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spk02: Good afternoon and welcome to the Amprius Technologies conference call and webcast. It's now my pleasure to turn the call over to Greg Bradbury.
spk08: Good afternoon. Welcome to Amprius Technologies' fourth quarter and full year 2022 conference call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun, and CFO, Sandra Wallach. At this time, all participants are in listen-only mode. 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 timing and ability of AMPRIUS to build its large-scale manufacturing facility, expand its manufacturing capacity, and scale its business. These statements involve known and unknown risks, uncertainties, and other important factors that may cause AMPRIUS's 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 AMBRIUS's filings with the Securities and Exchange Commission, including but not limited to the discussion of AMBRIUS's risk factors in its quarterly report on Form 10-Q filed on November 14, 2022. 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.ampreus.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 Ampreus Technologies CEO, Dr. Kang Sun, for his comments. Sir, please proceed.
spk06: Welcome, everyone, and thank you for joining us this afternoon. To begin today's discussion, I will give some company's background, followed by a review of our recent accomplishments, before turning the call over to our CFO, Sandra Wallach, to discuss our financial results for the year in more depth. After that, I will share some closing remarks before opening the call for questions. Amperes develops and manufactures ultra-high energy density lithium-ion batteries based on our proprietary silicon annual technology. Our business has four distinct advantages. Unmatched technical and product performance, proven manufacturability, years of product commercialization with industrial leaders, and a team of seasoned business operators with a solid track record. Our near-term goal is to scale our manufacturing with the long-term goal of becoming a mainstream battery solution with applications across all segments of electrical mobility, including the aviation and the EV industry. Over the past years, Amperes has delivered commercial batteries with the highest known energy density and power density. Our current available batteries have as much as 450 Wh per kilo in specific energy density and 1150 Wh per liter in volumetric energy density with up to 10C high power capability. Our batteries are also built for the cost operating environments with the durability to pass the United States military benchmark nail penetration test as well as the versatility to operate in an extremely wide temperature range of as low as minus 30 degrees Celsius and up to 55 degrees Celsius. These features, along with extreme fast charging rates of 0% to 80% state of the charging in approximately six minutes, set amperes apart. It's our belief that there is no one else in the commercial market that can perform at this level. In addition, we have amassed over 80 patents and over a decade of know-how in silicon nanotechnology and manufacturing. Moving to our review, 2022 was arguably the most transformational year for Ampere since our funding in 2008. It was also the year of many firsts for our business as we execute our strategy to transform electrical mobility with a focus on aviation applications. I will now make a minute to highlight some of our key milestones from the past year. As noted a few minutes ago, Amperes has a leading position in the emerging energy transformation sector with disruptive technology. We entered 2022 with our first commercial segment of 450 watt per kilo and the 1150 watt per liter product for high-performance aviation. We manufacture the only batteries on market that can produce these specifications, and we are constantly working to improve the performance and capabilities with our technology. As an example, Earlier today, we announced that our upgrade 500-watt-per-kilogram capable batteries, all those not yet available to the market, have had their capabilities verified by independent third parties, which is a crucial step in the product development timeline. Demand for this next generation of the battery is growing. and we are making great progress. Based on current estimates, we expect to be able to shape prototypes to select customers before end of 2023. We also complete several important demonstrations of our technology's capability in 2022. In October, we successfully exhibit our battery's extreme fast charging ability through a video demonstration where we were able to achieve a rate of 0% to 80% stay of charge in approximately six minutes. Our performance is ahead of the United States Advanced Battery Consortium 2025 goal of 0% to 80% charge in just 15 minutes. In practice, This will allow the vehicles and other applications to operate much more efficiently with less downtime. Additionally, in November, we announced that an independent third party testing lab validated our 390 watt per kilo polymer electrolyte cells successful testing of the United States military performance specifications nail penetration test. This test is used to determine the feasibility of a specific product in complex scenarios and is an important benchmark to be considered for military applications. We have a unique opportunity to provide a significant energy density performance increase of nearly 100%, doubling the runtime for mobile powered devices without increasing the overall weight of the wearable batteries for our soldiers. Moving to our business development efforts, 2022 was a successful sales year for our aviation and the defense segments. Amperes has deep enrolled with the aviation and the EV talk market because we produce high energy density, lightweight batteries. Single most important issue in EV top performance is battery weight, which is why our batteries are in such high demand. Lighter and denser batteries means greater and sustained range, while faster charge turnaround time means increased flight time. To that end, We signed new multi-year agreements with several aviation industry leaders like Air Environment, Paladin, FLIR, and BAE Systems, and extend our existing commitments with Airbus, the U.S. Army, and the U.S. ABC, among others. I will highlight some of those agreements now. In July, we announced a three-year deal with Paladin, FLIR, to supply our batteries as they develop their unmanned aircraft system products. Also in October, we entered into a three-year cooperation agreement with BAE Systems to develop