Conference Transcript - AMPX 2026-05-13

Operator

All right, everyone, I think we're going to get started here with our third, I would say, drone defense tech fireside chatter this morning, and we're lucky enough to have here Ricardo Rodriguez, the CFO of Amprius. Amprius, I believe, has the holy grail in battery technology for the drone space. If you ask drone companies, the OEMs building them what they want their drone to do, they're probably going to tell you, fly farther and carry heavier stuff. I would say Ampryous battery solutions allows that better than anyone and so I think just kind of to kick off the conversation could you provide an overview of Ampryous the battery technology business model and maybe kind of what differentiates you guys absolutely and thanks for having us

Ricardo Rodriguez, CFO

again maybe I think we had some slides that would be helpful to use as backdrop I'll fast forward Yeah, so Tom is pretty good at delivering this analogy, but in essence, think of it this way. We try to deliver you double the jolt or the energy and power with the same package or require half the weight or half the space to deliver the same amount of power and energy. And so, you know, espresso works just like I mentioned, right, compared to a cup of drip coffee. And so we've used this analogy to relate to folks. I'm a little bit more technical, and so I use a chart like this one. And I generally have to remind people that a battery is not just an energy storage device but also a pump, right? So folks expect us not just to deliver double the energy density, but also to give them a flexible platform that allows them to swap that extra energy density for power. So you actually need to depend on how much power is coming out of the cell as you move a robot, fly a drone, power a light EV, whatever the application ends up being. But going back to my previous slide, all else being equal, we try to give you double the energy density and proportionally a pretty high level of power more consistently over the same unit of space and weight. Given this, we're chasing some pretty diverse and fast growing end markets. If we were starting a battery company today, we would probably see a chart from a consultant that says that 70% of the market is EVs, another 15, 20% of the market is stationary storage. We're focused on the tip of the spear where this additional high energy density that we bring and additional power truly makes a difference and truly enables a duty cycle and a use case that otherwise wouldn't be there. So the first customers who came calling on the company were the UAV suppliers, followed by the light EV customers. We're currently quoting quite a few satellite and space applications. And then we're in the very early innings of robotics and have been involved with the eVTOL guys for about a year and a half, developing some custom cells for them. If you look at the lithium-ion side of the market for UAVs, we estimate that this is about a $2 billion market today, going to $3 billion by 2030. And that doesn't factor in a lot of upside that we're seeing today from the likes of the new budget requests from the U.S. and all the spending that they're going to have on drones within that. We like to say that we're fabless but not processless. So our team in Fremont basically puts together and tests a range of materials to put together the optimum battery for the right application in the right size, kind of coming from the right place in the right time. And that requires quite a bit of coordination, right? So we use a network of contract manufacturers to produce the batteries for us. We do all of our process development and validation in Fremont. One of the things that enables us to move fast and to scale quickly is that we can use standard lithium ion cell production equipment. So that enables us to have a new SKU on the shelf ready to go within a quarter and to have it in full production coming out of our network of contract manufacturers for customers within a quarter and a half. And, you know, we recently in Q1, we managed $28.5 million of revenue through 25 SKUs. And that, I think, is a sign of just how flexible and how nimble we are. We also, besides this mode that we created by developing SciCore, which is a silicon oxide battery, we are not stopping, right? We're continuing every six months throughout this year and next year. TO MOVE OUR CLUSTER OF SKUs UP IN THE ENERGY DENSITY SCALE. SO WE BELIEVE THAT WE'LL GET TO 600 Watt-HOURS PER KILOGRAM BY THE SECOND HALF OF 2027. AND OUR, YOU KNOW, 450-PLUS Watt-HOURS PER KILOGRAM OF ENERGY DENSITY RIGHT NOW IS BEST-IN-CLASS, RIGHT? A STANDARD LITHIUM-ION CELL GIVES YOU ROUGHLY 270 Watt-HOURS PER KILOGRAM. And a silicon-doped cell gives you about 310 or 320 watt-hours per kilogram. So for those folks who really need to enable a duty cycle that otherwise wouldn't be there, thanks to being able to carry higher energy or deliver power more consistently, we're there already with our portfolio of products. I mentioned contract manufacturing. You know, center of excellence for a lot of the stuff has been in China recently. That's where we have several of our contract manufacturing partners. We started producing cells in South Korea during the summer of last year. We're ramping that up this year as customers push to be NDAA compliant in advance of, you know, Where full NDA kicks in in 2028, and you need to be producing these cells in the U.S. starting in 2028. We actually won a bake-off last summer that the Defense Innovation Unit of the U.S. put together to develop an American-made high-energy density battery. We've gotten over $18 million from the DIU. They're funding the bulk of our capex this year. And we also announced the contract manufacturing partner to produce at least a million cylindrical cells a month starting at the end of the summer of this year here in the U.S. It's no secret that we're out there working right now to find pouch cell capacity in the U.S. And so we will be fully NDA compliant, not just now, but in 2027 and 2028. And this is important to note because a lot of folks are out there right now saying that they're NDAA compliant. But in my view, they should put an asterisk to the sign that says NDAA compliant for now. Because the NDAA compliant requirements do evolve. And as I said, by 2028, you need to be producing cells in the U.S. And this is all supplemental, right? So we're not moving out of China. There are plenty of customers within China. Our business within China is growing. Our customers in Europe take revenue, take product from China. And so this is all expansion. This is not replacing any of our value chain that we have today. In 2026, we told the street that we'll do at least $130 million of revenues. That's up from at least $125 million, which is what we told folks when we closed Q4. reported Q4 of last year and then longer term we want to keep going right we do see paths from our existing relationships to be able to deliver at least 600 million dollars of revenue if you look at what we do for customers we believe that we can earn a higher than 30% gross margin and then that if we keep the OPEX lean will translate into at least 20% adjusted EBITDA margins and so you know for us the the path is pretty clear right we we've got to keep winning commercially we've been demonstrating early innings of execution ramping up our network of contract manufacturers we continue to increase our supply position particularly in the US as we rush to be NDA compliant and we're pretty committed to this capital efficient model, right? You know, I think most investors want to know what the share count is going to be for a long time. So we've shut down our ATM. We've walked away and addressed our liability with a facility in Colorado that we had previously signed the lease to back in 2023. So we don't have that drag on our balance sheet anymore. And then last week you saw us announce plans to proactively address some of the warrant overhang that we had related to the public warrants that we had sitting out there that were well in the money thanks to how the stock is traded and what the team has enabled us to kind of get to.

