Q4 2023 Solid Power Inc Earnings Call

Operator: Greetings, welcome to the Solid Power, Inc. full year 2023 financial results and business update call. Please note that this conference is being recorded. I will now turn the conference over to your host, Jennifer Almquist, Investor Relations for Solid Power, Inc. Thank you.

Greetings and welcome to the solid power, Inc. Full year 2023 financial results and business update call.

Note that this conference is being recorded.

I'll now turn the conference over to your host.

Jennifer Quest Investor Relations for solid power, Inc. Thank you you may begin.

Jennifer Almquist: Thank you, Operator, and thank you, everyone, for joining us today. I'm joined on the call today by Solid Power's President and Chief Executive Officer, John VanSkoder, and Chief Financial Officer, Kevin Papsisky. A copy of today's earnings release is available on the investor relations section of Solid Power's website at ir.solidpowerbattery.com.

Thank you operator, and thank you everyone for joining us today I'm joined on the call today by Scott Powers, President and Chief Executive Officer, John Van <unk>, and Chief Financial Officer, Kevin Pascoe ski.

A copy of today's earnings release is available on the Investor Relations section of Southern Power's website, and I are solid power battery dotcom.

Jennifer Almquist: I'd like to remind you that parts of our discussion today will include forward-looking statements as defined by U.S. securities laws. These forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Solid Power disclaims any duty to update any forward-looking statements to reflect future events or circumstances. For a discussion of the risks and uncertainties that could cause actual results to differ materially from those expressed in today's forward-looking statements, please see Solid Power's most recent filings with the Securities and Exchange Commission, which can be found on the company's website at ir.solidpowerbattery.com. With that, I will turn it over to Jon Van Scoter. Thank you, Jen. And good afternoon, everyone.

I'd like to remind you that parts of our discussion today will include forward looking statements as defined by U S Securities laws.

These forward looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.

Except as otherwise required by applicable law.

Power disclaims any duty to update any forward looking statements to reflect future events or circumstances.

For a discussion of the risks and uncertainties that could cause actual results to differ materially from those expressed in today's forward looking statements. Please see solid power's most recent filings with the Securities and Exchange Commission, which can be found on the company's website at IR got southern power battery dotcom with.

That let me turn it over to Jonathan its cutter.

Thank you Jen and good afternoon, everyone. Thank you for joining the call today I'll.

Jon Van Scoter: Thank you for joining the call today. I'll begin today with a brief overview of 2023 and our overall progress. Then I'll walk through our 2024 goals and priorities. After that, I'll hand off the call to Kevin for the financial review, and we'll open up the call for Q&A.

I'll begin today with a brief overview of 2023 and our overall progress they.

Then I'll walk through our 2024 goals and priorities.

After that I'll hand off the call to Kevin for the financial review and we will open up the call for Q&A.

Jon Van Scoter: 2023 was a milestone year for Solid Power. We successfully commissioned SB2, our second Solid Power facility, to lead electrolyte production. We accelerated our cell development with a key partner and overcame significant yield challenges as we scaled production. And we delivered our first EV cells to officially enter the automotive qualification process. Before I go further in detail on our progress, I want to give kudos to the Solid Power team and express my sincere appreciation for their hard work in hitting these milestones. This was a challenging year, and the team did remarkable work to contribute to business growth. I'll start with our progress on the electrolyte side. Since commissioning our SP2 plant in April, we've successfully phased out electrolyte production at SP1 and begun using SP2 electrolyte in our EV cells.

2023 was a milestone year for solid power.

We successfully commissioned to S. P. Two core second solid power facility to lead electrolyte production.

We accelerated our cell development with a key partner and overcame significant yield challenges as we scaled production.

And we delivered our first E b cells to officially enter the automotive qualification process.

Before I go further in detail on our progress I want to give kudos to the solid power team and express my sincere appreciation for their hard work and hitting these milestones.

This was a challenging year and the team did remarkable work to contribute to the business growth.

I'll start with our progress on the electrified side.

Since commissioning our S. P. Two plant in April we successfully phased out electrolyte production at S. P. One and begun using S. P. Two electrolyte in R. E T cells.

Jon Van Scoter: We successfully ramped up our SB2 production, achieving an electrolyte production capability of 1.1 metric tons per month in multiple campaigns. This represents a tremendous increase in scale and a new best for the company. While this does fall just short of our original 2023 production goal, we were able to overcome a couple of unexpected challenges with equipment and incoming material quality that we saw late in the year.

We successfully ramped up RSP to production, achieving an electrolyte production capability of 1.1 metric tons per month in multiple campaigns.

This represents a tremendous increase in scale and a new best for the company.

While this does fall just short of our original 2023 production goal, we were able to overcome a couple of unexpected challenges with equipment and incoming material quality that we saw late in the year.

Jon Van Scoter: As we continue to work through these issues, we remain confident in scaling production of the electrolyte in 2024. During 2023, we also sampled our electrolyte to new potential customers with positive reception. To be clear, these are not companies we have a current joint development arrangement with.

Because we continue to work through these issues, we remain confident in scaling production of electrolyte in 2024.

During 2023, we also sampled our electrolyte to new potential customers with positive reception to.

To be clear these are not companies, we have a current joint development arrangement with.

Jon Van Scoter: Several of these potential customers have engaged in numerous rounds of feedback as we continue to optimize our electrolyte for these customers' unique needs. We now have multiple potential customers that are testing our powders, comparing them with our competition, and incorporating them into cell design. This reinforces electrolyte as our core strategy, and I'm personally very excited about the great long-term opportunity this represents for our shareholders. Overall, it was a strong year for our powder team, pursuing market opportunities and continuing to improve production. On the cell development side, we made significant advances in 2023, first in regard to cell production. Manufacturing yields improved greatly, and we also increased the quality of our 20 amp hour builds. We translated these learnings from those cells to quickly begin manufacturing our EV cells.

