Ampeus Fab, our gigawatt scale facility in Colorado, which we expect to be operational entering 2025.

Speaker 1

Finally, we are looking forward to several exciting milestones as we head into 2024. We expect to operationalize our megawatt scale Silicon Anode Battery Manufacturing Facility at Ampere's Lab, continue securing customer commitments to fulfill Ampere's fab, expect production capacity for 2025 and deliver 500 watt per kilo battery prototypes to select customers. As we look to the rest of the year, our strategy and the focus and the MPS remains unchanged. We have a tremendous opportunity ahead with the product portfolio that positioned us to both growth in the aviation market and expand to other industries fixing batteries with leading performance. The opportunities in front of Ampere are enormous, including the $49,000,000,000 aviation battery market by 2025, the 67 Building EV Battery Market by 2025 and the 1.25

Speaker 3

billion dollars

Speaker 1

conformal variable battery market by 2,030. Of all of which are on Ampere's growth path in coming years. 2023 has been a very productive year for the company thus far. Our solid third quarter performance has demonstrated our team's the ability to deliver what we have planned and promised. Thank you for your continued support of Ampere's Technology.

Speaker 1

With that, I will turn it back to the operator question and answers.

Speaker 4

Thank you. We will now conduct a question and answer session. Our first question comes from Colin Rusch with Oppenheimer. Please proceed.

Speaker 3

Thanks so much guys. I'll just pack them all into a single line of questioning. Can you talk a little bit about your potential price leverage given the higher energy density to themselves, any risk to capital equipment coming from international sources into the U. S. As you start to ramp up.

Speaker 3

And then for Saundra, if you could address timing for any potential incremental sources of capital. And then I'll hop back in the queue after that. Thanks.

Speaker 1

Okay, Collin. Thanks. Yes. First, At this moment, we have a significant leverage in terms of our product setting price, because this is the only products which can perform at a desired level and there is no other commercial product that can perform at 4 50 watt per kilo with the power capacity we deliver. So we do have better pricing and then alternatives as far as I know.

Speaker 1

Secondly, in terms of production equipment, we have entire Large scale, large scale, I mean the megawatt scale, 500 megawatt scale production equipment is specified and Supplier Select. At this moment, we're working on the details of the purchasing contracts.

Speaker 2

Great. And I'll step in and answer the timing of any potential capital needs. Jin. So right now, we don't have any immediate plans. We filed the shelves for $400,000,000 We have $100,000,000 ATM the TAM facility in place.

Speaker 2

And I think as our schedule becomes more confirmed as far as the build outs, we'll be taking a harder look at timing.

Speaker 4

Our next question comes from Chris Souther with B. Riley. Please proceed.

Speaker 5

Hey, guys. Thanks for taking my questions. Maybe just around the customer progress. Can you talk a little bit about the overall size of the orders from those 3 premier electric aviation manufacturers you called out and The timeframe that those orders cover. Maybe you could kind of frame the overall opportunities out there as part of A broader conversation around the backlog building activities.

Speaker 5

I'm trying to get a better sense of where we are in starting to sell out capacity in Colorado. In Colorado.

Speaker 1

Yes, Chris, well, first of all, we sold as we mentioned, we sold out our 2024 production capacity in California, because that's the place we have the manufacturing Sakshi. So we also have a very strong forecast because those customers will not give us orders until This year we have a production capacity available, but we did receive a commit forecast Tons of Megawatts at this moment. We are keep building the pipeline. If we look at the entire forecast, the entire forecast is very strong. We have customer gave us The indication, okay, over 100 megawatts.

Speaker 1

But in terms of signed agreements, We have tens or several tens of megawatts, the capacity engaged at this moment.

Speaker 5

Got it. Okay. That's really helpful. And certainly makes sense around seeing Colorado kind of in action before a lot of the formal larger orders. So on the point around 2024 capacity being sold out, I assume existing customers with like commercial products are prioritized, but how are you prioritizing new potential customers versus existing customers who are looking for samples.

Speaker 5

Since it seems like you continue to add New customers to the polls here, just what does the mix look like of new and existing customers kind of next year?

Speaker 1

We do allocate a certain capacity to serve new customer, as you mentioned, for sampling prototyping. But our primary commitment will be to the customer we already serve. We believe we do have a sufficient capacity allocation for new customer engagements.

Speaker 5

Okay. Yes, that's what I was hoping. Thank you.

Speaker 4

Thank you. Our next question comes from Tim Moore with EF Hutton. Please proceed.

Speaker 6

Thanks. Given that the aviation market Prioritizes safety first and energy and power. How meaningful of a breakthrough Could that electric vertical takeoff and landing purchase order that you recently got be for you to help serve now all the major segments of the Electric Mobility and Aviation. I mean, can you bundle and cross sell a complete offering now that you got the vertical takeoff and landing quarter?

Speaker 1

We do have tactical building blocks for all Electrical Mobility Applications. We truly believe that's the case because the energy, the power, safety, charging time, temperature performance, even the pressure performance, low pressure performance we delivered to the aviation market can be applied to other markets, especially for EV. At this moment, we don't have a large form Battery manufacturing capability at Ampeus, but that would change. I think we have all the technical building blocks available for those applications.

Speaker 6

That's helpful. That's nice to hear. And then my other question, just my follow-up question would be, your Colorado scale factory cleared that Ordnance Milestone 6 weeks ago. Can you just walk us through what else you need to meet or achieve Beginning the operations of the fab in the first half of next year besides receiving the equipment. Is there any other Kind of hurdles or actions that you need to do besides just receiving and installing equipment?