Operator

Well and Ricardo on that I think it would be helpful because maybe kind of like walk through kind of high level the mechanics of the of the warrant exchange and kind of like how much that actually kind of save the company with related to dilution totally so I mean I

Ricardo Rodriguez, CFO

think our math is now even higher than the 70 million that we thought we were gonna save investors and save dilution by engaging into this warrant exchange but in essence the company had 16 and a half million public warrants that expired in September of next year with a strike price of 1150 when we started trading significantly above $11.50, they were all well in the money, and we have the right to force to redeem these cash or cashless when we trade above $18 a share for 20 out of 30 trading days. If you look in Bloomberg, roughly 10, 11 top institutional holders held roughly 7.1 million of these warrants, and they run a delta hedge on these warrants, which means that if we're trading below $18 a share, they're probably 70% short for every warrant that they hold. If we're racking up days trading above $18 a share, they increase that short to 100% of their warrant coverage. And we just thought that since we don't need the proceeds and we believe in if we ever needed to play stock we believe in better placing it in good hands with long only folks we actually reached out to the top warrant holders and struck a deal to pay them 35 cents a warrant in order to agree to an exchange ratio that would be determined by a four-day VWAP of our stock price right and so that's being determined this week I think it'll instead of automatically issuing 7.1 million shares if we call these warrants or if these institutional holders exercise them we believe that we'll be able to give out less than 3.1 million shares so you know we basically

Operator

cut the dilution in more than half well um thank you for the overview absolutely i i i think now would just love to dive into kind of the core markets you're serving. Today, the UAS drone business is a big driver. I estimate 70-80% of sales are probably derived from that. Could you just kind of walk through where you're seeing the strongest demand today, maybe from a geographic perspective as well as an application perspective? Because I think in the headlines, a lot of people see like these small FPV drones. That's not necessarily the

Ricardo Rodriguez, CFO

market you are focused on I think we can cover that market pretty well through the pack houses so you probably saw the upgrade energy announcement of the acquired by UMAC here on Monday we work with Titan you know rebuild a really interesting group of folks are getting into the pack business as well and so you know we could take care of all those drone dominance and smaller drones through the pack houses and not spend many of our precious sales and technical resources right they basically purchase sales from us in bulk integrate them into relatively simple packs and resell them to the drone dominance and the small guys where to answer your question where we are seeing the bulk of the pool for customized sales for really that you know nth degree optimized solution is on drones that fly above 20,000 feet for surveillance and counterattack, right? And out of necessity, this started in Ukraine. I truly do think that even today, Ukraine and some of the more advanced names are the ones leading this field. And so those are who our main customers have been historically. They're also the ones getting the bulk of the larger awards, and they're the ones that are driving our demand, right?

