Good afternoon and welcome to the Amprius Technologies Conference Call and Webcast. It’s now my pleasure to turn the call over to Greg Bradbury..

Good afternoon. Welcome to Amprius Technologies’ fourth quarter and full year 2022 conference call. Joining us for today’s presentation are the company’s CEO, Dr. Kang Sun and CFO, Sandra Wallach. At this time, all participants are in listen-only mode. Following management’s remarks, we will open the call for questions.

Please note that this presentation contains forward-looking statements, including but not limited to statements regarding future product commercialization, new customer adoption and timing and ability of Amprius to build its large scale manufacturing facility, expand its manufacturing capacity and scale its business.

These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius’ results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements.

For a more complete discussion of these risks and uncertainties, please refer to Amprius’ filings with the Securities and Exchange Commission, including but not limited to a discussion of Amprius’ risk factors in its quarterly report on Form 10-Q filed on November 14, 2022.

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..

Amprius Lab and Amprius Fab. Amprius Lab, located in Fremont, will focus on advanced the battery technology product and the manufacturing process development. While Amprius Fab located in Brighton will focus on large scale fabrication of silicon anode batteries.

To support this transition, Jon Bornstein currently the company’s COO, will take a new role to lead Amprius Lab as the Division Business Unit President. In the interim, I will serve as the Acting President of Amprius Fab. I have one final update before I turn the call over to Sandra. One of the areas which I am most proud is the team we have built.

Over the last several months, we have added critical roles to lead up our efforts still. In my Acting President role for Amprius Fab, I am working with our new Vice President of Infrastructure, Andrew Huie, who joined us last September.

Andrew brings over 30 years of facility development and management experience and most recently served as the Director of Facilities at the Panasonic Energy of North America. Huie will be spearheading our efforts to scale production capacity, focusing on factory planning, facility development and regulatory compliance.

With our leadership team in place, we believe that we are well positioned to execute on our growth strategy. With that overview complete, I will now turn the call over to our CFO, Sandra Wallach, to review our financial results for the full year.

Sandra?.

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. As Kang mentioned, we believe that we have the proprietary technology in place and we have shown consistent manufacturability and commercial success.

We have been shipping commercial products since 2018. So, our focus today is not on commercializing, but is instead on scaling our production capacity to meet the growing demand in these fast moving markets.

In our financials, particularly in our revenue results, you will see data points that reinforced the strength of our customer development efforts as we scale.

We believe that those results, especially when paired with our investments in both our Fremont capacity and gigawatt-hour scale capabilities position the company well to achieve its growth and profitability potential. We closed out 2022 with $4.4 million in revenue.

Product revenue was $2.4 million including over 25 new customers, to which we shipped batteries within calendar 2022. Within that set of new customers, 4 are leading eVTOL manufacturers and 2 are global battery pack suppliers for the aviation sector.

Also, we delivered commercial quantity shipments to AeroVironment and Teledyne FLIR and completed two flight tests for Airbus’ HAPS program with a backlog of 6 more sets for future deliveries still pending.

Development services revenue totaled $1.8 million driven by both the delivery of cells and the timing of other deliverables under multiple contracts. We also recognized the first portion of the $1 million DOE cost sharing grant revenue, which was $0.2 million. For 2022, our GAAP gross profit margin was negative 123%.

Our gross margin displays variations period over period based on the mix of products and services. Now moving to our operating expense management, our GAAP operating expenses for 2022 were $12.6 million with higher G&A expenses in Q3 and Q4 due to increased public company cost. Our 2022 GAAP net loss was $17.3 million or a loss of $0.24 per share.

Our shares outstanding at December 31, 2022 were $84.6 million with $71.3 million weighted average shares of common stock outstanding for the year. As of December 31, 2022, there were 59 full time employees primarily based in our Fremont, California location. Share-based compensation for 2022 was $2.7 million.

Turning to the balance sheet, we exited 2022 with $69.7 million in cash and no debt, a net increase of $58.2 million from December 31, 2021.

The key drivers of our cash activity for the year were $13.9 million used in operating activities, $1.5 million in capital expenditures, which represents our investment in our current manufacturing facility as well as in opportunities to expand our footprint and accelerate our capacity to support customer qualifications and scale up, $73.6 million net cash provided by financing activities driven by proceeds received in connection with the business combination and pipe investment, net of issuance costs plus proceeds from the exercise of stock warrants and options.

