Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  
TRANSCRIPT SPONSOR

Lithium Technology Corporation (OTCPK:LTHU)

Wall Street Analyst Forum

May 24, 2007 9:10 am ET

Executives

Klaus Brandt - EVP and Managing Director

Amir Elbaz - CFO

Presentation

Moderator

Good morning, ladies and gentlemen. Welcome to Wall Street Analyst Forum 18th Annual Conference. My name is Amy and I'll be your room hostess for today's industry program. Before I introduce our first company of the morning, I'd like to just welcome those investors attending via the webcast. The webcast is live and retrievable following today's meeting.

Now at this time, I'd like to introduce Lithium Technology Corporation. They are global provider of large format rechargeable power solutions for diverse applications and offers largest lithium-ion cells with the highest power of any standard commercial lithium-ion cell produced in the Western Hemisphere.

Here today, on behalf of Lithium Technology is Dr. Klaus Brandt, Executive Vice President and Managing Director and Mr. Amir Elbaz, Chief Financial Officer. Welcome.

TRANSCRIPT SPONSOR

The Wall Street Analyst Forum, a leading conference host for public corporations to address analysts/portfolio managers and professional investors, sponsors four annual conferences in NYC for large, mid and small-cap companies. Seeking Alpha readers may attend Wall Street Analyst Forum conferences free of charge if you pre-register. See the full conference schedule and attendance information.

Read all Wall Street Analyst Forum conference presentation transcripts here.

To learn more about sponsoring investor conference presentation transcripts see here.

Klaus Brandt

Thank you for the introduction and good morning ladies and gentlemen. I would first like to take you through Lithium Technology's company overview as well as a presentation of Lithium Technology Corporation's technology. The Lithium Technology has two operations. One of those operations is in Plymouth Meeting, which is just outside of Philadelphia. Plymouth Meeting is a corporate headquarters of Lithium Technology Corporation. There we take care of U.S. sales as well as of U.S. government, military, and development contracts. We have part of our R&D operations there as well as the assembly of batteries based on cells, those are the individual electrochemical units, which are produced in our European operations.

The European operation is GAIA, GmbH in Nordhausen, Germany. It's a wholly owned subsidiary of LTC. There we produce those cells which are the building blocks for batteries, which are assembled in U.S. and also in Germany and we take care of European sales and battery design and assembly for European customers.

This is an overview of the operations both in Germany and in the U.S. Starting with German operations. We are just short of 60 employees in Germany. The facilities in Nordhausen are about 120,000 square feet of production space and in Plymouth Meeting we have about 13,000 square feet of production space.

The pictures you actually see on this slide are from the cell production in Nordhausen. The products in both facilities are custom engineered batteries and as I mentioned before in both facilities we handle development contracts of batteries for our customers.

The product themselves are cylindrical or flat lithium-ion cells of large format, that means of capacities from about 7.5 amps per hour to about 500 amps per hour.

I would like to give you now an overview of what LTC technology itself is. LTC’s technology is based on Lithium Ion Battery technology. Lithium-ion batteries are best known to consumers, as those batteries that power laptops as well as cell phones.

The advantage of lithium-ion over conventional battery technologies like lead acids and nickel-metal hydride are in the energy content of lithium-ion batteries.

If you compare the energy content per weight with lead acid and nickel-metal hydride, you have about a three-fold advantage over lead acids and about 1.5 fold advantage over nickel-metal hydride.

Per volume, the advantage of lithium-ion is about two times lead acids, and it's about 30% more than nickel-metal hydride. This means in applications that, with a same weight of battery, a lithium-ion battery could power a laptop three times as long as lead acids. Or if you talk about large applications like electric vehicles, this would be three times the range for the same weight of battery.

It's also very important to evaluate battery systems as the power per weight or volume. Power means the rate or the speed at which you can access the energy that is stored in the battery system.

To take the example again of an electric vehicle power means the acceleration for something you get or the top speed you get.

The lithium-ion excels as compared to lead acids by a very large factor per weight somewhere between 5 and 15 times, by volume 3 to 10 times. Even compared to nickel metal-hydride which today is a system that is actually used in hybrid electric vehicles like the Prius, it still has a significant advantage.

One other important consideration comparing battery systems is the capability to charge, meaning replenish the used energy into batteries as quickly as possible. Both lead acids and nickel metal-hydride has a disadvantage compared to lithium-ion.

To give you an example, we have some lithium-ion battery systems that can be charged in something like five minutes.

Another issue with large batteries is the amount of heat it generates; any energy storage or conversion device like a battery is not a 100% efficient, we are always going to use it to generate heat.

Heat generation lithium-ion compared to the conventional battery systems is very long. That has significant advantages. If you build a big battery it means your issues of cooling are much smaller than obviously the conventional systems.

