Amprius Technologies Inc. Q1 2023 Earnings Call

May 10, 2023

Operator: Good afternoon. Welcome to Amprius Technologies' Q1 2023 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun, and CFO, Sandra Walck. 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, 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.

Speaker 3: Good afternoon. Welcome to Ambrose Technologies' first quarter, 2023 Earnings Conference Call. Joining us for today's presentation are the company 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.

Speaker 4: 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, scale its business, and achieve a sustainable cost structure.

Speaker 5: 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 contact the 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, performance, or

Rachel Smith: For a more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission, including, but not limited to, the discussion of Amprius' risk factors in its annual report on Form 10-K filed on 30 March 2023. 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 will now turn the call over to Amprius Technologies' CEO, Dr. Kang Sun, for his comments. Sir, please proceed.

Operator: For a more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission, including, but not limited to, the discussion of Amprius' risk factors in its annual report on Form 10-K filed on 30 March 2023. 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 will now turn the call over to Amprius Technologies' CEO, Dr. Kang Sun, for his comments. Sir, please proceed.

Speaker 6: Please refer to Ampereous as Filing with the Securities and Exchange Commission, including but not limited to the discussion of Ampereous as Risks Factors in its annual report on Form 10K, filed on March 30, 2023.

Speaker 7: 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.

Speaker 8: I will now turn the call over to Amprius Technology CEO , Dr. Kang Sun, for his comments. Sir, please proceed.

Kang Sun: Welcome, everyone, and thank you for joining us this afternoon. After I report on our progress and accomplishments at Amprius in Q1, our CFO, Sandra Walck, will discuss our financial results for the period. After that, I will share some closing remarks before opening the call for questions. As some of you may know, Amprius is an ultra-high energy density lithium-ion battery developer and a manufacturer. Our high-performance batteries are based on Amprius' proprietary high-capacity silicon anode technologies. Today, Amprius delivers commercial batteries with 450 Wh/kg specific energy density and 1150 Wh/L volumetric energy density. Our batteries also have up to 10C power capability, and they enable the extreme fast charging rates of 0 to 80% state of charge in approximately 6 minutes.

Speaker 9: Welcome everyone and thank you for joining us this afternoon. After we report our progress and our condition at Ampere seeing the first quarter, our CFO Central Wallica will discuss our financial results for the period.

Speaker 10: However, that will share some closing remarks before opening the call for questions.

Speaker 11: As some of you may know, Amperes is an ultra high energy density DCML battery developer and manufacturer. Our high performance batteries are based on Amperes proprietary high capacity silicon andppy Bowl spike applications.

Speaker 12: Today, I'm facing the reverse commercial batteries with 450W of Pactiro, specific Amigurant Agency, and the 1150W of PoliHerb, body-metric Amigurant Agency.

Speaker 13: Our ventries also have up to 10C polychip identity.

Speaker 14: and enable the extreme fast charging rates of 0 to 80% field charged in approximately

Kang Sun: Amprius batteries are built for the toughest operating environments with 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 minus 30 degrees Celsius to up to 55 degrees Celsius. It's our belief that there is no one else in the commercial market that can perform at these levels. Amprius has over 80 patents and extensive know-how in silicon anode and silicon anode manufacturing technologies. Amprius has been in commercial battery production since 2018, so the company has many years of manufacturing experience of high-energy density, high-power density lithium-ion batteries. 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 aviation, and the EV industries.

Speaker 15: Ampere's batteries are built for the task of operating environments.

Speaker 16: with the durability to pass the United States military benchmark and new pan-trition test as well as the versatility to alter it in an extremely wide range.

Speaker 17: of minus 30 degrees Celsius.

Speaker 18: to up to 55 cents. He thought we'd believe that there is no errors in the commercial market that can perform at these levels.

Speaker 19: So the company has many years of manufacturing experience of high energy density, high power density DCML batteries.

Speaker 20: Our near-term goal is to scale our meta-faction with a long-term goal of becoming a mainstream mainstream patriarution.

Speaker 21: with applications across all segments of electrical mobility including aviation and even industries. Using our momentum from last year.

Kang Sun: Building our momentum from last year, we believe that we have hit the ground running so far in 2023. With new technology breakthroughs, continued commercial successes, and additional developments for our production capacity expansion, our Q1 achievements were important steps toward accomplishing our goal for 2023. I would now like to highlight a few events. In March, we announced the Amprius' new battery platform, which is independently verified for 500 Wh/kg specific energy density and a 1350 Wh/L volumetric energy density. Our 500 Wh/kg battery platform was purposely designed to serve the needs of certain strategic customer projects such as Aalto HAPS, the Airbus subsidiary developing high-altitude pseudo-satellite or HAPS. We expect to be able to ship prototypes to these select customers before end of 2023.

Speaker 22: We believe that we have a heat of the growing running so far in 2023.

Speaker 23: With new technology brief films, continued.

Speaker 24: commercial successes and additional developments for our production capacity expansion.

Speaker 25: Our first quarter achievements were important steps toward accomplishing our goal for 2023.

Speaker 26: I would now like to highlight a few events.

Speaker 27: In March, we announced the MPS new battery platform, which is independently verified for 500 Wh per kilo specific energy density and 1350 Wh per liter volumetric energy density.

Speaker 28: I will pay $ five hundred and acap with nothing so that it is made of plastic!

Speaker 29: was purposely designed to serve the needs of certain statistical customer projects.

