Amprius Technologies, Inc.

Good afternoon. Welcome to the Amperius Technologies' fourth quarter and full year 2024 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 our financial and business performance, our business strategy, future product development or commercialization, new customer adoption, and new applications, our growth and the growth of the markets in which we operate, and the timing and ability of Ambrius to expand its manufacturing capacity, build its large-scale manufacturing facility, scale its business, and achieve a sustainable cost structure. These statements involve known and unknown risks, uncertainties, and other important factors that may cause Ambrius' results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied in such forward-looking statements. For more complete discussion of these risks and uncertainties, please refer to AMPRIUS's filings with the Securities and Exchange Commission. Finally, I'd like to remind everyone that this conference call is being webcasted 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 Amperius 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 give you an overview of our record performance and some of our 2024 accomplishments while also highlighting the upcoming milestones we look forward to achieving soon. After that, our CFO, Sandra Wallach, will discuss our financial results for the period. Then 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 Ampere to those who may be new to our company. Ampere is a pioneer and a leader in silicon anode battery space. At Ampere, we develop, manufacture, and market high energy density and high power density silicon anode battery with applications across all segments of electrical mobility, including the aviation, electrical vehicle, and light electrical vehicle industries. Today, Amperes commands performance leadership with this combination of battery energy density power density, charging time, operating temperature range, and safety. Across our battery portfolio, we offer unmatched performance among commercially available batteries. Tempest has been delivering commercial batteries to the market with up to 450 Wh per kilo and 1150 Wh per liter. 10C power capability. Extreme fast charging rate of 0% to 80% stay of charge in approximately six minutes. The ability to operate in a wide temperature range of minus 30 degrees Celsius up to 55 degrees Celsius. And the safety design features that enable us to pass the United States military's benchmark and nail penetration test Each of these performance parameters is critically important to the real world electrical mobility applications. Not only do our batteries enable certain aircrafts and the vehicles to maximize performance, but they enable our customers to achieve their economic targets as well. In addition to our commercially available batteries today, We have also achieved a third-party validation of our latest 500-watt per kilo, 1,300-watt per liter battery platform. It's our belief that there are no other commercial batteries on the market that can perform at these levels today. Amperes is a silicon anode battery technology pioneer with over a decade of development experience and the long track record of commercial shipments and customer achievements. 2024 was an important and productive year for Ampere. Company introduced a new silicon anode battery platform, PsiCo. Commercialized a group of new batteries with breakthrough performance. due to over 1.8 gigawatt-hour contract manufacturing capacity, achieved record sales revenue, engaged with 235 customers, and developed a strong growth path. Innovative technologies and the breakthrough product performance are the foundation of Ampere's business. Large-scale manufacturability and commercialization of these technologies and the products have enabled Amperes to achieve incredible milestones and business results this year. In January 2025, Amperes introduced the first battery cell in the industry with a combined high energy and high power. 370 watt per kilo energy density and offering up to 3,500 watt per kilo power. Furthermore, the cell supports high discharge rates of up to 10 C without cooling and up to 15 C with active cooling, ensuring quick power delivery without compromising runtime. This cell provides ideal situation for aviation electrical vehicles and any electrical mobility applications that require both endurance and the rapid energy delivery. In Q4, the pre-production 10-ampere-hour samples were delivered to six of our customers, enabling real-world testing in challenging environments. We are seeing strong customer interest for this battery with industrial leaders like Teladon, FLIR, already actively evaluating its capabilities. Amperes also developed and shipped high-performance EV battery cell samples to the United States Advanced Battery Consortium, or USABC, in 2024. The USABC awarded Amperes a $3 million grant to develop a low-cost and the fast-charging battery cell back in 2022. Since then, Amperes not only met the US ABC's development targets, but exceeded them by delivering a cell with a specific energy of 360 Wh per kilo at the beginning of life and a power density of 1,200 Wh per kilo. The A-sample UV cells can also charge it to 90% of their rate energy in just 15 minutes, exceeding the U.S. ABC target of 80% with the same timeframe. In 2024, Amperes also received the X-Time Prime Award from the U.S. Army to develop a large-format 500-watt-per-kilo battery cell. We believe that this product which is in development with our partner, AeroVironment, will allow supreme battery performance that is not available anywhere else. This project is expected to be complete this year. Today, Amperes has a high-performance commercial battery portfolio that provides critical solutions to the customer with various applications across the