ENVX - Earnings call transcript Q4 2021

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Operator

Thank you for standing by and welcome to Enovix Corporation's Fourth Quarter and full-year 2021 Earnings Conference Call. Currently all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session.

As a reminder, today's program will be recorded. It is now my pleasure to introduce your host for today's program, Charles Anderson, Vice President of Investor Relations. sir. ahead, go Please

Charles Anderson

Chief and highlights, results Enovix call. session, today conference Officer, questions. the Q Rust, Chief everyone, and the Pietzke. and will After then Steffen are fourth conclude we full-year we'll Executive review and Harrold Co-Founder XXXX call and and A Officer, welcome you, the Steffen Corporation's Harrold financial to operating quarter President, Financial and Thank & with take us will

letter, you available that expectations, call XXXX and A remind website. all release, released materially website we our that the may Please factors. uncertainties. on this are full-year to me shareholder current Before this note forward-looking from will contain continue, future ir.enovix.com. and to forward-looking or risks we the on shareholder and of call today our later market These the QX let based conference subject @ available results variety of replay and closed that on due investor statements after be events of letter a differ relations actual are today. conference It's statements our page press

of required assurance give refer our no by and as based these available March we shareholder the XXXX, For factors of can that business, could undertake today, these intend us. will no not Xrd, Exchange and Commission. in update letter and Securities duty statements that currently prove on are disclosure the financial be do information statements a law. as We to to except results correct statements and affect to please made and our discussion with to today's future filings our All

accordance also measures, we not call, with this which are discuss prepared financial accounting accepted principles. generally in will During non-GAAP

over now on to financial of call will non-GAAP GAAP website. our find begin. to Harrold. which posted I measures Harrold is shareholder to these the can a reconciliation turn Investor financial the Relations in of our measures the letter, You Rust page

Harrold Rust

our Charlie. We the looking so Thank a to on with progress today. everyone. updating you in given you, We're do Ukraine. heart afternoon Good current situation forward to heavy

those the and thoughts our and including Our Ukraine, from friends family those affected ongoing with conflict, area. with employees by the are from

have working for factory does our Enovix Francisco airline founding. during our their time. for batteries, difficult the families, entered of the to computing of offers demand we in hard we are and XXXX since was equipment are types Asia currently increasing And people not for Airline, strategy, Ukrainian ones helped quite most One in to supply thoughts believe Without months. market. we energy that Today, commercializing direct at and the from business our on us which commercialization While the thinking their region. would have be mitigate Amphenol we critical mobile a deliver who are them, we San spring pursued to the their a ever begin the crew validated with the assistance highest this track chain are Ukraine, with year grateful density and coming for remain technical loved XXXX XXXX of Enovix. We We disruptions. importantly, not where from this today. we

XXXX Our details and our letter, accomplishments XXXX. website our shareholder on in focus posted our for

our XXXX. second By well to our questions. shipping breakthroughs Indications battery for began the what in at who from our I bringing then remain take financials. was team commercialization. in by want your will After In competitors from demand first and but quarter us especially up call distinguish we January, will production Fremont revenue to automated continue to task. entire our easy production are we Steffen years. our that, Fab-X. thank Let so, no Fab-X an product here, this above we'll customers. group means Hitting do several away review milestone me can expect line claim some significant at we samples from qualification for a recognizing doing the highlights of line of of out the It technology years first for operations supply of

we of we QX, capacity. Our -- contribution to by to $XXX result new improve industrial down qualify the and our continued we million sequentially new roughly be revenue fast process, funnel which a increased devoting can End how broad-based, devote incremental to as applications can funnel demand The to are additional and by Asia revenue we speed comes from the the markets region. engagements to in customers, in $X.X manufacturing billion. this XXXX resources we and on highlight capture bring applications but would

have will lower We for cost. amount up tremendous of a immediately ultimately learning are efficient, our next-generation designs lines These initial designs enable bringing line and into equipment. energy fed faster, smaller, production generated more and for our this that

for engagement cell a based soon these we demand response in to customer order line customer custom increased order speed designs, pilot qualification. to in First, will on next-generation and learnings

to lines best same our the line This It will up learnings. months, on proper our us the allow optimized next-gen us been based XXXX. scale when believe the revenue by time to give the plan just middle manufacturing is coming have capacity is process of order for and our to our lines bring that. these opportunity the long also we Second, do online to of first we in next-generation that view additional production

