Amprius Technologies, Inc. (AMPX) Earnings Call Transcript & Summary

Good afternoon. Welcome to Amprius Technologies' First Quarter 2024 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun; and CFO, Sandra Wallach. [Operator Instructions] 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 of 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 Amprius' 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. 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 will now turn the call over to Amprius Technologies' CEO, Dr. Kang Sun, for his comments. Sir, please proceed.

Welcome, everyone, and thank you for joining us this afternoon. On today's call, I will report our accomplishments from the first quarter. We are also highlighting some of the upcoming milestones we are expecting for this year. Our CFO, Sandra Wallach, will then discuss our financial results for the period. After that, I will share some closing remarks before opening the call for questions. Before I give a recap of the quarter, I would like to briefly introduce Amprius to those who may be new to the company. As a reminder, here at Amprius, we develop, manufacture and market high-energy density and high-power density batteries with applications across all segments of the electric mobility including the aviation and the EV industries. Across our battery portfolio, we offer unmatched performance, including batteries capable of specific energy density of 450 watt-hour per kilo and volumetric energy density of the 1,150 watt-hour per liter. 10C capability, the extreme fast-charge rate of 0% to 80% state of charge in approximately 6 minutes, the ability to operate in a wide temperature range of minus 30 degree Celsius up to 55 degree Celsius, and the safety design features that enable us to pass the United States' military benchmark nail penetration tests. Late last year, we achieved a third-party validation of our latest 500 watt-hour per kilo, 1300 watt-hour per liter battery platform, which we expect will be ready for commercial shipments later in 2024. Each of these performance parameters is critically important to electric mobility applications. Not only do our batteries enable certain aircrafts and vehicles to function, but they enable our customers to achieve their economic targets as well. It's our belief that there are no other commercial batteries on the market that can perform at these levels today. Amprius is the silicone anode batteries technology pioneer with over a decade of the development experience, a strong patent portfolio of over 80 issued patents and patent applications and the long-track record of commercial shipments and the customer successes. Turning now to a review of our first quarter. To start 2024, in addition to driving industry-leading performance with our battery technology, we took a critical step to drive our scale-up effort and increase our output to meet the growing demand for our solutions. In January, as a part of this continued push to make our product available to the electric mobility space, we launched our all new SiCore product family to go along with our existing silicon nanowire platform, now called SiMaxx. Complementary to SiMaxx, which is Amprius' highest energy density performance battery offering, the SiCore platform services applications that demand both high-energy density and longer cycle life, offering up to 400 watt-hour per kilo and as many as 1,200 cycles at the full depth of discharge. The SiCore product family also has additional form factor flexibility, capable for both pouch and cylindrical sale form factors. This enables utilization across a broader range of applications, such as e-bike and other micro-mobility market segments. In addition to having another product platform available for Amprius customers, introduction of SiCore batteries accelerates our revenue growth without additional capital investment and serves our customers without delay. To produce SiCore batteries, we take advantage of existing available lithium-ion battery production capacity in the industry and have toll manufacturers as a bridge between now and the operation of our own large-scale manufacturing facility. These toll manufacturing agreements provide us with hundreds of megawatt hours of SiCore capacity today. Overall, SiMaxx and SiCore are the combination of years of work in silicon anode space and are just the beginning of our vision here at Amprius to transform electrical mobility. We look forward to manufacturing both SiMaxx and SiCore at our Brighton, Colorado facility in the future. So far, 2024 has been a huge success commercially for Amprius. In Q1, we doubled the number of customers we shipped to over Q4 2023, shipping to 82 customers, up from 41. 52 of these shipments were to new customers across the electrical mobility sector, complementing our strong repeat customer base that includes AALTO Airbus, Teledyne FLIR, the U.S. Army, Kraus Hamdani and BAE Systems. The SiCore platform and the manufacturing capacity is a primary driver of our ability to meet this market demand. In the first quarter, we shipped SiCore products to 76 customers. As we further build out our book of customer for SiCore, we are confident that we will be able to continue to meet the strong demand for our batteries where our SiMaxx production approaches large-scale capacity. As customer demand for Amprius battery is accelerating, expanding production capacity is our priority. In Q1, we continued to make a significant progress inventing our production in Fremont, California. Also recently, we completed the qualification process for our centrotherm machine, which is used in the silicon and fabrication process. We remain on track to achieve 2 megawatt-hour production in Fremont by end of the year. We are also implementing SiMaxx production in-house to streamline our manufacturing process. We plan to have this capacity up and running in Fremont later this year. We have continued to make important progress to our large-scale manufacturing site in Brighton, Colorado as well. We currently have completed 30% of construction, design, drawings and specifications for the facility and have taken several regulatory steps for including submitting our site plan and advancing all other regulatory plans and applications for the facility. As an additional step and in response to the market's strong reaction to our SiCore platform, we have updated our plans for the Brighton facility to redesign our initial production line to be SiCore-focused. We will continue to produce SiMaxx out of Fremont until a second line begins production at Brighton. Looking ahead, we have already carried our momentum from the beginning of the year into the second quarter across several of our initiatives. First, we recently signed our first long-term manufacturing agreement with one of our toll manufacturing partners to confirm our collaboration and strategic alignment. This new agreement establishes overall engagement and move us from operating transitionally to a partnership framework. Second, we have extended our partnership with several customers, including multiple purchase orders from AALTO Airbus for our SiMaxx 450 watt-hour per kilo high-energy density cells. They continue to use these cells in their project design [ form ] with SiMaxx supplying the necessary power and endurance for their stratospheric fly operation. We have also received the first production order for the U.S. Army safe cell, and we expect to deliver them later this year. This is the first order we have received after successful completion of the development contract that we discussed during our last call. Third, we have signed several new strategic partnerships in the second quarter, most notably with AIBOT and Stafl Systems. Amprius will soon provide SiCore Cells to both partners, ensuring maximum power and reliability for AIBOT's mission-critical operation and serving as a Stafl Systems' preferred battery cell supplier. We look forward to partnering with both teams as they work on shaping the future of electric mobility. I believe that these collaborations can provide Amprius with increase in sales, expanding market reach and a greater market share in the high-performance battery market segment. Together, these high-profile customers and the strategic partnerships have helped strengthen Amprius' traction in our industry. Just a few weeks ago, in response to the growing global awareness of our battery, Amprius hosted its first Taiwan Battery Forum. Over 100 attendees from the industry-leading companies and institutions learned about Amprius' breakthrough silicon anode battery technologies and partnership opportunities. Also in April, Amprius was honored with inaugural CleanTech Battery Company of the Year award by the market intelligence and the research group Tech Breakthrough. This comes on the heels of the Amprius nomination to the Fast Company's annual list of the World's Most Innovative Companies, another point of recognition for our business. While we have long known that our products are yet to be matched at the commercial level, we are proud that the industry is taking notice as well. It's clear that our recent customer expansion and the new industrial recognition signaled a strong start to 2024 for Amprius. We are working hard to expand our production capacity to meet our sizable demand, and we are confident in the path forward for Amprius. With that, we will turn the call over to our CFO, Sandra Wallach to review our financial results for the quarter. Sandra?

