AQMS - Earnings call transcript Q1 2019

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Aqua Metals First Quarter 2019 Corporate Update Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask question. Instructions]. [Operator like conference now to turn to would over the Ms. I Associates. Managing Director Ziegler, of Alison Darrow Please ahead. go

Alison Ziegler

Thank Welcome financial Call. release the Last quarter you, company's XXXX March is Thursday Quarter operator. ended www.aquametals.com. Investors Aqua to available Aqua website on Metals section XXXX. at released XX, results the the First for This Metals' of Conference

company's Joining well as as President and us for CEO; today's call Merrill, from Chief the management Officer. is Steve Cotton, Financial Judd

occur to of place refer company's be May on to risks, Steve reflect making Aqua reliance statements that forward-looking any circumstances events disclaims does forward-looking Cotton, on to statements company cautions actual factors ahead. I'd over law. to today's Aqua XX-Q quarterly and not Steve, like such could CEO they other turn The go During management as any and Form results statements. Please report Metals unanticipated the new investors to differ Metals. call, to not will specifically X undue statements. undertake call And with for the the the filed statements. except from Thursday, update materially forward-looking or required cause to that, and a revise of by uncertainties summary or forward-looking those obligation as

Steve Cotton

Alison. welcome. everyone and Good afternoon, Thanks,

the to on the and I of Before comment in achieved we the would review the today. significant first half into like quarter, we first quarter closed operational the progress second earlier I financing

is we raise a at topic complete form rollout Debt to we which cash if And we waited operational we going we of saw have potentially market level. and it? press so ended as the to answer and to with constant stock where QX XX would in would stated impossible the did have release, also to we It take Thursday, report, our discussion we at anticipated the limit be alignment first of be Board the What the would in cash of several position quarter are As that to to you conjunction had was did? of modules. predict options always and our when to has quarter more know, Board's weaker why given question, our our results As a were Management the also of would compensated this announced condition a we you cash until just in capital decision been the what we in enough million, when at The shareholder previously year financing most progress $XX.X burn with later we months. rate. desire to when position the way the last And be. in point did? overall what dilution.

this offering's of of However, $XX $XX.X entered net approximately we with million the million the remainder roughly XXXX cash. before proceeds in issue effect of with

strengthening the goals. With our believe have the in our by a million $X a leasing at we authorized sheet the few Green Bank, balance achieves on go-forward of basis. million to approximately newly key disposal ability leverage $XX We

the scale to reach to level. plant XX First, runway neutral at cash we the plant need to a modules

partnerships. goals. and ability And strengthened position achieve options we the pursue sheet cash remove our key financing to concerns Second, balance other it need and about third, to does these

four and achieving modules. more XX-hour start a XXXX. substantial to recently our made Metals our to capital installation day production by program Phase of operations. has safely progress including It very seven-day has full-scale our One productive Aqua Turning with a been a operational completing week initial

of centrifuge of We quarter. electrolyte a to We've and to which operational our the recovery throughput. should milestones modules. a the quality to installation improve first and membrane Just AquaRefining sent during of reiterate concentrate increase installed some throughput completed press,

We that to completed are offtake and recover positive at some process our to cost and lead improvements to water allowing commissioning process to materials third completed of recovery operations for water enhancements We margin. the plant-wide AquaRefining usage for our electrical equipment our and improvements commissioning a material contribution AquaRefining. shipping and additional installed neutral, process the the go we not breaking us also bring and impact an made We upgrade. separation metallic AquaRefinery does that kettle complete power to key through to near more

and operating electrolyte ran we to and XXXX. completed and day, records as to AquaRefined is in conserve Throughout ordered boost also and scale. to enabled Two of team the ingot percentage convert volume it form XX, a margin the times AquaRefinery. part XXxX we the production hiring every dryer the The of on cash increasing key expanded plant to at increase quarter, company training some at a full-size modules our Phase capital four time. of two which a lead from expected contribution for equipment, yield to hours contribution our achieve first are upgrades we on two by metal focused add We the April be battery is which week our or and modules lead of safe into allow week quarter, the us days is with one recovery margin And moved to and further key in four modules March, improvement in production first for weekly Beginning four we also program operations XX employees. has This projects. right our later feedstock high-value