electrical mobility market. The 14 different SKUs provide a range of performance options for different applications that are all commercially available today. Technical achievements at Amperes have enabled our commercial success. In fact, in the first quarter alone, we shifted to 98 total customers, with 53 of those being new to the Ampere's platform. Our renting customer growth complemented by volume of shipments to strategical customers, resulting in first quarter revenue of 10.6 million, a 35% increase from the third quarter of 2024, and 170% increase from the fourth quarter of 2023. Additionally, 77% of the revenue from Q4 came from outside of the United States compared to just the 22% in the same period of last year are shipped to bases and demonstrates the expansion of our customer base worldwide. Over the course of 2024, we shipped to a total of 235 customers. This includes new customers, as well as repeat volume orders from our long-term partners, like Auto Airbus, Aero Environment, Teladon FLIR, Klaus Hamdani, and BAE Systems. The rapid customer expansion we are driving is a testament to our product competitiveness, manufacturing capability, and the sales strategy. We generated 24.2 million in revenue for the full year, 167% increase from 2023. In 2024, we developed some sizable business opportunities to support our growth for years to come. In Q3 and Q4, we shared that we signed two separate agreements with Fortune 500 companies. First agreement announced in September 2024 was a non-binding letter of intent with the Fortune Global 500 Technology OEM to develop a high energy cycle symmetrical cell for the light electrical vehicle market. The battery solution that Amperes will provide will be a technology breakthrough in cell chemistry, cell design, and cell manufacturing. We believe it will be a very attractive product for the light electrical vehicle market, which in Q4 contributes about 25% of our Q4 revenue. The light electrical vehicle market is expected to grow significantly. Based on a January 2025 report from the business research company, the light electrical vehicle market size is expected to reach approximately 136 buildings by 2029. In addition, the light electrical vehicle market has a shorter design cycle because it's already operating at a scale. The other agreement announced in October 2024 was a development contract for a small format custom high energy density Dymax pouch cell. Ampere's high energy batteries provide a critical solution to the customer's application. We expect to produce a battery with approximately 50% less weight and size compared to their current battery without compromising performance. At the end of Q3, we also announced two contracts totaling over 20 million to supply 40 amp hour high performance cells for light electrical vehicle applications. As an update, these cells are already shipping, and we expect to recognize 100% revenue in 2025. In total, we add over 16 million in new customer purchase orders to our backlog in the fourth quarter, giving us additional visibility into our growth for 2025. In addition to the performance of Amperes batteries, our manufacturing capability and capacity have attracted customer attention as well. Today, Amperes has over 1.8 gigawatt-hour cell manufacturing capacity and is well-equipped to deliver all types of battery cells to customers, pouch cells, cylindrical cells, and prismatic cells. The company is also actively working on developing a global contract manufacturing network. And in 2025, we are increasingly optimistic about our future and have begun the year with a running start. Last month, we announced that we secured a 15 million purchase order from a leading unmanned aircraft system or UAS manufacturer for our cycle cells. This volume purchase order follows the success for field trials and the qualification over the course of nine months, leading to Ampere's battery being designed into the manufacturer's fixed-wing UAS platform. This order secured a critical supply for the customer's production ramp, and we expect to ship the cells in the second half of 2025. As more commercial and defense aviation customers complete their battery qualification process, we are seeing a strong pipeline of follow-on commitments. We believe that orders like this indicate that the drone market is continuing to grow and that Amperes is going to play a large part in powering future applications. Fortune Business Insights projects the global drone market will surge from 18 buildings in 2023 to 213 buildings by 2032. So we believe we are just at the beginning of a significant expansion of one of our addressable markets. This quarter, we have also designed and shaped new high performance 6.3 ampere hour cylindrical cells for use in the light electrical vehicle sector. This cell delivers over 25% more capacity than current 21700 cells, setting a new standard for energy density in the industry for this widely used cell format. Because of its seamless integration to existing battery systems, the manufacturers can implement a high capacity, longer lasting power without a costly redesign. As a final note, we have obviously monitoring the policy changes and the potential industry headwinds resulting from the recent changes in federal administration. With much of the global battery supply in Asia, we are not immune to economic policy impacting the region. But we are taking swift action to mitigate any risks to the extent that we are able, including diversifying our manufacturing partnerships and the supply chains to avoid geopolitics, geopolitical concerns, and the tariff related issues. We plan to share additional updates with you as they become available. We remain confident in our expectation for growth throughout 2025. With that, I will now turn the call over to Sandra to review our financial results.