a lightweight high-energy battery specifically for electrically powered flight applications. In May, we will award funding for the second multi-year development program in the United States Advanced Battery Consortium for the development of a low-cost EV battery. This consortium is between Ford, GM, and Stenetis, and is enabled by a cooperative agreement with the United States Department of Energy. Their mission is to develop electrochemical energy storage technologies that advance the commercialization of next-generation electrified vehicle applications. I'm pleased to announce that we officially delivered the first set of the reference cells in the fourth quarter of 2022. Altogether, this new wings and opportunity expansion amount to a 65% year-over-year boost in battery shipments. We believe our successful early efforts are now driving a positive flywheel effect, leading to orders from the new customers and extension orders from existing customers. As we think about our goals for the next several years, our primary focus is on expanding capacity to meet demand. and ultimately achieve a sustainable cost structure at scale. We made several strategical moves in 2022 that put us on a clear path to achieve these goals. In September, we closed our business combination with Kensington Capital Acquisition Corp. 4 to provide us with greater access to capital via the public market. Through that process, we also raised $70 million in cash net of expenses and added a strategical customer to our investor base in every environment. We could not have asked for a better partner than the Kensington team and have continued to work closely alongside them as we executed our strategy. More recently, we put in place a community equity facility, which allows us to assess up to 200 million of additional funding. After a competitive process, we were selected to receive two cost-sharing grants from the United States Department of Energy in October of 2022. The first is a one million cost-sharing grant from the DOE's Advanced Manufacturing Office, specifically for the acceleration of the development of mass production process we use for our silicon annals. This process, based in our Fremont facility, includes a deposition system presently used in solar cell manufacturing. The second is a 50 million cost-sharing demonstration grant selected for negotiation of the award from the DOE's Office Manufacturing and Energy Supply Chain. We are among the first set of the company to be selected for negotiation of the award to receive funding from President Biden's bipartisan infrastructure law to expand the domestic manufacturing of batteries. To that end, in October, we received the first large-scale anode production machine from Central Therm, which is now being installed in our Fremont facility and is expected to increase our capacity for silicon anode production to approximately 2 megawatts exiting 2023. To meet this greater production output, we recently expanded our lease facility in Fremont, California, effectively doubling our footprint in that location our expansion in Fremont is planned to improve our high volume manufacturing processes and increase our capacity by 10x which will serve strategic aviation customers increasing needs and support sampling and qualification projects with new customers who are currently in backlog this takes me to our more exciting news. Early this month, we announced the selection of a site in Brighton, Colorado as a location for our 775,000 square foot nest production facility. The selection of the Colorado for our Gigawatt scale factory marks an important milestone for Amperes. We worked closely with the state of Colorado the Colorado Economic Development Commission, Ayrton County, and the City of Brighton to align on terms that are mutually beneficial, which include a comprehensive incentive proposal. The initial phase of our build out of the existing facility will provide a potential of up to five gigawatt hour and is also expanded to create over 330 new jobs. For the subsequent phases, the site has expansion capability for up to a total potential manufacturing capacity of 10 gigawatt hour. This site also holds a few advantages over our other potential locations. Notably, it's already equipped with the electrical power and the existing structural layout needed for gigawatt scale lithium-ion battery factory, which will reduce build-out cost and time to market with a goal of being operational in 2025. Also, it will brighten it closer to some of our material distributors in the Northwestern US, which we expect will lower operational costs over the long term. Our commitment to Colorado allows us to establish our large-scale operation here in the United States. Ampere's battery will be designed and made in the US. This new facility will transform our long-term production capabilities. In the near term, we will continue to develop and shape cutting-edge products from our Fremont facility while we refine our manufacturing processes to further de-risk the handle of our mass production products to Brighton in the coming years. To help with this transition, we made a strategic decision to form two new business units, Ambrose Lab and Ambrose Fab. Ambrose Lab, located in Fremont, will focus on advanced battery technology, products, and manufacturing process development. While Entry's Fab, located in Brighton, will focus on large-scale fabrication of silicon-handled batteries. To support this transition, John Bornstein, currently the company's COO, will take a new role to lead Entry's Lab as the division business unit president. In the interim, I will serve as acting president of MPFAB. I have one final update before I turn the call over to Sandra. One of the areas which I'm most proud is the team we have built. Over the last several months, we have added critical roles to lead our efforts to scale. In my acting president role for MPFAB, I'm working with our new Vice President of Infrastructure, Andrew Hui, who joined us last September. Andrew brings over 30 years of facility development and management experience, and most recently served as the Director of Facility and Panasonic Energy of North America. He will be spearheading our efforts to scale production capacity, focusing on factory planning, facility development, and regulatory compliance. With our leadership team in place, we believe that we are well positioned to execute on our growth strategy. With that overview complete, I will now turn the call over to our CFO, Sandra Warwick, to review our financial results for the full year. Sandra.