Speaker 1

The equipment part, We have a select, I would say the most advanced lithium ion battery manufacturing equipment suppliers in this industry. We select 4 suppliers for the entire manufacturing line. The delivery time would be 3 times to 9 months. We have at this moment, We are negotiating the final details of the purchasing contracts. So that's not the problem.

Speaker 1

Currently, we're still working on some regulatory issues. I think the regulatory issues is the major bottleneck for us Okay. To move forward, for example, air permitting, okay, those kind of things, we need to work out. We at this moment, look at the schedule we have here. We probably need to push our construction time to early next year instead this month.

Speaker 1

Before we thought that we can get this thing done this month, now we probably

Speaker 6

Great. That's helpful, Ken. Thanks for sharing that and I'll save the rest of my questions for offline later tonight. Thanks.

Speaker 1

Thank you.

Speaker 4

Our next question comes from Abhishek with Northland Capital. Please proceed.

Speaker 7

Hi, this is Kailash on behalf of Abhishek. So with respect to the conformable variable batteries, We just wanted to know if you could deliver to militaries outside the U. S?

Speaker 1

Bobby, we can to certain countries, for example, FarWise, the Australia, Japan, those countries, We shouldn't have a problem, but for certain countries, we do need to have export license for that engagement.

Speaker 7

All right. And as a follow-up, can you remind us how much revenue you would need to breakeven with respect to gross margin and when do you expect that to happen? Thanks.

Speaker 2

So as of now, we haven't given guidance as far as our financial model. So we haven't disclosed that.

Speaker 1

Perfect. Thank you.

Speaker 4

Thank you. Our next question comes from Amit Dayal with H. C. Wainwright. Please proceed.

Speaker 8

Thank you. Good afternoon, everyone. Can you remind us guys, so the Colorado facility, what the total CapEx requirement To get to that 500 Megawatt hour Phase 1 capacity target?

Speaker 2

Yes. We have given some ranges before. What we've updated as we get more information is we now know that the Production equipment will run between $70,000,000 $100,000,000 including tariffs for delivery to Colorado and the construction costs are still being updated based on the 60% drawings for the facility. So we haven't updated that range recently.

Speaker 8

Okay. Thank you, Sandra. I guess a follow-up to or a Jason question to that with respect to the Fremont capacity is how should we think about Modeling for the ramp at Fremont for the 2 megawatt hour.

Speaker 2

So we'll have the equipment online and available. We're very excited to showcase it on December 14 along with the rest of the 2 megawatts facility. We would expect that it will ramp up slowly throughout the year, sequentially each quarter. It won't all be available Q1.

Speaker 1

Okay. All right. Yes, that's all

Speaker 8

I have for now. I will follow-up with you offline. Thank you.

Speaker 4

Thank you. The next question comes from Jeff Grampp with Alliance Global. Please proceed.

Speaker 3

Good afternoon. Thanks for the time. With the impending additional capacity at Fremont, I imagine there's some potential to add more new customers while also increasing allocations to existing customers. Is that something you guys are considering at all or are there any constraints internally from maybe a personnel standpoint in managing more new customers?

Speaker 1

That will be the case. We view this capacity expansion with a new customer in mind. One of the reasons we built this new capacity because we're already out of the capacity for current customers. So the new capacity will enable us so we engage more customers.

Speaker 3

Great. Thank you. And can you talk at all about the timeline reality of the 500 watt hour battery that you guys are working on and what are kind of the early demand indications you See in terms of where that fits in the market relative to some of the existing offerings that you guys have already commercialized?

Speaker 1

We already have a customer demand, actually quite a strong demand. So we expect we start to install the equipment and start the initial manufacturing in 2025. At that time, we can have a customer factory inspection. We can provide, we call pilot production Port of Hyps, to a customer for EVAD Aviation.

Speaker 3

Great. Thank you for the time.

Speaker 2

Yes, I think Jeff, if your question was more around the 500 watt hour per kilogram or the 5 megawatt, 500 megawatt?

Operator

Sorry, it was more specific

Speaker 3

to the 500 watt hour battery that you guys are testing. I believe you talked about piloting that soon, but was just wondering the path Decorality.

Speaker 2

Yes. No. So that will be that will be we'll be hoping to ship prototypes to select strategic by the end of this year and then move into commercialization in the 1st part of 2024. To Kang's point, those products have already been designed into several of our customer platforms. So we're expecting that to ramp next year as well.

Speaker 3

Great. Thank you.

Speaker 4

Thank you. At this time, this concludes our question and answer session. If you have any additional questions, you may contact Embryus' Investor Relations team at ambrius.com. I'd now like to turn the call over to Doctor. Sun for his closing remarks.

Speaker 1

Thanks again everyone for joining us today. As a reminder, you may learn more about our company fund additional updates and learn about upcoming events and presentations from the Investor Relations section of our website. We hope to see you at the Advanced Automotive Battery Conference in San Diego next month and at our Fremont California Expansion Showcase event shortly thereafter. And we look forward to updating you on Ampere's progress our next call. Finally, I would like to thank our employees, partners and the shareholders for their continued support.

Speaker 1

Operator?

Speaker 4

Thank you for joining us today for Amprius Technologies' 3rd quarter 2022 earnings conference call. You may now disconnect.

Powered by Quartr
Earnings Conference Call
Amprius Technologies Q3 2023
00:00 / 00:00