Good afternoon. Welcome to Amprius Technologies' Second Quarter 2024 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun; and CFO, Sandra Wallach. [Operator Instructions]. Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding future product commercialization, new customer adoption and applications and the timing and ability of Amprius to expand its manufacturing capacity, build its large scale manufacturing facility, scale of 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 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 will now turn the call over to Amprius Technologies, 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 overview of our second first quarter accomplishments. We are also highlighting some of the upcoming milestones, we are expecting for this year. Our CFO, Sandra Wallach, will then discuss our financial results for the period. After that, we 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 Amprius to those who may be new to the company. As a reminder, here at Amprius, we develop, manufacture and market high-energy density and high-power density batteries with applications across all segments of the electric mobility, including the aviation and the EV industries. Today, Amprius commenced performance leadership in its completion of battery, energy density, power density, charging time, operating temperature range and safety. Across our battery portfolio, we offer unmatched performance, commercially available batteries. Amprius has been delivering commercial battery to the label certain aircraft and vehicles to maximize performance, we enable our customers to achieve their economic targets as well. In addition to what is commercially available today, we have also achieved third-party validation of our latest 500 watt-hour per kilo, 1,300 watt-hour per liter battery platform. This battery will be ready for commercial shipment later this year. It's our belief that there are no other commercial batteries on the market that can perform at these levels today. Amprius is the silicone anode batteries pioneer with over a decade of the development experience, producing a strong patent portfolio of over 80 issued patents and patent applications, and the long-track record of commercial statements and the customer success. Turning to the second quarter results, Amprius had a very productive quarter. We delivered new high-performance batteries to the market, developed…

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 second quarter with $3.3 million in total revenue. As we have previously discussed, our total revenue is a combination of our main revenue streams: product revenue, development services and grant revenue. This quarter, all $3.3 million came from our product revenue. As we've discussed in prior quarters, our development services revenue comes from development programs that are non-recurring in nature. On a sequential quarter over quarter basis, our product revenue increased $1 million or 43%, and compared to prior year, revenue increased $1.7 million or 105%. These increases were driven by shipments to 56 customers in the quarter. Although our product revenue remains largely driven by customer purchase orders that can arise at uneven times throughout the year, we have shown consistent new customer growth and diversification in recent quarters. As Kang mentioned, 24 of the 56 customers this quarter were new customers. Also, three customers this quarter represented greater than 10% of revenue compared with three in Q1 2024 and five in the same period last year. Going forward, we will continue adding to our customer mix to diversify our revenue streams and provide more reliable product output as we get to a position of scale. Moving to our profitability metrics, our gross margin was negative 195% for the quarter compared with negative 109% in Q1 2024 and negative 186% in the prior year period. As a reminder, we see significant gross margin variation as our product and service revenue mix fluctuates. Also, our gross margin continues to be impacted by preconstruction costs related to the Colorado facility. Longer term, we are confident that our GAAP…

Thanks, Sandra. As we look ahead, our strategy at Amprius has remained unchanged. Our top priorities are innovating in next generation batteries, growing our customer base, and scaling our manufacturing capacities. We have repeatedly demonstrated unmatched breakthrough battery performance in our industry, amending a firm technology lead with our cell combination of safety, energy, power, charging time and the timeshare performance. Our batteries are uniquely positioned for electrical mobility market and they are globally available right now. Our breakthrough technologies are already validated by our growing book of customers. This quarter alone, we shipped to over 56 customers, as we continue to expand our portfolio of offerings to meet a greater range of user cases, we expect significantly more traction with customers. We have developed the contracted manufacturing capacities that support annually over 10 million pouch battery cells and 125 million cylindrical cells for our SiCore batteries. We are also expanding our Fremont production capacity for SiMaxx battery production and finalizing our design process to our gigawatt hour factory in Colorado. Looking ahead, we have several upcoming milestones in the second half of the year that align with our main priorities. We expect to fully optimize our SiMaxx production process and the ramp up of production to up to 2 megawatt run rate exiting the year at our Fremont facility. This will represent a 10-fold increase in our production levels that we had exited in 2023 and give us additional capacity coming online through 2025. We intend to use this expanded capacity to continue growing our new customer order book, as well as move existing strategic customers on the technical to commercial validation process for the SiMaxx product. We're looking forward to bring additional new customer segments and expanding applications with our current customers as we're leveraging our unmatched commercially…

Thank you. [Operator Instructions]. Our first question comes from Colin Rusch from Oppenheimer. Go ahead.

Thanks so much guys. You've got an impressive customer list and it continues to grow. As you brought on the potential SiCore capacity, can you talk a little bit about the design cycles and the cycle times for when we might start seeing some of those customers start to drive more significant volumes?

