Amprius Technologies, Inc. (NYSE:AMPX) Q3 2024 Results Conference Call November 7, 2024 5:00 PM ET

Company Participants

Kang Sun - Chief Executive Officer
Sandra Wallach - Chief Financial Officer

Conference Call Participants

Colin Rusch - Oppenheimer
Mark Shooter - William Blair
Alfred Moore - ROTH
Jeff Grampp - Alliance Global
Ed Jackson - Northland Securities

Operator

Good afternoon. Welcome to the Amprius Technologies Third Quarter 2024 Earnings Conference Call. Joining us for today's presentation are the company's CEO, Dr. Kang Sun; and CFO, Sandra Wallach. [Operator Instructions]

Please note that this presentation contains forward-looking statements, including, but not limited to, statements regarding future product commercialization, new customer adoption and new applications and the timing and ability of Amprius to expand its manufacturing capacity, build its large-scale manufacturing facility, scale its business and achieve a sustainable cost structure.

These statements involve known and unknown risks, uncertainties and other important factors that may cause Amprius' results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. For a more complete discussion of these risks and uncertainties, please refer to Amprius' filings with the Securities and Exchange Commission.

Finally, I'd like to remind everyone that this conference call is being webcasted. A recording will be made available for replay on the company's Investor Relations website at ir.amprius.com. In addition to the webcast, the company has posted a shareholder letter that accompanies these results, which can also be found on the Investor Relations website.

I will now turn the call over to Amprius Technologies CEO, Dr. Kang Sun, for his comments. Sir, please proceed.

Kang Sun

Welcome, everyone, and thank you for joining us this afternoon. On today's call, I will give you an overview of our third quarter accomplishments, while also highlighting some of the upcoming milestones we are looking forward to achieving in the near future. After that, our CFO, Sandra Wallach, will discuss our financial results for the period. Then I will share some closing remarks before opening the call for questions.

Before I give a recap of the quarter, I would like to briefly introduce Amprius to those who may be new to our company. Amprius is a pioneer and a leader in the silicon anode battery space. At Amprius, we develop, manufacture and market high-energy density and high-power density silicon anode batteries, with applications across all segments of electrical mobility, including the aviation and the EV industries. Today, Amprius commands performance leadership with its combination of battery energy density, power density, charging time, operating temperature range and safety.

Across our battery portfolio, we offer unmatched performance among the commercially available batteries. Amprius has been delivering commercial batteries to the market, with up to 450 Wh/kg and 1,150 Wh/L; 10C power capability; the extremely fast charge rate of 0% to 80% rate of charge in approximately 6 minutes; the ability to operate in a wide temperature range of -30 degrees Celsius up to 55 degrees Celsius; and the safety design features that enable us to pass the United States military's benchmark nail penetration test. Each of these performance parameters is critically important to reward the electrical mobility applications. Not only do our battery enable certain aircraft and vehicles to maximize the performance, but they enable our customers to achieve their economic targets as well.

In addition to what is commercially available today, we have also achieved a third-party validation of our latest 500 Wh/kg, 1,300 Wh/L battery platform. This battery will be ready for shipment by the end of this year. It is our belief that there are no other commercial batteries on the market that can perform at this level today. Amprius is the silicon anode battery technology pioneer with over a decade of development experience and the long track record of commercial shipments and customer achievements. While Amprius' high-energy and high-power batteries are for all electrical mobility applications, the company is presently serving 2 large and high-growth segments: aviation and light electric vehicles. Both benefits from Amprius battery performance and present Amprius with enormous business opportunities.

Our aviation customers include manufacturing OEMs in high-altitude pseudo satellites, eVTOLs, electric aircraft and various drones from commercial to industrial to military. Fortune Business Insights projects that the global drone market will surge from the $18 billion in 2023 to $213 billion by 2032. So we believe we are just at the beginning of a significant expansion of one of our addressable markets.

