American Battery Technology (NASDAQ:ABAT) Q3 2026 Earnings Call

0:01 Good afternoon. I'm Tiffany Mooring and I'm the Director of Communications and Marketing at the American Battery Technology Company. I would like to welcome everyone to our fiscal year third quarter twenty twenty six earnings call. On behalf of the entire team at American Battery Technology Company, I would like to sincerely thank everyone for taking the time to join our call today. Following this presentation, a recording of this call along with our press release will be available on our website. This presentation does include forward looking statements within the meaning of the safe harbor provisions of The US Private Securities and Litigation 1995 Act. These statements are subject to risks and uncertainties that can cause actual results to differ from those anticipated.

0:50 Additional information regarding the factors that may cause actual results to differ can be found in our annual filings.

0:58 On today's call, our CEO and CTO, Ryan Meltzer will provide remarks regarding our two lines of business, which include our lithium ion battery recycling business and our primary claystone to lithium hydroxide business. It is now my pleasure to turn the meeting over to Ryan, who is joined by our CFO, Alex Flores.

1:26 Great, thank you, Tiffany, and thank you everyone for joining today. As a reminder, we are a critical mineral manufacturing business, and we are working to implement a domestic closed loop supply chain. In order to do this, we have three primary mechanisms. We have designed and are operating a lithium ion battery recycling facility. This facility takes in waste from different steps of the manufacturing process, as well as end of life batteries. We process those materials and make critical minerals that we then sell back into the market to our partners. Closing the loop is extremely important for gaining access to these critical minerals. However, in addition to closing the loop, we also need to fill that loop the first time.

2:11 And that's why we also have acquired critical mineral deposits within The US and have designed their own processes for how to access these critical minerals and how to manufacture them back into battery grade products. So these two lines of business were both closing the loop and filling that loop the first time with domestic low cost, low impact critical minerals. When we look at operations from our past quarter, we have been operating our first battery recycling facility near Reno, Nevada. And while operating this quarter, we did have record breaking revenue. So we were able to generate about $7,800,000 a 64% increase from our previous quarter. And this was achieved largely through increased capacity factor at our first facility as we've continued to ramp operations and scale production.

3:05 While our revenue grew substantially, our cost of goods sold to operate this facility grew at much lower rate. So only about 11% increase in cost of goods sold compared to our previous quarter. And when removing non cash expenses such as depreciation and stock based compensation, this drops down to about $5,800,000 of actual cash costs. This allows us to have a positive gross margin, the first positive gross margin that this company has had. And this is an achievement that many startups never get to. So we are very excited and proud at ABTC that we have achieved these positive gross margin operations at our first battery recycling facility and encourages us as we move forward with future facilities.

3:52 Again, we're not including cash expenses. This adjusted gross margin grows to $2,000,000 for the quarter. We've also maintained a healthy cash balance about $38,500,000 as of the end of the quarter. And also we as a company still have no debt whatsoever. So leaves us with a very strong balance sheet as we move forward, continuing to scale our first facility and also moving forward with the construction of additional facilities. In addition to our three month performance, if we step back and look at our fiscal year to date, so nine months into this year, we've generated about $13,500,000 in revenue so far this fiscal year. And again, our cost of goods sold is about $17,900,000 And when looking specifically at our cash cost of goods sold, 14,000,000.

4:47 So as we look at the nine months of operations to date, again, we are getting very close to adjusted gross margin positive operations. So we have three more months in our fiscal year and we are looking forward to continue to ramp our facility and to show even stronger performance as we wrap up our fiscal year in a few months.

5:10 Within the battery recycling business itself, the growth in revenue and operations really was about increase in our operational effectiveness as we continue to scale these operations. We work very closely not just with automotive companies to recycle electric vehicle batteries, but also with large grid operators. And a significant portion of our feed over the past few months has come from these large energy storage systems that are largely used to support data centers and artificial intelligence development. While our revenue grew again by about 64%, we've only grew the cash cost of operations by about 11% as we continue to implement our cost down optimizations to really be able to provide a much healthier gross margin in this past quarter.