Thank you, Kang. 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 first quarter with $2.3 million in total revenue. As we previously discussed, our total revenue is the combination of 2 main revenue streams: product revenue and development services and grant revenue. This quarter, all $2.3 million of our revenue came from our product revenue, representing a 397% increase from the prior year period and 147% sequential increase. These increases were largely driven by shipments to 82 customers in the quarter, a significant increase for Amprius. 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. Also of these customers, only 3 customers represented greater than 10% of revenue, a testament to our diverse customer set. As we've discussed in prior quarters, our development services revenue comes largely from large development programs that are non-recurring in nature. Moving to our profitability metrics. Our gross margin was negative 190% for the quarter compared to negative 518% in the prior year period and negative 98% in Q4 of 2023. As a reminder, we see significant gross margin variation as our product and services revenue mix fluctuates. Also, we anticipated that factory start-up costs would ramp up as we start Colorado design and preconstruction and still expect this to be the case through at least 2024. Longer-term, we're confident that our GAAP gross margin will begin to normalize as we approach our capacity expansion goals. Now on to our operating expense management. Our operating expenses for the first quarter were $5.9 million, a 6% decrease from the prior year period and flat quarter-over-quarter. This decrease is primarily attributable to a decrease in G&A costs that were offset by investments in R&D and sales. Our GAAP net loss for the first quarter was $9.9 million or a net loss of $0.11 per share with 90 million weighted average number of shares outstanding compared to a net loss of $0.11 per share with 84.6 million weighted average number of shares outstanding in the prior year period. Also, as of March 31, 2024, there were 81 full-time employees, up from 80 in the fourth quarter and 65 in the prior year period, with those employees primarily based in our Fremont, California location. Our share-based compensation for the first quarter was $1.2 million compared to $1.1 million in Q4 of 2023 and $0.7 million in the prior year period. As of March 31, 2024, we have 92.3 million shares outstanding. Now turning to the balance sheet. We exited the first quarter with $39 million in cash and no debt. Key drivers of our cash activity for the quarter were $9.8 million used in operating cash flow, $3.1 million used to continue our build-out of our expanded 2-megawatt production line in Fremont, $0.8 million used for progress payments to secure our production slots for mechanical, electrical and plumbing equipment; and $8.2 million of cash inflow added primarily through the usage of our ATM. 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 to take a moment to discuss our outlook for the remainder of the year. We expect to spend another $1 million to $2 million on equipment to support the 2-megawatt line in Fremont. This includes the necessary tools to have our cathode line up and running by the fourth quarter of this year. As Kang mentioned, we're also finalizing the design work for our Colorado facility. We expect to publicly communicate a construction cost forecast once the plan is finished. As part of our ongoing strategic planning efforts, we filed a shelf registration on Form S-3 back in October of 2023, and once effective, established a new ATM facility for $100 million. Subsequent to March 31, 2024, and through May 3, we have raised gross proceeds of about $2.1 million through the sale of approximately 1 million shares under the ATM facility. To support our strategic plan, we are pursuing additional funding through multiple vehicles, including equity issuances such as warrant exercises and sales under our ATM and non-dilutive sources such as grants, loans and incentives. With that, I will conclude the financial discussion and pass the call back to Kang.