Aerospace Testing International forecasts the electric aircraft and the eVTOL battery market could be $50 billion by 2030. The light electric vehicle market is quite impressive as well. Providence Research Report estimates the market will have a compound annual growth rate of 9.74% from 2023 to reach $206 billion by 2032. If there is one constraint in all of this, it's the critical role of the battery innovation. At Amprius, we offer solutions to this constraint and our third quarter results reflect our traction in both the aviation and the light electric vehicle industries as customers see the value of our technology.

In the third quarter, we more than doubled revenue from the second quarter and engaged with 53 new customers. We have expanded our market participation in the light electric vehicle segment, signed $20 million of customer contracts and the 2 LOIs with Fortune 500 industrial leaders, delivered high energy density 360 Wh/kg EV battery cells to industrial consortium, USABC, and developed gigawatt-hour scale contract manufacturing capacities. All these accomplishments and the progress position Amprius for accelerating the growth in coming quarters and years.

The introduction of Amprius cycle battery in January has given us a large advantage in battery space by expanding our offerings. Amprius offers a very versatile platform that enables the designs of the best-performing silicon anode batteries for a variety of customer applications. Today, we offer customers 14 different SKUs that are available in a variety of battery formats and the form factors. These cells, which ranges from 350 Wh/kg to 450 Wh/kg, ensure that we are covering a significant portion of our customers' commercial applications. Amprius batteries are recognized as the best-in-class for energy, power, cycle life, charging time, temperature performance and the safety for electric mobility. Our technology leadership and the battery performance are validated by increase in customer purchasing volume.

Now I would like to briefly provide an update on our partnership with the United States Advanced Battery Consortium, or USABC, since it is a remarkable technical breakthrough in an important market segment for Amprius. After being awarded a $3 million cost of sharing contract from the USABC in collaboration with the United States Department of Energy approximately 1.5 years ago, this quarter, we successfully delivered the EV cells to them.

USABC selected Amprius to address some of the most challenging issues experienced by EV users, such as range and the need for faster charging time. Amprius not only addressed this issue, but surpassed many of the initial goals set by USABC. Amprius EV cell achieved 360 Wh/kg energy density, 1,200 Wh/kg power density, a charge to 90% of their rated energy in 15 minutes and expect cycle life of 1,000.

We believe our continued success pave the way for future engagements with electrical vehicle manufacturers. Amprius batteries have become a great attraction in the electric mobility market. In many cases, Amprius batteries are the only noncommercial available battery that meet certain of our customers' requirements in technical performance and application economics.

In Q3, we shipped to 94 customers, of these 53 were new customers covering several parts of the electric mobility sector. Our year-to-date customer count now stands at over 175. Many of these customers are also longtime partners with repeat volume purchase orders, including AALTO/Airbus, AeroVironment, Teledyne FLIR, Kraus Hamdani and the BAE Systems. The combination of new customers and volume shipments to returning customers allowed us to generate $7.9 million in revenue for the third quarter. Our performance in third quarter represents more than double the amount of the revenue we generated just last quarter, almost triple what we generated in Q3 last year, and compares to the $9.1 million we generated in all of 2023.

The primary driver behind our growth this quarter has been our SiCore product. Since its launch in January, we have expanded our contract manufacturing capabilities, enabling us quickly to scale production and deliver large volume shipments where we have a strong demand. The 3 customer engagements we announced in Q3 are the results of the SiCore platform introduction and the contracted manufacturing strategy. The high performance of our battery and immediate availability of manufacturing capacities enable us to quickly move customers through the commercial validation process, secure volume purchase commitments and deliver large quantities of cells to customers.

Looking at some of these new agreements in more detail. In September, we announced that we received 2 contracts totaling over $20 million to supply 40 Ah high-performance cells for light electric vehicle applications, which we are already shipping. For context, our 40 Ah high-performance cycle battery are produced at a contract manufacturing facility as soon as the battery and the production lines are qualified by the customer, enabling us to rapidly scale and meet the customer demand. We expect to recognize this revenue by mid-2025.