Speaker 30: such as ATO or HABs, the Airbus subsidiary developing cloud-induced super satellites or HABs. We expect to be able to ship prototypes to these select customers before end of 2023.

Kang Sun: Amprius's 500 Wh/kg and 1350 Wh/L battery platform not only enhances our customer applications, it also demonstrates the robust product roadmap for Amprius silicon anode technologies. The company will continue to move along that roadmap to deliver the most advanced lithium-ion batteries available on the market. These achievements follow our most recent announcement in December 2022, that an independent third party had verified our passing of the military performance spec nail penetration test with an unprecedented 390 Wh/kg cell. Amprius' innovative polymer electrolyte prevents the penetrating nail from creating a low-resistance short circuit, as indicated by the minimal increase in cell temperature after penetration and only small increase in cell voltage. After nail penetration, the cell is still functioning and providing power, a critical capability for wearable batteries used by soldiers.

Speaker 31: MPS 500 WPG and 1350 WPG battery platform LaoHang Li enhances our customer applications

Speaker 32: It also demonstrates the robust product roadmap for MPS silicon analog technologies. The company will continue to move along that road map to deliver the most advanced ECML batteries available on the market.

a particular cell. I'm facing a negative polymer electrolyte, prevents the penetrating nail.

from creating a movie in the short circuit.

as indicated by the minimal increase in cell temperature after penetration.

and only small increase in cell voltage.

After new penetration, the cell is still functioning and providing power.

the cell still functioning and providing power.

Kang Sun: We announced earlier this month, and after a rigorous selection process, Amprius high energy density batteries were selected by the University of Michigan solar car team for their upcoming 3,000-km race at World Solar Challenge in Australia. The batteries for the race must provide exceptional performance in tough conditions. Our leading performance characteristics are undeniable and should provide the team with an edge for the event. We look forward to working with their team in the coming months. Moving to our business development efforts. We continue to see significant demand for our products in Q1, especially in the aviation and the EV markets, too. As cruising distance and weight are critical properties for aviation, our high energy density lightweight batteries provide ideal solutions, allowing us to develop footholds in the industry.

for variable batteries used by soldiers.

Also, we will announce the earlier this month.

And after a rigorous selection process, Amps High Energy density batteries were select that the University meets the solar car team for their upcoming 3000 kilometer release at a water solar 10 in Australia.

Our leading performance characteristics are undeniable and should provide a team with an edge for the event. We look forward to working with their team in the coming months.

Moving to our business, a development effort.

especially in the aviation and EV tow markets.

as cruising distance and the wheat are critical property for aviation.

Our high energy density led with batteries provided ideal solutions, allowing us to develop clean roads in the industry.

Kang Sun: This quarter was highlighted by successes both across our existing customer as well as through new customer opportunities. We shipped to 19 customers in Q1, including several new accounts. Among serious ongoing new business development opportunities, we kick off a new technical engagement this quarter with a leading aerospace OEM, codifying next steps towards testing and evaluation of Amprius batteries. Also, within our existing clients, we expand our relationship with AeroVironment to be the supplier of a key power element in AeroVironment's Switchblade 300 Block 20 missile. We expect to continue our regularly scheduled commercial shipments to AeroVironment as well as to Teledyne FLIR, two repeat customers and strong partners for Amprius.

This quarter was highlighted by the successes both class of existing customers.

as well as through new customer opportunities. We shaped to lending customers in the first quarter.

including several UCCAT dual counts.

Among a series of ongoing new business development opportunities, we kick off a new technical engagement this quarter with the leading aerospace OEM.

qualifying next steps towards testing and evaluation of ampere batteries.

Also, within our existing clients, we expand our relationship with the environment to be the supplier of key power elements in an environment such as a solar system, a solar system, or

switch blade 300 block 20 missile. We expect to continue our regularly scheduled commercial shipments to environments as well as to telegrams to repeat customers and strong partners for MPs.

Kang Sun: In addition, we have received a significant interest from other existing battery pack manufacturing partners for sizable expanded contracts to serve the larger aviation segment, including hundreds of MW through 2025 and beyond. Our pipeline of interest partners continues to grow, and we believe that our efforts to build out our manufacturing capacity will lead to additional new and expanded orders in the coming quarters. As we think about our goal for the next several years, our primary focus remains on expanding capacity to meet demand and ultimately achieve a sustainable cost structure at scale. After a transformation of 2022, with several strategic moves, including two cost-sharing grants that we were selected to receive from the United States Department of Energy, we continued to make important strides toward our goals in our Q1.

In addition, we have received the significant interest from other existing battery-pag manufacturing partners for sizable extended contracts to serve the larger aviation segment.

including in hundreds of megawatts through 2025 and beyond. Our pipeline of the interest partners continues to grow, and we believe that our efforts to build out our manufacturing capacity.

will lead to additional new and extended orders.

lead to additional legal and expand the orders in the coming quarters.

As we think about our goal for the last several years,

Our primary focus remains on expanding capacity to meet demand and ultimately achieve a sustainable cost structure at scale. After the transformation of 2022, with several strategic moves including two cost-sharing grants,

that we will select

to receive from the United States Department of Energy.