Moving to our outlook, we expect to continue to be limited by manufacturing capacity until we exit 2023 with the new 2-megawatt capacity coming online.

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

We expect that our G&A costs will continue at the higher rate exiting 2022 noting additional public company expenses. We will continue to be lean on other operating expenses strategically adding critical mass to the new business units that we announced and allocating the majority of our capital to scaling up our manufacturing.

And we expect higher capital expenditures going forward as we continue to build out the 2-megawatt capacity in Fremont, California, while we, in parallel design and construct our newly announced Brighton, Colorado, gigawatt-hour scale facility.

Our spending pattern is dependent on several factors outside of our control, including the timing of approval for rezoning for the Colorado site. So we will provide more specific projections as we have additional information to share. Also, 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 levels. In addition, we have received over $10 million in state and local incentive packages relating 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.

With the strength of our balance sheet and multiple vehicles to generate additional funding through both equity such as warrants in 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.

With that, I will conclude the financial discussion and pass the call back to Kang..

Thanks, Sandra. I would like to re-emphasize a few key points before closing. First, today, we have market leading technology and the position in aviation that are reflective of our unmatched performance in real world applications.

Over the past year, we have demonstrated extreme fast charging capability, enhanced our battery specific energy density from 450 to 500 watt-hour per kilo and we successfully passed the key performance test important to future work with the U.S. government. Second, we are building out the scale to serve tremendous demand in the U.S. and to support U.S.

based supply chain resiliency. Exiting 2023 we will further throughout our large-scale manufacturing process and the parameters with 2-megawatt pilot line coming up in our Fremont, California facility.

We are also now moving swiftly to prepare and build out our gigawatt scale facility in Brighton, Colorado for the first 500-megawatt demonstration program with the United States Department of Energy.

Third, we are continuing to build a pipeline of blue chip customers to meet our planned expansion efforts, which has operating at a scale of hundreds of megawatts exiting 2024. As we look to the rest of 2023, our strategy and focus at Amprius remains unchanged.

We have tremendous opportunity ahead with the product portfolio that positions us to post growth in aviation market and expand it to other industries, taking batteries with stronger performance and the faster charge time. We are continuing to build on our early lead through technological advancement and strategic partnerships.

Through the private and public sector, we now have the capital and are building the capacity to become a leading commercial provider in the sustainable mobility sector. Finally, we have the team in place to execute our mission. Thank you for your continued support of Amprius Technologies. With that, I will turn it back to the operator for Q&A..

Thank you. [Operator Instructions] Our first question today is coming from Colin Rusch from Oppenheimer. Your line is now live..

Thanks so much guys and congratulations on all the progress. Really glad to see you guys get that award this week with the Battery Show.

Kang, as you started installing the megawatt tools and evaluating them, can you talk about any surprises either positive or negative that you are seeing from the tools that are in installation at this point?.

At this point, we already powered the two in Fremont, this Centrotherm tool. We don’t – we also try to tune the source, because this thing we need to work with the supplier to get the deposition source adjusted.

We expect sometime in summer – later summer early fall, this tool will be fully – this particular tool will [indiscernible] growth will be fully in operation..

Okay, that’s tremendous. And then in terms of the selection of Colorado obviously, the building site has some advantages.

But can you talk a little bit more about supply chain advantages in terms of location as well as hiring opportunities, because there seems to be potentially some efficiencies that you guys are gaining by choosing this location?.

Yes, the most obvious one of course is close to our selling source. Selling today is manufactured in the state of Montana, Colorado compared to the other state, where we looked Georgia, Texas, now we see that in Colorado. Now, this is probably the most visible supply chain advantage.

In addition to that Colorado’s weather, it’s mostly drier, that is very important for us, I think the most important thing is the Colorado, they have the sufficient the power for us, as a battery manufacturer, we cannot afford to have power disruptions.

So they almost guarantee that the power supply, the current of power supply already adequate for our Phase 1..

Okay, that’s super helpful. And then just a final one with the introduction on the new product.

