Novonix - Earnings Call - H2 2024

Transcript

Robert Long (Interim CEO and CFO)

I am Robert Long, the Interim Chief Executive Officer and Chief Financial Officer of Novonix. Welcome to our fourth quarter activities report update from headquarters in Chattanooga, Tennessee. Although I can cover this later in the presentation, I would be remiss to not make note of the transition in CEO. As stated in that announcement, and with the focus on Chattanooga and the operations here, Dr. Chris Burns has transitioned to an advisory role reporting to the board. In this role, Chris will continue his great support of the business, and I just want to personally and professionally thank Chris, as does all of Novonix, for his great vision and leadership. Please make note of our Notice and Disclaimers for this presentation. Let's get into it.

Novonix is a leading U.S.-based battery materials and technology company with a focus on onshoring the graphite supply chain while also providing solutions for the battery industry. We now have binding offtake agreements with Panasonic, Stellantis, and PowerCo, which will account for all the expected production volume at our Riverside facility here in Chattanooga. Production at Riverside is expected to start in early 2026. Our production timelines have been adjusted from late 2025 to early 2026 due to delays in receiving equipment that has impacted the timing and installation and commissioning. We continue to work closely with our customers to achieve their desired product specifications. In late Q4, we announced a conditional commitment from the U.S. Department of Energy through the Loan Programs Office for a loan up to $754 million related to a planned site at Enterprise South here in Chattanooga.

Also, much has been in the news recently with administration changes and executive orders. I'll say we continue to see strong support and participation from the U.S. government. We continue to demonstrate our patented all-dry, zero-waste cathode process at pilot scale, and we believe this has great potential for reducing costs and the environmental footprint of another key material in the battery industry. Our Battery Technology Solutions Group continues to help accelerate the pace of innovation for key materials and process technology. Here at Novonix, we have three focus areas: anode materials, cathode materials, and our Battery Technology Solutions Group, and we recently announced our headquarters in Chattanooga, Tennessee, for the anode business and all of Novonix. Q4 was a busy quarter. We had several significant events. I've already mentioned the transition in the Chief Executive Officer role and want to again thank Chris for his year of service.

This quarter, we signed binding offtake agreements with Stellantis and PowerCo for our high-performance synthetic graphite materials, which allocates our remaining volumes at our Riverside facility. We had the conditional commitment from LPO for the Enterprise South, the planned Enterprise South site, and we recently entered into a license agreement with Harper International Corporation, our long-term technology partner, for the induction-based graphitization furnaces. At BTS, we signed a joint collaboration agreement with ICoNiChem to develop nickel-based chemistry for improved performance at a lower cost through more sustainable methods. We announced strategic partnerships with Voltaiq and Gamry. We had a patent granted by the United States for graphite-silicon alloy composite material. This is the same patent or also patented previously granted in Japan and Europe. From a corporate perspective, we completed the institutional portion of our equity raise, resulting in net proceeds of $26.6 million.

Those proceeds will be used to purchase, install, and commission equipment at our Riverside facility. We continue to work with and receive reimbursement from DOE MESC on that related grant, and our quarter-end cash balance was $42.6 million. When you consider this quarter-end cash balance and the second placement of the equity raise from Phillips 66 and the amounts from our share purchase plan of the equity raise, both of those completed in January, the quarter-end cash balance would have been $67.8 million. From here, we are very focused on localizing the synthetic graphite supply chain here to the U.S. The main point is the need for the U.S. domestic supply chain of this critical mineral. China currently has over 95% market share for battery-grade graphite. Onshoring this critical mineral and reducing reliance on China is very important. This is the coverage of the Stellantis offtake agreement.

This offtake agreement is binding for 86,000 tons and up to 115,000 tons over a six-year term starting in 2026. For PowerCo, this agreement results in a minimum of 32,000 tons starting in 2027, but over a five-year term. Previously covered, our agreement with Panasonic Energy is for 10,000 tons over four years, and we expect to start supplying Panasonic under this agreement in early 2026. Our Riverside facility with these offtake agreements is now at capacity, and we have certainly this volume we expect or will roll over into our planned Enterprise South facility. When we look at our path to commercialization, in 2024, we had significant accomplishments via completing engineering reports on Riverside.

Offtake agreement signed is covered production equipment that was purchased and installed to reach our efforts of 3,000-ton capacity per year and various facility improvements in support of the purchase and installation and ultimate commissioning of this equipment. In 2025, we're focused on installing capacity for 3,000 tons per annum, and the resulting product qualification will be in a position to start production in early 2026. In 2026, we'll start this production, and we'll continue to invest towards reaching full build-out of the Riverside facility. For Enterprise South, as I mentioned, we received conditional commitment in Q4 from the Loan Programs Office for $755 million. This facility is expected to reach full production of 31,500 tons per annum by the end of 2028. When you consider this facility plus Riverside, we will have at or just over 50,000 tons per annum capacity by 2028.

For Harper, as mentioned, Harper International, we entered into this license agreement for the rights and use of this continuous furnace technology to further develop furnaces. We're excited about the ongoing participation and relationship with Harper. For the trade case, this case is moving forward. The ITC recently made its preliminary determination to move forward with investigations regarding China's pricing practices, so we look forward to the next steps through this process. For cathode, as mentioned, we are focused on commercializing this all-dry, zero-waste process and have many efforts to complete the operations here and get to commercialization. And in driving future growth, as I've mentioned, we are scaling the Riverside operations to deliver our production volumes. Securing the related financing to scale these operations is the two most important tasks that we face.

And then also continuing to secure quality Tier 1 customers and then focused on the commercialization and further development of the cathode process and the strong work that our Battery Technology Solutions Group is performing. I thank you for the ongoing support of Novonix, and we look forward to future updates. Thank you.