In the last few months, we have also signed 2 separate agreements with Fortune 500 leaders. While we are in the early stage of this project, both engagements have the potential to greatly expand and become high volume orders from Tier 1 customers, where we now have the capacity to meet the demand. First of this contract is a nonbinding letter of intent with a Fortune Global 500 technology OEM to develop a high-energy SiCore cylindrical cell for the light electrical vehicle market. This LOI is expected to translate into a commercial supply agreement that will cover the next 5 years and could provide Amprius with battery production order exceeding 2 gigawatt hours over the proposed contract duration. We will begin shipping the first group of SiCore cylindrical cells designed for this application later this year.

The second Fortune 500 agreement is a development contract for small format, custom, high-energy SiMaxx pouch cell. Amprius' high-energy battery provided a critical solution to the customer's application. The project is expected to reduce the battery width and the size by approximately 50% compared to their current battery without compromising performance. Just a smaller and lighter battery enables better product design, enhances the overall customer experience and offers a significant competitive advantage in the market. The application is projected to require over one million cells per year if the project objectives are met. On that note, in order to support the current as well as the future customer commitments, we took additional steps forward this quarter to increase our manufacturing capabilities.

In June, we announced the initial rollout of our contract manufacturing strategy that secured over 500 megawatt hour of additional capacity to several partners. To further diversify and expand our manufacturing capacities, we recently launched 2 lines designed for the requirements of Amprius batteries with one of our existing partners. These production lines will be supporting the $20 million light electrical vehicle battery orders that I just mentioned. They are already operational and shipping cells. Beyond creating additional capacity, having lines engineered specifically for our products enable us to provide a more stringent designs for our cell chemistry, which is a key consideration for many of our highly technical customer applications.

Just as of today, we now have access to up to 800 megawatt hour of pouch cell and over one gigawatt hour of cylindrical cell production annually. As for our manufacturing facility, we are planning in Brighton, Colorado, we have now completed production line specifications and selection, finished construction design drawings and specifications for the facility. We remain on track from the regulatory standpoint, having recently submitted our site plan and advanced all other regulatory plans and applications for the facility.

Since we have a gigawatt hour scale contract manufacturing capacity available today, we may not need the Colorado production capacity to support the market demand for some time. We also continue to making progress ramping up our facility in Fremont, California. We remain on pace to scale our Fremont production rates entering 2025 with up to 2 megawatt hour scale. Looking ahead, we are increasingly optimistic about the road ahead of us as well as our ability to meet the challenges. With technical leadership, great battery performance, a growing book of customers, and the capacity to now support large volume treatments. We believe that we are set up for sustainable growth for the foreseeable future. We are working hard to execute our goals, and we expect to carry our momentum through the end of the 2024 and into 2025.

With that, I will now turn the call over to our CFO, Sandra Wallach, to review our financial results for the quarter. Thank you.

Sandra Wallach

Thank you, Kang. I would now like to spend a few minutes covering some key financial updates. As a reminder, our detailed financials can be found in our shareholder letter.

We finished the third quarter with $7.9 million in total revenue. As we have previously discussed, our total revenue is a combination of our main revenue streams: product revenue and development services and grant revenue. This quarter, $6.1 million came from our product revenue, representing a $2.7 million or 81% increase sequentially and a $3.9 million or 176% increase year-over-year.

Our development services and grant revenue totaled $1.8 million this quarter, which went from none in Q2 and up $1.2 million year-over-year. As we've discussed in the past, development services and grant revenue is nonrecurring in nature, leading to greater fluctuations depending on the comparison period. The combined increases in revenue this quarter were driven by the addition of new customers and grant programs. As Kang mentioned, we shipped to 94 customers in the third quarter. Of these customers, only 4 accounted for greater than 10% of revenue, an increase from 3% in the second quarter and consistent with the 4 customers counted in the third quarter of last year. Going forward, we will continue adding to our customer mix to diversify our revenue streams and provide more reliable product output as we get to a position of scale.