spk01: Thank you, King. I would now like to spend a few minutes covering some key updates. As a reminder, our detailed financials can be found in our shareholder letter. As Kang mentioned, we believe that we have the proprietary technology in place and that we have shown consistent manufacturability and commercial success. We've been shipping commercial products since 2018, so our focus today is not on commercializing, but is instead on scaling our production capacity to meet the growing demand in these fast moving markets. In our financials, particularly in our revenue results, you will see data points that reinforce the strength of our customer development efforts as we scale. We believe that those results, especially when paired with our investments in both our Fremont capacity and gigawatt hour scale capabilities, position the company well to achieve its growth and profitability potential. We closed out 2022 with $4.4 million in revenue. Product revenue was $2.4 million, including over 25 new customers to which we shipped batteries within calendar 2022. Within that set of new customers, four are leading eVTOL manufacturers and two are global battery pack suppliers for the aviation sector. Also, we delivered commercial quantity shipments to AeroVironment and Teledyne FLIR and completed two flight sets for Airbus' HAPS program, with a backlog of six more sets for future delivery still pending. Development services revenue totaled 1.8 million, driven by both the delivery of cells and the timing of other deliverables under multiple contracts. We also recognized the first portion of the $1 million DOE cost sharing grant revenue, which was 0.2 million. For 2022, our GAAP gross profit margin was negative 123%. Our gross margin displays variations period over period based on the mix of products and services. Now moving to our operating expense management, our GAAP operating expenses for 2022 were $12.6 million, with higher G&A expenses in Q3 and Q4 due to increased public company costs. Our 2022 gap net loss was 17.3 million or a loss of 24 cents per share. Our shares outstanding at December 31st, 2022 were 84.6 million with 71.3 million weighted average shares of common stock outstanding for the year. As of December 31st, 2022, there were 59 full-time employees primarily based in our Fremont, California location. Share-based compensation for 2022 was 2.7 million. Turning to the balance sheet, we exited 2022 with 69.7 million in cash and no debt, a net increase of 58.2 million from December 31st, 2021. The key drivers of our cash activity for the year were 13.9 million used in operating activities, 1.5 million in capital expenditures, which represents our investment in our current manufacturing facility, as well as in opportunities to expand our footprint and accelerate our capacity to support customer qualifications and scale up. Seventy-three point six million net cash provided by financing activities, driven by proceeds received in connection with the business combination and pipe investment, net of issuance costs, plus proceeds from the exercise of stock warrants and options. Moving to our outlook, we expect to continue to be limited by manufacturing capacity until we exit 2023 with the new two megawatt capacity coming online. Regarding revenue, we have several ongoing development services programs with performance obligations that we expect to complete within 2023, which means that we expect increased revenue recognition weighted more heavily towards the latter part of the year. We expect that our G&A costs will continue at the higher rate exiting 2022, noting additional public company expenses. We will continue to be lean on other operating expenses, strategically adding critical mass to the new business units that we announced, and allocating the majority of our capital to scaling up our manufacturing. And we expect higher capital expenditures going forward, as we continue to build out the two megawatt capacity in Fremont, California, while we in parallel design and construct our newly announced Brighton, Colorado gigawatt hour scale facility. Our spending pattern is dependent on several factors outside of our control, including the timing of approval for rezoning for the Colorado site, so we will provide more specific projections as we have additional information to share. Also, we expect that we will continue to have strong support from the US Inflation Reduction Act as we access production tax credits at the anode and cell levels. In addition, we have received over $10 million in state and local incentive packages relating to our gigawatt scale facility, which is a result of significant partnerships built in Colorado through our selection process. We believe that these tailwinds will further enhance our economics as we accelerate our scale to meet our massive market. With the strength of our balance sheet and multiple vehicles to generate additional funding through both equity, such as warrants in our committed equity facility, and non-dilutive sources, such as grants, loans, and incentives, we believe we will have enough cash to execute on our strategic plan. With that, I will conclude the financial discussion and pass the call back to Kang. Thanks, Sandra.