Several of these potential customers have engaged in numerous rounds of feedback as we continue to optimize our electrolyte for these customers unique needs.

We now have multiple potential customers that are testing, our powders comparing it with our competition and incorporating it into cell designs.

This reinforces electrolyte as our core strategy and I'm personally very excited about the great long term opportunity. This represents for our shareholders.

Overall, it was a strong year for our powder team pursuing market opportunities and continuing to improve production.

On the cell development side, we made significant advances in 2023 also.

First in regard to cell production.

Manufacturing yields improved greatly and we also increased the quality on our 'twenty empower builds.

We translated these learnings from those cells to quickly begin manufacturing R. E T cells.

Jon Van Scoter: This progress was driven by close collaboration with BMW as well as the utilization of new equipment and improved processes. With the increase in production, we've also seen improvements in cell performance. While still early, initial testing on A1 samples demonstrates generally good performance with incremental steps forward in cycle life, low temperature performance, pressure, and energy density goals. These learnings and continued testing will help to set guidelines and markers as we progress towards the performance targets required by A2 and A3 cells. 2023 cell development also presented us with challenges and unique learnings. As we've begun to scale up the size of our cells, safety performance has been varied. We are currently reviewing a small handful of cells that went into thermal runaway over the last couple of weeks. The team is heavily focused on root cause analysis as safety is an area where we hold ourselves to a high bar and believe we can excel over the long term. Preliminary findings point to inconsistent or contaminated input materials and small manufacturing defects.

This progress was driven by close collaboration with BMW as well as the utilization of new equipment and improve processes.

With the increase in production, we've also seen improvements in sales performance.

While still early initial testing on a one samples demonstrates generally good performance with incremental steps forward and cycle life.

Low temperature performance pressure and energy density goals.

These learnings and continued testing will help to set guidelines and markers as we progressed towards the performance targets required by eight two and eight three cells.

2023 cell development also presented us with challenges and unique learnings because we'd begun to scale up the size of ourselves safety performance has been varied.

We are currently reviewing a small handful of cells that went into thermal runaway over the last couple of weeks.

The team is heavily focused on root cause analysis as safety is an area, where we hold ourselves to a high bar and believe we can excel over the long term.

Preliminary findings point to inconsistent or contaminated input materials and small manufacturing defects.

Jon Van Scoter: We remain proud of the improvements our cell team has been able to achieve in 2023. The team's efforts have enabled us to refine our EV cell production process, ramp manufacturing volumes, and ultimately enter formal automotive qualifications. This solid execution underscores our confidence in overcoming our current challenges and those that lie ahead. Taking a step back more generally, during 2023, Solid Power also successfully grew the business to a total of over 270 employees, including key hires in the late fourth quarter for supply chain and communications, and further strengthened our management team and board with the addition of essential expertise. We also implemented new tools to support multiple areas of the business and increase efficiency, including SAP enterprise software, which has been fully adapted to our business processes.

We remain proud of the improvements are sell team has been able to achieve in 2023.

Team's efforts enabled us to refine our EV cell production process.

Manufacturing volumes and ultimately enter formal automotive qualification.

This solid execution underscores our confidence in overcoming our current challenges and those that lie ahead.

Taking a step back more generally during 2023 solid power also successfully grew the business to a total of over 270 employees, including key hires in late fourth quarter for supply chain and communications and further strengthened our management team and board.

With the addition of the central expertise.

We also implemented new tools to support multiple areas of the business and increase efficiency, including SAP enterprise software, which has been fully adapted into our business processes.

Jon Van Scoter: These are heavy lifts, and I want to thank the team for carrying these projects forward across the finish line. These successes give us a lot of positive momentum as we enter 2024, and we have some wins already this year.

These are heavy lifts and I want to thank the team for carrying these projects forward.

Ross the finish line.

These successes gave us a lot of positive momentum as we enter 2024, and we have some wins already this year in.

Jon Van Scoter: In January, we announced a deepened relationship with SKO. We believe this new arrangement will enable us to collaborate more deeply on our cell development with a Tier 1 battery manufacturing partner. Strengthen our competitive positioning by increasing our presence in Korea, demonstrate our capabilities as an electrolyte supplier with our first ever electrolyte supply agreement, and further strengthen our balance sheet over time. Importantly, once we have completed the tech transfer and Korea line installation in 2025, we will have enabled round-the-clock cell development capabilities using our technology on three lines across the U.S., Europe, and Asia. Since the announcement in January, the team has been busy. Jack L. Fersley has been promoted to Managing Director of our CRE operations.

In January we announced that deepen relationship with S. K.

We believe this new arrangement will enable us to collaborate more deeply on our cell development with a tier one battery manufacturing partner.

Strengthen our competitive positioning by increasing our presence in Korea.

Demonstrate our capabilities as an electrolyte supplier with our first ever electrolyte supply agreement.

And further strengthen our balance sheet over time.

Importantly, once we have completed the tech transfer.

And Korea line installation in 2025, we will have enabled round the clock cell development capabilities using our technology on three lines across the U S Europe and Asia.

Since announced in January the team has been busy.

Jack Al Firstly has been promoted to managing director of our Korea operations since joining solid power three years ago. Jack has been a key driver behind the success of many of our strategic and capital projects, including the installation of our EDI line and S. P. One.

