Ideal Power Inc.

Good morning, ladies and gentlemen, and welcome to the Ideal Power third quarter 2024 results call. At this time, all participants are in the listen-only mode, and 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 of your viewing screen. Analysts who publish research may ask questions on the phone line. For analysts to ask questions on the phone line, please press star 1 on your telephone keypad. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. As a reminder, this event is being recorded. I would now like to turn the conference over to Mr. Jeff Christensen, Investor Relations. Sir, please go ahead.

Thank you, Ali, and good morning, everyone. Thank you for joining Ideal Power's third quarter 2024 conference call. With me on the call are Dan Berdar, President and Chief Executive Officer, and Tim Burns, Chief Financial Officer. Ideal Power's third quarter 2024 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 company prospects, 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 to the company's website for more supporting company information. Now I would like to turn the call over to Ideal Power's President and CEO, Dan Burdard. Dan?

Thank you, Jeff. I appreciate everybody joining us today. I'm excited to update you on our progress since the start of the third quarter, including several significant developments. I'll cover the key highlights briefly, then discuss them in a little more depth and provide context for their importance. And Tim Burns will discuss our financial results. We'll be pleased to answer your questions after our prepared remarks. First, a global Tier 1 automotive supplier recently ordered numerous discrete D-Trans devices, a Simcoe power module, solid-state circuit breaker evaluation board, and driver. This customer is interested in using D-TRAN for solid-state EV contactor applications. Second, we continue to meet regularly with Stellantis technical and production teams. Phase 3 is expected to begin shortly after Stellantis selects a Tier 1 supplier to design and build the drivetrain inverter for its new EV platform. In a parallel initiative, Stellantis and Ideal Power continue to work with a large semiconductor company with expertise in driver control circuitry for the VTRAN inverter driver. Third, we're collaborating with our third global automaker, along with our previously announced engagements with Stellantis and a second top 10 global automaker. This auto OEM is evaluating VTRAN-enabled contactors in its electric vehicles. We recently delivered a solid-state circuit breaker evaluation board to this customer. Fourth, Richardson Electronics, a global distributor of our products, is engaged with a global leader in the design and manufacture of power conversion equipment, electric motors, and motor drives for the potential use of VTRAN in a matrix converter application. Fifth, this quarter, we added Riosho as our second distributor. Riosho has already placed orders with Ideal Power from a large global customer interested in the company's products for solid-state circuit protection applications. In addition, Ryosho recently introduced vTRAN to global automakers based in Japan. Sixth, this quarter, we also added SECORM as our third distributor. In response to customer requests, SECORM is quoting our products to large companies for solid-state circuit breaker applications. SECORM is strong in Asia, particularly China. Seventh, we commenced third-party automotive qualification testing of vTRAN devices. This testing requires over 1,000 packaged VTRAN devices from multiple wafer runs. Initial test results are positive with no failures to date. Eighth, based on the results of testing, we increased the current rating of our Simcool power module by 25% to 200 amps. In conjunction with a power module size reduction of approximately 50%, this significantly increases the power density for the Simcool power module while reducing cost. Looking first at the automotive market, since we're not constrained under our arrangement with Stellantis, we continue to lever our success with them to attract and engage other auto OEMs and Tier 1 automotive suppliers to evaluate VTRAN for their next generation electric and hybrid electric vehicle platforms. This quarter, we added our third global automaker and a global Tier 1 automotive supplier to our list of customer engagements. The third global automaker is evaluating VTRAN-enabled contactors for its electric vehicles. We recently delivered a solid-state circuit breaker evaluation board to this customer, while the new global Tier 1 automotive supplier ordered numerous discrete VTRAN devices, a simple power module, solid-state circuit breaker evaluation board, and a driver. Like the third global automaker, this Tier 1 supplier is also interested in using VTRAN for solid-state EV contactor applications, a new application where VTRAN is an enabling technology. The EV contactor application is generating a lot of interest from global automakers and their Tier 1 suppliers. Solid-state contactors provide several benefits over electromechanical contactors. They act much faster, thereby eliminating arcing and improving safety, and are more reliable as they do not include physical contacts subject to wear. In addition, they provide programmable settings for trip and current limits, as well as built-in safety diagnostics. Solid-state contactors are also expected to cost less than electromechanical contactors in EV applications. While conventional power semiconductors have conduction losses that are too high to make solid-state EV contactors practical, VTRAN is enabling as it provides ultra-low conduction losses with the added benefit of inherent bidirectionality. VTRAN-based EV contactors provide an efficient, fast-acting solution for high-voltage