Moving to our profitability metrics. Gross margin was negative 65% for the quarter compared to negative 195% in Q2 of 2024. And negative 152% in the prior year period. As a reminder, we see significant gross margin variation as our product and services revenue mix fluctuates. Gross margin this quarter was also impacted by design preconstruction costs related to the Colorado facility, which will not recur. Longer term, we're confident that our GAAP gross margin will begin to normalize as we approach our capacity expansion goals.

Now on to our operating expense management. Our operating expenses for the third quarter were $6.2 million, a decrease of $0.2 million or 4% compared with Q2 2024 and an increase of $1.3 million or 26% from the prior year period. The sequential decrease was driven by lower share-based compensation and outside services. The year-over-year increase is primarily attributable to increased investment in sales, allocation of R&D from COGS as development services agreements run off and largely flat G&A. Our GAAP net loss for the third quarter was $10.9 million or a net loss of $0.10 per share, with 110.4 million weighted average number of shares outstanding. In Q2 2024, net loss was negative $0.13 per share with 97 million weighted average number of shares outstanding. Q3 2023, net loss was a negative $0.10 per share with 86.4 million weighted average number of shares outstanding.

As of September 30, 2024, there were 92 full-time employees, up from 88% at the end of the second quarter, with those employees primarily based in our Fremont, California location. Our share-based compensation for the third quarter was $1.7 million compared to $1.9 million in Q2 and $1.1 million in the prior year period. The sequential decline was due to changes to the Board of Directors. As of September 30, 2024, we had 111.3 million shares outstanding, which was up 3.4 million from the prior quarter. That increase includes 3.1 million shares issued as part of the warrant exchange that reduced the total number of outstanding private warrants from 15.9 million to 0.3 million.

Now turning to the balance sheet. We exited the third quarter with $35 million in net cash and no debt. Key drivers for the $11.4 million of cash we used in the quarter were $9.5 million used in operating cash flow. We continue to remain lean with a $2.5 million to $3 million run rate per month, excluding transaction-related costs. Note that our Q3 '24 operating cash included $2.4 million of nonrecurring expenses used for the design of the Colorado facility. These expenses are projected to tail off with the completion of the construction drawings, which are substantially complete: $1.3 million used to continue the build-out of our expanded 2-megawatt production line in Fremont; and $0.5 million related to the payment of stock issuance costs associated with the warrant repricing offer. Considering our business achievements and ongoing projects, we believe we are efficiently using capital to drive Amprius forward.

Before I turn the call back over to Kang, I would like to take a moment to discuss our CapEx outlook for the remainder of the year. We expect to spend another $1 million on supporting equipment to complete the 2-megawatt line in Fremont in addition to our normal operating capital requirements. Now that the designs are effectively complete for Colorado, we will continue to monitor the larger industry dynamics driving our ability to proceed further. Timing and availability of funding, along with the monitoring of the overall sector for changes in demand, supply, battery cost structure, government incentives, trade tariffs and other considerations will influence our decision on next steps and timing.

One last housekeeping item I'd like to discuss is a change to our cap table after the end of the quarter. On October 23, we announced that Amprius Inc., our former controlling shareholder, had voluntarily liquidated and dissolved. As a result, the shares at Amprius Inc. held were distributed pro rata per a dissolution plan approved by their Board of Directors.

This distribution removes a controlling shareholder consideration and dispenses the shares more broadly into the hands of the original investors in Amprius, Inc. Amprius, Inc. also contributed to us 5.5 million common shares of Amprius Technologies and will reimburse related expenses in exchange for our assumption of the outstanding stock options of Amprius, Inc., an aggregate of 7 million options with a weighted average exercise price of $2.10 per share.

There was no operating impact to Amprius Technologies as a result of this distribution or option assumption, and we extinguished the contributed shares. The option assumption was approved by a committee of the Amprius Technologies Board of Directors comprised of solely independent and disinterested directors.

That concludes my financial discussion, and I will now pass the call back to Kang.

Kang Sun

Thanks, Sandra. As we look ahead, our strategy at Amprius remains unchanged. Our top priority are innovating next-generation batteries, growing our customer base and scaling our manufacturing capability. Today, Amprius has the best performing battery for the electric mobility market, strong revenue growth the impressive cost pipeline and a gigawatt hour scale manufacturing capacity available to us.