Also, Last, XXXX achievement an demonstrate elite outstanding validation. balance strengthened also Quite warrants, our $XXX letter, with pleased on us in from Vice we joins are established added Strategic Development, ion of Samsung data announcing considering Consumer the judges. we our Donnelly market. Award focused he where Pat the electric that Our secured both public the which SDI, OEMs today has and shareholder team contracts or in January. emerging our shareholder important progress with of We another of EV for for letter, Patrick a points the details of I'm with EV Today commercial demonstrate batteries announce as further battery on cathode. architecture sheet addition recent silicon million. to Business led EVs. our to commercializing X class showing in by redemption our panel updated multi-billion-dollar our we progress vehicle the lithium an Notably, auto that are and Show evaluated Department anode at President EVOEMs. several our Honoree XD XXX% Energy and program were third-party products Innovation MC an Electronics in of active

of back know, and XD one lost believe you that is sure active shareholder of their encouraging cycle exciting more happy As have the that on to are the killer anodes. only We results and Enovix XXX% our uniquely silicon cycles they XXX details solve and are capacity. we progress. and life we adoption read many this significant these of look Please problems approaching architecture as the of very you report X% These has low held to letter updating cells be forward are these to for problem achievements.

Now, I CFO, will our our turn Steffen? the discuss call over financials. will Steffen, to who

Steffen Pietzke

be financials our shareholder Thank found letter. you, our Harrold. in can detailed All

XXXX warrants. my spend our with We not the incremental topics. a January from I $XX.X So of the time of level quarter include does first closed we will remaining which $XXX.X exercise public few received million the of million, cash net high cash of in covering

product in fourth quarter. our with not the quarter did to results, Turning revenue the Consistent recognize we expectations.

we mentioned, with revenue the reported our of expect in previously goal. quarter to continue of for begin consistent Harrold the product to As our sale recognizing second batteries, XXXX,

the $XX.X quarter million were operating the expenses efforts in up the expenses commercialization, quarter stock-based to million also to our business the $XX.X fourth of from operating up third of stock-based our demand comp, non-GAAP operating comp. result non-GAAP our Our of for quarter million, the expenses excludes manufacturing were scale which $XX.X sequential meet excluding increase in in from XXXX, customers. The was and

used XXXX forecast slipped million equipment million. Cash full-year to timing free $XXX below to included $XX.X million payments, of our to flow, early of some into Turning cash the which capital expenditures. of million $XX.X which Due of came in we XXXX. of $XXX use results,

Now, our for XXXX. let's expectations discuss

As our revenue noted to expect earlier, recognize product XXXX. first in QX, we

million. to between and For generate full-year $XX we expect XXXX, revenue million $X

product NRE year, producing this that in revenue our service to for Keep mind future producing to both product heavily We cells samples will non-recurring in and addition revenue revenue, engineering of occupied revenue. our be or qualification expect that support alliance consist also revenue will ramps.

between we be For of million full-year to and capex. XX% expect will $XXX $XXX XXXX, we cash, use expect of millions roughly which

line bringing qualifications. customer we the are next-gen respond earlier, for need As on a in XXXX to pilot Harrold to increased mentioned

are the given continuing pressures to also surprisingly, like industry, surge balance we're batteries. a will are impacting our Not production and entered our silicon Fab-X line. immune in very with order XXX% a and our demand the uses rest for anode. inflationary the lithium summarize, which of investing production to the we To XD battery next-generation groundbreaking ion strong equipment active commercialize not XXXX battery build We architecture, sheet, to

are closing will believe Harrold. I now Harrold turn plan, drive to value. on We remarks. it focused our which shareholder executing will we for back

