Greetings and welcome to the Solid Power Inc. Second Quarter 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. You may begin..

Thank you, operator and thank you, everyone, for joining us today. I'm joined on the call today by Solid Power's Chairperson, Dave Jansen; President and Chief Executive Officer, John Van Scoter; and Chief Financial Officer, Kevin Paprzycki.

A copy of today's press release is available on the Investor Relations section of Solid Power's website at ir.solidpowerbattery.com. 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, let me turn it over to Dave Jansen..

Thank you, Jen and good afternoon, everyone. I'm very excited today to introduce John Van Scoter, who took over the reins as CEO in June. John brings to Solid Power a skill set that we believe is ideally suited for this stage of the company's development.

This includes deep experience working in clean tech and renewable energy as well as a history of leading tech companies through the development stage and into commercialization. It has been a pleasure working with John and helping him get up to speed. I've been extremely pleased with the leadership and engagement thus far.

I think I speak on behalf of the entire Board in saying we feel he is off to a great start. With all the changes over the past several months, I also want to acknowledge the Solid Power leadership team for continuing to drive progress towards our strategic goals.

I believe having John aboard will enhance their ability to continue to execute our strategic plan. With that, I'd like to hand the call over to John. John, welcome..

scaling production of our electrolyte, continuing to deliver electrolyte to potential customers for sampling and feedback, delivering EV sales to our partners and officially entering the automotive qualification process. With that, I'll hand it over to Kevin to take you through our financial results.

Kevin?.

Thanks, John. Good afternoon, everyone. I'll start off with an overview of our financial results and position. Then I'll review our '23 financial outlook and view on the second half.

Overall, we continue to track right on our projections for the year and believe we will remain well positioned for the long term with our strong liquidity and balance sheet. Our second quarter '23 revenue of $4.9 million was in line with our expectations. We continue to execute well on our expanded BMW agreement and on our government contracts.

Second quarter '23 operating expenses were $27.1 million, up $9.8 million from Q2 of last year. This increase represents our expansion of cell and electrolyte development efforts, including the start-up of electrolyte production at SP2. These efforts drove increased labor as we've grown the team as well as increased material spend in Q2.

As we continue to execute on our JDAs, increasing our EV cell and SP2 powder production, we expect our development-related investments to increase in the back half of the year. Our second quarter '23 operating loss was $22.2 million and net loss was $12.2 million. Turning to our balance sheet and liquidity position.

During the second quarter, we invested $36.3 million into operations. With the expected ramp in production of both electrolyte and cells, we expect cash used in operations for the back half of the year to be slightly higher but still leave us in our original guidance range. In the second quarter, we also invested $21.2 million in CapEx.

Most of our CapEx year-to-date went towards SP2 as we progressed towards our April production start-up. We ended the quarter with total liquidity of $443.4 million, consisting of cash, marketable securities and long-term investments. Looking ahead to the rest of '23, we are reiterating all of our guidance for the year.

We continue to expect revenue in the range of $15 million to $20 million. As we execute on our JDA deliverables, we expect revenue in the back half to be slightly higher but again, still in our guidance range. We are also continuing to guide to total combined cash investment in the range of $120 million to $140 million.

This breaks down into $70 million to $80 million of expected operational investment and capital investment between $50 million and $60 million. We have some remaining equipment to install at SP2 to help us scale which John discussed previously and we are continuing to build out our new powder R&D lab.

We expect ending liquidity for '23 in the range of $355 million to $375 million and believe that positions us well from a longer-term perspective into the late 2020s, with upside all the way through commercialization, if we are successful in attaining various grant funding available or project finance which we are aggressively pursuing.

With that, I'll now turn the call back to John..

Thanks, Kevin. Before I turn the call over for questions, I want to take a moment to discuss some news that we'll formally put out later today. Dave Jansen will be retiring from the company effective October 8. John Stephens, our Lead Independent Director, will take over as Chairperson effective September 1.

Dave will remain on the Board of Directors until his retirement date. We are sad to see Dave go. We, the Board and Solid Power shareholders, all owe him a depth of gratitude for his leadership and guidance of Solid Power. As you know, Dave has been involved with the company since the beginning. He has always stepped up when the company has needed him.

Initially as an adviser in 2014, he became the Board Chair. In 2017, he became President and took on an operational role to help us with our capital raising and lead the build-out of our executive team.

In the height of the pandemic, Dave extended his role by helping Solid Power navigate its Series B, PIPE and SPAC deals all of which proved far more difficult in that environment. Finally, he stepped up again last fall when the company needed an interim CEO.

He did this at great personal sacrifice delaying his retirement and leading this organization through major change amidst some personal health challenges. With new talent added to the Board and a permanent CEO at the helm, the time has come for Dave to finally get his well-earned retirement.

Dave will remain at the company for several more weeks transitioning both myself and John Stephens into our new roles. On behalf of Solid Power, I want to thank Dave for his service, his sacrifice and his support of Solid Power for these many, many years. His mark on the company is indelible.

And the strength of the company and its management team is a testament to his hard work. Wrapping up, I want to underscore my faith in the team here at Solid Power. While we still have work to do, the progress this team has made establishing Solid Power as a leader in solid-state battery technology cannot be overstated.

I'm proud to be part of this organization and look forward to continuing to drive shareholder value. With that, let's open it up to questions.

Operator?.

[Operator Instructions] The first question is from Brian Dobson of Chardan..

So congratulations on the positive feedback that you've received on the powder from your, call it, potential clients.

Can you share what some of the feedback you've received from BMW and others is and perhaps what changes you've made? And do you think that, that will ultimately make the product more marketable?.

Thank you for the question, Brian. Yes, we have on-site BMW staff and we're continuously getting feedback through those engineers as well as staff back in Munich with regard to the electrolyte performance.

The power of the learning loops through BMW evaluating the cells with our electrolyte and the feedback into the powder team is crucial to continuing to drive the improvement and the robustness of the powder. It's really been crucial to get us to where we are today. But I mentioned the internal metrics that we are hitting on the 12 metrics.

That's 1 state but then all the way through the battery feedback has been crucial through BMW and other partners..

Yes, very good.

And then regarding the exciting expansion that you alluded to in Korea, is there any more color that you can share with us? Or when do you think you'll be able to, I guess, further articulate your build-out strategy in that region?.

Yes.

Honestly, it is early but there's so much going on, on the peninsula that I just feel based on my prior experience with international operations and global reach in some of my former lives that it's really crucial for us to be there and be part of the action, be close to the EV OEMs, be close to the battery OEMs and then all the talent that is there on the island also to tap into that.

So we'll be looking forward to updating you much more as that strategy and position take shape but it's really early on right now given my 7 weeks in the chair..

That's right. I understand it's early.

But do you think it would be fair -- a fair characterization to say you're making this move because you have received positive feedback from players on the Peninsula?.

I think that's a fair statement..

[Operator Instructions] There are no questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to John Van Scoter, President and Chief Executive Officer, for closing remarks..

Well, thank you all for joining us today. And myself and the rest of the team here looks forward to updating you again next quarter. Thank you..

Thank you all for joining us today. We look forward to updating you again next quarter..