Jon Van Scoter: Since joining Solid Power three years ago, Jack has been a key driver behind the success of many of our strategic and capital projects, including the installation of our EV line in SP1. We're in the process of rounding out the CREA team and will be adding additional key hires very soon. We are acting with urgency and have already placed POs for equipment, moved into our permanent offices, secured back office support, and are meeting with local government officials to ensure positive collaboration as our operations grow. We will provide more updates as we progress and look forward to working more closely with SK in the years to come. We continue to feel confident in our development and strategic progress. This led us to announce a $50 million share buyback program in January to capitalize on what we see as our undervalued stock price. Our ability to execute this program is a reflection of our strong liquidity position and our commitment to driving long-term shareholder value. Looking forward to 2024, The team has set four goals for Solid Power this year.

We're in the process of rounding out the Korea team and we'll be adding additional key hires very soon.

We are acting with urgency and have already placed pose for equipment moved into our permanent offices secured back office support and our meeting with local government officials to ensure positive collaboration as our operations grow we will provide more updates as we progress and look forward to working more closely with S. K.

In the years to come.

We continue to feel confident in our development and strategic progress. This led us to announce a $50 million share buyback program in January to capitalize on what we see as our undervalued stock price our ability to execute this program is a reflection of our strong liquidity position and.

Our commitment to driving long term shareholder value.

Looking forward to 2024 the team is set for goals for solid power. This year. These goals build upon our current successes and continue our move towards commercialization.

Jon Van Scoter: These goals build upon our current successes and continue our move towards commercialization. Our goals for 2024 are, first, to expand our electrolyte capabilities and available market. Second, to continue advancing our cell design. Third, to execute on partner commitments, and lastly, to further strengthen our presence in Korea. Let me take a moment to walk through each of these.

Our goals for 2024, our first expand our electronic capabilities and available market.

Second continue advancing our cell designs third execute on partner commitments and lastly, further strengthen our presence in Korea.

Let me take a moment to walk through each of these.

Jon Van Scoter: Our first 2024 goal is to expand our electrolyte capabilities and the available market for our powder. To do this, we intend to focus on three key strategies. First, we plan to increase our production capability at SP2 to 30 metric tons per year, or 2.5 metric tons per month. We've already made great strides to achieve a 1.1 metric ton per month run rate, and we'll use last year's optimizations to increase to 2.5 metric tons per month. This assumes slight equipment modifications and improved quality of incoming material, as I mentioned previously.

Our first 2024, our goal is to expand our electronic capabilities and the available market for our powder.

To do this we intend to lean on three key strategies.

First we plan to increase our production capability S. P. Two to <unk> 30 metric tons per year or 2.5 metric tons per month, we have already made great strides to achieve a 1.1 metric ton per month run rate and we will use last year's optimizations to increase to $2 five metric tons per month.

This assumes the slight equipment modifications and improved quality of incoming material as I mentioned previously.

Jon Van Scoter: As we increase our volumes, we also intend to improve our manufacturing processes to drive greater consistency and performance. Second, we intend to expand our sampling program. The team has done a great job getting samples out to six different potential customers with growing interest from battery manufacturers and auto OEMs. Building on this success in 2024, we're growing this program and are in the process of working with an additional 10 to 15 potential customers and kicking off sampling cycles with each of them. We're excited about the opportunities these conversations open and are encouraged by the positive feedback we've gotten so far.

As we increase our volumes, we also intend to improve our manufacturing processes to drive greater consistency and performance.

Second to expand our sampling program.

Team has done a great job getting samples out to six different potential customers with growing interest from battery manufacturers and auto Oems.

Building off this success in 2024, we're growing this program and are in the process of working with an additional 10 to 15 potential customers and kicking off sampling cycles with each of them.

We're excited about the opportunities. These conversations open and are encouraged by the positive feedback we've gotten so far.

Jon Van Scoter: Third, we will continue to develop our next generation of power, which we believe will deliver improvements in connectivity, cost, and performance. We're continuing to build and enhance the SP2 R&D lab, which we are targeting to complete in mid-2024. This will help us optimize continuous electrolyte production, reduce the cost of our powder, and develop future generations of even higher performing electrolytes.

Third we will continue to develop our next generation of powders, which we believe will deliver improvements in connectivity cost and performance.

We're continuing to build and enhance the S. P. Two R&D lab, which we are targeting to complete mid 2024.

This will help us optimize continuous electrolyte production reduce the cost of our powder and develop future generations of even higher performing electric lights.

Jon Van Scoter: Our second goal for 2024 is to continue advancing our cell design. As we advance through the initial stages of automotive qualification, we are committed to further improving our cell performance across the board, including cycle life, safety, low temperature performance, pressure, and energy density. The advancements we make in each cell stage will act as key learnings to incorporate as we advance our designs to A2 and A3 sample cells. Along with many scheduled upgrades, this iterative process will help us deliver incremental steps toward final A3 performance requirements. We're also not starting from scratch.

Our second goal for 2024 is to continue advancing our cell designs as.

As we advance through the initial stages of automotive qualification. We are committed to further elevating our self performance across the board, including cycle life safety low temperature performance pressure and energy density.

The advancements we make each cell stage will act as key learnings to incorporate as we advance our designs to eight two and eight three sample cells along with many scheduled upgrades. This iterative process will help us deliver incremental steps towards final eight three performance requirements.

We're also not starting from scratch, we do not anticipate a two or a three designs will require a full redesign of the batteries or major changes of the chemistry used in our electrolyte.

Jon Van Scoter: We do not anticipate that A2 or A3 designs will require a full redesign of the batteries or major changes in the chemistry used in our electrolyte. We plan to shift our focus towards A2 cells in 2024, and this falls in line with our partners' commercialization timeline. The A2 Focus will also help us meet Partners' performance requirements, which are centered around higher energy density, longer battery life, and lower cost compared with today's lithium-ion.