Harrold Rust

Thanks, progress in Steffen, to XXXX. recap, we made outstanding

base, our the manufacturing are Operator. to responding priorities your growing Fab-X. We questions. and will we on and a product our ready improving customer to now that, building are be process customers. driving from tier-one shipping to In batteries With transformative learnings XXXX, enhancements, take based

Operator

Thank you. [Operator instructions].

Oppenheimer. from Our Colin first comes with question Rusch

open. is line Your

Colin Rusch

Thanks much, so guys.

of number for you've follow-up talk And a through I customers on qualification a into have the you around about then gone design the capacity expansion. moving bit can full the and sales? Now, little question

Harrold Rust

thanks and our on or working for customer, Harrold. is our qualification others Colin, we're samples that shipped We've Yeah, now. for right question. first This qualification samples

one comments mentioned recognizing we 'XX. start those from to expect customers we quarter the in of As second earlier, in revenue

Colin Rusch

but on on potentially talk facility next along I'm far in clearly about. entering phase your as that identifying and curious you've you into could are doing is of capacity this then about terms clip. potentially at decided Okay. about And healthy expansion, how thoughts [Indiscernible], and running location pretty the slightly a talk a demand larger

Harrold Rust

for Thanks comment. yeah. Yeah, that

to and across for revenues as possible. obviously as our we're product, mentioned, As and fast increasing that seeing growing into you products demand And customers. both an want translate

think this. As of we actually

One to the things we're for is need establish starting manufacturer. footprint global whether of we about, we think how earlier actually an to

right locations overseas domestic do and -- now, basically both we're evaluating so we're to And that.

of production the had floor line. of really looking given is how I working been that's remain expand, best way actively and throughput first and couple learning and thing candidate efficient we're We real would we've kind out of it. the one to to do And forward, really estate have in of in They and such that company of line the both that's us locate of it valuable on while factor LOIs we've facility, in move And those other the engaged what there. to a specialize design and quite opportunity what's actually our have a largest type say, ready. we on capital next-generation we are a with more for want firms terms submitted a addition, where sites and at The is space. manufacturing and we several properties of

stay So tuned I think for that.

with then We move to line expect for location that a it. soon this after and first announce next-gen forward

Colin Rusch

helpful. Thanks much, super so That's guys.

Operator

you. Thank

Our next Craig-Hallum. question comes with from Stoss Anthony

open. is line Your

Anthony Stoss

Harrold, with new that I'm Hey, process guys. curious you the identified.

a it is talked last You've have your up sampling markets, raise sense us cranking? from you faster, any up and XX that is the question, you to. plant follow-up highlighted that potential that more sample in etc. How give about what of it's quarter? new revenue much you the efficient, And and markets X then you're customers the into? there And being can operational when that Will

Harrold Rust

-- for was question question. first repeat. Thanks the sorry, Yeah. Do

Anthony Stoss

Plant X capacity.

Harrold Rust

X Yeah. Plant capacity.

a should new to from I space, efficient think lines capacity certainly are we extent these choose that the an to footprint here gives to. the more opportunity utilization increase

are. we're where where I broadly capacity at more put about customers a thinking think bit looking we our

So decide more might add here, decide to more to capacity capacity we we somewhere else. add may

be Ultimately, to capacity flexible that's sense I about locations what satisfy the at And most discussion go the active that. customer business do going we we're in look And aggregate we'll think I customers. makes really the enough think would just how through. I an to and demand? our for our install think about

I'd appreciate question, second that, if repeat you was Your -- if -- sorry, it. you could

Anthony Stoss

customers markets? any the to, you've many Yeah, there's you that quarter if last how sampled XX new and had

Harrold Rust

Yes.

