SES - Earnings call transcript Q2 2022

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Operator

Good afternoon. Thank you for attending the SES AI Corporation Second Quarter Earnings Call. My name is Matt and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Eric Goldstein, Vice President of Investor Relations. Eric, please go ahead.

Eric Goldstein

you. Thank welcome and call outlook and quarter our our results XXXX for to everyone covering conference second Hello, the year.

are Nealis, We today Officer; today detailing just me Qichao results. and P.M. Founder Joining financial Chief after and X:XX Jing a Chief issued Officer. our Financial press release Hu, Executive

release today's call our webcast at find website the Investor You'll ses.ai. and the in press of conference Relations section

performance the to implied uncertainties or expectations meaning our results They're detailed be in the different our get will applicable to discussion a today business our afternoon, we not limited uncertainties forward-looking cause as pass company's started, statements statements. to involve as forward-looking contain predictions could to, that, quarter. today. it which we These within Before cause review filings. legislation. the our earnings and materially statements reminder, actual information of include I'll on and This are securities risks, Qichao. those and in statements differ as this latest over these from With may from or based but future assumptions or certain may Such is are of and results risks for materially those that release well expressed and our our SEC the expectations current in results

Qichao Hu

the join our to time call. Eric. you, taking and afternoon, Good for Thank thanks everyone

for OEMs remained the continues and financials funding and exciting our million and to We sufficient liquidity introducing will expand. call. Our prices our second continues as new industry. charging vehicles at of strong. and grow sheet interest continues historically this to our quarter busy Consumer are over performance into pace. high on very more accelerating balance Energy insight Jing infrastructure believe be commercialization. continue a will is It to electric in company expectations models an line the was the our provide our cash quarter later in reach to the ended to with be with in time and $XXX

we As batteries. has batteries believe been in our improve that big next next-gen energy-dense lithium thing remain a need only cost the supports greater the reduce belief range is any and We with the have development global to and A-sample lithium more car with General never for And total, metal metal additional can to result, with each of joint have company other that makers. them potentially to to X Honda. JDAs agreement, OEMs lead continue active JDAs. Moreover, one dialogues Hyundai have Motors, we we and in

being improvements under announcements, don't lower we to make our We're tested any costs. While improvement a different including all and betas and of our variety to charging OEMs. performance working technology, scenarios temperatures to make manufacturing partners our to further formal are with battery our by closely many

efforts Our on continue of focused product to be a development number different areas.

to We're large manufacture and and power and First, this Korea. format, XX we need develop Giga Shanghai working end on SES at XXX cells.

of our on initiatives improvements, performance data Over to cells. the quarters, our more is next manufacturing on intention supply provide chain and details the few

to continue in fares. life we and electrolytes advancements periodic Second, with areas make charge our safety coatings improve to material of of and the fast cycle

cost-effective. methods that to for lithium of our batteries, mossy recycling explore We continue particularly are also

Shanghai Covid-related shutdowns. Our Giga run because in facility being of has April up after back down

our end are cells power data We sharing partners. our and testing XXX JDA with and producing the XX and

installed. SES The lines is are the brand-new facility almost being our structure is our Korea in of and complete Additionally, building manufacturing done.

ready by be facility this the third the end expect We for to quarter. of use

things. particularly We drones such are in verticals eVitals. are good lighter and verticals moving We weight as continue to to automotive. other at opportunities quite batteries pursue opportunities addition there in believe and attractive in Lithium

there are these very product initiatives this believe number a with including hope attractive provide We details cases. demonstration. discussions We use are later having potentially year, areas Betterworks to on players some at and of our those more in

confident begin transition samples are Nealis, number will to in X, JDA deliver for milestones B-samples; mid-XXXX, pass to no remain call and there supply we establish number financials. by changes partners; Finally, to to number take a CFO, chains now the the A-samples the that one, our first and materials. I we call who through continue optimize for during key us will; from Jing our to Please will May. our outlined X X, quarter

Jing Nealis

full and you, I expenses million, Qichao. the our $XX.X quarter, XXXX. Today, second financial period expense increase same discuss quarter. budgets operating million an In last Good for year. year the will cover second was Stock-based $XX.X the of Thank million in capital operating afternoon, quarter our compensation and our $X.X from everyone. results were

R&D which to development. Our of Hermes, metal our increase support year. period in lithium same Apollo, and our last million million health cells, our headcount tenant related to $X.X Avatar, quarter second reflects and and the of battery consumables lab were an personnel includes higher advanced capability material software costs for our increase expenses due automotive material large AI-powered platform new cost engineering for the from increased XXXX, to mine $X.X to software increase for increase supplies. development battery development in This monitor

contra JDA offset quarter treated in our gross $XX.X $X.X partners Our was expenses. reimbursable the spend from million by was was as R&D which which million R&D

costs G&A and by increase services. from increase second were Our last external support $XX.X quarter legal, This company, our period increase expenses related operations year. million personnel the audit costs driven a of to accounting million primarily same XXXX, to the as was higher an consulting, $X.X an in for public

change noncash million value liability. of second in fair sponsor the the gain RNO $XX a of associated incurred we with quarter, During the