spk06: I'd like to re-emphasize a few key points before closing. First, today we have a market-leading technology and position in aviation that are reflective of our unmatched performance in real-world applications. Over the past year, we demonstrated extremely fast charging capabilities, enhanced our battery-specific energy density from 450 to 500 watt per kilo. and successfully passed the key performance tests important to future work with the U.S. government. Second, we are building out the skill to serve tremendous demand in the U.S. and to support U.S.-based supply chain resiliency. Exiting 2023, we will further to out our largest scale manufacturing process and the parameters with the two megawatt pylenon coming up in our Fremont, California facility. We are also now moving swiftly to prepare to build out our gigawatt scale facility in Brighton, Colorado for the first 500 megawatt demonstration program with the United States Department of Energy Third, we are continuing to build a pipeline of blue-chip customers to meet our planned expansion efforts, which have us operating at a scale of hundreds of megawatts exiting 2024. As we look to the rest of 2023, our strategy and focus at Amperes remains unchanged. We have a tremendous opportunity ahead with the product portfolio that positions us to both growth in aviation market and expand it to other industries, taking batteries with stronger performance and faster charge time. We are continuing to build our early lead through technological advancement and the strategic partnerships. Through the private and the public sector, We now have the capital and are building the capacity to become a leading commercial provider in the sustainable mobility sector. Finally, we have the team in place to execute our mission. Thank you for your continued support of MPS Technologies. With that, I will turn it back to the operator for Q&A.
spk02: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. We ask you to please ask one question, one follow-up, then return to the queue. One moment, please, while we poll for questions. And once again, that's star 1 to be placed into question queue. Our first question today is coming from Colin Rush from Oppenheimer. Your line is now live.
spk07: Thanks so much, guys. And congratulations on all the progress. We're really glad to see you guys get that award this week with the battery show. You know, Kang, as you have started installing the megawatt tools and evaluating them, can you talk about any surprises, either positive or negative, that you're seeing from the tools or the installation at this point?
spk05: At this point, we already powered the two in Fremont, this battery. central thermal tube. We also try to tune the source, because we need to work with the supplier to get the deposition source adjusted. We expect sometimes in summer, late summer, early fall, this particular tool for silicon nanowire growth will be fully in operation.
spk07: Okay, that's tremendous. And then, you know, in terms of the selection of Colorado, you know, obviously, you know, the building site has some advantages, but can you talk a little bit more about supply chain advantages in terms of location as well as hiring opportunities? Because there seems to be, you know, potentially some efficiencies that you guys are gaining by choosing this location.
spk05: Yeah, the most obvious one, of course, is close to our saline source. Saline today is manufactured in the state of Montana. Colorado compared to the other state, we looked Georgia, Texas, now we see Colorado. This is probably the most visible supply chain advantage. In addition to that, Colorado's weather is much drier. That is very important for us. I think the most important thing is Colorado. They have sufficient power for us. As a battery manufacturer, we cannot afford to have power disruption. So they almost guarantee the power supply. The current power supply already adequate for our phase one.
spk07: Okay, that's super helpful. And then just a final one with the introduction of the new product. and the validation by the third party. Can you talk about what your customers are looking for in terms of incremental validation on that before you start to see some orders, or is it really just a capacity issue for you guys right now on that product, given the performance that you've been able to demonstrate?