Kang Sun: First, we recently expand our facility at Amprius Lab in Fremont, California, to accommodate our first large-scale anode production machine from Centrotherm. We now possess the second half of our existing facility, which we expect allows us to both perfect our high volume manufacturing processes and increase our capacity for silicon anode battery production to approximately 2MWh or 10 times our current production capacity exiting 2023. We look forward to better serving strategic aviation customers' needs and supporting prototyping and qualification projects with new customers who are currently in our backlog. We also announced in March that we had selected a site in Brighton, Colorado as the location for our approximately 775,000sq ft large-scale production facility. The first mass production site for next generation battery technology in the United States.

We continued to make important strides toward our goals in our first quarter.

to make an important disgrace toward our goals in our first quarter. First.

We recently expanded our facility at MPS Lab in Fremont, California, to accommodate our first large-scale annual production machine from Central Third.

We now process the second half of our existing facility.

which we expect allows us to both perfect our high volume manufacturing processes and increase our capacity for silicon annual battery production to approximately 2 NWh.

or 10 times our current production capacity.

our current production capacity existing in 2023.

We look forward to better serving strategic evasion customers' needs and supporting prototyping and the qualification projects with a new customer who are current in our backlog. We also launched the March set.

approximately 775,000 square foot large scale production facility.

the first mass production set for next generation battery technology in the United States.

Kang Sun: The selection of the Colorado for our gigawatt scale factory marks an important milestone for Amprius. Initial phase of our build out will provide a potential of up to 5 gigawatt with expansion capability for up to total potential manufacturing capacity of 10 gigawatt. As a reminder, this Amprius Fab facility is already equipped with electrical power and the existing structure layout needed for gigawatt scale lithium-ion battery factory, which will reduce build-out costs and time to the market with the goal of being operational in 2025. Also, Brighton is closer to some of our material distributors in the Northwestern United States, which we expect will lower operational costs over the long time. Lastly, as part of our 18 to 24 months plan to scale, we signed our lease for Amprius Fab in April. We are aiming to begin retrofitting the facility towards the end of summer.

The selection of the Colorado for our gigawatt scale factory marks important milestones for NPOs.

The lethal phase of our good-outs will provide a potential of up to 5GIGWA with extension Can'tdanna feel stopped.

for up to total potential manufacturing capacity of 10 gigawatts. As a reminder, this MPS fab facility is already equipped with electrical power and the existing structural layout needed for gigawatt scale DC-MIM battery factory.

which will reduce build-out costs and time to the market with the goal of being operational in 2025. Also, Bryson is closer to some of our material distributors in the Northwest and United States.

which we expect will lower our operational costs over the long time.

operational costs over the long time. How large will outcome be on a

As part of our 18 to 24 months plan to scale, we signed our lease for Andres Fab in April . We are aiming to begin retrofitting the facility towards the end of summer.

Kang Sun: Overall, this new facility will transform our long-term production capabilities. In the near term, we will continue to develop and ship cutting-edge products from Amprius Lab in Fremont, while we refine our manufacturing processes to further de-risk the handoff of our mass production to Amprius Fab in Brighton, Colorado in the coming years. I have one final update before I turn the call over to Sandra. Enabling our entire operation here at Amprius is our exceptional team and ongoing support from our board of directors. We recently announced that we have extended our board and appointed Kathleen Bayless as an independent director and our Audit Committee Chair. With her extensive management and board experience, we look forward to her unique perspectives on our board moving forward. We are excited to have her on our team as we work to execute our growth strategy.

Overall, 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 the Ampest lab in FEMA, where we refine our manufacturing processes to further decrease to the hand-off of our Father-Mess production to Ampest Fabbing Brighton Carado in the coming years.

over to the center. Enabling our entire operation here at Ampere's desire for exceptional team and ongoing support from our board of directors.

We recently announced that we have expanded our board and point-caffling fillers as the independent director.

and our auditing committee chair. With her extensive management and the board experience.

We look forward to her unique perspectives, our board, moving forward.

We look forward to her unique perspectives on our board moving forward. We are excited to have her on our team.

Kang Sun: With the overview complete, I will now turn the call over to our CFO, Sandra Wallach, to review our financial results for the quarter. Sandra?

as we work to execute our growth strategy. With the overview complete,

I will now turn the call over to our CFO , Sandra Wallach, to review our financial results for the quarter. I will now turn the call over to our CFO , Sandra Wallach, to review our financial results for the quarter.

turn the car over to our CFOs, Sandra Wallick, to review our financial results for the portion. Sandra.

Sandra Wallach: Thank you, Kang. 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. We closed out Q1 with $0.7 million in revenue compared to $2.1 million in Q1 2022. This decrease was partially due to a decrease of $1.5 million in development services revenue and a decrease of $0.1 million for the quarter year-over-year in product revenue, both partially offset by an increase of $0.2 million in government grant revenue. Of note, due to the timing of customer shipments, we ended the quarter with both $0.5 million more in product inventory than in the same quarter last year and $2.5 million in increased deferred revenue, pending final delivery of performance obligations later this year.

Thank you, Kang. 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. Thank you.

We closed out the first quarter with $0.7 million in revenue, compared to $2.1 million in Q1 2022.

This decrease was partially due to a decrease of $1.5 million in development services revenue.

and a decrease of $0.1 million for the quarter year-over-year in product revenue, both partially offset by an increase of $0.2 million in government grant revenue.

Of note, due to the timing of customer shipments, we ended the quarter with both $0.5 million more in product inventory than in the same quarter last year and $2.5 million in increased deferred revenue pending final delivery of performance obligations later this year.