We plan to shift our focus towards a two cells in 2024 and this falls in line with our partners commercialization timelines D. A to focus will also help us meet partners' performance requirements, which are centered around higher energy density longer battery life and lower cost compare.

Third with todays remarks.

Jon Van Scoter: Most importantly, as we continue to scale our cell size and progress through automotive qualification over the coming years, we believe our A2 cells will be a key step towards meeting our incredibly high safety standards. Our third 2024 goal is to continue to execute on our partner commitment. We have three unique and valued joint development partners, each with its own pace, working style, and immediate needs from Solid Power. Let me take them one at a time.

Most importantly.

As we continue to scale, our cell size and progressed through automotive qualification over the coming years, we believe our a T cells will be a key step towards meeting our incredibly high safety standards.

Our third 2024 goal is to continue to execute on our partner commitments.

We have three unique and valued joint development partners.

Each with their own pace working style and immediate needs from solid power.

Let me take them one at a time.

Jon Van Scoter: First, BMW. Since deepening our relationship with BMW in 2022, we have successfully entered the automotive qualification phase with A1 sample EV cells and delivered more than 200 of these cells to BMW. We will continue our strong collaboration in 2024 with BMW and look forward to supporting them as they build the world's first full-size demo sedan powered by Solid Power's solid-state battery. We are working collaboratively with BMW to ensure that our A2 sample cell will meet their requirements for their demo car.

First BMW.

Since deepening our relationship with BMW in 2022, we have successfully entered automotive qualification with a one sample E T cells and delivered more than 200 of these cells to BMW.

We will continue our strong collaboration in 2024 with BMW and look forward to supporting them as they build the world's first full sized demo sedan powered by solid powers solid state battery, we are working collaboratively with BMW to ensure that our <unk> sample cell will meet their requirements for their <unk>.

Jon Van Scoter: Turning to SK-ON, our deepened partnership in 2024 is incredibly encouraging, and we look forward to substantial collaboration alongside the SK-ON team. Under our recent agreements, we are committed to executing on our tech transfer commitment and beginning the process for the CREA line installation deliverables, including ordering equipment, integrating teams and responsibilities, and beginning implementation. We'll also be laying the groundwork for future electrolyte deliveries supported by higher volume production. With Ford, we continue to execute on our joint development agreement and are committed to continuing execution at a high level for this valued partner. We have shipped electrolyte to Ford and have received positive initial feedback.

Mo car.

Turning to S. K on our deepened partnership in 2024 is incredibly encouraging and we look forward to substantial collaboration alongside the S. K on team under our recent agreements we are committed to executing on our tech transfer commitments and beginning the process.

For the Korea line installation deliverables, including ordering equipment integrating teams and responsibilities and beginning implementation. We'll also be laying the groundwork for future electric deliveries supported by higher volume production.

With Ford, we continue to execute on our joint development agreement and are committed to continuing execution at a high level for this valued partner.

We are ship electrolyte to Ford and have received positive initial feedback in.

Jon Van Scoter: In 2024, we are both setting targets and exploring ways to collaborate even more closely as we continue to advance our technologies. Our fourth and final 2024 goal is to further strengthen our presence in Korea. We already have a great start here with the expanded SK-Aval green.

In 2024 were both setting targets and exploring ways to collaborate even more closely as we continue to advance our technologies.

Our fourth and final 2024 goal is to further strengthen our presence in Korea.

We're already have a great start here with the expanded S K out an agreement.

Jon Van Scoter: Additionally, we're working to embed solid power in the Korean battery ecosystem through collaborations with local institutions, including government labs, top universities, and public-private initiatives. These collaborations will enable us to build a stronger network in Korea with OEMs, battery manufacturers, and materials and equipment providers, while also keeping abreast of development trends, government incentives, and new technologies. We continue to believe that Solid Power stands to benefit immensely from the increased presence in this key battery market, and we look forward to sharing our progress as we continue to build our presence in Korea. Before I hand it over to Kevin, I also want to touch briefly on our external communications, which we highlighted as a priority in our calls last year. We remain committed to increasing high-quality interactions and greater visibility with our stakeholders.

Additionally, we're working to embed solid power in the Korea battery ecosystem through collaborations with local institutions, including government labs top universities and public private initiatives.

These collaborations will enable us to build a stronger network in Korea, with Oems and battery manufacturers and materials and equipment providers, while also keeping abreast of development trends government incentives and new technologies.

We continue to believe that solid power stands to benefit immensely from the increased presence in this key battery market.

And we look forward to sharing our progress as we continue to build our presence in Korea.

Before I hand, it over to Kevin I also want to touch briefly on our external communications, which we highlighted as a priority in our calls last year, we remain committed to increasing high quality interactions and greater visibility with our stakeholders for 2024 I'm happy to share we are planning to.

Jon Van Scoter: For 2024, I'm happy to share we're planning to roughly double our planned touch points with stakeholders, attending a mix of investor and industry conferences around the world. We also plan to evaluate and enhance our strategy for sharing important news and updates and explore the channels we'll use to distribute them, such as our website and social media, in order to provide richer, more timely information about Solid Power, our people, and our innovative technologies. We look forward to providing you with better visibility into the incredible things happening here. With that, I'll hand it over to Kevin to take you through our financial results. Kevin?

Roughly double our plan touch points with stakeholders attending a mix of investor and industry conferences around the world.

We also plan to evaluate and enhance our strategy for sharing important news and updates and explore the channels, we will use to distribute such as our website and social media in order to provide richer more timely information about solid power our people and our innovative technologies.

We look forward to providing you with better visibility into the incredible things happening here.

With that I'll hand, it over to Kevin to take you through our financial results Kevin.