5:59 We continue to work with many government agencies and handle both universal waste and circular classified material, which does end up being a significant portion of our feed as we work with all different types of battery materials throughout the country. Because of the operational effectiveness of this first facility and as we continue to increase the capacity factor, we are moving forward with the construction of a second critical mineral recycling facility. And over the past few months, the team has spent significant time meeting with economic development agencies, with politicians at the state level. And we're excited to shortly announce the details of our next recycling facility to be located in the Southeast US. And we continue to work with a lot of our partners as well. A lot of the decision of where we actually specifically put the second facility is in consultation with our partners throughout the supply chain so that we continue to enhance operations as we scale the second facility.

7:01 On our primary lithium business, we are continuing to develop our Tonibah Flats lithium project, which is one of the largest identified lithium deposits in The U. S. We published our pre feasibility study last fall and are now moving forward with our definitive feasibility study. We're excited to have been chosen by the National Energy Dominance Council and the FAST forty one Permit Council as a covered project. So essentially we've been selected for streamlined federal permitting as we move this critical mineral lithium project forward. This deposit is located entirely on land managed by the Bureau of Land Management within the Department of Interior. So working closely with the federal government and having these fast track streamlined operations has been extremely meaningful over the past year.

7:53 Last fall, we announced that we did complete all of our environmental studies that were submitted to the VLM and have been reviewed by the VLM itself. This is something we started back in the fall of twenty twenty two. So almost four years of efforts were culminated by completing each of those baseline studies and environmental analysis. The DFS is really the final phase of the engineering and financial analysis that we need to communicate to our offtake partners, to our investors and to all stakeholders. So again, as we complete our PFS last fall, we are working towards the completion of this definitive feasibility study. And some of the stats from the PFS are on the right, which really show how we plan to scale and operate this 30,000 ton per year facility and the financial attractiveness of moving this project forward.

8:51 For the three months ending in March, our financials presented here against that same quarter a year ago. So again, substantial growth and revenue from this quarter, about $7,800,000 worth. With our cash balance, we also are generating income from interest on that cash balance itself. And while the revenue grew dramatically, we see only moderate increases in the cost of goods sold as we scale these operations. We continue to work with several agencies within the U. S. Government who are funding specific parts of both our development and construction of projects. And as we look at how we use cash over this quarter, we had a significant drop in cash really needed for operating activities compared to a year ago.

9:37 And within this quarter, we didn't raise any funds through issuances through our at the market instruments or from exercising of any outstanding warrants or options. And we ended the quarter with about $38,500,000 in cash. When we look over the nine month period for fiscal year to date, again, a very large increase in revenue and only a moderate increase in cost of goods sold as we continue to grow the product we make much more quickly than our operating expenses themselves. Continue to work with the federal government over the past nine months. And again, we will look at how cash has been used. So an increase in cash used to purchase property and capital equipment.

10:23 And even with a much higher throughput than our recycling facility, we actually reduced operating costs from a cash basis in the past nine months versus the nine months of last fiscal year. Last fall, we did raise substantial funds and again ended this quarter with about $30,500,000 in cash. Separate from our financials at ABTC, we do think it's important that really all employees have company shares as part of their compensation agreements. This is throughout the entire structure of the company itself. When these shares are awarded, they're generally issued over many years and spread out over time. And many of them are conditional as well. Meaning they're only awarded a certain individual or a company milestones are achieved.

11:11 When we work preparing our financial statements, a decision is made about whether a future milestone is likely to be achieved or not. And even before any shares are issued, then this starts appearing as an operating expense on our financial statements. So a lot of these expenses can be inconsistent as they show in some quarters, really as it becomes more likely that a milestone is achieved. But the chart there really shows that over the past few years, really the amount of shares actually issued to employees is relatively consistent. So just over a million shares per quarter. And again, this goes all the way throughout the chain of the company. We do think it's important that all employees really do have ownership.

11:56 It does align incentives and it does allow us to grow together with the employees and the company itself.

12:06 So that's the walkthrough of our financials from our fiscal Q3 for the fiscal twenty twenty six year. And again, thank everyone for joining this call and we hope you're as excited about our path forward as we are.