Sandra Wallach: As we've noted in previous quarters, our product revenue is driven by customer purchase orders arriving at uneven times throughout the year, and development services revenue is intermittent based on revenue recognition timing. However, as Kang mentioned earlier, we shipped to nearly 20 customers this quarter, including 4 new customers, and we believe that our business development efforts continue to gain traction. Once our capacity expands and more customers transition to commercial orders, we expect to see a more even ramp of product revenue. Our GAAP gross margin was -504% in Q1, primarily due to non-recurring startup charges for our large-scale manufacturing facility. These charges included both a $1.4 million broker charge for our economic incentives negotiation and $0.3 million of pre-construction design firm startup cost.

As we've noted in previous quarters, our product revenue is driven by customer purchase orders, arriving at uneven times throughout the year, and development services revenue is intermittent based on revenue recognition timing.

However, as Kang mentioned earlier, we shipped to nearly 20 customers this quarter, including four new customers, and we believe that our business development efforts continue to gain traction.

Our GAAP gross margin was negative 504% in the first quarter, primarily due to non-recurring startup charges for our large-scale manufacturing facility. These charges included both a $1.4 million broker charge for our economic incentives negotiation, and a $1.5 million broker charge for our large-scale manufacturing facility.

Sandra Wallach: As the build-out continues, we expect that more one-time charges are likely to arise. Still, we forecast that our GAAP gross margin will begin to normalize as we reach our capacity expansion goals in the coming years. Moving now to our operating expense management. Our GAAP operating expenses for Q1 increased to $6.3 million, largely due to increased public company costs and additional investment in R&D staffing. Our GAAP net loss for Q1 was $9.1 million, or a net loss of $0.11 per share. Our shares outstanding at 31 March 2023 were 85 million. As of 31 March 2023, there were 65 full-time employees, primarily based in our Fremont, California, location, and our share-based compensation was $0.7 million for Q1. Now turning to the balance sheet.

and $0.3 million of preconstruction design firm startup cost.

As the bill out continues, we expect that more one-time charges are likely to arise.

Still, we forecast that our gap growth margin will begin to normalize as we reach our capacity expansion goals in the coming years.

Moving now to our operating expense management, our GAAP operating expenses for the first quarter increased to $6.3 million, largely due to increased public company cost and additional investment in R&D staffing.

Our gap net loss for the first quarter was $9.1 million or a net loss of $0.11 per share.

Our shares outstanding at March 31, 2023, were $85 million.

As of March 31, 2023, there were 65 full-time employees, primarily based in our Fremont, California location, and our share-based compensation was $0.7 million for the first quarter.

Sandra Wallach: We exited Q1 with $64.2 million in cash and no debt. The key drivers of our cash activity for the quarter were $6.5 million used in operating activities. As we previously discussed, our run rate for cash used in operating activities is projected to be around $2 million per month, in addition to 2022 audit costs and transaction-related expenses. Other drivers include $1.1 million of investment into the expansion of our Amprius Lab facility in Fremont, and $2.1 million in financing cash inflow related to usage of our Committed Equity Facility. These activities resulted in the total net use of cash of $5.5 million for the quarter. Considering our business achievements and ongoing projects, we believe we have been efficiently using capital to drive Amprius forward. Moving to our outlook.

Now, turning to the balance sheet, we exited the first quarter with $64.2 million in cash and no debt. The key drivers of our cash activity for the quarter were…

$6.5 million used in operating activities. As we previously discussed, our run rate for cash used in operating activities is projected to be around $2 million per month in addition to 2022 audit costs and transaction related expenses. Other drivers include $1.1 million in total revenue.

investment into the expansion of our Amparis lab facility in Fremont and $2.1 million in financing cash inflow related to usage of our committed equity facility.

These activities resulted in the total net use of cash, a 5.5 million for the quarter.

Considering our business achievements and ongoing projects, we believe we have been efficiently using capital to drive Amprius forward. Moving to our outlook, we still expect to be limited by manufacturing capacity until we exit 2023, when our new 2 MW capacity is projected to come online.

Sandra Wallach: We still expect to be limited by manufacturing capacity until we exit 2023, when our new 2MW capacity is projected to come online. Regarding revenue, we have several ongoing development services programs with performance obligations that we expect to complete within 2023, which means that we should see increased revenue recognition weighted more heavily towards the latter part of the year. We anticipate that our G&A costs will continue at the higher rate we experienced exiting 2022 when accounting for additional public company expenses. Also, we plan to continue to be lean on other operating expenses as we strategically add critical mass to our Amprius Lab and Amprius Fab operating units and allocate the majority of our capital to scaling up our manufacturing.

Regarding revenue, we have several ongoing development services programs with performance obligations that we expect to complete within 2023, which means that we should see increased revenue recognition weighted more heavily towards the latter part of the year.

We anticipate that our G&A costs will continue at the higher rate we experienced exiting 2022 when accounting for additional public company expenses.

Also, we plan to continue to be lean on other operating expenses as we strategically add critical mass to our Amprius Lab and Amprius Fab operating units and allocate the majority of our capital to scaling up our manufacturing.

Sandra Wallach: To this end, we expect higher capital expenditures going forward as we continue to fully build out the 2MW capacity at Amprius Lab and design and construct our gigawatt-hour scale Amprius Fab facility. Our spending pattern is dependent on several factors outside of our control, including the timing of rezoning approval for the Colorado site. We expect to provide more specific projections as we have additional information to share. As we work to fund capital requirements for our scale up in excess of our previously noted cost-sharing grants from the U.S. Department of Energy, we expect that we will continue to have strong support from the U.S. Inflation Reduction Act as we access production tax credits at the anode and cell level.