Kevin Papsisky: Thanks, John. Good afternoon, everyone. I'll start off today with an overview of our financial results and then discuss our 24 outlook. Our 23 financial results reflect strong execution by the team, from our startup of SP2 all the way through our entry into A-samples. Our 23 revenue of $17.4 million fell right in the middle of our guidance range.

Thanks, John Good afternoon, everyone.

I'll start off today with an overview of our financial results and then discuss our 24 outlook.

Our 23 financial results reflect strong execution by the team from.

From our start up the best P. Two all the way through our entry into a samples.

23 revenue of $17 $4 million, so right in the middle of our guidance range.

Kevin Papsisky: This reflects solid performance on key milestones, partner commitments, and government contracts. 23 operating expenses were 108 million dollars, reflecting increased operational costs as we ramped both EV cell and electrolyte production over the year, and increased R&D costs as we worked to deliver our A1 sample cells. Our 23 operating loss was $90.6 million, and net loss was $65.5 million, or $0.37 per share.

This reflects solid performance on key milestones partner commitments and government contracts.

23, operating expenses were $108 million, reflecting increased operational costs as we ramped both E T cell intellectually production over the year.

And increased R&D costs, as we work to deliver our <unk> sample cells.

Our 23 operating loss was $96 million and net loss was $65 5 million or <unk> 37 per share.

Kevin Papsisky: Turning to our balance sheet and liquidity, during the quarter, we invested $58.3 million into operations and $34.5 million into CapEx, bringing our total cash investment to $92.8 million. This was well below our guidance range. When we were able during the year, we prudently pushed expenditures into 24. All in, we deferred roughly $35 million, consisting of about $20 million in operational investments, mostly development materials, and around $15 million in capital investments related to our R&D lab and other SP2 enhancements. As a result of our lower spend, we ended the year with total liquidity just under $416 million.

Turning to our balance sheet and liquidity during 'twenty, three we invested $58 $3 million in the operations and $34 $5 million and the Capex bring.

Our total cash investment to $92 $8 million.

This was well below our guidance range.

When we were able during the year, we prudently pushed expenditures into 'twenty four.

All in we deferred roughly $35 million consisting of about $20 million in operational investments, mostly development materials and <unk>.

Around $15 million in capital investments related to our R&D lab and other S. P. Two enhancements.

As a result of our lower spend we ended the year with total liquidity just under $416 million.

Kevin Papsisky: Our ending liquidity includes $34.5 million in cash and equivalents that we keep on hand. But the bulk of this amount, around $381 million, is invested and shows up in the marketable securities and long-term investment line items on our balance sheet. All of those investments are in A-rated securities. We plan to provide longer-term cash guidance later this year. However, at the moment, we continue to believe this strong liquidity position, combined with our capital-light business model, still gives us a cash runway into the late 2020s. Looking ahead to 24.

Our ending liquidity includes $34 $5 million in cash and equivalents that we keep on hand.

But the bulk of this amount around $381 million is invested and shows up in the marketable securities and long term investment line items on our balance sheet.

All of those investments are an a rated securities.

We plan to provide longer term cash guidance later this year. However at the moment, we continue to believe this strong liquidity position.

Bind with our capital light business model still gives us a cash runway into the late 2000 twenty's.

Looking ahead to 'twenty four we currently expect our 2004 revenue to be in the range of $20 million to $25 million.

Kevin Papsisky: We currently expect our 24 revenue to be in the range of 20 to $25 million. This includes expected revenue from the S.K. agreement we signed in January, as well as the remaining revenue from our BMW agreement. Our 24 revenue from government contracts is expected to be lower than 23.

This includes expected revenue from the <unk> agreement, we signed in January.

As well as the remaining revenue from our BMW.

Our 24 revenue from government contracts is expected to be lower than 2003.

Kevin Papsisky: This is a result of both the successful completion of current contracts as well as us being more selective in the programs we pursue. We will still pursue government contracts when it makes sense to do so. However, our focus is on delivering for our core customers. We're still firming up the timing of certain deliverables of our SK agreement, but right now, we believe our revenue will come in pretty steadily over the year. With respect to liquidity, we expect 24's total cash investment to be in the range of $100 to $120 million. Breaking this down, we expect operating cash investment to be in the range of $60 to $70 million, including the $20 million carryover from 23.

This is a result of both successful completion of current contracts as.

As well as us being more selective in the programs we pursue.

We will still pursue government contracts when it makes sense to do so however, our focus is on delivering for our core customers.

Were still firming up the timing of certain deliverables of our SK agreement, but right now we believe our revenue will come in pretty ratably over the year.

With respect to liquidity, we expect 24 total cash investment to be in the range of $100 million to $120 million.

Breaking this down we.

We expect operating cash investment to be in the range of $60 million to $70 million, including the $20 million carryover from 'twenty three.

Kevin Papsisky: Our operational investment includes development of our A2 sample cells as well as higher volume production of our electrolyte and the development of our next generation powder as well. In terms of timing, our cash investment will likely be pretty evenly spread over 24. We expect 24 total CapEx to be in the range of $40 to $50 million, which includes around 15 million dollars carried over from 23 for the build-out of our powder development capabilities, as well as equipment upgrades for materials handling and cell development. Overall, this CAPEX spend is significantly lower than previous years when we were investing large amounts of cash into the construction of SP2 and the installation of our EV cell line. With that, I'll turn the call back to John. Thanks, Kevin.

Our operational investment.

<unk> development of our <unk> sample cells as well as higher volume production of our electrolyte and the development of our next generation powder as well.

In terms of timing, our cash investment will likely be pretty evenly spread over 'twenty four.

We expect 24 total capex to be in the range of $40 million to $50 million.