shares value in outlined end our derivative quarter. the our at price accounted we on of As the tranches certain first quarter of common liability our stock as the for measured a fair call, based sponsor are of at RNO

in unchanged our $XX last guidance to investment expect continue For quarter. be cash in $XX and of to range operations full from year million, the XXXX, million we

on power spending increased we sample Asia. the with the $X.X expectations focus for our and quarter of quarter increased entering the build-out primarily during with investments the partners, to quarter. Capital went in development development production in and our of OEM our volume our cells in second A XXX Avatar. the were million, CapEx large XX As line end facilities of

go We initial CapEx continue $XX to million, our to of unchanged will XXXX to continue total guidance in from in to expect Asia. $XX the range largely be facilities our million towards which

get and our which funding ended the remains equivalents to of We second with of Looking sheet we us million at commercialization. liquidity, XXXX, balance is sufficient cash to cash $XXX strong. quarter believe

in was expenditures million. $XX.X used cash quarter activities operating second capital and Our approximately

XXXX, which to back For full well total we leave million year $XX Eric. the $XXX million our will million use continue $XXX over hand of of between with I entering call us and should liquidity XXXX. to to that, cash expect With be

Eric Goldstein

Jing. Thanks,

start been to questions that We’re with going Q&A investors. receiving today’s some from we’ve

current first The what day? many of facility? two are with for sharing cells capacity? customers. kind our is our And what status we Qichao, are current of our data How the Qichao. What we are is Shanghai making per

Qichao Hu

per life, all And XXX problems the problems only sharing not middle problem. we have to beginning make capacity, data, current charge, safety, ampule the with we then cells then currently, day. life because intentionally capacity making with we and scale cycle and sure with at make we of different end collecting that Our we're the And high-temperature with JDA per do cells solve thousand then started data But small larger cycle have of partners. those charge, a to few our a solve have the gradually slow started XX month. about life of charge, OEM life, have rates. scale want we fast life cycle we life fast And periodic of

to these year. some We later data publish plan this also of

Eric Goldstein

Great.

focused Second And Avatar. you in detail a about question What internal in for new area? the much of have Can hiring Qichao. are developments little more done bit we talk this on? development

Qichao Hu

Sure.

So the parts. data. two is it has manufacturing One

physics-based on for installed train power data. this both these the lines we the much have XX Korea sensors model for more collect second the many well sensors larger to started we for on we line years can we model. Shanghai use line. Avator the data, as and XXX a lot for cells, this for then of because then because use a but we goal our defects in the potential also collect small that cell more the And area. as we We also we manufacturing to as And in learning-based is actually of end cell, And so to current health. for the to possible. sophisticated the then cells accumulated than to the and the as data been doing this The smaller the try larger much for And state and that we're cells data model monitor just use Avatar part building manufacturing have many the is yes, that machine and is we develop performance this more the and larger cells. And data and have shows ability the cell the hiring

Eric Goldstein

great. Okay,

by sense things for For of will new year? to be Jing. us Korean during the Jing, ready you our balance a use be our on capital the facility some $XX October. we'll been spending year-to-date million has spending Can that and give this of

Jing Nealis

Yes. Eric. Thanks,

end it of will SES be of for October one build-out JDA the of finish the ready Korea to partners. we'll So in by our our use and facility

add addition, are multiple internal build Giga as do testing JDA of of OEMs and we'll us facility our In cell planning out one to support we our continue Shanghai perform of another our Avatar serve partners. development work Phase well for facility. expand as lines II the Also, to to for to Shanghai manufacturing additional further and our

Eric Goldstein

now we’re lines questions? you Okay. Matt, I open Q&A. the for think for Can ready please

Operator

Certainly.

Shawn first the Research. is of line Water from Severson The with question Tower

Shawn Severson

I some in how partner question of value was whether recycle country extracted positive a regarding US the and well. percentage Act. by But that, and overall battery or know for equation Qichao, negative Reduction fitting my you’re regarding there thoughts as in you? on or there to material first into is it’s also just the language that

Qichao Hu

us, cell we consists America. engineering in this mature lot And then process and are our collection based our about of general, still even we're separator us the core partner But details And partners so now lot a algorithm, already we're but is core, of to then And in bill. this battery operations with really also for pack that thanks. a studying Korea electrolyte of panel it's to ecosystem the metal North looking more. this moving the movement. in building space China, recycling. then motivates incentive a excited data really are CATL seeing very Yes, on exciting in -- And the of companies and of

not just of a but that beyond and lithium entire and day, to America also goal definitely supply mature ecosystem very metal be and mature actually our this lithium-ion develop a Korea lot of at So build process. this exists built the the further because copy in in supports sort highly within chain China Avatar the battery paste and the currently battery process, North our will so can we end using of lithium leverage efficient

And exciting move. a it's really so

Shawn Severson

about question than talked and you shorter next outside regarding is longer to cycle describe in this to vehicle I’m quickly this what that of is relative or My couple and applications a the that of missing in expect timeline? side? nuances I know In there that Or general, are commercialization vehicles. you others. process. some move words, other there? So Would automotive drones