Thank you, King. I would now like to spend a few minutes covering some of our key financial updates. As a reminder, our detailed financials can be found in our shareholder letter. We ended the fourth quarter with 10.6 million in total revenue. As we have previously discussed, our total revenue is the combination of our main revenue streams, product revenue and development services and grant revenue. This quarter, 10.3 million came from our product revenue, representing a 4.3 million or 71% increase sequentially. Product revenue in Q4 2023 was just $0.9 million, marking a nearly 1,000% increase year over year. Our development services and grant revenue totaled $0.3 million this quarter, which was down from $1.8 million in Q3 and $3 million year over year. As we've discussed in the past, development services and grant revenue from large development programs are non-recurring in nature. leading to greater fluctuations depending on the comparison period. The overall increase in revenue this quarter was primarily driven by the addition of new customers. As Kang mentioned, we shipped to 98 customers in the fourth quarter. Of these customers, only three accounted for greater than 10% of revenue, a decrease from four in the third quarter, and an increase from two customers counted in the fourth quarter of 2023. Going forward, we plan to continue adding to our customer mix to diversify our revenue streams and provide more reliable product shipments as we get to a position of scale. Pivoting to our full year results, we closed 2024 with $24.2 million in revenue. This represents 167% increase from the $9.1 million in revenue we generated in 2023. This achievement was fueled by the increase in product sales as a percentage of total sales, supported by the impressive growth of our customer base. As a reminder, we shipped to 235 individual accounts in 2024. Moving to our profitability metrics, gross margin was negative 21% for the quarter compared to negative 65% in Q3 of 2024 and negative 98% for the prior year period. For the full year, gross margin was negative 76% compared to negative 162% in the prior year period. The improvement is directly related to the launch of our SICOR product line, which has a positive gross margin contribution. As a reminder, we see significant gross margin variation as our product and services revenue mix fluctuates. Gross margins in 2024 were also impacted by pre-construction planning costs. related to the Colorado facility, which were completed in October of 2024. Now moving on to our operating expense management. Our operating expenses for the fourth quarter were $9.5 million, an increase of $3.4 million or 55% compared with Q3 2024, and an increase of $3.6 million or 62% from the prior year period. OPEX increased from Q3 to Q4 as a result of higher R&D costs associated with operating expenses compared to cost of sales. This change coincides with the runoff of large development contracts as we pivoted to a mix of revenue that is more heavily weighted to product sales. The sequential increase in OPEX also included non-recurring G&A stock-based compensation of $0.7 million in Q4, which was associated with a fully vested grant that was made by our former holding company, Amprius Inc., for key employees and service providers prior to the assumption of stock options by Amprius Technologies, and a non-recurring loss on a write-down of property, plant, and equipment of $1.9 million in Q4. Year over year, the increase in OPEX was driven by increased investment in sales, The aforementioned reallocation of R&D from cost of goods sold as development services agreements run off, and the same non-recurring stock-based compensation charge and loss on a write-down of property, plant, and equipment. For the full year, our operating expenses were $27.9 million compared to $24 million in 2023. Our gap net loss for the fourth quarter was 11.4 million, or a net loss of 10 cents per share, with 109.8 million weighted average number of shares outstanding. In Q3 2024, our net loss was 10.9 million, or negative 10 cents per share, with 110.4 million weighted average number of shares outstanding. Q4 2023 net loss was 9.7 million, or negative 11 cents per share, with 88.5 million weighted average number of shares outstanding. Our gap net loss included two non-recurring charges that totaled two cents per share. The first one-time event was a loss on a write-down of property, plant, and equipment of 1.9 million as shown in our financial statements. The second is the stock-based compensation charge from Ampreus Inc. of 0.7 million. For the full year, net loss was 44.7 million or negative 45 cents basic and diluted EPS with 101.9 million weighted average number of shares outstanding compared to a net loss of 36.8 million or negative 43 cents per share with 86.2 million weighted average number of shares outstanding in 2023. As of December 31st, 2024, there were 99 full-time employees up from 92 at the end of the third quarter with those employees primarily based in our Fremont, California location. Our share-based compensation for the fourth quarter was 2.4 million compared to 1.7 million in Q3 and 1.1 million in the prior year period. The sequential increase is primarily based on the non-recurring grant of fully vested shares by Amprius Inc. for key employees and service providers. For the full year, share-based compensation was $7.3 million compared to $3.9 million in 2023. This change is primarily due to changes in the Board of Directors and the previously mentioned non-recurring grant of fully vested shares by Amprius Inc. As of December 31st, 2024, we had 116.9 million shares outstanding. which was up 5.6 million from the prior quarter. The change includes 5.5 million shares forfeited and canceled as part of the option assumption agreement with Ampreis Inc. prior to its dissolution. This decrease was more than offset by 0.3 million shares related to option exercises and RSU vestings and 10.8 million shares issued from our ATM reserve. Now turning to the balance sheet, we exited the year with 55.2 million in net cash and no debt. The 20.1 million net increase in cash is related primarily to the 22.6 million we generated through the issuance of common stock under our at market sales agreement. As of December 31st, 2024, we had over 66 million left on the facility. Other key drivers for cash for the quarter included 6.1 million used in operating cash flow. We continue to remain lean with a 2.5 to 3 million monthly run rate, excluding transaction-related cost. Our fourth quarter operating cash results included minimal non-recurring expenses for the design and pre-construction work on the Colorado facility, which was completed in October of 2024. At this time, we do not expect future expenses related to the facility build-out. We also had $4.2 million of cash inflow associated with the return of our deposits for long lead time items related to the Colorado facility. This was partially offset by $0.6 million in property, plant, and equipment purchases for the Fremont facility. 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 CapEx outlook for 2025. We expect to spend another million dollars on supporting equipment to complete the two megawatt line in Fremont in addition to normal operating capital requirements. Now that the designs are effectively complete for Colorado, we will continue to monitor the larger industry dynamics, driving our ability to proceed further. The scope and schedule of the construction will be determined based on, among other factors, timing and availability of funding, along with monitoring the overall sector for changes in demand, supply, battery cost structure, government incentives, trade tariffs, and other considerations may also influence our decision, including whether to proceed with the construction at all. As Kang mentioned, we have secured adequate capacity for the foreseeable future through our contract manufacturing network and plan to expand that in 2025 without deploying our capital. That concludes my financial discussion and I will now pass the call back to Kang.