Our technical leadership and unmatched battery performance in the industry has been validated by industrial leaders and repeat customer orders. Our contract manufacturing strategy has also shown great results. We are already able to support our customers with over 10 million pouch battery cells and 125 million cylindrical sales annually. We also recently celebrated the launch of dedicated Amprius lines at one of our manufacturing partners with the capacity for 800 megawatt hour of pouch cells. At the same time, we are exploring additional manufacturing partners in Asia and Europe, expanding our Fremont production capacity for SiMaxx battery production, and have finalized our design for the factory in Colorado.

We believe that the opportunity in front of Amprius is tremendous. Our teams are more confident than ever in delivering what we have planned and promised. We look forward to closing out the year strong and heading to 2025 with the increasing momentum. Over the last few months, we will also be attending several industrial and financial conferences, and we hope to see you there. Thank you for your continued support of Amprius Technologies. We look forward to continuing to deliver on what we have planned and promised in the upcoming quarters.

With that, I will turn back to the operator for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Colin Rusch from Oppenheimer.

Colin Rusch

And I appreciate all the detail on the contract manufacturing capacity that you have. Would love to dig into the customer list a little bit more. Can you talk about how many customers are in late-stage negotiations that have the potential to be 10 megawatt hours or more, and how should we think about the cadence of incremental customer announcements like the one you just mentioned?

Kang Sun

Yes. Colin, for the customer have a significant volume. We already concluded 2 customer with a combined revenue $20 million, we have delivered that within the year. Actually, we expect next May, we can recognize the revenue. And in addition to that, we have a conversation with another 3 customers. Those are high-volume potential customers.

Colin Rusch

Great. That's super helpful. And then just given the change in strategy away towards a CapEx-light model, can you talk a little bit about the path to operational cash flow breakeven? It seems like you guys -- given the differentiated product and the capacity availability potentially have a pretty straight line towards reaching that operational breakeven.

Sandra Wallach

Absolutely. So as we've mentioned before, the product that we sell under the trademark of SiCore is profitable day one without having to put any of our investor money to work in the capital and infrastructure. We have still limitations in how much of the SiMaxx we can deliver, given the up to 2 megawatts that we're cleaning in Fremont. We expect the near-term revenue growth to all come from SiCore. So that gives us a clearer view now that Kang has removed the capacity constraint to really grow into that operational profitability profile as we move forward.

Colin Rusch

And then just from an organizational capacity perspective on the OpEx side, can you talk a little bit about what investments you need to make to really support a drive towards breakeven revenue levels?

Sandra Wallach

So this last quarter, we made an investment of 2 additional salespeople. That's really been our big focus, along with business development and adding some key R&D resources into the Fremont team so we can drive the cycles of learning faster. So that's really where we're looking at 92 employees we're talking about a handful of really critical hires that we're focused on right now.

Operator

And we'll take our next question from Jed Dorsheimer from William Blair.

Mark Shooter

You have Mark Shooter on for Jed. Just to put a finer point on Colin's question, are you saying that you'll be recognizing all of the $20 million by May or that you'll start to recognize some revenue by May?

Kang Sun

Mark, at this time, our plan is to recognize the revenue by May.

Mark Shooter

Okay. So by May of next year, you'll have $20 million in revenue from those...

Kang Sun

Yes, the $20 million is from these customers. We already started shipping the product this quarter.

Mark Shooter

Got it. And to dive into that a bit more with the customer strategy, congrats on 175 customers, that is quite a lot. I'm wondering if your strategy is to continue to service many customers with more smaller volumes and bespoke cell designs maybe to capture higher margin. Or are you looking to secure more chunkier large customers with higher volume? How are you thinking about that?

Kang Sun

Yes. We like to focus on large customers with substantial volume. So that way it's easier for us in not just product development, also the manufacturing and service. So those are our half of the funnel. We have the 175 of them. But eventually, we hope, there are sizable large volume customers who will place an order.