the say grow to quarter. million impressively, grew $XXX during the funnel I So roughly it would continues

think well. I prop we've across all as high been are the some broad new couple markets energy segments. where, I ready. a we've the think industrial One both seen growth is market in value a density But is targeting has also in pretty interest

relative new to I And area we've that's think what so been prior which in one quarters. is seeing

Anthony Stoss

the a just you and new curious kind process. is in there in haven't one again everything brand you equipment If I'm of I the think lead and you sneak on dealt new Is could within the additional material other quick new one times? any qualified that process. for just there can past, when

Steffen Pietzke

some Yeah, existing with -- I think I can think new We those know cases, cases, learned where far pretty We're some of enough. much vendors, well. it's we're some In these equipment. in we've better are as in vendors on a equipment combination, discussions. a improvements looking make at we along piece

we've second a first line is good saying are. quarters. of we'll ground several on it which the next quarter And been first last sense in that from facility standpoint, have what those So lead we a And year. producing the what consistent have revenue next-generation time we sometime have quarter, the for and that believe

Anthony Stoss

Harrold. good. Very Thanks

Steffen Pietzke

Thank you.

Operator

Derek Thank question Securities. you, next with our comes Soderberg Colliers from

is line open. Your

Derek Soderberg

Hey questions. guys, my for taking thanks

on started think just Fab-X, were quarter, at you that So talking in, second putting you in late production line last the about guys it. I

-- expect that So second And in sort to new timeline be should and we that lot of equipment? up will the there. line was prior-generation out ship fully what to Fab-X sales I one do using a line the the or for be at of the and you second the be what Sorry, sort that or line the by the one. ready using of using late manufacturing battery that year, year, that that with running last-line what, of end And inning are that equipment not. sort second-line and be guess

Harrold Rust

second essential produced the that January, has be cells will two have one the Fremont production It's in We in is production the lines we the One here shipped here qualifications in facility. has been which that longer. quarter. in

would some role it's you The doing done, work time-wise, big do And qualification bit your it line I the through And of done it's the producing one question cell products. is of second say year, equipment is on right this because a behind to kinds are would a larger with about one is, second coming of there for There that we landed is, we standpoint, if product think additional expect the now the yes. later. in actually And summer the that when be will what be we're line have say the first the is that is production is qualifying the of line that's end pieces but customers. the two support year that some true from the work then towards of a that, most few say generation? the last our to answer showing work revenue But I qualification overall, [Indiscernible] of I will for doing up. would current is that more deliveries. available where revenue kind

all use we've which will the that, valuable. is learning super done, been has -- We on

all we're really a helps the to learned that on more grow pleased better. would next turn quite excited these than because we've into I that that a bit next-generation us line lines design with. can are company is we really And fact, In we to say it

Derek Soderberg

revenue Got and that just of follow-up, to there, Is timeline just like throughput some is prioritizing it. ahead your bulk curious it about is a if licensing timeline then related to the scaling equipment. that sort spoke changing trying Fab-X, relates of think good And your doesn't guys up commentary? to sort to the qualifications that way capacity, to JV commentary and you of that strategy priority sound to manufacturing customer as of the equipment my that of improving to

Harrold Rust

regular on a do then production as focused getting talk same being we're, hit mean, to time a on key squarely out bit maybe to right I space faster. market. our we've grow is way little and enter -- to that potential we how A licenses the would which is somewhat or feel partners on we've geared customers I on built piece and talking about think we're we track, that on in the and is that their -- right because of Fab-X with that towards At hit which of about the we're the the further approach lines partnership Yeah, the talked more can EV parallel time, stuff strategy, line. for we second-generation a ourselves basis working known what JV goals, obviously

conversations so to be those the he'll try And to Donnelly, have addition push with is those actually who some someone forward. the and of Patrick of space discussions about ad going we talked players be with helping to

Derek Soderberg

guys. Thanks, Perfect.

