Aqua Metals Inc (AQMS) Q2 2024 Earnings Call Highlights: Navigating Challenges with Strategic ...

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  • Total Cash: Approximately $7.8 million as of June 30, 2024.

  • Property, Plant, and Equipment Increase: Approximately $6.5 million.

  • Other Assets Increase: Approximately $3.5 million.

  • Plant Operations Costs: $2.4 million for the quarter, $4.6 million year-to-date.

  • Net Loss (Q2 2024): Approximately $5.6 million or negative $0.05 per share.

  • Net Loss (First Half 2024): Approximately $11.3 million or negative $0.10 per share.

Release Date: August 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Aqua Metals Inc (NASDAQ:AQMS) can still produce positive margins without debt service, showcasing the favorable economics of their AquaRefining process.

  • The company has downsized staff to align cash burn with a longer cash runway, extending it by another year.

  • Commercial partner development remains strong, with ongoing operations at their pilot plant and partnerships with major industry OEMs.

  • Aqua Metals Inc (NASDAQ:AQMS) is exploring alternative financing models, such as project finance and strategic investors, to complete the Sierra ARC commercial plant.

  • The company has a solid relationship with its lender, maintaining a foundation for future collaboration under better macroeconomic conditions.

Negative Points

  • Critical battery minerals prices have plunged, impacting the company's financial calculations and market conditions.

  • Interest rates remain high, adding pressure to the company's financial situation and debt service capabilities.

  • The company has experienced a significant increase in plant operation costs, with a 60% rise for the quarter and 80% year-to-date.

  • Aqua Metals Inc (NASDAQ:AQMS) reported a net loss of $5.6 million for the quarter, an increase from the previous year's loss.

  • The completion of the Sierra ARC commercial plant is delayed due to unfavorable macroeconomic circumstances, affecting the company's operational timeline.

Q & A Highlights

Q: Could you give us an update on the DOE grant you were applying for and also on the USDA? A: We applied for the DOE's MESC 3099 initiative grant in March, and decisions are expected by October. Conversations with the USDA are ongoing, and we are working through the timeline for their response to our appeal.

Q: Are there any supply chain disruptions anticipated for the facility build-out, assuming financing is secured? A: We are cautiously deploying already purchased equipment and deferring non-long lead time expenses. The supply chain remains solid, and vendors are supportive.

Q: What level of battery material prices would be optimal for profitability? A: Even at current low prices, we generate positive plant margins. Higher prices would improve our ability to service debt. Future price projections are favorable for our operations.

Q: Is there potential for financing from partners like 6K and Dragonfly? A: Currently, each company is focused on financing its own operations, and there are no co-financing discussions with these partners at this time.

Q: Will there be any one-time severance costs, and what is the expected CapEx for the remaining equipment? A: There will be some severance expenses in Q3. Most equipment has been purchased, and we plan minimal additional CapEx for critical long lead time items.

Q: Was there a breakup fee with the lender? A: No breakup fee was incurred. We maintain a good relationship with the lender and may work with them again in the future.

Q: Have you considered unconventional financing options like IP lending? A: Yes, we completed a third-party IP valuation, which is part of ongoing discussions with counterparties and is considered a valuable asset.

Q: How does the ARC extension affect material shipments to 6K? A: The ARC timeline was ahead of 6K's facility schedule, so there is no current impact on our ability to supply them. We continue to support 6K's production of low-cost cathode materials.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.