Thanks, Sandra. I'd like to reemphasize a few key points before closing. First, Amprius' silicon anode technology continues to demonstrate the unmatched performance in our industry. Amprius' battery command a firm lead with their combination of safety, energy, power, charging time and temperature performance. They are uniquely positioned for the electrical mobility market. Second, Amprius batteries are commercially available today. Our breakthrough technologies are validated by over 80 customer orders. This quarter, we doubled our number of customers who received the shipments. Not only did we have our normal repeat customers, but 52 were new customers, a testament to our robust demand pipeline. We look forward to further building up our customer book in the coming quarters. Third, we are scaling our manufacturing capacity through building our own production capacities and partnering with toll manufacturing partners. With our ramp underway in Fremont, our design process moving forward in Brighton and signed partnerships with additional toll manufacturing partners in place. We remain on track to deliver expanded production capacities to fulfill market demand. Finally, we are looking forward to several exciting upcoming milestones over the rest of the year. We expect to fully optimize our SiMaxx mass production process and ramp up production to a 2-megawatt hour run rate exiting the year at our Fremont capacity -- facility. This will represent a tenfold increase in our production levels that we had exiting 2023 and give us additional available products for the strategical customers. We look forward to taking advantage of the hundreds of megawatt hours of new cycle product availability provided by our toll manufacturing agreements to reach more customers and expand our current customer engagement. During the summer, we will deliver the 100 amp-hour EV form factor cells to the US Advanced Battery Consortium, USABC, as a part of our grant program. We are in the process of finalizing the design plans and are excited to begin the construction of our gigawatt-scale facility Brighton, Colorado. As we always prioritize, we will continue to bring to market new and innovative products that push the boundaries of what is possible for our industry. As part of this, we look forward to commercializing our 500 watt-hour per kilo SiMaxx cells later this year. As we look ahead, our strategy and focus on Amprius remains unchanged. We believe that the opportunity in front of Amprius is tremendous, and that our product portfolio positioned us to both grow in the aviation market and expand to other industries seeking batteries with leading performance. Our addressable markets are growing and durable, including the $1.25 billion conformal wearable battery market by 2030, the $33 billion aviation battery market by 2030, and the $500 billion EV battery market by 2033, all of which are on Amprius growth path in coming years. 2024 is off to a strong start. We look forward to continuing to deliver what we have planned and promised in the year ahead. Thank you for your continued support of Amprius Technologies. With that, I will turn it back to the operator for the Q&A.

[Operator Instructions] Our first question is from Colin Rusch with Oppenheimer & Company. Please proceed.

Thanks so much. You know, guys, there's an awful lot of new customers. Can you give us a sense of what the diversity is from a geographic standpoint and an application standpoint? You mentioned mobility. I'm just curious, if you can give us a sense of who those folks are and what sort of sampling they're doing at this point.

Yeah, Colin, we have disclosed some customers we can disclose. Our customer coverage is quite broad. We -- primarily in United States and Europe, we also have Asian customers. For example, we have customers in India. Our primary battery application for those customers is still in aviation industry.

Excellent. And then, you know, as you move into working with the contract manufacturer, can you talk a little bit about how you anticipate your, you know, potential scaling of sales? It seems to me that you guys are in a unique position to grow fairly quickly as you get into the balance of the year from a revenue perspective.

