Good afternoon. Welcome to Amprius Technologies Third Quarter 2023 Earnings Conference Call. Showing 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 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. These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' 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' 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 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'll now turn the call over to Amprius Technology's 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 at Amprius in the third quarter. And our CFO, Sandra Wallach, will discuss our financial results for the period. After that, I will share some closing remarks before opening the call for questions. The third quarter was an exciting quarter for us. Before I give the quarterly report, I would like to briefly introduce Amprius to those who may be new to the Company. Amprius developers, manufacturers and markets high energy density and high-power density batteries with applications across all segments of electric mobility, including aviation and the EV industries. As a pioneer of silicon anode battery technologies, Amprius has spent the last decade developing various silicon anode structures and robust manufacturing processes as well as a strong patent portfolio of over 80 patents. Amprius silicon anode batteries provide industry-leading performance today, including 450 watt-hour per kilo specific energy density and the 1,150 watt-hour per litre volumetric energy density available commercially since early 2022. And the 500 watt hour per kilo, 1,300 watt-hour per liter battery platform in our lab independently verified back in early 2023. Our battery performed up to 10C power capability, extreme fast charge rate of 0 to 80% state of charge approximately six minutes, a wide operating temperature range of minus 30 degrees up to 55 degrees Celsius and the safety design feature that enable us to pass United States military benchmark nail penetration test. Amprius has been in commercial battery production since 2018. So the Company had many years the 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. Amprius high-performance batteries have attracted market attention…

Thank you, Kang. 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 third quarter with $2.8 million in revenue, a $ two million increase compared to $0.8 million in the same quarter last year and up $1. two million sequentially. There were two main drivers of this increase. First, our product revenue increased by $1.7 million from the prior year period to $2. two million, largely driven by shipments to 38 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. In the third quarter, we even limited the number of customers that account for greater than 10% of our revenue to only four customers in the quarter compared to five such customers last quarter. Second, our development services revenue was $0.6 million, a reflection of our successful completion of the RCCTL program for the U.S. Army as Kang previously mentioned. Moving to our profitability metrics. Our gross margin was negative 152% for the third quarter compared to negative 185% in Q3 202 two and an improvement from negative 186% in Q2 2023. As we've discussed in prior quarters, we see significant gross margin variation as our product and service revenue mix fluctuates. Also, we anticipate that factory start-up costs will ramp up as we start Colorado Construction in earnest. Longer term, we are confident that our GAAP gross margin will begin to normalize as we approach our capacity expansion goals. Now on to our operating expense management. Our operating expenses for the third quarter were…

Thanks, Sandra. I'd like to reemphasize a few key points before closing. First, Amprius Silicon or technology continues to demonstrate unmatched performance in our industry. Amprius command a firm lead with their combination of safety, energy, power, charging time, and temperature performance, and are uniquely positioned for the electric mobility market. Second, Amprius battery are commercially available today. We have been shipping commercial products since 2018, and our technological advancement continues to bring in significant customer demand. This quarter, we not only delivered to repeated customers and expand our technical engagements, we added 18 new customers as well. Our demand pipeline is robust, and we look forward to further building out our customer book in the coming quarters. Third, we are scaling our manufacturing capacity to serve significantly ahead with our two MWh production line nearing completion, we are expanding our footprint and the capacity at Amprius Lab in California. We also remain on track to build out Amprius Fab, our gigawatt scale facility in Colorado, which we expect to be operational entering 2025. Finally, we are looking forward to several exciting milestones as we head into 2024. We expect to operationalize our megawatt-scale silicon anode battery manufacturing facility at Amprius lab, continue securing customer commitments to fulfill Amprius Fab, expect production capacity for 2025 and delivered $500 Wh/kg battery prototypes to select customers. As we look to the rest of the year, our strategy and focus in Amprius remains unchanged. We have a tremendous opportunity ahead with a product portfolio that positions us to both growth in aviation market and expand to other industries seeking batteries with leading performance. The opportunities in front of Amprius are enormous, including the $49 billion aviation battery market by 2025, the $67 billion EV battery market by 2025 and the $1.25 billion conformal wearable battery market by 2030; of all of which are Amprius growth path in coming years. 2023 has been a very productive year for the Company thus far. Our solid third quarter performance has demonstrated our team's ability to deliver what we have planned and promised. Thank you for your continued support of Amprius Technologies. With that, I will turn it back to the operator for questions and answers.