Which includes around $15 million carried over from 23 for the Buildout of our powder development capabilities as well as equipment upgrades for materials handling and cell development.

Overall this capex spend is significantly lower than previous years, when we were investing large amounts of cash into the construction of <unk>.

The installation of our <unk>.

With that I will turn the call back to John.

Jon Van Scoter: 2023 was a milestone year for Solid Power, enabled by the hard work and execution of the Solid Power team and the excellent collaboration we've had with our partners. As we enter 2024, we're acting with competitive urgency; the successes of 2023 have us well positioned to execute. I look forward to keeping you updated.

Thanks, Kevin 2023 was a milestone year for solid power enabled by hard work and execution of a solid power team and the excellent collaboration we've had with our partners.

As we enter 2024, we're acting with competitive urgency to successes of 2023 have us well positioned to execute I look forward to keeping you updated with that I will hand, it over for Q&A.

Operator: With that, I will hand it over to you for Q&A. We will now begin the question and answer session. If you have a question, you may press star then 1.

We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.

Operator: If you're using a, Please pick up your handset. If at any time your question has been addressed and you would like to withdraw your call and Express Star. Our first question comes from Mike Shlisky with D.A. Davis.

If you're using your speakerphone, please pick up your handset before pressing the key if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two alright.

Our first question comes from Mike <unk> with D. A Davidson. Please go ahead.

Michael Shlisky: Go ahead. Yes, hello, good afternoon, and thank you. Some of your questions, some of your comments about buying some brand-new customers were interesting. Can you maybe share with us how different the powder would be from one customer to the next if you found someone brand-new here?

Yes, Hello, good afternoon, and thank you.

John some of your question some of your comments about buying some some brand new customers were existing can you hear me.

Share with us.

How different would the powder be from one customer to the next it sounds from a brand new here and are there are major expenses that to take place to onboard a potential new customer.

Jon Van Scoter: And are there major expenses that have to take place to onboard a potential new customer and a long-term customer? Yeah, good to hear from you, Mike. Good question.

And a long term project.

Yes, good to hear from me Mike Good question.

Jon Van Scoter: We're finding that the variants across the various customers require a degree of customization, but not substantial differences from customer to customer. We also have designed the SP2 electrolyte facility to already comprehend those changes from customer to customer. So, the facility is responding well to the changes that we're asking it to make without getting into too much of the weeds. Things like particle size, morphology, those sort of things are varying customer to customer, all well within the variability of our process within SP2. We don't expect that there will be any significant cost difference to manufacture those from customer to customer, but we are very excited about being able to tune our electrolytes specifically to our customer cell design needs. Great, thanks. Just to follow up there, how about the cost to actually... When you try to find the right power for them, do they come to you with what they want? Or do you just spend a lot of time experimenting, and there's a lot of cost involved?

We're finding that the variance across the various customers.

Require a degree of customization, but not substantial difference.

From customer to customer.

We also have designed DSP two electrolyte facility.

Two already comprehended those changes from customer to customer so.

The facility is responding well to the changes that we're asking them to make.

Without getting into too much of the weeds things.

Things like particle size.

Morphology, those sort of things are varying customer customer all well within the variability of our process within SB too we.

We don't expect that there will be any significant cost difference to manufacture those from customer to customer.

But we are very excited about being able to tune our electrolyte specifically to our customer sell design needs.

Great. Thanks, just a follow up there.

How about the cost to actually.

Get that potential customer.

When you're trying to find the right power plants do they come to you with what they want what do you just got a lot of time experimenting and there's not a cost to that.

Jon Van Scoter: I'm just kind of curious as to, if you do have new customers, if you're going to start seeing elevated costs, maybe in 2025 or so. I think we're actually seeing what we had predicted, where we would go in with an initial sample, there would be initial testing done by the customer at the powder level, and then they would give us feedback around changes that they would like to see. We would then resample them maybe once, maybe twice, and then that would progress into where they would start to incorporate into cell designs.

I'm curious as to.

You have new customers.

Elevated costs, maybe 25 or 2026.

I think we have actually a risk.

Seeing what we had predicted where we would go in with an initial sample.

There will be initial testing done by the customer at the powder level.

And then they would give us feedback around <unk>.

Changes that they would like to see we would then re sampled them maybe once maybe twice.

And then that would progress into where they would start to incorporate into cell designs. We have a number of customers that are in that process right. Now we have previously I think signals that we thought the whole process from that initial sample through integration too.

Jon Van Scoter: We have a number of customers that are in that process right now. We have previously indicated that the whole process from that initial sample through integration into their cell designs and then into the actual supply agreement could take between 12 and 24 months. And I think we're seeing now that consistently around 18 to 24 months it takes to do that process, and this is very much in line with what we had expected. We don't see a significant cost increase in order to do that this year or next.

They are cell designs, and then into actual supply agreement could take between 12 and 24 months and I think we're seeing now consistently around 18 to 24 months, it's taking to do that process.

And very much in line with what we had expected.

We don't see a significant cost.

Increase in order to do that this year or next we've comprehended that in our overhead structures that we've signaled to the market.

Jon Van Scoter: We've understood that in our overhead structures that we've signaled to the market, got it. And then I also wanted to follow up on your comments about thermal runaway instruments that you had mentioned in some of the tests, cells. Obviously, just having one is a problem.

Got it.

And then I also wanted to follow back to your comments about talking about runaway incidents that you had mentioned in some of the testing and some of the cells. Obviously, just having one of the probably the one issue at a problem, but could you maybe tell us what percent of the cells that you did produce.

Jon Van Scoter: One issue is a problem. Can you maybe tell us what percent of the cells that you did produce were affected by this? Was it a flaw in just the cells that you found, or was it overall? Were all the cells produced the exact same way?