Yeah, we are strengthening our sales team with the introduction of the SiCore products. We basically resolved the manufacturing capacity issue for that particular product. We have 100-megawatt hours capacity behind us, both in cylindrical form and in pouch form. So this gives us tremendous support for our customer development effort here. So the company, recently we just added more individuals to our sales force.

And then in Fremont, just the final one from me, can you talk a little bit about the tool qualification and how that's going? Are the machines and primarily the key machine working as you anticipated as you go through all the testing processes?

Yes. In Fremont, the only machine is mentioned is the centrotherm machine which produces the Silicon nanowire anode. The rest of our equipment, our off-shelf equipment, just like other people are using in the industry. So recently, the Fremont centrotherm machine started producing silicon anode for our batteries. So of course, we still need adjust the production protocol -- prospects of the production protocol making it more efficient. This machine when we say qualification of the machine, we mean that the machine can produce quality silicon nano and for our battery.

Our next question is from Donovan Schafer with Northland Capital Markets. Please proceed.

So first, I want to also ask about with the customer orders there -- with there being so many of the 82 -- or deliveries to customers. So just to kind of cross the Ts and dot the Is, I just want to confirm, so you say 52 of those were 2 new customers across the electricity or electric mobility sector. Is there any caveat there? Or can I just take the 82 minus the 52 and just say that you got -- you had 30 repeat orders in the quarter. Is that accurate?

Yes, that's the right math.

Okay. Great. And then the other part of that is it looks like 76 of those -- the shipments were for SiCore. So I guess that raises the question, do you have some repeat customers where they previously did SiMaxx orders and now they're showing an interest in SiCore. And so, I guess, they had enough interest in SiMaxx, but are also curious to know how this other product potentially works for them. Is that kind of what's going on there?

Yes.

The answer is yes. We have a customer interest in both products.

And some of it's crossing over, it seems like.

Those product offer -- yes. That's right, yes.

Okay. Okay. And then I saw in the letter to investors that the initial production in Colorado, you switched to -- that, that will be for SiCore now instead of SiMaxx. And you say that, that's in response to kind of customer interest. But what I'm curious is, can you give us anything more in terms of like what are the specific attributes about SiCore versus SiMaxx that's causing that interest? And also, is there a difference in manufacturing costs, that's an impact there or one is less expensive to manufacture versus the other?

Yes. One of the reasons we have a tremendous interest for SiCore, because we have more SiCore for customers today. We have a large production capacity behind us, so we can serve a lot more customers. The more customers we serve has more interest to come to us. So that's the reason we look at the momentum we built up here, with we probably need to do the SiCore first because those customers, by the time will we finish our factory, we will have very significant inquiries from our customers.

Okay. And actually -- so you've got -- it's the fact that you can have these conversations around SiCore, where you've got the tolling arrangements in place already with some manufacturers. So, you -- that creates more of an interest with the potential customer because, okay, gee whiz, you're ready to provide volume. And then you might as well bring that manufacturing in-house over time. So, then I guess the question there is how long -- when should we start to expect to maybe see that tolling partnership that you've kind of buttoned up with one manufacturer? Do you have any sense around when that could start turning into some kind of a revenue around the SiCore product at a scale, even though it's sort of through tolling?

Yes, we already have -- you can see we have so many customer engagements now, right? So though we believe this year, part of those customers will start -- some of those customers are still in the qualification stage. Not every customer give big orders, but since we have so many customers, we have over 80 customers, we expect a section of those customer will place decent orders this year.

Okay. And I think that makes sense in terms of sequence that they're going to be incrementally more interested in taking SiCore, qualifying it and figuring out if they can incorporate that into their offering at scale. But to get -- to show that interest and go through that qualification process once you've validated or had handshakes and contracts and so forth signed with people so you can back it up and say, okay, once you place an order, we're ready to go. Okay. Sorry, just thinking that through out loud. I'll take the rest of my questions offline.

Our next question is from Jed Dorsheimer with William Blair.

This is Mark Shooter on for Jed Dorsheimer. Kang, a question on the 76 customers, say they all come to fruition. And I know you have hundreds of megawatts in the toll coaters, but is there a scenario in which you'll have to restrict allocation to a certain number of customers?

We have -- Mark, we have a tremendous capacity be had for SiCore -- for SiCore customers, I would say, in 2024, maybe even 2025, we should not have supply issues.

Understood. Okay. And do you see any of those potential customers, is there any restriction on converting to PO based on where the material is coming from? I'm thinking, okay, I'd like to miss a deal if you there waiting for U.S. domestic production. Is that a factor at all in your conversations?

Yes, the customer engaged, they shouldn't have that problem. The customer who has -- the customers who have concerns would not engage with us for toll manufacturing model.