[Operator Instructions]. Our first question comes from Colin Rusch with Oppenheimer. Please proceed.

Thanks so much, guys. I'll just pack them all into a single line of questioning. Can you talk a little bit about your potential price leverage given the higher energy density to the cells any risk to capital payment coming from international sources into the U.S. as you start to ramp up? And then for Sandra, if you could address timing for any potential incremental sources of capital? And I'll hop back in a few after that. Thanks.

Okay, Colin. Thanks. First, at this moment, we have a significant leverage in terms of our product selling price because this is only product which can perform at a desired level. And there is no other commercial product that can perform at 450 Wh/kg with the power capacity we deliver. So we do have better pricing and then alternatives as far as I know. Secondly, in terms of production equipment, we have entire large scale, I mean, the megawatt scale, 500 megawatt scale production equipment is specified, and supplier select at this moment, we're working on the details of the purchasing contracts.

Great. And I'll step in and answer the timing of any potential capital needs Colin, great question. So right now, we don't have any immediate plans. We filed the shelf for $400 million. We have $100 million ATM facility in place. And I think as our schedule becomes more confirmed as far as the build-out, we'll be taking a harder look at timing.

Our next question comes from Chris Souther with B. Riley. Please proceed.

Hey, guys. Thanks for taking my questions. Maybe just around the customer progress. Can you talk a little bit about the overall size of the orders from this pre-premier electric aviation capacities you called out and contra that those orders cover, maybe you could kind of frame the overall opportunity set there as part of a broader conversation around the backlog building activities. I'm trying to get a better sense of where we are in starting to sell out capacity in Colorado.

Yes, Chris. Well, first, as we mentioned, we sold out our 2024 production capacity in California because that's the place we have the manufacturing factory. So we also have a very strong forecast because those customers will not give us orders until this year, we have production capacity available. But we did receive a commit, okay, forecast tens of megawatts at this moment. We are keep building the pipeline. If we look at the entire forecast, the entire forecast is very strong. We have customer give us the indication, okay, over 100 megawatts, but in terms of signed agreements, we have tens or several tens of megawatts the capacity engaged at this moment.

Yeah, okay. That's really helpful. And it certainly makes sense around seeing Colorado in action before a lot of the formal large orders. So on the point around 2024 capacity being sold out, I assume existing customers with like commercial products are prioritized, but how are you prioritizing new potential customers versus existing customers who are looking for samples? It seems like you continue to add new customers to the fold here. Just what does the mix look like of new and existing customers kind of next year?

We do allocate a certain capacity to serve new customers, as we mentioned, for something for the piping, but our primary commitment will be to the customer we already serve. But we believe -- we do have -- yes, we do have a sufficient capacity allocation for new customer engagement.

[Operator Instructions] Our next question comes from Tim Moore with E.F. Hutton. Please proceed.

Thanks. Given that the aviation market prioritizes safety first and Energy and Power, how meaningful of a breakthrough could that electric vertical takeoff and landing purchase order that you recently got, be for you to help serve now all the major segments of the electric mobility and aviation you bundle and cross-sell a complete offering now that you got the vertical take-off and landing quarter?

We do have Integrity group building blocks or electric mobility applications. We truly believe that's the case because the energy, the power, safety, charging time, tentative performance, even the pressure performance, low pressure performance we delivered to the aviation market can be applied to other markets, especially for EVs. At this moment, we don't have a large formal manufacturing capability at Amprius, but that would change. I think we have all the technical building blocks available for the applications.

That's helpful. That's nice to hear. And then my other question, just my follow-up question would be your Colorado Scale Factory cleared that ordinance milestone six weeks ago. Can you just walk us through what else you need to meet or achieve beginning the operations of the fab in the first half of next year besides receiving the equipment. Is there any other kind of hurdles or actions that you need to do besides just receiving and installing equipment?

