Ideal Power Inc.

Good morning, ladies and gentlemen, and welcome to the Ideal Power third quarter 2023 results call. At this time, all participants are on a listen-only mode. At the end of management's remarks, there will be a question and answer session. Investors can submit their questions anytime within the meeting webcast by typing them into the Q&A button on the left side of your viewing screen. Sell side analysts may ask questions on the phone line. For analysts to ask questions on the phone line, please press star 1 to enter the queue. As a reminder, this event is being recorded. I would now like to turn the conference over to Jeff Christensen. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining Ideal Power's third quarter 2023 conference call. With me on the call are Dan Bernard, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's third quarter 2023 financial results press release is available on the company's website at idealpower.com. Before we begin, I'd like to remind everyone that statements made on the call and webcasts, including those regarding future financial results and industry perspectives, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks. And we would also refer you to the company's website for more supporting industry information. Now I'll turn the call over to Ideal Powers President and CEO, Dan Bernard. Dan?

Thank you, Jeff. Good morning, everyone, and welcome to our third quarter 2023 and the after results conference call. I'll update you on our progress since the start of the third quarter, including the successful completion of all of our 2023 milestones to date, as well as our priorities for the balance of the year to commercialize our B-Trans semiconductor technology. Then Tim Burns, our CFO, will take you through the numbers, after which we'll take your questions. The third quarter and all of 2023 showed continued excellent progress and continued execution against our published milestones focused on our transition from a technology development company to a commercial company. We're stacking sequential quarters of some of the most significant accomplishments in the company's history. This quarter, we accomplished several key advances that underscored the technical and commercial progress of our B-TRAN commercialization roadmap. We're thrilled about our momentum and recent success in six major areas. First, we successfully completed phase one and secured phase two of our development program with a top 10 global automaker. Second, we added the Simcool IQ Intelligent Power Module, our second commercial product, to our commercial product offerings. Third, We completed shipments to all the large companies in our customer test and evaluation program and recently added a global power conversion supplier to the program. Fourth, in response to customer requests, we're providing volume quotes to large test and evaluation program participants. Participants in the program have expanded their plans for B-TRAN to include additional applications. Fifth, we delivered hundreds of tested and packaged B-TRAN devices to diversify technologies to complete our work under the NAVSEA solid-state circuit breaker program. And sixth, we began discussions with potential distributors for our Simcool and Simcool IQ power modules. We're actively engaged with multiple customers in each of our key markets, and I'm pleased and excited about our progress and the feedback we're receiving from our growing customer engagements. The introduction of our technology comes at a time when there are significant macro trends in the adoption of renewables and electric vehicles, key market segments we expect to act as a driver of our revenue growth in the coming years. The increased electrification of our society and the growing adoption of batteries for a wide range of applications is driving an increased need for more efficient semiconductors for bidirectional power control. Utilizing conventional technologies, bidirectional switches for high-power applications are made using pairs of IGBTs and diodes. The downside of conventional semiconductors are that you need four devices to make a bidirectional switch, which doubles the conduction losses of the individual IGBTs. B-TRAN enables bidirectional switching in a single device. And most importantly, B-TRAN does it with five times lower conduction losses, which translates to more useful energy for the end-use application versus the conventional approach. So that means more usable kilowatt hours out of an energy storage installation or a solar plus storage installation. It means greater range for electric vehicle. It can mean faster charging for charging solutions. It's all about dramatically reducing the losses from the semiconductors that are the core of many modern products. Our B-Tran is moving into commercialization at a great time when renewables, energy storage, electric vehicles, and electric vehicle charging are in the early stages of their adoption. These market segments still have the largest part of their growth curve ahead of them. The inherent bidirectionality and lower losses of V-TRAN are well-suited to renewables coupled with energy storage, making renewable energy a dispatchable resource in improving the usable kilowatt hours from these systems. Automotive manufacturers are finding with V-TRAN there's a path to reduce power semiconductor costs, the second largest production cost on electric vehicles, and simultaneously improving vehicle range to mitigate driver range anxiety. we're participating in a large, rapidly growing market for high-power semiconductor devices. That market is projected to reach $11 billion by 2026 and will be driven for many years by the adoption of renewable energy, energy storage, electric vehicles, and EV charging infrastructure. We expect industrial markets, and in particular, solid-state circuit breakers, served by our SimCool power module to be the earliest source of our product sales. And then right behind that, in a matter of a few months, will be our Simcool IQ Intelligent Power Module. That product applies to the renewables market, particularly renewables coupled with energy storage, EV charging, and other industrial markets. These applications have a relatively short design cycle of about one year. Then behind that, our next revenue will come from automotive manufacturers. It