of amount of Importantly, from in hard the improvement of This XXXX in XXXX. approximately of battery we in resulting recovery plant begin margin. to two-thirds conversion third lead, installation the which products the the contribution April is throughout lead half in ingot process into form have of lead January includes can units we XX% increased unit significant to kettle the the a to allow the metallic a other in processing and

end kettle the quarter. this at lead first The bullion of shipment first the of was shipped from

underway end considerable or year margin which have bring lead conversion the plant-wide to generate gross process We projects hard by XX% to could for more could approximately which further metallic today's AquaRefinery. XX% additional

now our in Clarios. of with moving organized newly assets LP. and solutions on to Inc., agreements to with Group by XXXX, power of formed including the partnership Business our is Controls operations Controls Brookfield were Johnson and a In Johnson So collaboration which May Partners Battery Clarios, sold battery company

as first or alternate their an the During ongoing commence First program particular discussions we the Facility met support supply know-how of services as at location. licensing to location proposed with April, Clarios and and first of that nominated AquaRefining well for equipment to development week

performance uptime, of on the performance electrolyte to agreed shipping feed result we rates include discussions, material and like metrics and precedent as a AquaRefined As conditions these things These for specific existing module of usage, emissions. AquaRefinery equipment.

our expand XXXX planned AquaRefinery, we equipment as licensing package Clarios margins and to to that and In plan XXXX. inclusive and metrics And addition, performance execute first of Note our to floor the XXXX. upon this the also the in We beyond. XXXX Aqua metrics in an to that on with over final grow continue believe expect Metals should first June of I turn continued for of as and win Chief design Officer Judd? lead of to And financials. early and during supply shipment our Merrill, agreement performance AquaRefinery revenues and will provide XXXX to of engineering and we detailed mix our of to will and revenue location. AquaRefining XXXX. of the track higher-margin to remainder on Financial technical ramp execute now technical are throughout completion achieve program to our the include our as we progress equipment proposal general a on QX our revenue a move target the licensing during XXXX review licensing agreement proposal agreement development first beginning Judd the

Judd Merrill

Steve. you, Thank

the XX, of $X.X we revenue that QX with I'd of to XXXX, point expectations. the was million $XXX,XXX in in For out management's ended like the quarter March compared XXXX. to recognized line first quarter revenue

on one a slowed and of Phase which limiting two production quarter to to at last focus or program discussed quarterly our time. capital report, entailed mentioned operations AquaRefining one in just we modules completing As our

XXXX derived bullion and selling and selling from now pieces QX, XXXX part the whereas revenue QX, more in than lead. was in battery higher the is revenue from breaking Although and was AquaRefined XXXX, XXXX, QX, being more revenue, derived

will lead the of see as year. increase We the over AquaRefined percentage a of revenue percentage

Turning to general and administrative expenses.

$X of the in for was non-cash the Interest convertible non-cash quarter in in by one-time Inc. a of Interstate in professional quarter first in and stock-based of early, included $X.X as $X.X were The the million $X.X expense subsidiary was that the The International, $X interest in management $X.X agreement including general increasing incurred $X.X of services months of also For interest to the savings. facility. We expense held provided expense, increase $X.X Veolia compensation. expenses item from related XXXX. which the Battery Alameda recent quarter million operations million quarter the for maintenance XXXX a off note, The compared item in services, for quarter XXXX. million million the in driven Interstate XXXX, company million approximately sublease resulted million payoff the non-cash the one-time the the the that with $X.X amortization and resulted to several benefit to and expense Systems approximately by compared million associated quarter first items expense the ago. non-cash note $X.X items year first expense of million interest administrative of resulting amortization XXXX first in million a line to These of paid first without four a

of million quarter outstanding quarter quarter we diluted loss the XXXX. loss million. XXXX a $X XXXX a was by or as for to or per quarter the for the million the diluted to first XXXX. negative compared $X.X $X.XX operating for share loss of loss was had share non-cash Weighted of of XX.X $XX.X shares of XX, quarter $X.X a quarter average impacted first share compared first -- an March the the of negatively increased million ended of negative $X.XX first in net loss per Net for For items. to million an The operating XXXX, net