To this end, we expect higher capital expenditures going forward as we continue to fully build out the 2 MW capacity at Amprius Lab and design and construct our gigawatt hour scale Amprius Fab facility.

Our spending pattern is dependent on several factors outside of our control, including the timing of rezoning approval for the Colorado site, so we expect to provide more specific projections as we have additional information to share.

As we work to fund capital requirements for our scale-up in excess of our previously noted cost sharing grants from the U.S. Department of Energy, we expect that we will continue to have strong support from the U.S. Inflation Reduction Act as we access production tax credits at the in-ode and sell level.

Sandra Wallach: In addition, we have received over $10 million in state and local incentive packages related to our gigawatt scale facility, which is the 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. Overall, with the strength of the balance sheet and multiple vehicles to generate additional funding through both equity, such as warrants and 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. One last item. Based on the recommendation of a special independent board committee, we entered into a merger agreement with Amprius, Inc., our 77% stockholder. Under the merger agreement, among other things, the shares of common stock currently owned by Amprius Inc.

In addition, we have received over $10 million in state and local incentive packages related 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.

Overall, with the strength of the balance sheet and multiple vehicles to generate additional funding through both equity, such as warrants and 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.

One last item, based on the recommendation of a special independent board committee, we entered into a merger agreement with Ampereus Inc. Our 77% stockholder. Under the merger agreement, among other things, the shares of common stock currently owned by Ampereus Inc.

Sandra Wallach: Will be canceled, and we will issue to the stockholders of Amprius, Inc. new shares of our common stock based on the negotiated and discounted exchange ratio, and we will assume all options and warrants outstanding at Amprius, Inc. The newly issued shares will be subject to the same lockup that applies to Amprius, Inc.'s current shares. The merger is conditioned on, among other things, the approval of a majority of the stockholders of Amprius Technologies that are not affiliated with either Amprius, Inc. or held by any of our directors or officers. We expect the special meeting to approve the merger will occur in the Q3 of this year. For more information, please reference the Form 8-K we filed earlier today. With that, I will conclude the financial discussion and pass the call back to Kang.

We'll be canceled and we will issue to the stockholders of the Ampere Sinc, new shares of our common stock based on the negotiated and disrounded exchange ratio.

And we will assume all options and warrants outstanding at Amprius, Inc.

other things, the approval of a majority of the stockholders of Amprius Technologies that are not affiliated with either Amprius Inc. or held by any of our directors or officers. We expect this special meeting to approve the merger will occur in the third quarter of this year.

Kang Sun: Thanks, Sandra. I'd like to re-emphasize a few points before closing. First, we are delivering next-generation commercially available lithium-ion batteries today. Our market-leading technology and the position in the aviation space are reflective of our unmatched performance in real-world applications and our battery's ability to solve real-world problems. As shown by our recent increase in battery-specific energy density from 450 to 500 Wh/kg, we will continue to enhance our product performance and set new industry standards. Second, we have been shipping commercial products since 2018, so our focus today is not on commercializing. Instead, we are building out the scale to serve significant demand in the US and to support US-based supply chain resilience. Exiting 2023, we will further roll out our large-scale manufacturing process and parameters with our 2 MWh production line at the Amprius Lab in Fremont.

commercially available lithium-ion batteries today. Our market-eating technology and precision in the aviation space are reflective of our unmatched performance in real-world applications.

and our battery's ability to solve real-world problems. As shown by our recent increase in battery specific energy density from 450 to 500 Wh per kilo.

we will continue to enhance our product performance and set new industry standards.

Second, we have been shipping commercial products since 2018. So our focus today is not on commercializing.

Instead, we are building out the scale to serve significantly men in the U.S. and to U.S. based supply chain recipients.

Exiting 2023, we will further pull out our largest scale manufacturing process and parameters.

Kang Sun: We are also moving swiftly to prepare the build-out of Amprius Fab, our gigawatt-scale facility in Brighton, Colorado, for the first 500 megawatt-hour demonstration program with the United States Department of Energy. In the meantime, we are using our limited capacity to provide the necessary samples to potential customers moving through the technical to commercial validation process. Third, we are looking forward to several exciting milestones over the rest of 2023. In H2, we expect to finalize the optimal deposition process for our next production tool development for silicon anode wire, begin construction of Amprius Fab, deliver prototypes of our 500 Wh/kg battery to select customers, and operationalize our 2-megawatt production line at Amprius Lab by the end of the year. As we look to the rest of the year, our strategy and focus at Amprius remains unchanged.

with our two megawatt-hour production line at the MPS lab in Fremont. We are also moving swiftly to prepare the build-out of MPSFET.

Our gigawatt-scale facility in Brighton, Colorado, was the first 500 megawatt demonstration program with the United States Department of Energy.

In the meantime, we are using our limited capacity to provide the necessary samples to potential customers moving through the technical to commercial validation process.

Third, we are looking forward.

Third, we are looking forward to several exciting milestones.

over the rest of the 2023.

In the second half of the year, we expect to finalize the optimal deposition process for our mass production to develop for the city and landowner. Begin construction of Ampere's Feds.

Delivering prototypes of our 500-watt per kilo battery to select customers.

and operationalize our two megawatt production line as Ampest led by end of the year. As we look through the rest of the year, our strategy and the focus at Ampest remains unchanged. The end of the year.