generally takes three to five years to get through the automakers process, a process we started with a top 10 global automaker last year. So the industrial markets will drive our initial revenue ramp as we wrap the business up and continuing right behind that will be the automakers that we're engaged with. That'll be buying in high volume to support their EV platforms. We utilize an asset light business model and are leveraging the large investment that's already been made in the silicon wafer processing infrastructure. We're a core technology team with a testing lab here in Austin and a small but growing outward-facing business development team focused on commercializing our technology. And in terms of fabrication of wafers and packaging, all that is outsourced, leveraging the existing huge industry investment in silicon wafer processing and packaging. As we continue to execute on our aggressive BTRAN commercialization roadmap, our near-term priorities are to get initial sales of our SimCool power module, Complete phase two of our development program with a top 10 global automaker in the first quarter of 2024. Continue providing sales quotes to large test and evaluation program participants. Continue shipments to test and evaluation program participants. This is an embedded process in our sales and marketing and a source of input for our next generation products. continue multiple wafer runs with our first high-volume wafer foundry to support our SimCool and SimCool product builds, automotive certification testing, and test and evaluation partners, and qualify our second high-volume wafer foundry, including completion of a wafer run at their production facility. The full flow engineering run with this wafer fab is progressing well and is expected to be completed early in the second quarter of 2024. We're confident we'll have ample capacity to ship devices for the expected demand over the next few years. And I'll discuss the highlights of some of those third quarter accomplishments and our priorities along with other key developments. Simcoe power modules are in fabrication at both of our packaging partners. The design cycles for industrial applications such as solid-state circuit breakers vary, but they typically take about a year. Revenue for Simcool is expected to begin ramping in the second half of 2024 as initial customers complete their evaluation of the Simcool product and their resultant solid-state circuit breaker product designs. Moving on, we entered into a development agreement late last year with a global top 10 automotive OEM. We're partnering with this automaker's advanced technology development team to develop a custom VTRAN power module in collaboration with an innovative packaging company, also selected by the automaker. This custom VTRAN-based module is targeted for use in electric vehicle drivetrain inverters and the automaker's next-generation electric vehicle platform. This represents our second engagement with the world's leading automotive manufacturers, as another top 10 global automaker is already in our test and evaluation program. We're thrilled with the success of Phase 1 and the advancement into Phase 2 of our development program with this automaker. The B-TRAN devices delivered to the automaker in phase one outperformed the device performance specifications provided to them at the beginning of the program. The successful completion of phase one was customer validation of the performance of B-TRAN and its potential impact on improving EV range and cost. We leveraged our success with this customer to attract and engage a tier one auto supplier and expect it will also lead to engagement with other automobile OEMs and tier one suppliers. This program is on an accelerated timeline to get the custom module production ready by 2025. That's the customer's stated goal for the program. We successfully completed all phase one deliverables of this multi-year development program, including completing a wafer run, shipment of devices and test boards to both the automaker and the packaging company they selected, and providing technical support and testing on B-TRAN, its performance and drive circuitry. Phase 2 builds on the completion of all Phase 1 deliverables. In Phase 2, we're continuing to collaborate with the automaker and the automaker's packaging company, supplying D-TRAN devices for integration into the custom power module, design, and finalizing the test plan for Phase 3. Phase 3 will be extensive testing of the custom module, incorporating D-TRAN devices to meet automotive certification standards, enabling D-TRAN to be the core of the powertrain inverter for the automaker's next-generation electric vehicles. Three of the five deliverables in phase two of the program have already been completed, and the fourth deliverable should be completed in the next couple of weeks, well ahead of schedule. We're already discussing the scope of phase three with the top 10 automaker and expect us to start testing for automotive qualification in advance of completing phase three. Turning to our test and evaluation program, BTRAM customer shipments to program participants included multiple package V-TRAN devices, a device driver, and a power test board housed in a safety enclosure to facilitate and accelerate the evaluation process. V-TRAN shipments to date to program participants include a top 10 global automaker, a global tier one automotive supplier, a leading provider in the solar industry, two Forbes Global 500 power management companies, and a global provider of backup power and energy management solutions, and several others with additional kits to follow for current and new program participants. These shipments and subsequent customer evaluations have already led to requests from some of the multibillion-dollar companies in our test and evaluation program for multi-year, high-volume quotations for use in their own internal product planning. The conversion of a single opportunity could potentially have a significant impact on the trajectory of our pending revenue ramp. As previously announced this quarter, we added a European-based global power conversion and energy storage supplier with over $500 million in annual sales to the B-TRAN test and evaluation program roster. The company will evaluate B-TRAN initially for use in its static switches in data center