Yes, Colin, we introduced the SiCore early this year in January 2024. So the customer need to go through the modification -- two steps of modification. The first thing is the product modification, that normally takes 9 to 12 months. So after that, there is production qualification. We already have a customer start of the second stage of the modification. In September, we will have customer come to our manufacturing site to look at our manufacturing facilities. So normally, this will take some 9 to 18 months, depends on the size and the complexity of the project.

Great. And then, as you look at the ramp up in Fremont, can you talk a little bit about any sort of surprises that you're running into as you start getting a little bit more into the meat of that ramp up?

Yes. Fremont we qualify the Fremont, the first the most important thing is to grow the silicon nanowire, that's the SiMaxx product. We already qualified the central thermostat tool for silicon nanowire growth. That's the step we have, but the entire manufacturing process need to be optimized to reach the nameplate capacity. So we next few months will be the time for us to develop and optimize those process. By end of the year, we will have this is our plan, the end of the year, we should have better facility in full production.

Thanks so much guys. I'll take it offline.

The next question comes from Chip Moore from Roth. Go ahead, Chip.

Thank you. Hey, everybody. Thanks for taking the question. I wanted to ask about the I think it was $7.6 million in new bookings that you mentioned. Is that all SiMaxx? And how should we think about timeline on those orders?

Yes, that's across both SiMaxx and SiCore, and most of those are for the upcoming quarters.

Got it. So most of that in the back half of the year is a fair assumption?

Right. With the exception of some large purchase orders that we got from AALTO/Airbus, which include committing capacity through 2025, but I would say the majority of it is for the next couple of quarters along with the backlog that we had coming into the quarter.

Got it. Okay, that's helpful. Thanks, Sandra. And then maybe just my follow-up, you mentioned maybe some factors that might impact Colorado, I think it was maybe scope and schedule, just any more detail there on how you're thinking about things right now and what you might contemplate as some key swing factors?

Chip, there are many factors. You know the last 12 months, the battery industry has changed significantly. The supply, the demand, the government policies, there are many possible factors that could influence our design and influence, how we operate at the factory. So, we need to wait for a couple -- we have not stopped moving forward. We just have not put all the effort and accelerated the process. We finished the 60% of the design. We are working on 90% design. We finished most of the regulatory issues. We are moving forward with caution, not just us, the entire industry now will pay attention to the supply and the demand and the cost of operation and the government incentives today or government incentives in the future.

Understood. Yes. We'll see what happens, right, in November as well. Okay. Thanks very much.

Our next question comes from Jeff Grampp from Alliance Global Partners. Go ahead, Jeff.

Afternoon, everyone. Wanted to touch on the customer count, was down a bit sequentially, but obviously Q1 was a super strong quarter for you guys from a customer account perspective. I'm wondering how you guys are interpreting that. Do you see customers order and then maybe take a few months or couple of quarters to kind of assess and then potentially come back where some of these maybe anticipated one offs, so perhaps that Q1 was inflated. Just wondering how you guys are interpreting that customer count change from Q1 to Q2 and how you see it going forward?

Customer account change does not mean we have less customer, Jeff, because of the former customer, they acquired sample, they take time to evaluate the sample. During this period of time, we did ship to them additional samples, so they are not accounted for our shipments.

Understood. Okay, thank you. And for my follow-up, I'm curious the customer receptivity with SiCore is obviously very strong. You have the third parties that obviously have a lot of capacity, but at the same time you guys are focused within Colorado on SiCore. I'm curious, do you expect customers, will only order from a U.S. domiciled SiCore facility or would that kind of be a natural transition as you stand that facility up whereby you're fulfilling that through your tolling partners and then over time would transition that once Colorado is online? Like what is -- how important is that for customers having that U.S. Supply chain in place?

Most of the customer only two parameters, quality and cost. Another one is the performance. We have leading performance batteries, but we expect our factory to deliver quality and a cost and a favorable cost. So for now, I would say majority of the customer really don't pay attention why the battery are made. Of course, we have some special application that will require we make batteries in the United States. So we developed a significant manufacturing capacity there. You can see we have over 10 million power cells available to us in 2024. We have over 100 million cylindrical cell manufacturing capacity available to us in 2024. So, the manufacturing capacity for SiCore is no longer an issue for us. We just need to sell more. At the same time, we do have a customer, hope we can produce domestically. So we are working on that, okay, that's the Colorado. In addition to that, we are also planning to have more manufacturing partners in other region, for example, in Europe.

Okay. Great details. Thank you guys for the time.

Our next question comes from Donovan Schafer from Northland Capital Markets. Go ahead, Donovan.

