Good afternoon. Welcome to Amprius Technologies’ First Quarter 2023 Earnings 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 it 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. 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 it’s quarterly report on Form 10-Q filed on March 30, 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.

Welcome, everyone, and thank you for joining us this afternoon. After I report on our progress and accomplishments at Amprius in the first quarter, our CFO, Sandra Wallach, 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 a ultra-high energy density lithium-ion battery developer and manufacturer. Our high performance batteries are based on Amprius’ proprietary high capacity silicon anode technologies. Today, Amprius delivers commercial batteries with 450 watt-hour per kilo specific energy density and the 1,150 watt-hour per liter volumetric energy density. Our batteries also have up to 10C power capability and enables extreme fast charging rates of 0% to 80% state of charging in approximately six minutes. Amprius batteries are viewed for the tough operating environments with the 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 Celsius. Is 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 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 EV industries. Building our momentum from last year, we believe that we have hit the ground running so far in 2023, with new technological breakthroughs, continued commercial successes, and additional developments for our production capacity expansion. Our first…

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 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 and 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. 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. 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 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 0.3 million of pre-construction design firm startup costs. 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…

Thanks, Sandra. I’d like to reemphasize 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 batteries’ ability to solve real world problems. As shown by our recent increase in battery specific energy density from 450 to 500 watt-hour per kilo, we will continue to enhance our product performance and set new industry standards. Second, we have been initiating commercial products since 2018. So our focus today is not on commercializing, instead, we are building out the scale to serve a significant demand in the U.S. to support U.S. based supply chain resilience. Exiting 2023, we will further pull out our large-scale manufacturing process and the parameters with our two megawatt hour production line at the Amprius Lab in Fremont. We are also moving swiftly to prepare the build-out of Amprius Fab, our gigawatt scale facility in Brighton, Colorado, but 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 the 2023. In the second half of the year, we expect to finalize the optimal transition process for our mass production to develop silicon anode, begin construction of Amprius Fab, deliver prototypes of our 500 watt-hour per kilo battery to select customers, and operationalize our two megawatt production line at Amprius Lab by end of the year. As we look to the rest of the year, our strategy and the focus at Amprius remains unchanged. We have a tremendous opportunity ahead. We support our portfolio that position us to both growth in the aviation market and extend 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 strategical partnerships. Both the private and the public sector, we now have the capital and are building the capacity to become the leading commercial provider in a sustainable mobility sector. Finally, we believe we have the right team in place to execute our mission and deliver what we have planned and the promise 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.

Thank you. The floor is now open for questions. [Operator Instructions] And our first question comes from Colin Rusch from Oppenheimer. Go ahead, Colin.

Thanks so much, you guys, for the update. And I’ll start, Sandra, just with the – this merger agreement. I just want to make sure that there’s no 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 holdco. And then those folks will have – they’ll be subject to the same lockup as the holdco 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 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?

Okay. Colin, as for the Colorado facility at this moment, we almost – we are at the final stage of a selection of our production to decide our production specifications and we have almost all the equipment lined up, okay – I mean, the supplier lined up. In June, we probably have the 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 [additional] manufacturing processes. So we are still working on a few regulatory issues. We hope we can start construction, okay, bring it to ground – we don’t need to bring it to ground. We just need the retrofitting the – retrofit the facilities sometime in early fall.

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 installed and start working through some of the testing processes?

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

Excellent. Thanks so much, guys.

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

Hey, guys. On the CapEx plan, I didn’t see any incremental details on the anticipated amount and timing for the 5 gigawatt hour Colorado expansion. It sounds like any material changes will become clearer after June, but just wanted to get a sense of how the sizing and cadence are shaping out as far as the CapEx plans?

Yes. So we – once we have more detail and certainty about the timing for the first 500 megawatt, which is the DOE 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.

Okay, that makes sense. And then in the shareholder letter, you called out that several of the customers who have the potential for hundreds of megawatts through 2025 and beyond. Could you give us a sense of the size and scope of the 20-ish customers today? I assume you count several customers among that size, ones that you’ve named like [indiscernible] Airbus, AeroVironments, but I’m just kind of curious of the 20, how many do you think are in that kind of size range if you had the capacity today?

So we call the hundreds of megawatts inquiries and the discussions with our customers. Those would be the off-takers for Colorado manufactory. Among those customers, when we see 20 customers, so those customers are included – or they lose 20 customers, we probably will finalize those deals sometimes in the later part of the July. We feel the Colorado facility is very important. We have a customer to take orders from that facility. So company is working very diligently to build a strong pipeline for our large-scale manufacturing facility.

Got it. 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?

In July, we probably – when we are working very fast on building this manufacturing facility here, the manufacturing facility in 2025, this is a 500 megawatt manufacturing facility. We like to have a team of operation in 2025. So 2025, whatever it is, this factory can produce over 500 megawatt because there’s set up, there’s customer evaluation, factory inspections, all those kind of activities to make sure we have sufficient – we have full capacity once we started operation. Okay, we need to run the full capacity, we need to have very strong pipeline. So pipeline needed to be hundred megawatt hours. So the deals we are in discussion, I expect to conclude in the later part of the July. So that will give us the customer base for our large scale manufacturing facility in Colorado.

To further answer, many of the customers that we’re serving today, not just these two pack manufacturers who serve a more diversified aviation sector. Many of our nameplate customers, our hallmark customers have significant demand that we can support, so that will be – that is also part of how we’re building the pipeline for 2025.

Yes. That’s really helpful on the visibility. Thanks, guys.

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. Curious, you can talk a bit how you’re balancing new customers versus existing. Good to see new logos coming in. And then maybe talk a bit about the qualification process, what that takes, how long that takes, and really how you balance that to your point of getting that demand in place?

Yes, we have existing customers, they expanded 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, our existing customers. We’re also working with new customers exploring new applications. So the qualification process depends on who will be the customer. We have the customer, the qualification time is relatively shorter, I mean in half year or so of possibility. 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, have their own application already identified. Those customers qualification time will be short. They just test our batteries and put in their device then they can use. Another type of customer, we have to work with them on their new project. For example, they design a new flying devices require our battery support. Those kinds of projects that you will be taking a little bit of a longer time. For battery qualification for our customer – our current customer applications normally takes about six months to two years depending on how sophisticated the application will be. Now, most of the time, the delays not come from Amprius, most of the time the delay because the customer, their own project have been delayed.

That’s very helpful, Kang. And I could ask one more. With regards to Colorado and ramp-up there, you’ve talked about sort of derisking production with what you’ve learned, maybe expand on that process. And it sounds like you’re already tested the centrotherm equipment overseas, is that something you can incorporate? And just how do you go about incorporating some of those learnings? Thanks.

Yes, that’s two megawatt. That’s why there’s two megawatts, really, this is what we call two megawatt because the machine is really designed more than two megawatts, which is assuming we can deliver two megawatt capacity end of the year. So this is very, very important exercise at Amprius. If this machine can meet our specification, scale up will not be the issue. So far, we tested in Germany and in Fremont give us a very encouraging result. This is a much higher throughput and much robust process than what is the process we have today. If these two megawatts works for two purposes, why is the validation? This probably the most important thing to us. The second part is give us 10x more capacity to serve our customers.

Okay, 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 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.

Thanks again, everyone, for joining us today. I’d also like to thank our employees, partners, and 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 the 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 Technologies first quarter 2023 earnings conference call. You may now disconnect your lines and have a wonderful day.