UPS systems, solar inverters, and energy storage products. They focus on improving energy efficiency in these products to reduce operating costs for their customers. This global supplier presents multiple opportunities for us as they address three of our target markets, UPS systems for data centers, renewable energy, and energy storage. Shifting to our second product, we added the Simcool IQ to our commercial product offerings. It's built on the multi-die packaging design of Simcool and adds an intelligent driver optimized for bidirectional operation. This product targets renewables, particularly renewables such as solar and wind coupled with energy storage, standalone energy storage, UPS data centers, EV charging, and other industrial end markets. Similar to the solid-state circuit breaker market, these markets typically have design cycles closer to a year. Revenue for the intelligent power module will start next year and ramp up as OEM product designs are completed. Let's turn to the supply chain that ensures we'll support our sales ramp beginning in the second half of 2024. Earlier this year, we qualified an Asian wafer fabrication supplier with high volume capability. Test results from the first full flow engineering run with this wafer fabricator demonstrated the manufacturability of BTRAN with high yield without the need for significant capital investment and excellent device performance, clearing the last and by far the biggest technical risk for BTRAN development and commercialization. This successful fabrication run was accomplished in the wafer foundry's existing silicon wafer fabrication line without the need for any special equipment or capital investment to produce high quality wafers fabricated on both sides. This was a pivotal accomplishment and a prerequisite for commercialization. Wafer and device testing results displayed high yield, minimal die-to-die variability, and outperformed our expectations. we conducted switching tests on discrete package devices and demonstrated the robust nature of our device design. Our discrete package devices, which are rated at 50 amps, were successfully tested up to 150 amps, or three times the rating shown on our data sheet. As a result of this testing, the 100 amp rating of our multi-die SimCool power module was increased to 160 amps. The results exceeded our expectations and validated the strength of our device design and the full process flow for B-TRAN that we developed over several years working with development fabrication partners. As you might imagine, engineers at our target customers are excited to see that our technology performs well beyond its advertised specifications. We have multiple wafer runs ongoing with this high volume wafer foundry. These runs will provide ample devices for additional 2023 deliveries under our test and evaluation program, Simcool production, and to support our development program with a top 10 global automaker. We're pleased with both the performance and overall quality of wafer fabrication and the technical capability of the wafer foundry's manufacturing team. This wafer foundry is also already certified to automobile standards, making it a qualified supplier for the automotive programs and reflecting the high standards, capabilities, and quality of their wafer fabrication. Also, as I mentioned last quarter, we're working with the second high volume wafer foundry in Europe. The foundry completed a feasibility study and engineering short loops for key process steps and started a qualification run. Based on the successful short loops and the wafer foundry's experience and expertise in manufacturing bipolar devices, such as IGBTs, we're confident that we'll be able to complete qualification of this foundry in the second quarter of next year. With these two wafer foundry partners on board, will have dual sourcing for wafer fabrication in different parts of the world with no exposure to China. This dual sourcing will provide us with sufficient capacity for the large customers we're engaging. Both wafer foundries have world-class experience, facilities, and capabilities, and are eager to be engaged in a new high-performance technology such as B-TRAN. Overall, our dual sourcing strategy will allow us to proactively secure not only the necessary production capacity, but also the ability to source components and services from partners in disparate geographies as part of our strategy to mitigate supply chain risk. We're not aware of any competing inherently bidirectional technologies, and our technology is heavily protected through patents and trade secrets. Looking at our expanding BTRAN patent estate, we have 77 issued BTRAN patents, with 33 of those issued outside of the United States. Our current geographic coverage for our patents includes North America, China, Japan, South Korea, India, and Europe, with pending coverage in Taiwan, all representing high-priority patent coverage geographies. As part of our product development and introductions, we're expanding our patent efforts to include improvements in the architecture itself, and what we believe to be high-value patents on our driver and packaging designs, as both are unique to the bidirectional nature of our technology. As a result of our continued innovation, our list of pending B-TRAN patents is now at 36. In addition, we treat our double-sided wafer fabrication process as a trade secret. So even studying our patents, somebody wouldn't have the know-how to be able to fabricate the device. There's an enormous amount of learning that's gone into the fabrication process flow to make high-quality, high-performing double-sided devices for commercial sale. In summary, market interest is strong, and we remain focused on executing our B-TRAN commercialization roadmap. We're thrilled that we are successfully executing the plan, having already met all of our milestones for the first nine months of the year and remain on track to meet the key milestones and objectives I outlined for the remainder of the year. We expect B-TRAN to display conventional power semiconductor solutions in many applications within the electric vehicle, renewable energy, energy storage, solid state circuit breaker, and motor drive markets. I would like to hand the call over to our chief financial officer, Tim Burns, to review our third quarter financial results. Tim?