Mark Shooter

Okay. And lastly, I mean at a steady state, say, in a couple of years out when the facilities are ramped and you have large orders, do you have a gross margin target in mind considering the cost for the toller?

Sandra Wallach

We haven't given any guidance about our target model. But again, because the majority of the volume will be coming from SiCore, which is made on traditional graphite manufacturing lines, we've seen the reason why we can't get to parity with graphite.

Operator

And we'll take our next question from Chip Moore from ROTH.

Alfred Moore

Congrats on all of the progress this quarter. I wanted to follow up on the $20 million contracts that it sounds like you're going to recognize by the middle of next year. Is there potential for those to grow? Or should we think about a new set of purchase orders? Or what's the opportunity with those customers?

Kang Sun

Chip, at this time, the orders they placed will satisfy their needs until middle of last year. That's why -- by middle of next year. Those batteries will be made and sold, the revenue will be recognized. But those are very important customers. They are the leaders in this particular segment. So we anticipate that they will grow. They will have additional order coming sometime next year because this only satisfies half of the year of their demand. So we are working with those customers very closely. First task is to get those product made and have revenue recognized by May.

Alfred Moore

Understood. That's helpful, Kang. And maybe for my follow-up, on the LOI in the electric vehicle space, large potential, right, 2 gigawatt hours. I think you talked about a potential supply agreement over 5 years. What are the milestones to reach that in terms of samples and evaluation? I imagine that takes some time, but how should we think about that?

Kang Sun

Yes. I think the key -- this is breakthrough technology. This requires a substantial change of the cell chemistry and the cell design. Now we have done most of those. This is not from scratch, okay? Amprius already has the foundation for both. So we need to perfect the cell design. We are planning to give them the first batch of the sample. Whatever they ask for, there is no one in the industry has made it, also no one in the industry, so they believe this can be done, okay? But Amprius is already demonstrating that.

So they were planning to come to factory, to check the factory out December 5, okay, because I will not be available. So it delayed the factory inspection probably toward the next year. We convinced them they should test the sample first before they come to the factory. So this is very reputable customer. It's an industrial leader, definitely, is the industry leader. It's number -- it's not #1 and #2 with a particular market segment. So we are very proud of having this opportunity to serve there.

Operator

We'll take our next question from Jeff Grampp from Alliance Global.

Jeffrey Grampp

I had a question on customer account metrics you guys provided. I think this was a new record, both for new customers as well as total, which I guess also kind of means it looks like existing customer count was also at a record. So I'm curious to drive into the main drivers of that. In particular, wondering, is this SiCore expansion and the capacity that you guys have secured, would you say that's the main catalyst to the increased receptivity, if you will, from customers that they feel more conviction in your ability to deliver in volume? Or what other factors might you see at play to drive this acceleration?

Kang Sun

Jeff, the first driver is our battery performance. There's no doubt about it. Okay. They couldn't get a battery with the same performance anywhere in the industry today. I think that's the key driver. That's the key attraction for us in the marketplace. So before, we have capacity limitation. So our qualification process has been long and lengthy for some customers. We had to give up because we don't have enough capacity to serve them.

So the SiCore introduction plus our contract manufacturing strategy works very well for us. And not only we have sufficient capacity to serve the customer, also customers are quite familiar with our manufacturing process and when we have a customer, November 18, we have another large customer coming to China to look at our factory, that's where I will make a trip to Asia next week. So the driver is technology leadership and available manufacturing capacity also manufacturing capability. Capacity and capability are 2 different things. Capacity means our manufacturing lines can deliver quality can deliver the format and the form factor you want, also can deliver on time.

Jeffrey Grampp

Great. That's really helpful details. For my follow-up, I was curious the -- that $20 million-plus level order that you guys had a couple of months ago now. Given that, that was for SiCore, it really hasn't even been in the market, I think, for a full year yet. It would seem to suggest, I guess, a pretty quick qualifying period for the customer. I'm curious if in your sense, that's unique for that particular need or how you're generally seeing customer qualification timelines changing, if at all, with SiCore and with some of your recent proof points, if you will, and derisking this for customers?

