Sign in

You're signed outSign in or to get full access.

FB

FREYR Battery, Inc. /DE/ (FREY)·Q1 2024 Earnings Summary

Executive Summary

  • FREYR reported a net loss of $28.5M and diluted EPS of $(0.20) for Q1 2024; cash, cash equivalents and restricted cash were $252.8M with no debt .
  • Management reaffirmed the near-term milestone to commence automated unit cell production at the CQP in H1 2024, adding specificity to target initial volume production in Q2 2024; conventional technology licensing for Giga America is targeted for announcement in Q2 2024 .
  • Sequential cash discipline improved: total cash uses fell to $23M vs $52M in Q4 2023 and $88M in Q1 2023, with gross capex of ~$21M largely offset by $19M contractor reimbursement; cash runway “well beyond” two years remains the focus .
  • Key catalysts: proof of automated unit cell production at the CQP, announcement of a conventional tech agreement and offtakes, and DOE Title 17 conditional commitment targeted by year-end 2024 .

What Went Well and What Went Wrong

What Went Well

  • Approaching first automated unit cell production using the SemiSolid Casting and Unit Cell Assembly at the CQP remains on track for H1 2024; management added a Q2 timeline for initial volume production to harvest data and quality evaluations .
  • Strengthened Board alignment and capital formation capabilities with appointments of founding investors Todd Kantor and Tore Ivar Slettemoen, and David Manners; insiders’ collective ownership exceeds 20% per slides .
  • Improved cash discipline: Q1 cash uses of $23M vs $52M in Q4 2023 and $88M in Q1 2023; gross capex of $21M offset by $19M reimbursement; headcount cut by 20% and contractors by 50% vs Nov 2023 .

Management quotes:

  • “We expect to move from an aspiring battery company to a battery-producing company… later this quarter.” – Executive Chair Tom‑Einar Jensen .
  • “We continue to expect that the first unit cell production trial… will take place in Q2 2024.” – CEO Birger Steen .
  • “Ended Q1 2024 with $253 million of cash and no debt.” – CFO Oscar Brown .

What Went Wrong

  • Continued complexity at the CQP: final tuning of the multi-carrier system (MCS) to merge cathode/anode/separator at precision tolerances remains outstanding, delaying verification of fully automated production; however, cathode/anode casting achieved and early hand-merge tests are “encouraging” .
  • Q1 net loss widened YoY to $28.5M vs $12.7M; diluted EPS fell to $(0.20) vs $(0.09) prior year, driven in part by lower foreign currency gains YoY and higher R&D tied to commissioning .
  • Estimates visibility: consensus estimates could not be sourced via S&P Global (mapping unavailable), limiting external benchmark comparisons this quarter [GetEstimates error].

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Net Loss ($USD Millions)$10.0 $24.152 $28.543
Diluted EPS ($)$(0.07) $(0.17) $(0.20)
Total Operating Expenses ($USD Millions)N/A$39.077 $34.802
Cash, Cash Equivalents & Restricted Cash ($USD Millions)$328 (end Q3) $275.742 (end Q4) $252.766 (end Q1)
Cash from Operations ($USD Millions)N/A$(34) (Q4) $(16.218) (Q1)
Gross Capital Expenditures ($USD Millions)$41 (Q3) $19 (Q4 investing primarily capex) $21.455 (Q1)

Additional detail:

  • No product revenues reported; statements present operating expenses and loss from operations with no revenue line items .
  • Warrant liability fair value adjustment Q1: $0.146M gain vs $8.515M gain in Q4 2023 .

KPIs

KPIQ3 2023Q4 2023Q1 2024
CQP MilestonesDelay; governance changes; daily vendor engagement Automated cathode and anode casting achieved; dry room ops; integrate casting webs via MCS next Prepare for first automated unit cell production trial; target Q2 initial volume production
Workforce / Cost ActionsTarget burn rate < $30M/qtr starting Jan 1 Restructuring charge $6M; FY cash runway into 2026 FT headcount −20%; contractors −50%; cash uses $23M
Giga ArcticOption value preserved; cold-stack costs $3–4M/yr No significant capex planned in 2024 No further significant net capex budgeted; unsolicited sale inquiries; book value ~$225M
Conventional Tech TrackPursuing partners to accelerate market entry Target H1 2024 finalization/announcement Expect announcements in Q2; offtakes and financing processes to relaunch
DOE Title 17Target YE 2024 conditional commitment Target YE 2024 conditional commitment Target YE 2024 conditional commitment; robust balance sheet; no secondary contemplated

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Automated unit cell production at CQPH1 2024On track H1 2024 On track H1 2024 Maintained
Initial volume production (CQP)Q2 2024Not previously specifiedCommence Q2 2024 Narrowed timing
Conventional technology agreement (Giga America)H1/Q2 2024Target finalization/announcement H1 2024 Expect position to announce in Q2 2024 Narrowed timing
DOE Title 17 conditional commitmentYE 2024Target by year-end 2024 Target by year-end 2024 Maintained
Giga Arctic capex2024Not forecasting significant 2024 capex No further significant net capex budgeted in 2024 Maintained
Cash runwayMulti‑year2+ years runway into 2026 Extending runway beyond 2 years Maintained/extended