Battery stock-based in payoff expense of I related convertible Interstate As one-time these the $X.X with million and conjunction note, recorded agreement. million items the of million $X.X compensation, Veolia $X non-cash amortization to of mentioned, a expense included

Company underwriting offering expects with do May in up to announced million. the its announced include XXXX, ability cash it's leases public but balance in offering of million amount On As discount the covenants and million. of XX The had primary today. leases, March the sheet. the $X to the strength Company priced with had common Company's This cash shares The million of and capital $XX.X Green balance into also up with $XX.X Metals cash and/or at latest be waive offering Aqua and a combined Green share. not public the in allow close waiver Bank, reached Company does stock $X underwritten the operating Company's price recently offering million net an XX, per USDA-backed million deducting the its and offering the now agreement to Company $X capital the it certain enter shoe, lender calculation the include loan, to from XXXX, to operating will equivalents. that XX, does significantly the current transaction to in the $X.XX of increases from of public estimated Bank this The other of after expense. proceeds that a and

Looking goals. ramp our operations, cash ahead the improvement meet of mindful of at up management operations to XXXX, while needs we the work Company and to is

During for quarter, million and cash in used the CapEx. Company the million for cash operations of $X.X $X.X

for scale As down. expect generate to AquaRefined needs our operations cash lead, of we revenues and we see go production

continue will XX reach cash operations we full need capacity to we modules. until for at However,

execute that million expenditure to million partners. we We in also have that, first next our to sufficient Nevada both scaling begin place capital We need with Bank. anticipate $X for be complete the the Steve. have and by and turn back leases planned of expansions, offering I'd on it Green waiver capital approximately us the up end in million to with cash capital of now to from will of earmarked and/or have $X AquaRefinery XX With capital of steps XXXX to that to $X now modules met this We allow of expenditures. to

Steve Cotton

Thanks, Judd.

metal achieved by continue production to of module milestone for would records rollout for the we Having since optimizing to of back-to-back As XXxX production achievement mark and we've concentrate in which total moving process, weeks our we modules, AquaRefined a to eight, record to rollout regular We've and and production of trajectory forward. centrifuge already enable the filter new up scale operation. expect reached process initial plant we set equipment with a begun activities. April five achievements modules press in continue production continued set expect XXxX XX% four the company our major These capacity. to through modules XX, the rollout to

have In are modules one modules those one initiatives fact, QX one out over week on in automation now running run steady-state four. already earlier through controls additional of prove we in and a to that for

scaling. coordinate meet leader needs. operations partnership modules synchronized more in operations will need to plant Veolia, management to proven are brought throughout support the a to operations has AquaRefining further we As invaluable global online, plant be the as The with

we work target modules achieve the end remain XX in by there is considerable operation still we be track on XXXX. of done, of to While believe do to our

to further critical recovery. target to for recovery additional and equipment a further phase electrolyte XXX% scale yield of summer ordered now the which With the production, and we plant. believe completed to processes of AquaRefinery. will which the Phase the to the With equipment, phase has complete of enhancing recovery We've our margin ability in contribution we're increase target material be allowing the full-size to driving X, the and installed delivered conserving up scale us for pilot further. quarter through XX% our includes scale to our margin place electrolyte X electrolyte to during and remains anticipated and been X increase in third improvements dryer contribution to processed

from metal and into also convert We feedstock are AquaRefinery. form AquaRefined lead ingot and lead recovered of the bullion it the committed to at right in increasing percentage lead battery high-value

could we XXX% generate greenfield centers. to unlock deploying addition near if additional that plan to retrofitting could considerable in AquaRefineries capital-light believe could gross recycling existing AquaRefinery which battery we then possible. fact, achieved, margin new be for opportunities that plant-wide And In conversion were X, current our consider of

I to We continue the finally, for partners the our and to we given offtake And and diversify pursue before opportunities possible by open receive. say the made premiums the partnerships just demand the lead for up and and call growing can't questions, It hard without the year. additional since partners. increase of high-purity employees we've have all start I enough about of progress not work been would commitment our the

producing and While highest-purity come we fully continued continue to and are a operational with be production world. by there proud progress challenges will with to ramping XX modules in a the scaling we lead to all have first-of-its-kind facility have of the year-end. a on are I'm we AquaRefinery track in long say, operational some And way,

would history this Metals. to the like and right people us the in partners now support I point Aqua in will have any making adequate line. place for your to our of confident We more continued at and capital you reach that finish able than time be we thank

questions. to ready take now are We

Operator

you. Thank

begin Our question session Ilya ahead. Grozovsky Securities. We from Instructions] first question-and-answer will go the Please [Operator National comes with now

Sorry.