Kang Sun: We have a tremendous opportunity ahead. With product portfolio that position us to both growth in the aviation market and expand it to other industries, seeking batteries with stronger performance and faster charging time. We are continuing to build on our early lead with technological advancement and strategic partnerships. Through the private and the public sector, we now have the capital and are building the capacity to become the leading commercial provider in the sustainable mobility sector. Finally, we believe we have the right team in place to execute our mission and deliver what we have planned and promised over the last decade. Thank you for your continued support of Amprius Technologies. With that, I will turn it back to the operator for the Q&A.

We have a tremendous opportunity ahead with product portfolio that positioned us to both growth in the aviation market and the extent to other industries, taking batteries with a stronger performance and a faster charging time.

We are continuing to build our early lead with technological advancement and strategic partnerships.

tools for private and the public sector.

We now have the capital and are building the capacity to become the leading commercial provider in the sustainable mobility sector.

Finally, we believe we have the right team in place to execute our mission and deliver what we have planned and promised over the last decade. Thank you for your continued support of Ampere's technology.

With that, I will turn it back to the officer.

Operator: Thank you. The floor is now open for questions. If you do have a question, please press star one. If your question has been answered, you can remove yourself from the queue by pressing one. The company requests that each participant limit their comments to one question and one follow-up. Please hold while we poll for questions. Our first question comes from Colin Rusch from Oppenheimer. Go ahead, Colin.

for the Q&A. Thank you. The floor is now open for questions. If you do have a question, please press star 1. If your question has been answered, you can remove yourself from the queue by pressing 1.

The company requests that each participant limit their comments to one question and one follow up.

Please hold while we pull for questions. And our first question comes from Colin Rush from Oppenheimer. Go ahead, Colin. Thanks so much, you guys, for the update. And I'll start, Sandra, just with this murder agreement. I just want to make sure that there's no fundamental change in the capital structure organization. And you're just going to be able to distribute the shares to the individual holders of the whole co. And then...

Colin Rusch: Thanks so much, you guys, for the update. I'll start, Sandra, just with this merger agreement. I just wanna make sure that there's no, you know, fundamental change in the capital structure of the organization. You're just going to be able to distribute the shares to the individual holders of the whole co. You know, those folks they'll be subject to the same lockup as the whole co was previously. Is that the correct way to understand this merger?

you know those folks will have, it will be subred to the same lockup as the the whole goal was previously. Is that the correct way to understand this merger? Yes, it is. Okay, perfect. And then, Kang, in looking at the Colorado facility, can you talk a little bit about how far along you are?

Sandra Wallach: Yes, it is.

Colin Rusch: Okay, perfect. Then, Kang, in looking at the Colorado facility, can you talk a little bit about how far along you are in terms of the, you know, the design and the engineering process. And how much flexibility you have with that still as you work through the 2MW scale-up in Fremont?

in terms of the design and the engineering process and how much flexibility you have with that still as you work through the two megawatt scale-up in Fremont.

Kang Sun: Okay, Colin. As for the Colorado facility, at this moment, we are at the final stage of selection of our production lines to define our production line specifications. You know, we have almost all the equipment lined up. Okay, I mean, the supplier lined up. We are, in June, we probably have the pricing negotiation. Okay. We already finished the technical specifications. This is very, very fast for us because our team has a lot of experience in dealing with equipment suppliers and lithium-ion manufacturing processes. We still working on a few regulatory issues. Yeah, we hope we can start construction. Okay, break ground. We don't need to break the ground, we'll need to retrofit the facility sometime in early fall.

We are at the final stage of selection of our production, to decide our production and specifications. We have almost all the equipment lined up, okay, I mean the supplier lined up. We are in June , we probably have...

pricing negotiation. Okay we already finished the technical specifications. This is very very fast for us because we have our team has a lot of experience in dealing with equipment suppliers and lithium ion manufacturing processes.

So we're still working on a few regulatory issues.

Yeah, we hope we can start the construction, break the ground. We don't need to break the ground, we can need to retrofit the facility sometimes in early fall.

Colin Rusch: Perfect. In Fremont, can you talk about any sort of surprises, either positive or negative, that you're seeing with the tool as you get it installed and start working through some of the testing processes?

Perfect. And then in Fremont, can you talk about any sort of surprises, either positive or negative, that you're seeing with the tool as you get it installed and start working through some of the testing processes? Yeah, Fremont, we do a very rigorous testing in Fremont, also in Germany. So far, we are...

Kang Sun: Yeah, Fremont, we do a very rigorous testing in Fremont, also in Germany. So far, we are moving forward according to our own schedule. I think the next month, June, is an important month for us. This is the time we will complete the most critical part of the evaluation of this process. After that, the rest of those should be relatively smooth.

moving forward according our on schedule. So I think the next month's June is important the month was this is the time we will complete the most critical part of the evaluation of this process.

Colin Rusch: Excellent. Thanks so much, guys.

Operator: Our next question comes from Christopher Souther from B. Riley. Go ahead, Chris.

And our next question comes from Chris Souther from B. Riley. Go ahead, Chris. Sleachy sounds

Christopher Souther: Hey guys. On the CapEx plan, I didn't see any incremental details on the anticipated amounts and timing for the 5GWh Colorado expansion. It sounds like any material changes would become clearer after June, but just wanted to get a sense of how, you know, the size and cadence are shaping out, you know, as far as the CapEx plans.

