Amprius Technologies, Inc.

Good afternoon. Welcome to Amperius Technologies' fourth quarter and full year 2023 earnings 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, the timing and ability of AMPRIUS to build its large-scale manufacturing facility, expand its manufacturing capacity, scale its business, and achieve a sustainable cost structure, and AMPRIUS's financial and business performance. 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 AMPRIUS's 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 Investors 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 Investors Relations website. I'll now turn the call over to Ambria's technology 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 progress and accomplishments for the fourth quarter, while also highlighting some of the milestones we achieved in 2023. 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. The fourth quarter was a strong end of a great year for Amplius. Before I give a recap of the year, I would like to briefly introduce Amplius to those who may be new to the company. Amperes develops, manufactures, and markets high energy density and high power density batteries with applications across all segments of electrical mobility, including the aviation and EV industries. As a pioneer of silicon anode battery technologies, Amperes has spent the last decade developing various silicon anode structures and cell chemistries. as well as manufacturing processes. The company has a strong patent portfolio of over 80 issued patents and pending applications. When it comes to the battery performance, Amplia's silicon annual batteries command a firm leading position in the industry. Amplia's batteries deliver 450 Wh per kilo specific energy density. and the 1,150-watt per liter volumetric energy density, and have been available commercially since early 2022. In 2023, we developed a 500-watt per kilo, 1,300-watt per liter battery platform, which will be ready for commercial shipment soon. Also, Amperes silicon anode structures And the cell chemistries enable us to power capability and to balance the high energy and the high power battery designs. Our silicon-handled batteries have the extreme fast charging rate of zero to 80% stay of the charge in approximately six minutes. Can operate in a wide temperature range of minus 30 degrees Celsius up to 55 degrees Celsius. And they have safety design features that enable us to pass the United States military benchmark and nail penetration test. Each of these performance parameters is critically important for electrical mobility applications. Not only do our battery enable certain aircraft and the vehicles function, but in doing so, They also enable our customers to achieve their economic targets as well. MPS has been in commercial battery production since 2018. So the company has many years of experience manufacturing high energy density and high power density lithium ion batteries. It's our belief that there are no other commercial batteries on the market that can perform at these levels today. Between our two battery families, Femex and Seiko, Ampere's high-performance batteries have attracted significant market attention and customer demand. The company's priority today is to build additional manufacturing capacity as quickly as we can to meet the significant customer demand for our products. 2023 was a transformational year for Ampere. we came into the year with three major goals. First, we set out to further advance our silicon annual battery technology to deliver breakthrough performance. Second, we sought new customer wins as we continue to grow our product shipment volume. And third, we strive to expand our production capacity to meet the increasing demand of our batteries. We made significant progress across each of these areas and are confident that our effort has positioned Amperes to continue executing on its growth strategy in 2024 and beyond. Specifically, we had several noteworthy accomplishments in 2023. Last year turned out to be a banner year for our technology development. Back in March, we unveiled our 500-watt-per-kilo battery platform, a first for our industry. To the best of our knowledge, once our sales began shipping to customers this year, Ampere would be the first company to achieve 500-watt-per-kilo energy density in a commercially available battery. Then in August, we also unveiled our breakthrough battery cell chemistry and design that enables 400 Wh per kilo energy density with a simultaneous latency power capability. The energy and the power delivered by this cell make it the ideal solution for electrical mobility applications such as aviation and EVs. For EV tours, this battery is designed to provide the necessary proportion power and energy for taking off, cruising, and landing, while also extending flight range by as much as 50% as modeled based on commercially available alternatives. We complete the customer evaluations and begin shaping batteries to select customers in 2023 with the expanded commercialization expected in 2024. We hit the ground running in 2024 as well. In January, we launched our all-new cycle product family to go along with our existing silicon nanowire platform, now called CEMEX. While CEMEX includes our highest performance batteries. The cycle platform services the applications that demand high energy density and longer cycle life, offering up to 400 watt per kilo and as many as 1,200 cycles at full depth of discharge. Developed in close collaboration with Basilius, a formerly affiliated company, we are able to achieve greater manufacturing capacity in the short term by working with two manufacturing partners, which we expect will allow us to serve more customers and bring in additional revenue while we extend our U.S. manufacturing capacity. We believe that tool manufacturing capacities can create a bridge until our facility in Colorado comes online. The cycle products also have additional form factor flexibility, capable for both pouch and cylindrical cells form factors. This allows them to be used in more applications and to be available at a scale today. These two product platforms are the culmination of years of work in silicon anode space and are just the beginning of our vision here at Amperes to transform electrical mobility. Overall, when it comes to battery performance, we continued setting new bars for ourselves in 2023. We are confident that Amre's battery can reach unmatched level of performance, and we look forward to trying to extend our performance lead in 2024. We believe that the highest endorsements of our technology are customer orders. Our industry continues to notice the battery performance success that we are having. And as a result, our demand far outstrips our supply. Throughout the year, we had several customer wins. We furthered our partnership with AeroVironment in Q1, started a new technical engagement with a leading high-performance automotive OEM in Q2. and reached a long-term battery supply agreement with Panergy in Q3. Also, in the fourth quarter, we made a significant progress on building out our book of customers, shifting to 41 total customers in the quarter, up from 38 in Q3. While many of them were repeating customers like auto, Airbus, other than FLIR and the US Army and the BAE systems. Sixteen of them were new customers who came to us from across the electrical mobility sector. For example, we announced the volume purchase order from a VTOL manufacturer in October and complete the high volume shipment of CYMAX cells to the Korean Aerospace Research Institute in December. We also successfully secured the CEMEX purchase order from three premier electrical aviation manufacturers. For customer, 450-watt-per-kilo cell