Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ideal Power Inc (IPWR, Financial) is collaborating with a third global automaker, adding to its existing engagements with Stellantis and another top 10 global automaker.
- The company announced a global distribution agreement with a second distributor, particularly strong in Asia, which has already started placing orders.
- Ideal Power Inc (IPWR) qualified a second wafer fabrication supplier with high-volume production capability, ensuring dual sourcing and geographic diversity.
- Secured orders for B-TRAN devices and circuit breaker evaluation boards from a global leader in power semiconductor and power electronics solutions.
- Increased the current rating of their simple power module by 25% and reduced its size by approximately 50%, significantly enhancing power density.
Negative Points
- Second quarter 2024 cash burn was $2.2 million, up from $1.9 million in the first quarter of 2024 and $1.8 million in the second quarter of 2023.
- Operating expenses increased to $2.9 million in the second quarter of 2024 from $2.4 million in the second quarter of 2023, driven by higher research and development spending.
- The company recorded minimal revenue for the second quarter, indicating low volume orders from large companies evaluating their products.
- Net loss in the second quarter of 2024 was $2.7 million, compared to $2.3 million in the second quarter of 2023.
- The adoption of new technology like B-TRAN faces challenges due to the conservative nature of engineers and the need for extensive testing and validation.
Q & A Highlights
Q: How do you feel about the macro-economic environment given recent market fluctuations, and what is your broader product demand landscape over the next 12 months?
A: Despite the noise in the auto industry with plant closures and high costs, the teams we work with are focused on future products. The macro trends of electric vehicle adoption, EV charging, renewable energy, and energy storage remain strong. We haven't seen any impact or slowdown in these areas, which is encouraging for our growth prospects. (R. Daniel Brdar, CEO)
Q: How has your work with Stellantis and other OEMs prepared you for engaging with a third OEM?
A: Working with Stellantis has been beneficial as it helped us understand the data, testing, and packaging requirements of automakers. This experience has allowed us to present ourselves as a professional and knowledgeable partner to other OEMs. (R. Daniel Brdar, CEO)
Q: Can you describe the margin opportunity in industrials compared with automotive, and the lead times from testing to implementation for both sectors?
A: Industrial design cycles are roughly a year, while automotive cycles are about three-plus years. Our target gross margin at scale is about 50%, with industrial opportunities potentially offering higher margins due to our enabling technology. Automotive margins are expected to be lower due to cost sensitivity in the sector. (Timothy Burns, CFO)
Q: What additional support do distributors like Richardson and RYOCHO need to provide for your products?
A: We provide distributors with the Simcoe power module, application data, and training on our device. They offer technical sales functions without needing to modify the product or provide additional hardware or software. (R. Daniel Brdar, CEO)
Q: How does B-TRAN compete against silicon carbide devices, especially regarding heat tolerance?
A: While silicon carbide has higher heat tolerance, packaging limits it to about 175 degrees C. Silicon carbide is used more for faster switching applications, but it has higher conduction losses and costs three to five times more than silicon devices. B-TRAN offers a cost-effective alternative with lower conduction losses. (R. Daniel Brdar, CEO)
Q: Will the reduction in module size impact customer testing timelines?
A: No, the size reduction reflects customer feedback and helps with acceptance. It allows for a more plug-and-play approach in their products without affecting testing timelines. (R. Daniel Brdar, CEO)
Q: How would your strategy change in the face of a potential global glut of silicon carbide and lower prices?
A: We anticipate silicon carbide costs will decrease over time, but we will remain competitive due to the lower cost of silicon. If necessary, we can develop silicon carbide B-TRAN devices, leveraging the material's advantages while addressing its current challenges. (R. Daniel Brdar, CEO)
Q: What are the main reasons for not purchasing Ideal Power products?
A: Engineers are conservative and new technology adoption takes time. The lack of long-term field data and familiarity with B-TRAN may cause hesitation. However, our costs will be competitive, and we will meet industry standards and certifications. (R. Daniel Brdar, CEO)
Q: Can Simcoe power modules be configured for high voltage and current needed for high-power EV contactors?
A: Yes, our devices can be paralleled to reach the desired voltage and current ratings. This flexibility allows for various configurations to meet market applications. (R. Daniel Brdar, CEO)
Q: How does the inherent bidirectionality of B-TRAN benefit EV contactors?
A: The bidirectional nature of B-TRAN allows for flexible configuration in EV contactors. As we work with OEMs, we will better understand their specific requirements and how they want to utilize the device. (R. Daniel Brdar, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