applications in EVs where they can play a critical role in isolating the battery, inverter, and onboard charger to ensure safety when the vehicle is off or being serviced. The need for very low losses and the ability of a contactor to act very quickly is becoming increasingly important as automotive OEMs increase the operating voltage of their systems to enable shorter charging times for the batteries. Moving on to different EV applications for V-TRAN, our program with Stellantis is for a custom V-TRAN power module for use in their EV drivetrain platform across their brands. Stellantis is furthest along of the three global electric vehicle automakers we're working with. The development program with Stellantis is structured in three phases. As many of you know, we successfully completed phase two of our program with them earlier this year and are eagerly waiting to begin the next phase. While Stellantis upper management has been focused on resolving their well-documented inventory and labor challenges this year, we're now seeing a return to focusing on future models and platforms. The selection of a Tier 1 for the program's drivetrain inverter is now under internal review, and we're confident we'll secure the next phase of the program in the coming months. Since completing Phase 2, we continue to meet with their technical and production teams weekly to keep the program progressing. Meanwhile, Stellantis developed and sent out a drivetrain inverter solicitation to roughly a half-dozen Tier 1 suppliers. The Tier 1 suppliers were asked to provide their proposals to supply VTRAN-based drivetrain inverters. Stellantis introduced our team to the Tier 1 suppliers we were not already working with so we could bring them up to speed on the technology, our products, the unique configuration we developed for the application, and the corresponding test data that demonstrated we provide better performance compared to other silicon and silicon carbide solutions. The Tier 1 inverter proposals have been submitted to Stellantis. They are reviewing the proposals and will now select one or two Tier 1 suppliers to design and build the drivetrain inverter for their new EV platform. After the Tier 1 inverter supplier is selected by Stellantis, we expect to start the next phase working with the Tier 1 suppliers and Stellantis teams with the objective of developing a production-ready BTRAN power module for use in their EV drivetrain. Completion of the BTRAN module is targeted for 2025. Stellantis is also interested in BTRAN for battery circuit protection applications as well. In a parallel initiative, Stellantis is working with us and a large semiconductor company with expertise in driver control circuitry for a VTRAN inverter driver. In addition, Stellantis recently introduced us to another large semiconductor company to explore potential collaboration on a novel concept utilizing VTRAN for the inverter module. While waiting on the next phase to be formalized, we recently commenced third-party automotive qualification testing of our VTRAN die. We prioritize shipment of packaged VTRAN devices for multiple wafer runs for this third-party testing because it will allow us to share third-party test data with industrial customers during the automotive qualification and design-in process and prior to these industrial customers ramping their potential new product offerings incorporating VTRAN. Industrial qualification includes a subset of the testing required for automotive qualification with less stringent requirements for certain tests. Formal third-party automotive qualification is only required prior to customers including our B-Trans semiconductor technology in automotive products, systems, and subsystems offered for sale. Automotive qualification testing includes a broad array of testing required by automotive codes and standards utilizing specified parameters, in some cases much more stringent than industrial standards, and a wide range of test conditions. The testing to achieve automotive qualification requires over 1,000 packaged VTRAN devices from multiple wafer runs. The process itself includes tens of thousands of power cycles at various current levels, thermal cycling at extreme temperature and humidity levels, blocking voltage, and shock and vibration testing and visual inspection. These tests are designed to expose a semiconductor to conditions that are intended to accelerate failure mechanisms and demonstrate the long-term reliability of the devices. Since testing began last month, it has gone well with no failures to date. We expect auto-qualification to be successfully completed in the first half of 2025. As I mentioned, industrial orders in the near term are not dependent on the successful completion of automotive qualification. However, third-party automotive qualification will provide further assurance to industrial customers of the long-term reliability of B-TRAN in conditions beyond what is required for industrial applications. It's also expected to potentially accelerate sales to industrial customers that are often conservative in adopting new technologies. Now, let's take a look at the industrial markets, as these are expected to be the early source of our product sales and revenue ramp, initially for solid-state circuit breakers and other circuit protection applications served by our SimCool power module. eTRAN is an enabling technology for solid-state circuit protection applications as it reduces conduction losses and operating costs in power switching and control circuitry. Solid-state devices can act literally orders of magnitude faster than the electromechanical circuit breakers widely used today, and VTRAN-enabled circuit protection devices provide the additional benefits of ultra-low conduction losses, critical and