Operator

from your And you. open. Cowen, is Daoud line question our with Thank next comes Gabe

Gabe Daoud

taking to deliver capacity I for think Thanks XX back at was just manufacturing scale questions. capabilities, expected guys. year. Harrold, the Hey, million a cells and initially Maybe Fab-X the to

that get actually Just today. just curious, And -- have how lines just I'm how then you from a lives because that today could that much -- of deliver lines would of how many many to you the products assume? trying sense

Harrold Rust

Yes.

would at here at here, to more to over locations. about whether So the would decision we've out here. increase strategy place Gabe. capacity it Certainly that how in of future. now. more these consistent strategy that say significantly our ability lines, in rolls to we the the ones the thanks will are maybe have the and with something do here, That's for question, lines we sense the generation be talked that some for right Certainly, look our other our time these less capacity judge ramp beyond two would we makes and our I that Fab-X and next-generation as beyond do

for are customers we and to other with flexible think want the to our what be that are opportunities locations. I respect these where on

end to ' want just probably we today adapt and customers we executing on. dynamically, Ultimately, whatever is capacity different than sure make would say overall slightly I we needs. our we'll think the to sure can deliver up we'll meet I'm

Gabe Daoud

gears to XXX. And and the partners at to about liter. hour cells densities the the the Thanks on in just the interested some -- the EV get cycle figured energy more talk density? there's of a Understood. Harrold. a looking life just deal per a energy I know shifting what of one per EV on then And just kilogram. maybe are hours you talk those battery. part Could if Could volumetric you showed on we as I or gravimetric about bit lot target data programmed you

Harrold Rust

silicon that as excited were about look for data do product that that And we gravity talks designing some market, is about we've so from the interest turns from would and I we our standpoint. there to struggle in that. cells that what customer we're is good, space that could specific capability that aggressive say, on a standpoint website unique architecture. data in And people that in both I of a I add-on was active we've now cycling purpose, metric believe past. the in far exciting. establish energy built might an say to would It that high is a XXX% super And out Yes, pretty have from cars as as on the standpoint, specific somewhat We energy or if would today think volume thus the valuable cells not like. we're a weight. The that silicon long-term stuff the looks it compelling some objective either show had out ways density active because to on our the

Gabe Daoud

to like Thanks, they hit just close those curious, Charlie. cycles, and how did than swell, now X%? was cycled as And sold well then less it cells have much Thanks. XXX I'm

Harrold Rust

system, general the where of unique batteries. say little strength see actual Yeah, the in and our we very I architecture swelling would and

Gabe Daoud

Got it. Thanks. Harrold.

Operator

next [Operator with Trading. from you. question comes Williams Instructions] Sean Thank Our Milligan

is Your open. line

Sean Milligan

Hey guys, question. taking thanks for my

I look bringing and As the build Patrick. you EV to know on out sales process you're

two? that Just to curious year over if he's team him, the build any going or brought how with out next is

Harrold Rust

have I board the questions those that it's thoughts how to of some right make stuff the I organs that us and all But to I for be to would like sure have is build up shapes on to in front I'm actual don't the over I several those -- next that would out. answer just me some now. know of going comments coming yet. kind have answers quarters. don't say honest to you Patrick to

Sean Milligan

I players Have testing sampled then think side the NMC to I'm Okay. with point? you're with on correct. technology, the And EV EV any with if cells dairy this you other program, technologies

Harrold Rust

Yes.

standard more done So what targeted today, in electronics batteries we've four which space. the sizes the have past, we for are consumer of

And good it customer tend Cobalt in fleet to it so Those we've how technology ready. space and the a gives in cathode cells of capable those of But of have to into oxide space what batteries from sampled as the that a opposed performs. are NMC. look our is sense

we've And doing the so if half last that's not longer. year, something been over

Sean Milligan

maybe guess customers Right. win from of And last to then seeing revenue? a XX to one take then I you've product kind And how that able sampled cells around the talk you're to -- first sampling rate question, curious that's you pipeline. that you're it long if in mentioned to, just