spk05: We have a capacity issue with a lot of customers, a lot of inquiries. We have a we have inquiries from industrial players, even from the government, but we don't have enough capacity to satisfy their demand. That's the one challenge for us. That's why the capacity expansion is our priority. The second demand from the customer, of course, we are currently focusing on aviation segment. So aviation segment, So far, we are the only one that can provide high-energy, high-power batteries. Already today, we allow 500 Wh per kilo. That's the battery the Airbus has for when really needed to make a second-generation product work. So we have capacity challenge. At the same time, we have customer demand energy. and the power, okay? When I say energy and the power, I'm curious today, probably the only company they can get, okay, high energy, high power. I have not seen other battery continue.
spk07: Okay, thanks so much, guys.
spk02: Thank you. As a reminder, that's star one to be placed in the question queue. Our next question is coming from Chris Souther from B Reilly. Your line is now live.
spk03: Hey, guys. Thanks for taking my questions here. Maybe just touch on the Colorado facility. You called out in the letter a rezoning process that you're going through there. Anything you'd share about that process and how we should think about the timing, assuming you get clarity on that over the next couple weeks, months, whatever, and then the overall Capital needs expected through the end of next year. Any update there given the plan to be here to be pretty solidified in Colorado?
spk05: Yeah, I can answer the timing issue and then timing question, then Sandra can elaborate more on the financing. So we are currently working with the regulatory authorities. I think that this is the most time consuming part of this project. I'm currently sourcing the production line, and we have another line up. I believe our production line can be delivered on time. Construction discussion went well. We are planning to have this construction start late summer and early fall. It took us about 18 months to get the building retrofit than have our production line installed.
spk03: Got it.
spk04: And then any update on the capital, you know, expectations through the end of next year, given, you know, I think we've probably got a pretty good idea of, you know, your expected costs at this point, you know, given the site selection and all that.
spk01: Yeah, so that's a great question. So our production equipment capital needs are still in the 120 to 150 million per gigawatt. That's the total cost without government grant offsets. And we're estimating possibly another 100 million on construction and TI. So somewhere in total between 220 and 250.
spk03: Got it. Okay. That's really helpful. And then on the customer side, it seems like, you know, you guys are continuing to add new customers testing. Maybe you could just talk a little bit more about some of the demand end segments. Aside from USABC, are there any other non-Aerospace, you know, defense tech customers in there and then maybe within Aerospace? I'm curious if you could talk about, you know, either size or, you know, use cases. within that kind of broader sector to give us some kind of breakdown around the types of demand you're seeing out there?
spk05: We are working with, of course, most of our customer aviation battery customers. At the same time, we have been, the last few years, engaging with non-aviation battery customers, primarily in the electrical vehicle battery space. Because we don't have a large-format production line at this time, so we only can stay at the evaluation stage. At this phase, I would call it the technical exchange phase. As you know, the USABC award us the grant twice. ask us to proceed the low cost high energy density electrical vehicle we also have interaction with other oem evoems but at this time still at a technical exchange stage until we have a larger format ev format i mean 100 amp hour 120 amp hour cells we will stay at a technical exchange stage.
spk03: Yeah, that makes sense. But maybe just within aerospace, any other ways you can kind of segment out the types of customers or the use cases would be helpful there.
spk05: Right. For us today, you see, we have industrial customers. We have a customer in defense segment. Those batteries are adequate for other applications. We just need to have the capacity and the right format of the battery and the right size of the battery for those applications. I think this is our effort that lasts 18 to 24 months. We will get there. As we repeatedly mentioned, our challenge is is the capacity. Once we get capacity issue resolved, we will have a much better situation in revenue generation and serve the customers.
spk03: Okay. Makes sense. I'll hop in the queue. Thanks, guys.
spk02: Thank you. As a reminder, that's star one to be placed in the question queue. One moment, please, while we poll for further questions. We've reached the end of the question and answer session. I'd like to turn the floor back over to Dr. Sun for any further or closing comments.
spk05: Thanks again, everyone, for joining us today. I'd like to thank our employees, partners, and shareholders for their continued support. As a reminder, you may learn more about our company updates and where we will be presenting in the investor relations section of our website. We look forward to updating you on RMT's progress on our next call.
spk02: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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