[ph], Our investor. question private is a next from Conrad Brian

Unidentified Analyst

you my number did Hey, to that eight thanks for running that and about least production putting are during call. My additional never keep full-time question modules since up we first taking talking five hear seem one and into ramping we QX. place through at is run

you production So right primary from constraint putting in what's now? keeping the that's those modules

Steve Cotton

week thanks in the point in six over eight of time. actually modules one at one question. yes, for Modules through Brian, for was those five module a run

capacitization we it's the still complete production working brand-new filter that's of where production they're they're online and press commissioning centrifuge. to that that concentrate coming from the as So run, point getting on but and the the we're ready the to

running So to they're pieces enough concentrate of those the the well two produce expected. lot other because of are equipment concentrate need modules that as using four a so

So matter of a it's that concentrate production. just getting

industry-standard type us waiting on constraint we've scaling that for equipment equipment more that. the of to is finish and invented a it's of So that of

Unidentified Analyst

to when you that that modules equipment you running? expect be And Okay. get XX support to sufficient all

Steve Cotton

helpful will with filter with partnership well be our a of as that in Veolia they presses. And as Yes. have experience also Yes. centrifuges lot very because

the we is feel of with resolve of equipment, able be together to fairly type So, scaling we'll a very issues type industry standard that which confident scenario. that associated

Unidentified Analyst

give time are And a you think could line going eight? to you through Okay. five running when on you be

Steve Cotton

four the the we're It's Well, take four where of step time, we've really be end but at towards we'll linear. time it of more line got I a at because of modules on at would the between bit year, fairly view running and a little two a but end likely to the year. first a it'll modules function from them the the time four

So make modular four time. more than you we'll knows not should And hear that milestones. sure from module those now as be everybody – running modules we'll at long then, a make we too to continue that

Unidentified Analyst

Okay. lead further All you XX% different sounds lead to to trying a It Or for long-term processed process up into processing? you I of to that, Is you'll that right. have and in of the just form? able that XX% the offsite send think remaining think like get I goal be mentioned And AR a do XX%. XXX%. to

Steve Cotton

Yeah.

not that form ingot or of turn we facility form percentage treat either AquaRefining and has into greatly. grown actually then the in that AquaRefined the process lead lead lead go an does lead the hard So take the through and of metal we a bullion lead that

now to two-thirds April we we're over January, from were year this converting Just XX%. half about or in converting just

into lead, to way of recover that the by closer With lead of that can't electrolyte believe The as units ship more battery have recovered that that other and lead go and get well of some we furnace project XX%-x process the capability management year Phase locations material as recovery. we'll to smelting end X that's metallic of end. to currently not the that under as we we units percentage we the take the a have that the that remaining unfinished work to on process additional a

initiatives the value XX-something the year year closer that see which with here. following does do get beyond near of can So we towards percent get impact to gets end We material rather and past the us to we and though and and the would most XXX% additional a targets. XXX% path into and costs closer finish by the the that the gets so most

Unidentified Analyst

All my right. Thank That's all you. question.

Operator

next [Operator Ilya Securities. Instructions] Grozovsky National Please Our question from with comes go ahead.

Ilya Grozovsky

Thanks. Okay.

Sorry about mute. was the on probably I think I

side? wanted you to that in bit over the like do financial XXXX Just a of of sense little get your agreement to hit that of looks color they've a terms some Johnson what the point the milestones on what licensing course you get of Thanks. better you assuming asked at you on model hit Brookfield-Clarios the

Steve Cotton

as scaling Yeah, how Clarios. financial the earlier I with the same the are conditions Ilya. we'll Thanks precedent the licensing all relationship metrics spoke related which and the work to facility, also of people. work it that we're of for by we those question. will and towards through about the discussing nature And work continue equipment the supply services and They

the them relationship, the all to work that be on monetize were it's the which is because of working discussions specifics same it that site so the acquired the us get that. despite will is needs them to will by to continue that gets with how plant that beneficial all. around to for years. have fact we will been out time the we where we metrics with it's precedent And to all people provide for we're and with of details how equipment, that with working the So we've condition the they Brookfield But

we're these too So disclose time we're discussions what just not during much the that period beyond at of I've and negotiations really having to liberty said.