Harrold Rust

don't ability as have that the more the engage off our move of figures our the we're of we've specifically funnel, think my to each of the is demand I would ability into of really part to people with the say top seeing. kind driven and the I many don't part commented on bar head how the by to funnel I

pretty we of line, the spending which big is roughly a times is to whole the initiative, things which place doing year, put think a the of line throughput One have now. I that is capital we're in pilot actually right some this XX we're next-generation

designed to cut what to going is having so ability really line. with one hope manufacturing with manufacturing highly qualification the really we the also So it's deliver customers It's designs that not looks by our custom that's about have that is to same our production raw better. some can customers something the obviously timeout thing exciting -- is flexible, like then of lots significantly reflects kernels to multi-step deal the much as And And samples super better. and for to be that that also the is next-gen around products. go qualifications new-gen of through there the horsepower

we to our stuff part will all our with funnel of time-to-market customers. increase some of of the our these think So also reduce drive those and the ability increase bottom things -- to

a pretty and that's big give So is thing initiative real it's going think we will critical an us which doing, advantage forward. company a the

Sean Milligan

line the or? is And pilot year mid

Harrold Rust

It this will be coming end in year, right. the of

look So effect this to towards at opportunities that how us customers I end into on with year down. the also of and converting move would promise starting a fast quicker people to significant revenue. And actual have a of engage can in give be terms we

Sean Milligan

Harrold. Okay, And just one more great. then

bringing In customers lines. starting sampled you terms sample had into they're or sort other you customers to land products. now you've I it, know and with would of to the starting and initially maybe across product cells see expand of the in X product early different that strategy have

Harrold Rust

products. The where there to life customers. across view materializing. to in can't and Those revolutions starting with customers through factors had their that relationship. we're can encouraging ride customers starting stuff our customers sign X traction of of And say at think pick even within with which necessarily around I increase products about everyone, obviously, multiple I would we've our multiple see service extending is general; since of are products. of is terms talk And follow-on we decision we're in a we these But are to very ready. customers is discussions for initial customers, happening, customer specific

Sean Milligan

you that to? of for get life Okay, approaching the XXX cycle great. -- that And the that the EV, the if cycle you're what's now. what's should What's the target on to look number target lives need we

Harrold Rust

that initial now Right XXXX the out or short DOE about X,XXX goal we've of we're to capacity sitting X% cycles fade side. only stated XXX set cycles. now Right just capacity. and this was got XX% program of just XX% The short in we're a

that report good encouraged additional news think on pretty we're those we we'll and to have later. of So results

Sean Milligan

Great. Thank the time. you for

Harrold Rust

you. Thank

Operator

conference to Thank questions at Mr. hand for you. I'm time. currently comments. showing further would like over the closing I this to Rust no back

Harrold Rust

a line make your where journey listening up great this have we forward. been everybody a call. customers a the company we can past this going ultimately made we're take, of it's fundamentally going, to the have realized to changed, better proven about in we others qualification for think for we you, milestone be a earnings making we it, that's and talk to production are Thank our as our lined has battery a year. that from proven in. think things technologies, and super space Shipping a works. to today position we've We to forming practice and think reducing about. are excited. product really many our to that batteries commercialize. for that out progress excited lot time that in and to but We're got yet product made differentiates We've that us long samples is what progress that. We're all We've huge of first very us This We we a look forward of

by impacted you the We company the journey the with making. excited day. around with also is That but vision the every that badge, runs We're list We look Enovix positively dead make of to our a and for we're we're in have values, Innovation is core every happen company. this progress to every forward employee and for person their -- the vision along that ride. run, set about having

Operator

you call. conference concludes this Ladies for and today's participation. your gentlemen, Thank

now disconnect. day. wonderful have You may Everyone, a

Enovix (ENVX) 4 Mar 222021 Q4 Earnings call transcript