Solid Power, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unless otherwise stated, financial figures below are in millions of U.S. dollars. Solid Power is developing all-solid-state battery technology and had not generated material revenue from its principal business activities.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $2.813 | $0.628 | $7.591 | $1.669 |
| Operating expenses, including direct costs | $18.412 | $9.109 | $49.199 | $20.492 |
| Operating loss | $(15.599) | $(8.481) | $(41.608) | $(18.823) |
| Net loss | $(12.399) | $(8.450) | $(9.076) | $(24.864) |
| Basic and diluted loss per share | $(0.07) | $(0.08) | $(0.05) | $(0.28) |
- Revenue increased substantially year over year, primarily from government contracts and collaborative arrangements. Direct costs exceeded revenue by $0.731 million in Q3 and $0.970 million for the nine-month period; the filing does not present a separate gross-margin measure.
- Q3 operating loss widened 84% year over year as research and development spending and other operating costs rose. Nine-month net loss improved mainly because of a $28.183 million gain from remeasuring warrant liabilities; this noncash gain did not offset the underlying operating loss.
- For the nine months, operating cash use was $30.486 million, versus $18.033 million in 2021. Investing cash use was $385.782 million, including purchases of investments and $47.915 million of property and equipment. Financing provided $0.521 million. Cash and cash equivalents fell to $97.700 million from $513.447 million at year-end 2021.
- Total liquidity, defined by the company as cash, marketable securities and long-term investments, was $507.573 million at September 30, 2022, compared with $589.332 million at December 31, 2021. Current assets were $374.284 million and current liabilities $15.154 million.
- Total assets were $597.779 million and stockholders’ equity was $552.951 million. Long-term debt was $0.026 million; lease liabilities totaled approximately $8.600 million. Warrant liabilities were $21.837 million.
Material changes and operating developments
- Q3 revenue was up 348% year over year; nine-month revenue increased 355%. Operating expenses rose 102% in Q3 and 140% for the nine months, including higher research and development, direct costs, and public-company-related general and administrative expenses.
- The company began shipping 20 Ah cells to automotive OEM partners for initial testing during Q3 and had recently begun production of its initial 60–100 Ah EV cells. It was working toward shipment of EV cells to partners and testing houses by year-end to begin formal automotive qualification, but said this process could slip into 2023.
- Construction and equipment investment continued for a second EV cell pilot line and a second facility in Thornton, Colorado, to expand sulfide-based electrolyte production. The company expected the Thornton facility to begin production in Q1 2023. Construction in progress was $49.966 million at quarter-end.
- Common shares outstanding rose to 175.742 million from 167.558 million at year-end 2021. The company reported $6.498 million of stock-based compensation for the first nine months.
Outlook, risks and notable items
- Management said existing liquidity was sufficient for operating, working-capital and capital-expenditure needs for at least the next 12 months, and longer until adequate cash flows are generated from licensing or electrolyte sales. It also cautioned that changed conditions or operating needs could require additional equity or debt financing, or spending reductions or delays.
- The company expected elevated operating and investing expenditures as it expands development, optimizes pilot lines and completes the Thornton facility. It described commercialization as a development goal for 2028, not a near-term revenue forecast.
- Key risks include technical and customer qualification uncertainty, commercialization timing, the ability to secure licensing and supply agreements on acceptable terms, scaling electrolyte production, facility delays, supply-chain disruption, competition, EV adoption, and continued losses. OEM and joint-development relationships are non-exclusive.
- The company reported no material change to its risk factors since its 2021 Form 10-K and no current litigation likely to have a material adverse effect. A prior fee demand related to the business combination was settled in March 2022 for an amount materially consistent with the $0.500 million accrual.
- Management concluded disclosure controls were effective at September 30, 2022. A previously reported material weakness in internal control over financial reporting remained under remediation; management expected remediation by December 31, 2022.
Important facts for investors to verify
- Whether EV-cell deliveries and the formal automotive qualification process proceeded on the revised timeline, including any delay into 2023.
- Whether the Thornton electrolyte facility began production in Q1 2023 and whether construction costs or schedules changed.
- Cash burn, investment liquidity and capital spending relative to management’s stated liquidity runway; distinguish cash from marketable securities and long-term investments.
- Progress toward commercial contracts and revenue beyond government-funded work and collaborative arrangements, and the resulting economics of any licensing or electrolyte sales.
- Whether the material weakness was remediated by the stated date, and how ongoing stock-based compensation and potential share issuance affect dilution.