Qichao Hu

non-EV we catch general, the faster. XXX, development that than in for automotive. cyclic are, is fragmented delivery if automotive. and drones, less for lithium definitely And In example, them our applications than It's on the XXX, definitely for faster like then but to for move expect more then cannot if for we robots. happen these And robots, we will the Sure. drones we metal, then example, applications, that's use

our closer do are. other we later to some then in we will markets, we we And world, have other have better do to we these markets. especially while in better we can plan the and serve and then So year, a this thresholds XXXX meeting targets, second improve different and demos drones. world And definitely get these automotive do

Shawn Severson

process? is when I take more My might I’m other say about regarding OEMs. in last your process I mean, you mean question, comment the testing XX-month to with with that, agreement understand long that queue I’ll when something you XX-month jump process a some How the testing like say additional these you usually? talking trying testing announce does OEMs. before additional frame time or we’re back or just the

Qichao Hu

Yes.

made have So our frame because now, the we JDAs. from lot a typically X of time progress with

the more with start we we when don't set So we with data. from start OEM, established of a a beginning, start new

year months. are takes developing of one B-sample. course, at turn And year, So fifth the then goal we then of to X OEM to is a a into about a our A-sample priority. and typically, a And it JDAs the potentially time, -- fourth That's JDA. XX primary same our

Operator

your registered. with is you currently the Research. Thank for Wolfe Bell no from The questions question. David The of question next further line

David Bell

need you into production more will insight be you on need facility? give existing or to to could regarding to I again your Korea? wanted what B-sample? to line of bit of a to and just commercialization, quickly invest actually us able use specific see you little or us remind transitioning would Or when ask, A-sample can the criteria a cell Shanghai you you time And from

Qichao Hu

the and get building year, mid-next C-sample we're B-sample. that's test and will we'll in a power C-sample And then XX chart basically of and cells. at that modules these then safety, these then then testing to until basically get so power level, spider mid-XXXX. high-temperature Current expect complicated And and specs. need hundreds take we vehicles with a plan and mid-next of packs to vehicles. building expect is charge of dozens A XXX A-sample cell targets get some a to for in A-sample we but sample. small be And in end number to then cyclical the we with basically cells started C-sample more And when impedance, the about is meet vehicles. a to density, to rate, we we cells year. energy year, the even and B-Sample OEM -- end XX expect we criteria are a now B-sample expect so these XXX And

of commercial. challenges And technology challenges for or when we contract are supply commercialization manufacturing definition A-sample manufacturing a We've B-sample. started basically plants. we de-risked as our then So the to and and we've receive the chain and challenges all the derisked B-sample that's build or we

too facility only A&B-sample. Shanghai current for are Korea and facilities. for in manufacturing small Our They're

to and we will larger get partners suitable with So a and beyond, once we sites. C-sample work manufacturing build our a identify location OEM

And like will so it looks in America. far, that very be likely North

David Bell

Is going that the share burden we there additional on you something on the or one a about the question Is future us be is just supply And Okay. from more chain. should anode? think that of metal your for the could partners? as the anything lithium to with scaling investment capital you in

Qichao Hu

Yes.

one So we our and as Tianqi disclose partners is of one also are we working largest Lithium with shareholders publicly a and of shareholders. Ivanhoe our largest few

foil. scale and [wide and this, are to to we few other to lithium addition venture we lower announcements up in and expect make between in working of a lithium about with a months collaboration In this few format] cost a partners the joint potentially

Operator

is follow-up question from next a The Severson. Shawn

Shawn Severson

if guess, change I or all your trying budget going and breakout place R&D looking where can second at it Korea, some and spend be and importantly, is us the I’m would of in in into regarding XXXX today you question understand rough And XXXX year. half and next a spend? just is give of Shanghai ‘XX, will the where taking In how the to where that spend manufacturing?

Jing Nealis

Shawn. Thanks, that. take I'll

calls. overall our big a So is R&D are spend, baskets. few One there headcount

well of up and then engineers Korea we in all R&D employees, another as big will headcount hiring is X materials expense Shanghai, and and globally locations. ramp while happening So And in our grow lab-related also part costs. line that's U.S. costs facility R&D our and more pilot as

more facility, and and sales is running that but to course make make cost Korea few year the are start we month on up the II year hundred Shanghai also is of more a be and we grow the and of cells and next will our of out Shanghai Korea will spending while making over material once number Phase we expanded. money So to the a this

Avatar on to I of more a then don't the 'XX were would I software of continue testing area second areas bit increase. the number XXXX. sales also expect year. are we spending in more as increase will that but of go have then developing spending material So work this to for half for grow and R&D and development, the software. That cash And also the the specific expect the for cost of on part the these expense. the we little a up spending well Avatar Also as as

Operator

so questions management time additional closing this the remarks. no team conference at any to are for There over I'll the pass waiting

Qichao Hu

Yes. and the with to everyone Thanks for speaking forward during the quarter. call joining in look

Jing Nealis

you. Thank

Operator

for That concludes participation. Thank you the your conference call.

You may now disconnect your lines.

SES AI (SES) 14 Aug 222022 Q2 Earnings call transcript