Kang Sun

Yes. We accumulate precision the data point for customers to review. Now this is Amprius battery. We have a long history. We have a lot of data available for various batteries for customers to take a look. So what dragged the qualification, most times are not our battery, okay, or will be the certification process. Now for -- depending on the application, this particular application, the certification process is much simpler than other applications.

For example, eVTOL battery qualification is much longer than the drones. The drone is much longer than light electrical vehicles. So it depends on the application, the qualification cycle could be quite short. The customer can fairly quickly to qualify our battery. In this case, the $20 million contract, we present our database. Customer did a very quick test to validate our data. At the same time, their qualification process is much shorter than other qualification processes.

Operator

[Operator Instructions] And we'll take our next question from Ed Jackson from Northland Securities.

Edward Jackson

I've got a couple of questions that are still left on my list. One is with regards to the spending on the Colorado facility and its impact on your third quarter gross margin. You said, if I listened to the call correctly that it was $2.4 million. First of all, I want to verify that's what you said. And then secondly, can I assume from your commentary that the spend for kind of the leg work for that facility is kind of ramped down and now we could expect it to essentially be nonexistent with the fourth quarter and going forward? That's my first question.

Sandra Wallach

Yes, Ted. So the $2.4 million was based on cash flow for operating cash, that's what we spent in the third quarter. There's always a difference between the P&L and cash. But the $2.4 million is related to the P&L -- I'm sorry, to cash. And yes, we substantially completed all of the design and construction specifications in October. So we're expecting that to ramp down and drop to a very low rate until we're ready to spin back up and get started.

Edward Jackson

So what was the nut that was in your COGS for Colorado that was in the third quarter, just kind of an apples-to-apples comparison when I think about your fourth quarter since that won't be in there anymore.

Sandra Wallach

It was a little bit higher than the cash basis. So it was closer to $2.9 million.

Edward Jackson

Okay. So then just to make sure I understand right. So all else being equal, if we had the exact same shipment levels in the fourth quarter that you had in the third quarter that we would see your margin improved by just under $3 million simply because of that?

Sandra Wallach

Yes. Again, our margin fluctuates based on the mix of...

Edward Jackson

Yes. That's why I -- my next thing is just a bit of clarification. And when you talked about the Fremont facility and having to put another $1 million in it in the fourth quarter. Is that on top of -- is that additional CapEx? Are you saying that your fourth quarter CapEx will basically be about $3 million -- I mean $1 million, excuse me.

Sandra Wallach

So it's $1 million to finish off the build-out for the balance of the up to 2-megawatt capacity. Every factory I've ever been with has some normal run rate of CapEx for replacement and upgrade. So it will -- but it's not a material number.

Edward Jackson

Okay. I mean, that's helpful. And then when you -- and I'm sneaking this in, but it's still on the Fremont and then I'll get out of the line and come back in. But if I -- when I listen to the commentary in red, you're expecting to exit 2024 with 2 megawatts of capacity available at Fremont that, that will be -- that's -- you're there, is that correct?

Sandra Wallach

So we believe that we will be entering 2025 with the up to 2 megawatts of capacity. So 2 megawatts is the nameplate and we've been ramping through that. But we've always said that we'll be up to 2 megawatts.

Operator

And at this time, this concludes our question-and-answer session. If you have any additional questions, you may contact Amprius' Investor Relations team at ir@amprius.com.

I'd now like to turn the call back over to Dr. Sun for his closing remarks.

Kang Sun

Thanks again, everyone, for joining us today. As a reminder, you can find out more about our company, receive additional updates and learn about the upcoming events and presentations from the Investor Relations section of our website. We hope to see you at one of our upcoming events, and we'll continue to update you on the exciting progress we are making in transforming the electrical mobility market. Finally, I'd like to thank our employees, partners and the shareholders for their continued support. Operator?

Operator

Thank you for joining us today for Amprius Technologies Third Quarter 2024 Earnings Conference Call. You may now disconnect, and have a great day.