for battery pack development and quantification. These customer cells were developed in collaboration with MPS's strategical partners to address their unique HEPS qualification requirements and enable these customers to operate in highly challenging environments with greater energy density and the longer cycle life than the previous 400-watt per kilo platform. The new cell the only known commercially available batteries of their kind that can provide enough power and endurance to help overnight stratospheric flight applications. These orders help strengthen Ampere's position as a premier global battery solution for eVTOL and HEPS applications. Also, we think our variable variables market, we complete our first volume shipment of the safe cell for the U.S. Army in December. This shipment is an important milestone for us because it completes our scale-up manufacturing initiative under the U.S. Army-funded manufacturing technology program, which allows us to now have a large deployment of our sales for the mission critical products. To meet the market and the customer demand, we have made significant progress in building out our manufacturing capacity. First, we complete our new production line, Fremont, California in December. With this investment, we have increased our manufacturing capacity by approximately 10 times and expect to achieve two megawatt hours of capacity exiting 2024. In our largest scale manufacturing site in Brighton, Colorado, we received the final rezoning permit that allows us to move forward with the site. We have made progress in recent months on ordering long lead time items such as electrical, mechanical, and plumbing systems to ensure that we remain on track with our timeline. We are also continuing the design and the pre-construction work that will allow us to be operational in 2025. In addition to our own manufacturing capacity development, we have developed two manufacturing partnerships to provide us with the largest scale manufacturing capacity for cycle battery production right away. Overall, we believe that 2023 was a highly successful year across our major initiatives. As we turn our attention to 2024, it remains critical to our growth strategy that we continue advancing our technology and expanding our production capacity. We are off to a good start. In addition to a long cycle and the making progress of pre-construction activities at Ampere's FAB, we announced that we received the AS9126 certification for our Fremont production facility. The crucial certification received from Smith's quality assessment as we continue to supply battery to the burgeoning electrical aviation industry, helping to advance the technology like eVTOL, HABs, and the drones. As shown in our recent customer wins and the technology advancement, we believe that low-IRs can commercially offer capabilities that match those of ampere's batteries. Early this week, We were named one of the Fast Companies 2024 Most Innovative Companies, largely due to our battery's advanced capabilities. We were also recognized at a recent International Battery Seminar, winning the Best of Show New Product Award for our CEMEX 400-watt per kilo cell. This is our second consecutive award in this category at IBS as well, as we won last year for our 450 Wh per kilo, 1150 Wh per liter lithium ion cell. Overall, these awards further underscore the demand for our innovative solutions. We are working hard to expand our production capacity to meet that demand, and we are confident in the path forward for MPS. With that, I will now turn the call over to our CFO, Sandra Wallach, to review our financial results for the quarter.

Sandra. Thank you, King. 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 fourth quarter with $3.9 million in revenue. a 3.1 million increase compared to 0.8 million in the same quarter last year, and up 1.1 million sequentially. There were three drivers of this net increase in Q4 versus Q4 of 2022. First, our product revenue increased by 0.3 million from the prior year period to 0.9 million, largely driven by shipments to 41 customers in the quarter, a second consecutive quarterly record 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 two customers represented greater than 10% of revenue, a testament to our diverse customer set. Second, our development services revenue increased by 3 million. a reflection of the successful completion of the U.S. Army Manufacturing Technology Program delivery that Kang mentioned earlier. Development services are non-recurring in their nature due to disparate programs. Third, these two increases were partially offset by $0.2 million reduction in government grant revenue period over period due to the completion of the DOE program in Q3 2023. Pivoting to our full-year results, We closed 2023 with $9.1 million in revenue. This represents a growth rate of over 100% from 2022. Moving to our profitability metrics, our gross margin was negative 162% for the full year, compared to negative 128% in the prior year period. As we've discussed in prior quarters, we see significant gross margin variation as our product and services revenue mix fluctuates. Also, we anticipated that factory startup costs would ramp up as we start Colorado design and construction. Longer term, we are confident that our GAAP gross margin will begin to normalize as we approach our capacity expansion goals. Now onto our operating expense management. Our operating expenses for the full year 2023 were 24 million, a 94% increase from the prior year. While we continue to maintain a lean cost structure, The increase is primarily attributed to the increased G&A related to public company expenses and transaction-related costs, as well as targeted staffing increases in R&D and sales and marketing. Our gap net loss for the full year 2023 was 36.8 million, or a net loss of 43 cents per share, with 86.2 million weighted average number of shares outstanding, compared to a net loss of 24 cents per share with 71.3 million weighted average number of shares outstanding. Also, as of December 31st, 2023, there were 80 full-time employees, up from 76 in the third quarter, and 59 at the end of 2022, with those employees primarily based in our Fremont, California location. Our share-based compensation for the year was 3.9 million compared to 2.7 million in 2022. Turning to the balance sheet, we exited the year with $45.8 million in cash and no debt. Key drivers of our cash activity for the year were $25.6 million used in operating cash flow, $17.6 million used for costs related to the build-out of the Fremont and Brighton facilities, and $19.2 million inflow added primarily through the usage of our equity financing. 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 2024. We expect to spend another two to three million completing the new cathode line and other support equipment for the megawatt hour line in Fremont this year. As detailed design work on our facility in Brighton is finalized, and construction gets underway, we expect to finalize our construction cost forecast and will provide updates as the year goes on. As part of our strategic planning efforts, we filed a shelf registration on Form S3 in October 2023, and once effective, established a new ATM facility for $100 million. We have terminated the committed equity facility concurrent with the effectiveness of the shelf registration statement. Subsequent to December 31st, 2023, we have raised gross proceeds of about 6.5 million through the sale of approximately 2 million shares under the ATM facility as of March 18th, 2024. To support our strategic plan, we are pursuing additional funding through multiple vehicles, including both 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 Ken.