Hey, guys, I'm the CAFEX planner. I didn't see any incremental detail from the anticipated amount and timing for the 5 gigawatt-hour Colorado expansion. It sounds like any material changes will become clear after June , but I just wanted to get a sense of how the sizing impedance are shaping out.

Sandra Wallach: Yeah. Once we have more detail and certainty about the timing for the first 500MW, which is the DOE demonstration project, then we will be putting together the CapEx plan to get us through the 5GW. The estimates that we've shared prior remain unchanged.

As far as the CapEx plans. Yeah, so we once we have more detail and certainty about the timing for the first 500 megawatts, which is the demonstration project, then we will be putting together.

the CAPEX plan to get us through the 5 gigawatts. But the estimates that we've shared prior remain unchanged.

Christopher Souther: Got it. Okay, that makes sense. In the shareholder letters, you called out that several of the customers have the potential for hundreds of megawatts through 2025 and beyond. Could you give us a sense of the size and scope of the 20s customers today? I assume you'd count several customers among that size, you know, ones that you've named, like Lufthansa, Airbus, and AeroVironment. You know, but I'm just kind of curious, of the 20, how many do you think are in that, you know, kind of size range, you know, if you had the capacity today?

Okay, that makes sense. And then in the shareholder letter you called out that several of the customers have the potential for hundreds of megawatts through 2025 and beyond. Can you give us a sense of the size and scope of the...

I assume you count several customers among that size, ones that you've named like, air environments. I'm just curious, of the 20, how many do you think are in that size range if you have the capacity today? There are 13, uh, 16, um, 5 amps on that one. You'reLady, like me. Alton Samurai. Yeah, typically. There's two things on that one.

I assume you count several customers among that size, ones that you've named like, say, Airbus, Air Environments. I'm just curious, of the 20, how many do you think are in that size range if you add the capacity today? For me

Kang Sun: Yeah. We talk about the hundreds of megawatts inquiries and discussions with our customers. Those would be the off-takers for Colorado manufacturing. Among those customers, when we say 20 customers, those customers are included, okay, in those 20 customers. Now, we probably will finalize those deals sometimes in later part of July. When we build the Colorado facility, it's very important we have a customer to take orders from that facility. Company is working very diligently to build a strong pipeline for our largest scale manufacturing facility.

We talked about the hundreds of megawatts in queries and discussions with our customers. Those are the ñ would be the off-takers for Colorado manufacturing.

Among those customers, when we say 20 customers, those customers are included in those 20 customers. We probably will follow those deals sometimes in…

later part of July . You see, when we view the Colorado facility, it is very important that we help the customer.

to take orders from that facility. That's a company is working very diligently to build a strong pipeline for our large-scale manufacturing facility.

Christopher Souther: Got it. That's a process that probably starts in July? Or you think, you know, in July, August, we'll have kind of details around, you know, the, I guess, kind of the, you know, planned dedicated capacity by customers would be, you know, something you guys think you'd have?

So that's a process that probably starts in July or you think in July , August , live kind of details around I guess kind of the planned dedicated capacity by customers would be something you guys think you'd have? And and make sure that those are the All Inventors by June 2017 when you summarize it.

Kang Sun: In July, we probably, when we are working very fast on the building this manufacturing facility here. The manufacturing facility in 2025, this is a 500MW manufacturing facility. We like to have it in operation in 2025. 2025, at least this factory can produce a portion of the 500MW because there is a setup, there is a customer evaluation, factory inspection, all those kind of activities. Now, to make sure we have full capacity during once we start our operation, okay, we need to run the full capacity. We need to have very strong pipeline. Pipeline needed to be hundreds MWh.

Thank you, we probably when we are working very fast on the building this manufacturing facility here, the manufacturing facility in 2025, this is 500 megawatts.

manufacturing facility we like to have it in operation in 2025. So in 2025 at least this factory can produce

The cost of the 500 megawatt because there is a setup, there is a customer evaluation, effect reconstruction, all those kinds of activities.

to make sure we have full capacity once we start the operation. We need to run the full capacity. We need to have a very strong pipeline. So pipeline needed to be hundreds megawatt hours.

Kang Sun: I expect to conclude in the later part of July. That will give us the customer base for our largest scale manufacturing facility in Colorado.

So the deals we are in discussion, I expect to conclude in the later part of July . So that will give us a –

the customer base for our largest scale manufacturing facility in Colorado.

Sandra Wallach: Chris, I think to-

Christopher Souther: Yeah, that's really helpful.

Sandra Wallach: To further answer, many of the customers that we're serving today, not just these two pack manufacturers who serve more diversified aviation sector. Many of our nameplate customers, our hallmark customers, have significant demand that we can't support. That is also part of how we're building the pipeline for 2025.

Yeah, it's really helpful. To further answer many of the customers that we're serving today, not just these two PAC manufacturers who serve more diversified aviation sector. Many of our nameplate customers are hallmarked customers. Have significant demand.

that we can't support, so that is also part of how we're building the pipeline for 2025. That's really helpful on the visibility.

Christopher Souther: Yeah. No, that's really helpful on the visibility. Thanks, guys.

Operator: Thank you. Our next question comes from Chip Moore from EF Hutton. Go ahead, Chip.

Thank you. And our next question comes from Chip Moore from EF Hutton. Go ahead, Chip. Good evening. Thanks for taking the question and congrats on all the progress year to date. I guess I wanted to follow up on the commercial pipeline, right? Great to see that growing. I'm curious if you can talk a bit about how you're balancing...