Ilya Grozovsky

be But XXXX? do that in you will or that anticipate XXXX

Steve Cotton

to that because on able the our path along June. June to don't June by expect amended announce will where those time. in looking year will still expect lines to would that more we provide information early able be this of you're around how basis agreement and with an you're We how Well, XXXX the precedent really take with will a details economics we forward the pricing and the bunch update The to will them. so that look us by we're we on move-forward going conditions discussing things at the be going work. a of economics is year, and the of that end some by see It's for take to before that,

Ilya Grozovsky

Got it.

you. Thank Okay.

Operator

Private Our from next Please ahead. comes a Alpesh go [ph], question Investor. Patel

Unidentified Analyst

you offering into the call. question quick any I done. -- insiders had there was Thank Hi. One was that bought or my that taking just for it recently regarding Were

Steve Cotton

participated the that little the So was with to and -- issue to in a we unfortunately. a management offerings. short it of and short-swing we compliance had sell This were offering the part for bit this unable recently one, technical participate done, when prior Board most have comes trading

will So us net about round But rounds the in purchased of I today. of CEO prior lot reiterate investment -- and have a the financing that shares prevented perspective I the I've personal this as company, from do through shares various company, particular able to that, almost that. be to timing XXX,XXX the to

Unidentified Analyst

made them cash. made in correct? to Veolia, in as the not to made be far shares, payments They be as will all And Okay. be will

Steve Cotton

you in of The contract Veolia form are correct. structured the is shares,

So it's cash-dilutive of the side business. cash not our for

Unidentified Analyst

you which one take Okay. a negative, positive that This question. I company a neutral? that And as final do now or JCI is Clarios, guess, a sold, or

Steve Cotton

positive. is it a think We

look Brookfield's I well. lot as sustainability a see at there's that think the thesis, to talk of energy This storage. more stand-alone them you'll a if to and of their be investment future plan. around able with be little business And move as the bit folks forward a at nimble you Clarios and allows do

And -- really with already with, for there we've So common and about the We at they're working that that's vision see for really are and the and future there's it folks why the to acquirer their to folks that there's us the feel it a been think. the company, throughout with. I between happy is we're a begin happy working lot of excitement organization. which

Unidentified Analyst

on call mentioned in JCI global use, potential you of are for U.S. are with the more talking such that or a -- Metals' technology. -- guess, the or partners just Aqua also, And you Is -- or negotiating you to Okay. other that as I

Steve Cotton

So, of to we're lead. of talking off-take our various for and partners types that's inclusive

we But well So trying licensing folks interest. will is level front, the because do already lead working And, time places global getting the part a place we as with there we because be keep and AquaRefinery the have we're to good Clarios, first of to for have the And course, where the they to facility and higher some scale busy rights get remain focused and where of on industry, identified other us needs being. the premium. as for and the really to continue it AquaRefinery. technology could that's both a lead talking of we're within our that business, lead as the the front on

Unidentified Analyst

forward. Okay. thank taking moving Well, All you luck my for best of and call right.

Steve Cotton

you. Thank

Operator

over turn This session. Cotton concludes Steve I any would like to closing conference remarks. for the question-and-answer the back to

Steve Cotton

confident Clarios a to today as our Lead only as as we again, others. shareholders, in this and Well, plant can history Okay. from more available everybody. and time potential well than not ahead, you we updating Thank are partners, market, with scale milestones at that thanks but all AquaRefining work in for growing we we weeks everyone, our the everybody any the look continued and your we And this Thanks will and additional remind execute from is billion appreciate this to I'll on our achieved. metal really technology. you, forward operator. as months support, penetrate meaningfully ensure best the are market licensing as time our point that $XX-plus

Operator

conference today's concludes This call.

your day. disconnect participating may for you a and lines. You pleasant Thank have

Aqua Metals (AQMS) 14 May 192019 Q1 Earnings call transcript