Operator

and it's fair to assume from like a geographic perspective i think you guys published this like as of 2025 like 75 of revenues is international probably in that europe region u.s 25 but i think in this last earnings call like a reason for the uptick of guidance was like i think the momentum that we're seeing in the u.s so maybe could you talk about what's kind of implied in in the new updated guidance from like a demand driver perspective totally so I mean

Ricardo Rodriguez, CFO

obviously the the beat was reflected in the updated baseline but when we look at the rest of the year we do see demand in the u.s. taking drone dominance and the upside from that aside we do see demand in the u.s. being driven in the second half by sales to some of our main customers like air of arm and crowd Samdani, Teledyne, and others, we'll see how much of it still fits within 2026, and I think we were fairly conservative in what portion of it falls within 2026 itself, because we still don't know exactly when, whether that'll land, or whether all of it will land in 2026 versus a portion in 2027, and so that's obviously a positive sign. I mean, even in Q1, our sales in the U.S. tripled, our sales in China also grew, and we truly do believe that the Nordics, Ukraine, Germany, and the rest of Europe are going to ratchet up their spending as well. So that has the potential of driving further upside for us in 2026, but definitely in 2027.

Operator

Yeah. Well, I think a unique dynamic with Amprius, and you have the number there, so I don't have to ask you, 600 customers you're working with. But what I think is unique is, could you talk about where your customers are in the adoption cycle? How I've understand it is they value your solution, but it's really only been in maybe one variant or a couple of variants. And now what you're seeing is customers adopting yourselves across the whole portfolio. So could Maybe kind of talk about that dynamic.

Ricardo Rodriguez, CFO

Yeah, so adoption happens usually within a quarter, a quarter and a half, right? And, you know, my background's in the automotive industry where there's a very clear line between development, prototyping, and when you actually go into production, right? In the UAV space, I'm having to learn that there's more of a gray line and half of the stuff that's flying out there could be considered a prototype. right which means that the validation hurdles are not that high you can get swapped in especially for the less expensive drones where we use the you know where we go in through a pack made by somebody else versus it being integrated by the OEM the swap can happen in a week within a week right and so for us it's just a matter of getting out there getting in front of these customers and these customers having the appetite to replace standard cells with us right and a lot of this depends on the duty cycle and their willingness to pay frankly right if you need don't need the UAV to go that far you may just use standard lithium-ion cells and that's okay but where we do play a very unique role is on UAVs that carry a lot of devices right so if you're having to power multiple cameras a gimbal a bunch of communications equipment you wonder where is their power left they make the thing fly all right and that's where I

Operator

think we play a critical role okay and I think too when it comes to your customers where like in and going to that point just kind of like to double down because I think just can want to make sure like our investors understand And, like, Group 2 and Group 3, like the long-range precision strike, loitering munitions, you might not be seeing this yet, but what's the possibility of, like, a replenishment cycle? Because batteries aren't going to last forever if these things are out. Still early, like you said, like, they're just starting really kind of to scale this up. But has the company given any thought on, like, what that may look like as almost like a recurring revenue stream longer term?

Ricardo Rodriguez, CFO

Yeah, there's definitely a bit of a razor blade model to this, especially on the drones that are kept within the fleet and that are upkept and they go out and complete a mission and come back. We do estimate roughly a purchase of two to three packs per year in our market sizing, right? It's still very early innings, right? We've been in these for a year, year and a half. most and We are starting to see these come back But at the same time I would point you to our slide where we had the tech roadmap, right? We're also not standing still so some of these guys say, okay, I'm gonna buy as few Batteries as possible for the initial installation Knowing that you are gonna get better over time, right? And so our head of sales actually talks about this frequently we don't just sell a cell right now to get installed we actually sell a roadmap and it's a roadmap on where we're gonna be technology and energy density and power wise and also where we're gonna be making the stuff well and I think kind

Operator

of a key question here because you guys were very smart if I think going after this market early I think there was speculate or there's speculation on if this cycle was actually real and I think that's actually now you've proven the doubters wrong which probably has now attracted more people going after this market from a battery perspective. Could you talk just about kind of like the competitive landscape today how that's maybe changed over the last six months but like what you think can allow you guys to maintain this