We are affected by this.

Was it a law and justice cells that you found it was the overall where all of the cell.

Produced the exact same way and again are there going to be some.

Jon Van Scoter: And again, are there going to be some unusual or high cost to resolve that issue? Obviously, everyone wants to be in very safe cells. I'm curious if you can just give us some kind of number.

Usual or high costs to resolve that issue, obviously, everyone wants to be in great shape.

I was curious can you just give us some kind of numbers behind that.

Yes, so as you know well my God. This is not a unique phenomenon to sunpower. This is.

Jon Van Scoter: Yes, so as you know, Mike, this is not a unique phenomenon to Solid Power. This is part of the normal battery scaling and technology maturation of the new technology. So, in terms of percentage, we have manufactured over a thousand cells, EV cells, in the second half of last year, and this is a very, very small percentage of those cells, a handful, that have exhibited this phenomenon.

Part of the normal battery scaling and technology maturation about with the new technology.

So in terms of percentage we have.

Manufactured over 1000 cells EV sales in the second half of last year and this is a very very small percentage of those are handful.

That has exhibited this phenomenon.

Jon Van Scoter: It is very early on in the most current occurrences. You're not at the root cause yet. But I'm pleased to say that the team is embracing standard, well-proven engineering principles to get to root cause, 8D, Ishikawa diagrams, FMEAs, etc. And when we've had these types of occurrences in the past, we've resolved them rapidly. So we wanted to be transparent and share this recent occurrence. But when we've had these kind of events in the past, applying those types of disciplines with the quality of the team that we have here, we expect that we'll resolve this quickly. And again, there is no significant incremental cost to do this.

It is very early on on the most current occurrences youre not at the root cause yet.

But I am pleased to say that the team is embracing.

Standard well proven engineering principles to get to root cause HD Ishikawa diagrams S emea's et cetera and.

And when we've had these type of currencies in the past we resolve them rapidly. So we wanted to be transparent and share of this recent occurrence, but when we've had these kind of events in the past applying those type disciplines with the quality of the team that we have here, we expect that will resolve this quickly.

And again no significant incremental cost to do this I think we've comprehended the opex that we need to on an ongoing basis continue to iterate evolve and recover from these situations like we just signaled have occurred.

Jon Van Scoter: I think we've grasped the optics that we need to, on an ongoing basis, continue to iterate, evolve, and recover from these situations like we've just signaled have occurred. Great. Outstanding. I'll pass it along. The next question comes from Jeffrey Campbell with Seaport Research. Please go ahead. Good afternoon.

Great.

I'll pass it along thank you.

The next question comes from Jeffrey Campbell with Seaport Research. Please go ahead.

Good afternoon.

Jeffrey Campbell: Congratulations on a strong quarter. The SK-ON agreement noted that SK's license... Solid Power, Solid State, Cell Designs, and Manufacturing Processes... It's limited to R&D. I just wondered, does this limitation specifically refer to the S-gain onset?

Congratulations on a strong quarter.

They ask down agreement noted the <unk> license.

Power solid state cell designs and manufacturing processes is.

It is limited to R&D activities and may not be used for commercial scale production I just wonder does this limitation specifically refer to the downside.

Jon Van Scoter: Yes, it does. It is specific to the SK-ON agreement. If successful in this phase, we would expect that that would give way to a subsequent license agreement for commercial production. Okay, great. In your earlier discussion, you mentioned that one of the goals and expanding their presence in Korea is new technology. I was just wondering what kind of new tech they are using, if there's something specific.

Yes. It does there is specific to the SK on agreement.

Successful in this space, we would expect that that would give way to a subsequent license agreement for commercial production.

Okay great.

And your earlier discussion you mentioned that one of the.

Goals and expanding your presence in Korea was exposure to newer technology I was just wondering what kind of rates that you're thinking about.

If there's something specific at this point.

Jon Van Scoter: You know, there really isn't, Jeff. There's so much going on on the peninsula that we're trying to keep our aperture open. My initial thought is toward, you know, higher nickel content NMCs. We're already having those discussions with various vendors. Then my thought goes to the tool set, you know, staying up with the current state of lithium ion equipment and manufacturing techniques because the bulk of that, I think, will be applicable to our manufacturing flow for the cells. And then just anything that's coming out of universities or national labs, given the amount of focus that Korea has in the battery space, is kind of where my head goes. But it's really across the board right now.

There really isn't Jeff.

It was so much going on in the peninsula that we're trying to keep our aperture open.

My initial thought is towards.

Higher nickel content Nmc's, we're already having those discussions with various vendors and then my thought goes to the tool set.

Staying up with the current state of lithium ion.

Equipment and manufacturing techniques because the bulk of that is I think you know will be applicable into our manufacturing flow for the cells.

And then just anything that's coming out of universities.

Our national Labs, given the amount of.

Focus that Korea has in the battery space are kind of as where my head goes.

But it's really across the board right now it's too early see any specifics underneath those.

Jon Van Scoter: It's too early to say any specifics underneath those categories, but that's a good laundry list of things to keep an eye on. My last question is, you mentioned the A2 cell, focused on BMW in 2024. Since A1 cells have been delivered since October, and I assume that reference is to BMW Pregnancies, do you have a timeline for accomplishing your 2024 agenda?

Categories.

Okay No that's.

It's a good laundry list of things to keep an eye on.

My last question is you mentioned that the eight T cell design is a focus for BMW in 2024.

<unk> sales have been delivered since October.

That references to BMW correct me if I'm wrong.

Do you have a timeline for accomplishing your 2020 482 girls.