continuously conducting applications, and inherent bidirectionality. We've got a roster of large companies that we've been working with for several months, and we've got several more in the queue in early-stage discussions. customers that have already conducted an initial evaluation of our products we're now in the process of responding to their requests for proposals for custom packages and or development agreements if their applications require any unique packaging or customization for customers that will use our standard products we expect increasing order sizes as they transition from initial evaluation and prototyping to building inventory for OEM product launches to facilitate this process we created a solid-state circuit breaker reference design for these customers that includes an evaluation board along with B-TRAN devices. This reference design is expected to accelerate customers' evaluation of B-TRAN for use in their solid-state circuit breaker products. Our revenue will be modest with small orders in the near term as customers evaluate B-TRAN and build initial product prototypes incorporating our products. Once these customers are deep into their design cycle, we expect order size to significantly increase, resulting in a ramp in revenue. While the timing of customer adoption is not within our direct control, we're targeting to ramp revenue in the second half of next year based on the multitude of global customers evaluating our technology, several of whom have already placed initial orders. We added our second and third distributors, Riosho and Secorm, in the third quarter, a significant development in our commercialization roadmap for BTRAN, Ryosho and CCORM are similar to our previously announced distributor, Richardson Electronics, as they have expertise in demand creation, not just catalog order taking, strong technical sales teams, global reach, and a proven track record of securing sales for new technologies. Ryosho is the U.S. subsidiary of Rioden, a publicly listed company on the Tokyo Stock Exchange, with almost $2 billion in annual sales in over 20 international locations. Ryosho is focused on the sale of semiconductors and other electronic components with particular strength throughout Asia. Right out of the gate, they placed orders with us from a large global customer interested in our technology for solid-state circuit protection applications and recently introduced V-TRAN to global automakers based in Japan. ZECORM Advanced Technology is quoting our products to large companies for solid-state circuit breaker applications. Our products fit very well with their customer base. They have customers throughout Asia, with China as their primary focus. China is the largest market in the world for power semiconductors today. CCORM is focused on industrial applications requiring circuit protection and DC infrastructure and electric vehicle charging, and is a leader in sales to the utility infrastructure market. The addition of these two distributors is another example of our asset-light business model that leverages the large investment already made in silicon processing, distribution, demand creation, and support infrastructure. Utilizing data from a recent study by Mordor Intelligence in their Global Power Electronics Market Report, we expect the D-Trans Serviceable Addressable Market, or SAM, to more than double over the next five years to almost $8 billion, growing at a compound annual growth rate of 16%. Within the overall market is the $1 billion SAM for solid-state switchgear we're attacking with our SimCool power module. and the $1.4 billion SAM for renewable energy, energy storage, microgrids, and EV charging, targeted by our SimCool IQ product. Our SAM also includes $1.6 million for industrial applications, such as motor drives and UPS systems for data centers, and $3.6 billion for automotive. As it relates to the recent election, there is some investor concern regarding the impact of the new administration on certain of our target markets, such as electric vehicles and renewable energy. This could be seen recently as companies in these sectors experience sharp declines in their stock price immediately following the election. While we understand the concern, the adoption of electric vehicles and renewable energy is a global market and will continue despite any near-term changes in government policy in the United States. We see the global nature of these markets as our customer base is largely made up of large global companies, many of them headquartered in Europe or Asia. There is a broad and global support for the clean energy transition at all levels of government globally. Private investment in clean energy continues to increase. Renewable energy is now the lowest cost source of electricity in many areas, and industry experts continue to forecast significant growth for electric vehicles and renewables. Regardless of the administration in Washington, D.C., we're well positioned for growth due to the increased and inevitable further electrification of society that will drive growing demand for power semiconductors, particularly those with compelling value propositions like DETRAN. We see no change in the level of engagement of our customers as they are uniformly focused on improving the performance and cost of their next generation products. DETRAN not only improves the economics of electric vehicles and renewable energy solutions, but also other applications like solid state circuit protection, motor drives, and UPS systems for data centers. Turning to our high volume wafer fabrication suppliers in Europe and Asia, we're dual sourced for wafer fabrication in different parts of the world with ample capacity to support anticipated customer demand over the next few years. Our dual sourcing for wafer