Hi, guys. Thanks for taking the questions. So first I want to ask, in the letter to shareholders, you mentioned that 50% of the Q2 deliveries or revenue was from outside the U.S. Is that a mix that we would expect to continue going forward or was that kind of an outlier for the quarter?

So, Donovan, in last year or earlier, our primary focus is in U.S. and some in Europe such as Airbus. So now we want to go globally, okay. We want to expand our market reach and that means not just the U.S., not just Europe, okay, we're including Asia in our market engagement. Okay.

And then with the ATM, if you can just give us an update whether there has been any usage of the ATM so far into the third quarter?

Yes. So we have not been active on the ATM in the third quarter.

Okay. And then just one last one to squeeze in is for the milestones for the rest of the year, when you say you plan to finalize design drawings for the Brighton facility by the year end, does that mean does it follow the same goal or that we can have the expectation that there will be a cost estimate by year end as well or could that take longer?

By year end, we would have more accurate cost estimation. We do have cost estimation today, but based on 60% design, we like to finish this design before year end and have the cost estimate and -- more accurate cost estimate and the entire construction market and the raw materials for construction, all those things have been very dynamic, okay. So we update our information almost on a monthly basis. So before end of the year, we should have regulatory issues resolved and we should have a design finished, we should have a construction cost estimate.

Would have and would you expect to share the cost estimate publicly at that time?

We will see, you know, how I created the data, Sandra?

Yes. I think it depends on how quickly we're going to move the facility forward and I think that's the part that we're still evaluating.

Okay. All right. That's helpful.

Our next question comes from Ryan Pfingst from B. Riley. Go ahead, Ryan.

Hey, thanks for taking my questions. Just a follow-up on some commentary you had earlier. Could you just tell us what some of the risks are on the policy side if we do get a change in administration in November?

That one is difficult for us to comment, Ryan. Although, such speculations, right, there is no fact at this moment. For us, not just the common incentives, we need to look at the market dynamics. At this moment, the manufacturing capacity for our SiCore product is not an issue. We have tremendous manufacturing capacity behind us, At the same time, we are developing our SiMaxx manufacturing capacity here. So the company has a product, has a manufacturing capacity. We have a customer base, we just need to accelerate the customer modification process to grow the revenue.

Fair enough. And then understanding that EVs are a longer term focus, but wondering if you had an update on your engagement with OEMs and if we might see a related announcement in the near term there?

As we mentioned earlier, last few calls, we do have engagement with all segments of electric mobility including EVs, but we don't have a commercial product for EV customers, but we do have technical exchanges.

Got it. Thanks for those answers.

Our next question comes from Amit Dayal from H.C. Wainwright. Your line is now open.

Thank you. Good afternoon everyone. Most of my questions have been asked. Just one question around the Colorado facility, are we fully committed to building this facility out or in the for preserving the balance sheet and capital etc.? As you scale up, could you potentially contract manufacture both the SiCore and SiMaxx offerings while you build the market for these products?

Sure. We, in terms of SiCore manufacturing capacity, we have plans probably can support us for the next few years. Even today this year we have 10 million, next year we will have much more capacity available to us. In better sense, there is no additional capacity needed. However, we consider as a manufacturing company we do need to have our own manufacturing facility. So that's why we are still working on the Colorado factory. As Sandra mentioned it before, manufacturers needed to be considered, okay, and we will see what kind of design, what kind of capacity we need in Colorado because the market has been changed compared to two years ago. So we need to reevaluate our design, our scale of our own factory in the United States. The manufacturing capacity for SiCore as I mentioned is no longer the issue for Amprius.

Understood. I'm just trying to get a sense when by when you might make that call because it gives investors a sense of how you can use your balance sheet to progress the commercialization efforts?

Understood. We at this moment, we're still working on the project, because we need to see the market dynamics, the market is changing very fast. I think at the end of the year, not just the market dynamics also the political dynamics will influence what we are going to do.

Okay. Yeah, that's all I have guys. I'll take my other questions offline. Thank you.

At this time, this concludes our question and answer session. If your question was not taken, you may contact Amprius's Investor Relations team at ir@amprius.com. I would now like to turn the call back over to Kang Sun for any closing remarks.

Thanks again everyone for joining us today. As a reminder, you can find out more about our company, receive additional updates and learn about upcoming events and the presentations from the Investor Relations section of our website. We hope to see you at one of our upcoming conferences, and we'll continue to update you on the exciting progress we are making in transforming the electrical mobility market. Finally, I would like to thank our employees, partners and the shareholders for their continued support. Operator?

Thank you for joining us today for Amprius Technology First Quarter 2023 Earnings Conference Call. [Operator Closing Remarks].