Solid Power, Inc. (NASDAQ:SLDP) Q1 2024 Earnings Call Transcript May 7, 2024
Solid Power, Inc. misses on earnings expectations. Reported EPS is $-0.11731 EPS, expectations were $-0.11. SLDP isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Greetings and welcome to the Solid Power, Inc. First Quarter 2024 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. Thank you. You may begin.
Jennifer Almquist: Thank you, operator. Welcome, everyone and thank you for joining us today. I’m joined on today’s call by Solid Power’s President and Chief Executive Officer, John Van Scoter; and Chief Financial Officer, Kevin Paprzycki. A copy of today’s earnings release is available on the Investor Relations section of Solid Power’s website, www.solidpowerbattery.com. I’d like to remind you that parts of our discussion today will include forward-looking statements as defined by the 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 www.solidpowerbattery.com. With that, let me turn it over to John Van Scoter.
John Van Scoter: Thank you, Jen. Good afternoon, everyone and thank you for joining today’s call. I’ll begin today with a brief update on our progress. After that, I’ll hand the call off to Kevin for the financial review. Then we’ll open up the call for Q&A. When we last spoke, we outlined our 2024 goals. They are to expand our electrolyte capabilities and available market, advanced to A-2 Sample cell designs, execute for our partners and strengthen our presence in Korea. 2024 is off to a good start with continued strong execution on all 4 of these priorities during the first quarter. With respect to electrolyte, we expanded our sampling program with ongoing shipments to new potential customers. We made progress on our A-2 cell design and are executing on a path that we believe will enable us to deliver higher performing cells by target dates.
We continue to execute for our partners, most notably through strong early execution on our SK On, R&D, technology transfer and line installation agreements and we further established our team and offices in Korea, providing the basis for ongoing engagement in the region. Looking a little more closely at each of these goals, starting with electrolyte. We continue to see growing interest in our electrolyte powder. During the quarter, we made shipments to our existing partners. We also made repeat shipments to a potential customer after receiving positive feedback and shipped our electrolyte to a new potential OEM customer we are excited to work with. Our electrolyte has now been shipped to 10 potential customers outside of our existing joint development relationships.
We’ve also continued to invest in our new electrolyte R&D lab which we are targeting to complete sometime midyear. The goal of this lab will be to optimize continuous electrolyte production, reduce the cost of our powder and develop future generations of even higher performing electrolyte. We continue to believe our proprietary electrolyte represents a great long-term opportunity for our industry and for our shareholders and we remain committed to continuing to expand our capabilities and available market in this area. Turning to cell development. Our team continues to refine our A-2 cell design with a goal of delivering A-2 cells to our partners by the end of this year. Our A-2 cells are designed to improve our cell performance, including energy and power.
We believe these improvements also represent an incremental step towards commercial solid-state technology. With respect to cell performance, our team has also been working hard to better address the handful of A-1 cells that went into thermal runaway earlier this year. The team is improving our internal testing capabilities, performing detailed analysis of our cell reactions and thoroughly evaluating materials and processes used in production. We’ve been able to identify minor changes in our cells’ chemistry and design as well as improvements in our manufacturing process that we have factored into our plans for the A-2 builds. Battery technology development is challenging and our team is energized by the opportunity to overcome hurdles and demonstrate the potential of solid-state batteries.
I’m proud of our team’s work and want to express my appreciation for their commitment to driving realistic, thoughtful solutions. Turning to our partners. Since signing the expanded agreement with SK On in January, we have begun collaboration in earnest. In April, we hosted SK On for 3 weeks here in Colorado to kick off the tech transfer process under our R&D license. During those 3 weeks, we conducted workshops, training and other hands-on learning with respect to our cell production processes. This was valuable time spent and beneficial for both sides as we set a solid foundation for future collaboration. We also sent a team to Korea to begin work on the SK On line installation. I’m pleased to say that we’re nearing design freeze on SK On’s new EV cell line.
All the line’s major equipment is now on order, keeping us well on track to complete the line in the first half of 2025. Both the tech transfer and line installation efforts will ultimately increase collaboration and leverage the development efforts on our solid-state technology across the U.S., Europe and Asia in the years to come. We also continue our close collaboration with both BMW and Ford under our joint development agreements. We continue to value these relationships and look forward to continuing to work closely with our OEM partners throughout the year. And lastly, Korea. We’ve made good progress in solidifying our Korean presence. We now have an entire team on the ground in Korea with a combination of expat Solid Power employees and local expertise who onboarded in our SP2 facility a couple of weeks ago.
This team is located in Seoul, where we are establishing a home base for driving further engagement across the peninsula with potential customers, vendors, government agencies and others in the forefront of battery technology development. Before I wrap up, I also want to say we’re making good progress on our planned investor events for later this year. We look forward to sharing more details with you in the coming months. With that, I’ll turn the call over to Kevin.
Kevin Paprzycki: Thanks, John. Good afternoon, everyone. I’ll start off today with an overview of our financial results for Q1. Then I’ll discuss our ’24 outlook. Our first quarter financial results reflect continued technology development and initial execution on our new SK agreements. First quarter revenue was just under $6 million. This primarily reflects solid performance on our BMW agreement. Operating expenses for Q1 were $31.7 million, reflecting our planned investments in cell and electrolyte development, the scaling of our operations and execution under our development agreements. First quarter operating loss was $25.8 million and net loss was $21.2 million or $0.12 per share. Turning to our balance sheet. We ended the quarter with total liquidity of $379 million in cash, marketable securities and long-term investments.
We invested $29.1 million in operations during the quarter and $4.1 million in CapEx, mostly going towards our new electrolyte R&D lab. Our overall CapEx investments were lower than last year when we were investing heavily in our SP2 electrolyte plant. We did have an increase in working capital invested this quarter. We had a couple of large partner receivables at the end of Q1 that will be collected in Q2 in line with contract milestones. We also placed down payments during the quarter on equipment for the SK line install. We expect our working capital to normalize over the remainder of the year, lowering our cash burn over coming quarters. Lastly, during the quarter, we repurchased 5 million shares of our common stock for a total of just over $8 million.
You will see $4.9 million on our statement of cash flows with the remaining amount sitting on the balance sheet as the cash settled in early April. Overall, our liquidity position remains strong, especially in light of our capital-light business model with its lower CapEx requirements. Turning to our outlook for the year. We are reiterating our guidance for ’24, with revenue still expected to be in the $20 million to $25 million range. This includes the remaining revenue from our BMW agreement and expected revenue from our new SK agreements. We did have a small amount of SK revenue in Q1 and expect more over the rest of the year as we execute on tech transfer and line installation. With respect to the overall cash flow guidance, we are reiterating our expectation that total cash investment for ’24 will be in the range of $100 million to $120 million, with operating cash investment expected to be $60 million to $70 million and CapEx investments expected to be $40 million to $50 million.
In addition to the $100 million to $120 million, we will have $8 million of share repurchase investments show up in our financing cash flows from the repurchases we’ve done so far this year. We’ll continue to evaluate the timing and amounts of future repurchases under our plan. With that, I’ll now turn the call back to John.
John Van Scoter: Thanks, Kevin. In closing, 2024 is off to a solid start. The team here at Solid Power continues to execute well on our 2024 goals, whether the targets are technical, strategic or financial in nature. I’m confident that this continued strong execution will drive shareholder value for the long term. With that, I’ll turn it over to Q&A.
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