Aqua Metals(US:AQMS)2019-08-04 06:50Financial Data and Key Metrics Changes - For Q2 2019, the company recognized revenue of approximately $1.5 million, a significant increase from $483,000 in Q2 2018, reflecting the initiation of 24x7 operations [12] - Cost of product sales increased to $7.2 million from $4.6 million year-over-year, but costs related to revenue generation decreased by 52% [12][13] - The net loss for Q2 2019 was $10.5 million, or a negative $0.21 per diluted share, compared to a net loss of $9.9 million, or a negative $0.33 per diluted share in Q2 2018 [14] Business Line Data and Key Metrics Changes - AquaRefined lead production saw a 458% increase over Q1, while lead bullion metal production increased by 352%, leading to a 438% overall production increase from Q1 to Q2 [7][12] - The company moved to 24x7 operations with its initial four modules, up from 24x4 operations, achieving a record production level [9][12] Market Data and Key Metrics Changes - The partnership with Clarios is progressing, with specific performance metrics agreed upon for the existing AquaRefinery, which are conditions precedent to shipping equipment [10] - The company is preparing for the delivery of equipment for Phase 2 of its capital program, expected to further boost electrolyte recovery and increase yield later in 2019 [9][10] Company Strategy and Development Direction - The company aims to scale production by optimizing Phase 1 equipment and expects to continue increasing module utilization [17] - Phase 2 of the capital projects plan is critical for enhancing contribution margin and scaling the plant to 16 modules [17] - The company is focused on achieving higher-margin licensing revenue beginning as early as 2020 through its partnership with Clarios [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving production targets and highlighted the importance of strategic partnerships and operational improvements [18] - The company anticipates a decrease in cash burn as production ramps up, with cash needs expected to decline as operations scale [16][33] Other Important Information - The company had $27.3 million in cash and cash equivalents as of June 30, 2019, including approximately $20.3 million net received from a public offering [14] - General and administrative expenses for Q2 2019 were the lowest in the last six quarters, excluding non-cash items [13] Q&A Session Summary Question: What is the cadence towards cash break-even? - Management indicated that cash break-even is expected to be reached once the company scales to 16 modules, with cash burn decreasing throughout the year [21] Question: Can you provide an update on the Clarios relationship? - Discussions with Clarios are ongoing regarding performance metrics and the overall joint development agreement, with expectations to have more information early next year [23] Question: What was the July output in terms of tonnage? - July output was similar to June due to maintenance issues unrelated to AquaRefining, but the overall trend remains positive [25] Question: How many modules are needed for positive gross margin contribution? - The company stated that 16 modules are required to reach breakeven, with positive margins expected beyond that [31] Question: What is the impact of Phase 2 on lead recovery? - Phase 2 is expected to significantly improve electrolyte recovery and contribute to higher margins, with a goal of reaching up to 100% recovery by 2020 [35][49] Question: How is the relationship with Interstate? - The relationship with Interstate remains strong, with them being a significant investor and feedstock supplier [59]