Jon Van Scoter: Our first confirmation: yes, those A-1s did go to BMW last year. And we actually worked on the A2 design last year, and when BMW came in with the requirements for the demo car this year, we quickly realized we need to pivot, take the learnings from A1, which have been substantial, both at BMW as well as within Solid Power, apply them to the design that we have for A2, and then drive to execution on that design by late this year, which is the current scheduling for that design and initial production. Great Thank you. I appreciate it. Again, if you have a question, please press star and then 1.

Ill first confirmation, yes, those eight ones did go to BMW last year.

And we actually worked on a two design last year.

And when BMW came in with their requirements for the demo car. This year, we quickly realized we need to pivot take the learnings from May one which have been substantial both at BMW as well as within South power applied into the design that we have right too.

And then drive execution on that design by late this year is the current <unk>.

Scheduling for that design and.

The initial initial production.

Okay, great. Thank you I appreciate that.

Again, if you have a question. Please press star and then one our next question comes from Brian Dobson with high.

Brian H. Dobson: Our next question comes from Brian Dobson with IJ. Chardon Capital Markets. Please go ahead.

Chardan capital markets. Please go ahead.

Okay.

Brian H. Dobson: Hi, good evening. Thanks for taking my question. So just an additional question on the expanded relationship with SKL. Do you view that as a long-term strategic partnership and do you see that as rather important to expanding on the Korean Peninsula? The simple answer, Brian, is yes.

Hi, good evening. Thanks for thanks for taking my question. So just an additional question on the expanded relationship with Essakane.

Do you view that as a long term strategic partnership and do you see that is.

Rather important to expanding the Korean peninsula.

Yes.

The simple answer Bryan is yes.

We think that to be able to do.

Jon Van Scoter: We think that being able to do concurrent development with our technologies on all three continents is going to be a strategic advantage of ours. The discussion and the relationship with SK since putting that agreement in place have only gotten better. We're even discussing follow-on agreements, potentially, about how we could continue to expand the collaboration. So it is very strategic to us at the cell level and then feeding back to our electrolyte the performance, given their high volume expertise, to make sure that our electrolyte is the best it can be moving forward is very, very important to us. And yes, they are very strong on the peninsula.

Concurrent development with our technologies on all three continents is going to be a strategic advantage of ours.

The the discussion on the relationship with SK since putting the agreement in places only gotten better.

Or even discussing follow on agreements potentially about how we could continue to expand the collaboration so it is very strategic to us.

At the cell level, and then feeding back to our electrolyte the performance given their high volume expertise.

To make sure that our electrolyte is the best it can be.

Moving forward is very very important to us.

And yes, they are very strong on the peninsula. So the relationships that they bring across the board.

Jon Van Scoter: So the relationships that they bring across the board, whether it's equipment or whether it's relationships with the government or universities, are all very, very important to us going forward. Also, their relationships with raw material suppliers are also very important to us. So it's very, very important for us to move forward strategically in Korea. Yeah, I certainly agree with that viewpoint.

Whether it's equipment or whether its relationships with the government or universities.

<unk> is all very very important to us going forward also there relationships with material suppliers raw material suppliers that is.

It is also very important to us so.

It's very very important to us.

Moving forward strategically in Korea.

Yeah.

Yes.

Do you agree with that viewpoint.

Jon Van Scoter: I guess circling back to one of your key goals for 2024, as far as expanding electrolyte production in that segment, you touched upon expanding your sampling program and said that you're already in talks with several companies. Could some of those be automotive OEMs? Are you focusing on the automotive area, or are there other areas that you wish to expand into with your sampling program? Yes, simply put, they are in the automotive space with both EV OEMs as well as battery manufacturers that target the EV space. And I would say they're roughly evenly split right now between those two categories.

I guess circling back to one of your key goals for 2024 as far as expanding electrolyte production.

In that segment you.

You touched upon expanding your sampling program and.

<unk> said that Youre already in talks with several companies and some of those be automotive Oems are you focusing in the automotive area or are there other areas that you wish to expand into with your standpoint program.

Yes.

Simply put they are in the automotive space with bolt EV Oems as well as battery manufacturers that target the <unk> space and I would say they are roughly evenly split right now.

Those two categories.

Jon Van Scoter: We have had some discussions with our battery OEMs about them taking the technology into other spaces beyond automotive, but I would say that that's very early on at this stage. Right now, we are going to rely on them to do that right now and leverage their capabilities in those other spaces. So it's really primarily automotive and then evenly split between EV OEMs and battery OEMs. Yeah, very good. Is it fair to say that those battery suppliers would be Tier 1 battery suppliers or Tier 1 automotive suppliers?

We have had some discussions with our battery Oems.

Them, taking the technology into other spaces beyond automotive, but I would say that debt.

Very early on at this stage right now we are going to rely on them to do that right now and leverage their capabilities in those other spaces. So it's really primarily automotive.

And then evenly split between EV Oems and battery Oems.

Yes, very good is it fair to say that those batteries suppliers would be tier one battery suppliers are tier one automotive suppliers.

Jon Van Scoter: Yes. Yeah, very good indeed. Thanks very much. Thank you, Brent. This concludes our question and answer session. I would like to turn the conference back over to John Van Scoder for any closing remarks. Yes, well, thank you for the questions and thank you for your interest in Solid Power. We look forward to updating you as we continue to execute on our vision and our progress on our strategic objectives. Thank you. This conference is now concluded. Thank you for attending today's presentation.

Yes.

Yeah very good thanks very much.

Thank you Brian.

This concludes our question and answer session I would like to turn the conference back over to John Van <unk> for any closing remarks.

Yes, well thank you for the questions and thank you for your interest in solid power. We look forward to updating you as we continue to execute on.

Along our vision and.

Our progress along our strategic objectives. Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.