fabrication in disparate geographies has no exposure to China or Taiwan to mitigate supply chain risk. Our fat partner in Asia was able to produce functional bi-directional devices from an engineering run last year that demonstrated high wafer yield without the need for special equipment or capital investment. There's always room to improve yields, and over the course of the last year, we focused on further increasing yields to reach our commercial yield target. By leveraging our proprietary and proven process flow, we successfully qualified a second wafer fabrication partner located in Europe last quarter. The engineering run at this fab, similar to the engineering run in our Asian fab, provided functional bidirectional devices. Due to process improvements, device performance from the most recent runs at this fab match, or in some cases exceeds, that of devices from our fab partner in Asia. We're working closely with this partner to increase yields leveraging our lessons learned from our other wafer fabrication runs. We expect to achieve our commercial yield target at this fab in advance of our sales ramp expected to start in the second half of next year. Moving on to innovation, we expect to complete the first engineering run of our next generation B-Tran die design later this year. This die will be roughly half the size of the current die, translating to more than twice as many die per wafer while providing the same voltage and current rating capability of our current device. This next generation B-TRAN die design is part of our long-term cost reduction roadmap. We've already completed the packaging design for this next generation die. We expect the packaging itself to be about 30% smaller than our current package design with a corresponding decrease in cost. Turning to parallel device characterization, we've demonstrated that the current sharing of B-TRAN is better than that of conventional devices such as IGBTs when devices are run in parallel for high current capability. This is of critical importance for solid-state circuit breaker applications, where OEM will combine multiple Simcoe power modules in parallel to achieve their desired breaker rating. Unlike IGBTs, vTRAN is able to balance current sharing between devices in parallel at specified levels of temperature mismatch between the devices. This feature improves reliability compared to running IGBTs in parallel for multi-die power modules, providing us with another competitive advantage compared to conventional technologies. Another advantage to our approach for the foreseeable future is that the wafers and resulting dyes are all the same for any application, whether going into a circuit breaker, electric vehicle, energy storage system, data center, or solar installation. We can ramp up production cost effectively because we don't have to forecast wafer demand and dye design mix based on the application. For automakers, it will ultimately be them buying our dyes. All they need from us are our wafers or dyes themselves. For example, under the Stellantis program, they're working with an innovative packaging company to develop a unique packaging design that fits the needs of their BTRAN-enabled drive chain inverter. This allows us to continue to focus on improving our core technologies. We're unaware of any competing inherently bidirectional high-power technologies using anything similar to our technology. High-growth, high-power applications, such as solid-state circuit breakers, power converters for energy storage, solar, and wind power, electric vehicle inverters and contactors, electric vehicle charging stations, UPS systems for data centers, and other applications are all focused on bringing down cost while improving efficiency for their next generation products. While silicon carbide has been targeting many of these same applications, the high cost and inherent materials challenges of silicon carbide remain a long-term challenge to meet the needs of many of these customers. This is evidenced by the recent decision by companies such as Corvo, who announced they are exiting the silicon carbide market. We believe BTRAN, particularly in bidirectional applications, offers a new low-loss, lower-cost approach. Looking at our expanding BTRAN patent estate, we currently have 90 issued BTRAN patents, with 42 of those issued outside of the United States. Our current geographic coverage for our patents includes North America, China, Japan, South Korea, India, Europe, and now Taiwan, all representing our high priority geographic coverages. Just last month, we had our first B-TRAN patent issue in Taiwan, providing coverage in a country known for its power semiconductor manufacturing. As a result of our continued innovation, our list of pending B-TRAN patents is now at 50. In addition, we treat the proven process flow we use to make our devices as a trade secret and work under strict confidentiality with our wafer fabrication partners. So even if competitors studied our patents, they would not have the know-how on how to actually fabricate the device. Overall, this quarter, we added our third global automaker for our list of customer engagements. We secured initial orders from a global Tier 1 automotive supplier. We added our second and third distributors with expertise in demand creation, and they're placing customer orders and providing quotes for our products to large global companies. And we're continuing to innovate and advance our BTRAN technology and products while preparing our supply chain to handle the pending sales ramp. The momentum we're building is working to advance companies to orders, followed by potential custom development agreements and or design wins and revenue growth. I would like to hand the call over to Tim Burns to review our financials. Tim?