And the validation with a third party, I guess, can you talk about what your customers are looking for? And in terms of incremental validation on that before you start to see some orders or is it really just a capacity issue for you guys right now on that product, given the performance, so you’ve been able to demonstrate?.

We have capacity issue with a lot of customers a lot of inquiries. We have inquiries from industrial players, even from the government, but we don’t have enough capacity to satisfy their demand. That’s a one challenge for us. That’s why the capacity extension is our priority.

The second demand from the customer, of course, we are currently focusing on aviation segment. So aviation segment, so far we are the only one can provide high energy, high power batteries. And already today, we announced the 500 watt-hour per kilo.

That’s the battery the Airbus has for when really needed to make a 2nd generation product [indiscernible]. So we have capacity challenge. At the same time, we have customer demand, some energy and the power, okay. [indiscernible] energy and the power Amprius today, probably the only company we can get – okay, high energy high power.

I have not seen other battery can deliver..

Okay, thanks so much, guys..

Thank you. [Operator Instructions] Our next question is coming from Chris [indiscernible] from B. Riley. Your line is now live..

Hey, guys. Thanks for taking my questions here.

Maybe just touch on the Colorado facility, you called out in the letter rezoning process that you’re going through there anything you care about that process? And how we should think about the timing, assuming you get clarity on that over the next couple of weeks, months whenever, and then the overall capital needs expected through the end of next year.

Any update there given the plans appear to be pretty solidified in Colorado?.

Yes, okay. And so the timing issue, and then timing question, then Sandra can you elaborate more on the financing? So, we are currently working with the regulatory authorities. I think this is the most time-consuming part of this project. And currently the source of the production line and we have never land up.

I believe our production line can be delivered on time. Construction discussion went well. We are planning to have this construction start late summer and early fall. It took us about 18 months to get building retrofit suite then have our production line thought..

Got it. And then any update on the capital expectations through the end of next year.

Given – I think we’ve probably got a pretty good idea of your expected costs at this point given the site selection and all that?.

Yes, so that’s a great question. So our production and equipment capital needs are still in the $120 million to 150 million per gigawatt. That’s the total cost without government grant offsets. And we’re estimating possibly another $100 million on construction NTIs, so, somewhere in total between $220 million and $250 million..

Got it. Okay, that’s really helpful.

And then on the customer side, it seems like you guys are continuing to add new customers testing, maybe you could just talk a little bit more about some of the demand and segments aside from USABC, are there any other non-aerospace defense type customers in there, and then maybe within aerospace, curious if you could talk about either dies or use cases within that kind of broader sector to give us some kind of breakdown around the types of demand you’re seeing out there?.

So we are working with – of course, most of our customer aviation battery customers. At the same time, we have been last few years engaging with non-aviation battery customers primarily in the electrical vehicle battery space, because we don’t have a larger format, production line and it’s time.

So we only can see the evaluation stage at this phase I would call technical exchange phase.

As the USABC or [indiscernible] the grant, this – twice asked us to proceed the low cost high energy density electrical vehicle, we also have interaction with other OEM, EV OEMs but at this time still at a technical exchange stage until we have a larger format EV format, I mean, 100 amp-hour, 120 amp-hour cells, we will stay at a technically extended stage..

Yes, that makes sense.

So maybe just within aerospace any other – any ways you can kind of segment out the types of customers or the use cases would be helpful there?.

Right. For us today, you see we have industrial customers, we have customers in Defense segment. Those batteries are adequate for other applications. We just need to have the capacity and the lighter format of the battery in a right size of the battery.

For those applications, I think this is our effort [indiscernible] 18 to 24 months, we will get there. Our – as we mentioned, repeatedly mentioning in our challenge is the ease of capacity. Once we get capacity issue resolved, we will have much better fluctuation in revenue generation and serve the customers..

Makes sense. I will hop into queue. Thanks, guys..

Thank you. [Operator Instructions] We have reached the end of the question-and-answer session I’d like to turn the floor back over to Dr. Sun for any further or closing comments..

Thanks again everyone for joining us today. I’d like to thank our employees, partners and shareholders for their continued support. As a reminder, you may learn more about our company updates and the call we will be presenting in the Investor Relations section of our website. We look forward to updating you on Amprius progress on our next call.

Operator?.

Thank you. That does conclude today’s teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today..