Ricardo Rodriguez, CFO

moat that you've already built? Absolutely so I mean frankly the market came to us right we have only been doing outbound outreach since Tom joined the company in May of last year almost exactly a year ago right and so this Martin this is a market that first came to us with Symax Airbus came to us for the alto quasi satellite drones and then that brought an AV AV who was also an investor in the company before we went public and then you know the outbound outreach really started just a year ago right we do see a lot of battery companies out there with trying to repurpose capacity that was originally intended for EVs or for stationary storage into these markets right but you know the point that our our CTO always makes and we make internally is like, you can't go after this market if you don't understand the duty cycle in detail. And by that, I mean, you know, in this spider chart that I showed on the right side, where exactly does the customer want to be for the application that they're building? And we see a lot of EV type cells get repurposed. A LOT OF THESE ARE SILICON-DOPED CYLINDRICAL CELLS THAT MAY BE GOOD ENOUGH FOR SOME DUTY CYCLES, BUT FOR THOSE CUSTOMERS THAT ARE AT THE TIP OF THE SPEAR, LEADING IN TERMS OF ENERGY DENSITY, PERFORMANCE, THEIR ABILITY, POWER OUTPUT, ET CETERA, THAT'S WHERE WE ARE. AND DOING THIS QUICKLY AND WITH FLEXIBILITY AND WITH SPEED, WE THINK IT'S WHAT'S GOING extend our lead even further, right? The other bit that helps us is that we've consistently been delivering a little bit more than what we promised to folks. You can go ask the DIU, I think some of our investors have gone and asked our customers, hey what are those Amprios guys delivering to you? And it's usually a little bit more than what they showed up here and promised. And we've seen a lot of battery companies either because they jumped headfirst to build a capacity make a bunch of promises that they then can't sustain in the field and so we believe that as long as we can continue sort of under promising and over delivering both in our products and in the performance of the company we'll be fine and we'll be ahead of the competition but it all starts with really just understanding what exactly is the customer trying to get the thing

Operator

to do. Right. Well, I think an important part too, like as demand continues to ramp, and I think we're in the very early stages, we still got this massive 55 billion in dog funding that I think Amprius is very well exposed to. What, can you walk us through your current manufacturing capacity and your ability to scale production to meet this elevated level of demand? Yeah. So, you know,

Ricardo Rodriguez, CFO

what happens at the company at any given point of time is we look at what flavor the demand comes in, And then we play this game of Tetris to fulfill it, right, across 25 different SKUs and from all of our contract manufacturing partners. And it is a pretty dynamic process, right, because we're trying to not leave any revenue on the table, but yet at the same time have enough foresight to understand what flavor the demand is going to come in at. And the question on capacity is a pretty theoretical one. But if all of our customers were to pick our top four flavors, we would have at least $600 million of capacity. The reality is that it doesn't work that way, right? And we are working to drive some convergence. For example, with DIU, we're looking at only a couple of standard pouch cell pack sizes that will be made in the U.S. to try to not proliferate too much beyond 25 SKUs. But it's kind of easier said than done, right? If you want to optimize things, you may need a custom sell. And we're totally fine as long as we get paid for all the work that goes into it.

Operator

Well, and I think one kind of important question is, especially with this drone, is obviously the stocks perform very, very well. um but like i feel like we're still very early kind of in this growth cycle so like maybe walk through kind of like how you guys see this you're guiding to very strong growth north of 80 percent plus but how should we think about this growth cycle over the next two to three years yeah so

Ricardo Rodriguez, CFO

we see a multi-legged story playing itself out here right because just when you think uh that uavs may slow down or that their growth rate may slow down uh there are a bunch of other There are markets out there that have very similar requirements, right? Robotics, you know, we see it in light EVs, although we have to manage the mix of light EVs pretty carefully. I think EV tolls, you know, once they get through their FAA certification, they're going to start pulling hard in that 2028 time frame, we believe. For satellites in space, I mean, the experts have totally missed the potential opportunity that there is there to move from, you know, more exotic chemistries over to lithium ion if you're sending stuff up there faster and more frequently. And so, but at the same time, I do think that for the next give or take two years, it's all going to be about the UAV growth, right? Given what's going on in the world, given increased NATO spend, increased military spend, even in China, in the U.S., etc., it's just a more efficient way to go out on the field. It's this whole notion of bots before boots, and we believe that that's got multiple legs. You know, the drone manufacturers are also just finding out their own reason for being, right? Which is why we can't discriminate on who we sell sales into. And we've got our PAC partners sort of leading the front on one end with the, because this is kind of a cottage industry. and then we've got our specialized sales team dealing with the customers that are a little bit more advanced in framing out their requirements well and kind of to piggyback off

Operator

the slide here um robotics seems like one of the biggest type of maybe longer term growth markets but it's such a big category so could you maybe kind of focus like where do you feel like your sales are most applicable to you got industrial robotics humanoid robotics consumer robotics Any specific areas you guys will be targeting there?