Chip Moore: Good evening. Thanks for taking the question and congrats on all the progress year to date. I guess I wanted to follow up on the commercial pipeline. Right. Great to see that growing. Curious if maybe if you can talk a bit how you're balancing, you know, new customers versus existing. Good to see, you know, new logos coming in. And then maybe talk a bit about the qualification process, you know, what that takes, how long that takes, and really how you balance that to your point of getting that demand in place.

you know, new customers versus existing, but to see, you know, new logos coming in. And then maybe talk a bit about the qualification process, you know, what that takes, how long that takes, and really how you balance that to your point of getting that demand in place. Now we have

Kang Sun: Yeah, we have existing customers. They expand their purchase from Amprius. That's part of the business. So far the most of those capacities we are planning for large scale manufacturing in Colorado are existing customers. Yeah. We're also working with new customers, exploring new applications. So the qualification process depends on who will be the customer. Yeah. We have the customer that qualification time is relatively short. Short, I mean, in half year or so. You know, of course, if this is a new project for the customer. There are two types of customers. One customer use our battery to replace their existing applications. They already have their own devices, their own application already identified. Those customers' qualification time will be short.

We have existing customers. They expanded their purchase from Amperes. That's part of the business. So far, most of those capacities, we are...

planning for a large scale manufacturing in Colorado are existing customers we're also working with new customers exploring new new applications so the qualification process depends on who will be the customer

We have the customer that qualification time is relatively short, short-handing in half year or so. Of course, if this is a new project for the customer, there are two types of customers. One customer use our battery to replace.

existing applications. They already have their own devices, their own application already identified. Most customers' qualification time will be short. They just test our battery and put it in their device and they can use it. They are not the type of customer we have to work with them on their new project.

Kang Sun: They just test our battery then put in their device, then they can use. There are another type of battery customer, we have to work with them on their new project. For example, they design a new flying devices that require our battery support. Okay, those kind of projects usually take a little bit of longer time. For battery qualification for our customer, our current customer applications normally takes about six months to two years, depends on how sophisticated the application will be. Now, most of the time the delay not come from Amprius. Most of the time the delay because the customer, their own projects have been delayed.

For example, they design new flying devices that require our battery support. Those kinds of projects usually take a little bit longer time.

two years depends on.

how the application will be. Now, most of the time the delay not have come from an amperes. Most of the time the delay because the customer, their own project have been delayed.

Chip Moore: Mm-hmm. No, that's very helpful, Kang. If I could ask one more, you know, with regards to Colorado, and ramp up there, you know, you talked about sort of de-risking production with what you've learned. Maybe expand on that process, and it sounds like you've already tested the Centrotherm equipment overseas. Is that something you can incorporate? Just how do you go about incorporating some of those learnings? Thanks.

Now, that's very helpful. And I could ask 1 more with regards to Colorado and ramp up there, you talked about sort of. The risking production with what you've learned, maybe expand on that process and it sounds like you're you've already tested the central thermal equipment overseas. Is that something you can incorporate and just how do you go about incorporating some of those learnings?

Kang Sun: Yeah. That's 2MW. That's why this is 2MW. Actually, this is what we call 2MW because the machine actually designed more than 2MW. We just assume, you know, we can deliver 2MW capacity end of the year. This is very, very important exercise at Amprius. If this machine can meet our specification, scale up will not be the issue. Now, so far, we tested in Germany and in Fremont give us very encouraging results. This is a much higher throughput and a much robust process than what the process we have today. If this 2MW works, serve two purposes. One is the validation. This is probably the most important thing to us. The second part is give us 10 times more capacity to serve our customers.

Thanks. Yes, that's two megawatt. That's why this is two megawatt. Actually, this is what we call two megawatt because the machine actually designed more than two megawatt. We just assume we can't deliver two megawatt capacity end of the year.

So this is a very, very important exercise at Ampere. If this machine can meet our specification,

and scale up will not be the issue. So far, we tested in Germany and in Fremont, gave us very encouraging results.

This is a much higher throughput and a much robust process than what the process we have today. If this two-megawatt works, it serves two purposes. One is the validation. It's probably the most important thing to us.

The second part is give us 10 times more capacity to serve our customers. Great. I appreciate it. Thanks very much. At this time, this concludes our question and answer session. If your question was not taken, you may contact Ampriya's investor relations team.

Chip Moore: Great. I appreciate it. Thanks very much.

Operator: At this time, this concludes our question and answer session. If your question was not taken, you may contact Amprius investor relations team at IR@amprius.com. I would now like to turn the call back over to Dr. Sun for his closing remarks.

Kang Sun: Thanks again everyone for joining us today. I would also like to thank our employees, partners, and the shareholders for their continued support. As a reminder, you may learn more about our company from the additional updates and learn about upcoming events and presentations from the investor relations section of our website. We look forward to updating you on Amprius progress on our next call. Thanks.

As a reminder, you may learn more about our company from the additional updates and learn about upcoming events and presentations from the investor relations section of our website.

We look forward to updating you on Amprius progress on our next call. Thanks. Thank you for joining us today for Amprius Technology first quarter 2023 earnings conference call. You may now disconnect your lines and have a wonderful day.

Operator: Thank you for joining us today for Amprius Technologies Q1 2023 Earnings Conference Call. You may now disconnect your lines and have a wonderful day.

Amprius Technologies Inc. Q1 2023 Earnings Call

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