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023, Q4 2023)Current Period (Q1 2024)Trend
CQP automation progressDelay and governance fixes; automated electrode casting; integrate webs via MCS next On track H1 automated unit cells; Q2 initial volume production targeted; fine-tuning MCS Improving execution cadence
Conventional technology licensingPursuing partners; fastest path to market Advanced negotiations; expect announcements Q2; offtakes/financing refresh Advancing
DOE Title 17Target YE 2024 conditional commitment; iterative process Target YE 2024; robust balance sheet; continuing application Stable
ESS market demand/macroESS focus; cyclical pricing but strong growth; offtakes needed G7 storage target 1,500 GW by 2030; AI/crypto driving demand; aligns with strategy Positive structural backdrop
Cost discipline/runwayBurn rate < $30M/qtr starting Jan; 2+ years runway Cash uses down; headcount/contractor reductions; extend runway >2 years Improving
Giga Arctic postureCold-stack, minimal 2024 spend No significant net capex; evaluating use cases or sale; book value ~$225M Preserving option value
Board/organizationRedomicile to U.S.; streamline org Board strengthened with investors and public-policy expertise Strengthened governance
IRA 45X benefitsU.S. incentives favored; DOE LPO Conventional track noted; 45X ~$1–2M/day benefit at optimized yields Reinforced

Management Commentary

  • “We… expect to move from an aspiring battery company to a battery-producing company… later this quarter.” – Tom‑Einar Jensen .
  • “We continue to expect that the first unit cell production trial… will take place in Q2 2024.” – Birger Steen .
  • “Ended Q1 2024 with $253 million of cash and no debt… seek opportunities to reduce unnecessary costs… extend our liquidity runway beyond the 2-year target.” – Oscar Brown .
  • “A conventional technology track is likely the fastest pathway to market… IRA 45X production tax credits equate to $1–2 million per day of estimated benefit… at optimized production yields.” – Earnings slides .
  • “We are approaching a major milestone… first unit cell production trial using the full automation… Casting and Unit Cell Assembly.” – Birger Steen .

Q&A Highlights

  • CQP final steps: tuning the MCS to precisely merge cathode/anode/separator; management suggested “a few hours, a few days away” from first fully automated casted and merged cells, contingent on precision tuning .
  • Downstream opportunity: focus on ESS customers adjacent to PV, with U.S. soil production offering supply-chain resilience over 10 years; Nidec partnership for modules/packs remains central .
  • Growth initiative sourcing: most projects came from inbound interest given FREYR’s balance sheet and positioning; funnel approach with triage and screening .
  • Guidance clarifications: initial unit cell production in Q2; conventional tech agreement expected Q2 with offtakes and financing refresh .

Estimates Context

  • Wall Street consensus (S&P Global): EPS and revenue estimates for FREY Q1 2024 and prior quarters were unavailable due to missing SPGI mapping in our data connector (SpgiEstimatesError). As a result, no vs‑consensus comparison is provided this quarter [GetEstimates error].
  • Implication: Without formal consensus, buyside should anchor near-term inflections on operational milestones (CQP automation, conventional licensing and offtakes, DOE Title 17 process) rather than EPS/Revenue beats/misses .

Key Takeaways for Investors

  • CQP progress is the near-term swing factor: successful automated unit cell production in H1, with initial volume production in Q2, would materially de-risk technology and catalyze customer validation and capital formation; watch for formal updates from the CQP .
  • Conventional tech track is a strategic hedge: licensing a mature platform can accelerate first revenues and leverage IRA economics while 24M scales; an agreement and offtake announcements are targeted for Q2 .
  • Balance sheet strength supports optionality: $252.8M cash and no debt, with reduced burn and capex discipline, extends runway beyond 2 years, enabling non‑dilutive capital pursuit and project flexibility .
  • Giga Arctic remains option value with potential monetization: no significant 2024 capex; unsolicited building sale inquiries; book value ~$225M—could be a funding lever depending on strategic choices .
  • Structural ESS demand is strengthening: G7’s 1,500 GW target by 2030 and rising data‑center power needs (AI/crypto) align with FREYR’s ESS focus—supportive for offtake momentum once production plans firm .
  • Near-term trading implications: stock likely reacts to discrete milestones—CQP automation proof, conventional agreement announcement, and DOE conditional commitment; delays or slippage vs Q2/H1 timelines would be negative, while firm offtakes and financing signals would be positive .
  • Medium-term thesis: dual‑track technology strategy plus IRA economics can underpin a viable U.S. battery manufacturing footprint if execution at CQP and partner selection is timely; monitor margin potential and capex phasing as projects move toward FID .