The equipment part, we have a select, I would say, the most advanced lithium-ion battery manufacturing equipment suppliers in this industry. We select four suppliers for the internal manufacturing line. The delivery time would be three maximum a month. We have, at this moment, we are negotiating the final details of the purchasing contracts. So that's not the problem. Currently, we're still working on some regulatory issues. I think the regulatory issues is the major bottleneck for us to move forward. For example, air permitting of those kinds of things, we did a work out. We, at this moment, look at the schedule we have here, we probably need to push our construction plan to early next year instead this month before we thought that we can get this thing done this month now, we probably push it to sometimes in January to start the construction.

Great. That's helpful, King. Thanks for sharing that. I'll save the rest of my questions for offline later tonight. Thanks.

Our next question comes from Abhi Sinha with Northland Capital. Please proceed.

Hi. This is Kailash on behalf of Abishek. So with respect to the conformal wearable batteries, we just wanted to know if you could deliver to militaries outside the U.S.?

We can to certain countries, for example, Paris, Australia, Japan countries, we shouldn't have a problem. But for certain countries, we do need to have an export license for that engagement.

Perfect. And as a follow-up, can you remind us how much revenue you would need to break even with respect to gross margin? And when do you expect that to happen? Thanks.

So as of now, we haven't given guidance as far as our financial model. So we haven't disclosed that.

Perfect. Thank you.

Our next question comes from Amit Dayal with HC Wainwright. Please proceed.

Thank you. Good afternoon, everyone. Can you remind us guys, for the Colorado facility, what the total CapEx requirement is to get to that 500 megawatt hour Phase 1 capacity target?

Yeah. We have given some ranges before. What we've updated as we get more information is we now know that the production equipment will run between $70 million and $100 million, including tariffs for delivery to Colorado and the construction costs are still being updated based on the 60% drawings for the facility. So we haven't updated that range recently.

Okay. Thank you, Sandra. I guess a follow-up to or adjacent question to that with respect to the Fremont capacity is how should we think about modeling for the ramp at three months for the two megawatt hour?

So we'll have the equipment online and available. We're very excited to showcase it on December 14, along with the rest of the 2-megawatt facility. We would expect that it will ramp up slowly throughout the year sequentially each quarter. It won't all be available Q1.

Okay. All right. Yeah, that's all I have for now. I will, you know, follow-up with you offline. Thank you.

The next question comes from Jeff Grant with Alliance Global. Please proceed.

Good afternoon. Thanks for the time. With the impending additional capacity at Fremont, I imagine there's some potential to add more new customers while also increasing allocations to existing customers. Is that something you guys are considering at all? Or are there any constraints internally from maybe a personnel standpoint in managing more new customers?

That would be the case. We view this capacity expansion with a new customer in mind. One of the reasons we built this new capacity because we're already out of the capacity for current customers. So the new capacity will enable us to engage more customers.

Great. Thank you. And can you talk at all about the time line of commerciality of the 500-watt hour battery that you guys are working on? And what are kind of the early demand indications you see in terms of where that fits in the market relative to some of the existing offerings that you guys have already commercialized?

We already have a customer demand, actually quite a strong demand. So we expect to restart to install our equipment and start the initial manufacturing in 2025. At that time, we can have a customer factory inspection. We can provide -- we call pilot production prototypes to customers for evaluation.

Yes, I think, Jeff, if your question was more around the 500 watt per kilogram of a 53 megawatts?

Sorry, it was more specific to the 500-watt hour battery that you guys are testing Yes. I believe you talked about piloting that soon, but I was just wondering the path to commerciality.

No. So that we'll be hoping to shift prototypes to select strategics by the end of this year and then move into commercialization in the first part of 2024. To Kang's point, those products have already been designed into several of our customer platforms. So we're expecting that to ramp next year as well.

Great. Thank you.

At this time, this concludes our question-and-answer session. If you have any additional questions, you may contact Amprius Investor Relations team at ir@Amprius.com. I'd now like to turn the call over to Dr. Sun for his closing remarks.

Thanks, again, everyone, for joining us today. As a reminder, you may learn more about our Company, find additional updates, and learn about the upcoming events and presentations from the Investor Relations section of our website. We hope to see you at the advanced automotive battery conference in San Diego next month and at our Fremont, California expansion showcase event shortly thereafter. And we look forward to updating you on Amprius progress on our next call. Finally, I would like to thank our employees, partners and shareholders for their continued support. Operator?

Thank you for joining us today for Amprius Technologies Third Quarter 2023 Earnings Conference Call. You may now disconnect.