Ricardo Rodriguez, CFO

Yeah, I think this is one that is obviously for untethered robotics, right? It's starting with industrial first. We do see Asia already having a meaningful fleet of humanoids. And so we are trying to understand those requirements earlier because those requirements will be the same requirements that the companies here in the U.S. will have. And so we're starting to see the need for, even though they're all mostly using centralized battery packs today, is to get the things to work. We're starting to see that get split up and go towards different parts of the robot itself to balance weight, to have power closer to where it's needed. and you know some of our power cells are perfect candidates for some of those applications and then centrally you can use our you know high energy density cells to you know power the thing for longer same in the same way as we do with the uavs good cfo question here capital allocation

Operator

strategy um you talked about kind of cleaning up the balance sheet now um you basically kind of like operate like break even on the net income side or you guys just now are just an even profitable still kind of investing um uh internally into expanding that capex but like how should we think about the capital allocation strategy kind of over the next 18 months yeah so i mean the the bulk use

Ricardo Rodriguez, CFO

of our cash from the balance sheet, which, you know, we think is adequate relative to the opportunity at around $72 million as of the end of April, is going towards funding the working capital needs to fuel this growth, right? We are not using cash to fund negative gross margins, and we're also not using cash to fund OPEX. So that puts us in a pretty good spot. We're also GOING TO WORK TO SET UP A DEBT FACILITY THAT CAN FLEX UP AND DOWN AS WE MORE EFFICIENTLY WORK TO FUND THIS. THE BULK OF OUR CAPEX IS BEING FUNDED BY THE DEFENSE INNOVATION UNIT IN COMBINATION WITH OUR CONTRACT MANUFACTURING PARTNERS. AND SO OUR STRATEGY WOULD NEED TO CHANGE PRETTY DRAMATICALLY IN ORDER FOR US TO NEED ADDITIONAL CAPITAL. AND THAT'S KIND OF WHERE WE SIT. And, you know, five, six months ago, we developed our little punch list of six or seven things that we thought we would need to do to the company in order to get the stock to work. Of course, assuming that we continue executing this ramp profitably, and we keep working our way at doing them. And so I think it's only a matter of time before we continue progressing as we execute.

Operator

We've got about a few minutes left or any questions in the crowd.

Ricardo Rodriguez, CFO

So SILA Nano and Group 14 are silicon carbon companies. So even though it's clearly a battery technology, I consider them more material companies. very similar to, you know, Brazilias, which is a company that we, it's a former subsidiary that we buy the silicon oxide from. And we don't discriminate. I mean, we've tested Silas' carbon product. We've tested Group 14's product as well. We think that there's a potential use case for that kind of stuff. We also test other materials from Japan, from South Korea. but our product is the cells right not the powder and this is actually a pretty interesting point because you know when we look at M&A or when we look at other opportunities are there out there there were plenty of companies that raised a lot of capital in 2021 to develop battery process technologies materials and other things that could advance batteries now it's time to come back out to the capital markets to raise funds and we're seeing that unless you have a sell it's pretty hard to have revenues or you're selling ounces of this stuff to try to work your way into a battery right and so you know we will test all of these materials in fact that's one of the metrics that our CTO uses in his funnel basically per unit of time how many materials have I tested and validated and put on the shelf. And then on the M&A side, it informs a lot of what we engage with

Operator

and what we don't. So, yeah. Questions? Well, Ricardo, with the last few minutes you have here, I just want to pass it back to you. Any kind of last minute kind of key takeaways you just hope

Ricardo Rodriguez, CFO

the audience takes home with them? Yeah, I mean, I think you hit the nail on the head throughout the conversation talking about how this is still very early innings you know we did 73 million of revenue last year I joke with our team you know average new car dealership in the U.S. does about 85 million so we've got ways to go and so yeah

Operator

stay tuned well thank you guys for tuning in that will end the webcast