Also important for many applications is over what temperature range can you operate the battery. Again lithium-ion has a significant advantage over the conventional battery systems. What also sets lithium-ion apart is its high voltage per cell.

To explain it better, every device has a requirement for an operating voltage and each cell, electrochemical cell has a voltage which is given by its chemistry. So, if you want to operate, for example, an electric vehicle that has a 200 volts operating voltage. With lead acid you would need 100 lead acid cells. You have to connect electrically in series to achieve the 200 volts. With nickel-metal hydride, you need about 180. With lithium-ion, you need less than 60. So, that reduces the complexity of the battery and in the end also will reduce the cost.

Now, what are LTC's unique technology propositions? LTC has developed a unique cell design that allows the cell to have a very low internal resistance. Internal resistance is important condition for being able to discharge the batteries at very high power, and also as I mentioned before, it is a condition for having low heat generation.

LTC also has a proprietary manufacturing process that is unique rather than using what is called a solvent coating process to make electrolysis using extrusion. Extrusion uses a lot less of organic solvents in the process and is therefore environmentally friendly.

LTC has large number of patents that protect its unique technology, 33 are issued and more than 33 are still pending.

What are our present products? Our product portfolio has cylindrical cells, meaning cells that have a cylindrical shape, as you can see in the front part of picture, that go from 7.5 amps per hour all the way to 500 amps per hour. To give you sort of a scale for this, if your cell phone battery has about 1 amps per hour of capacity, the cells in your laptop battery about 2 amps per hour to 3 amps per hour.

In size the 500 amp hour battery is about the size of a waste paper basket. So, we are talking in scale. We are talking sizes that are more than a 100 fold the size of lithium-ion batteries that are in commercial applications like laptops.

We have two basic types of product which are tailored to different applications. We have what we call a high-energy product, where the energy content of the cell is optimized and we have also a high power and ultra high power product where we have optimized the cell design to deliver high power. Again, staying with example of transportation of vehicles and high energy products would be ideal for a electric vehicle, solar electric vehicle, a high power product would be ideal for a hybrid electric vehicle.

Based on customer requirements, we have designed and delivered battery packs that go up to 600 volts containing about 200 cells per battery pack. In the picture you see an example of the battery pack.

What we need with lithium-ion technology is also what's called a Battery Management System or BMS. And I will get to the issue of the BMS on the later slide.

First let me get back to the comparison between the various battery systems. What you see here is a plot which gives you a comparison of battery systems normalizing its characteristic in units per weight. On the horizontal axis, you see the power that a battery system can deliver expressed in watts per kilogram. On the vertical axis, you see the energy that a battery system can deliver in watt hours per kilogram.

All battery systems will have a characteristic that they deliver the maximum amount of energy when you require a minimum amount of power, so all start on the vertical axis with the highest value of specific energy.

If you compare the various systems there, you see that lithium-ion as we already discussed has advantages which are about as effective at least three compared to lead acid and over two to compare to nickel-metal hydride.

As I mentioned before, all systems will drop off in the energy they can deliver, if you increase the power that you demand from the battery. How quickly that drop is very different for various systems; lead acids for example drops very quickly, nickel-metal hydride can sustain higher powers than lead acid battery. And if you compare now lithium-ion, our high energy series provides the highest energy but drops faster in with higher powers than our high power system.

If you look at the requirements again, vehicles and electric vehicle requires a lot of energy. Energy means the range for which it can drive before its being recharged but less specific power. So, our high energy series would match the technical requirements for an electric vehicle application.

A hybrid electric vehicle however, requires a lot of power for acceleration; it has a smaller battery and has a much shorter driving range. So its energy content needs can be smaller, but it still needs high power for acceleration. So here you would choose the high power version.

If you compare it with the conventional technologies, as you can see, lead acid batteries are neither well suited for electric vehicles or hybrid electric vehicles, whereas nickel metal-hydride is suited for hybrid electric vehicles. But performance wise its inferior to lithium-ion technology.

I mentioned before that lithium-ion batteries need what's called a Battery Management System. Here's a schematic of such a system. What you need to know is that the battery management system is required on one hand to ensure the lifetime of the battery, by making sure that each cell in the battery does not get out of its operational range; at the same time it’s a safety safeguard that is required so that the battery does not get operated outside the safe limits.

It provides some additional features which are useful to the user. For one it supplies a very accurate State-of-Charge you call SOC, and it also enables you to assess the State-of-Health, SOH of the battery system.

This intelligent battery management system can communicate, for example, over a so called CAN bus with the application, for example, this vehicle. This is what it looks like. This is an example of the hardware that was developed in cooperation with an electronics company that enables the control of very large lithium-ion batteries up to several hundred cells, up to 600 volts and many kilowatt hours.

What does a completed battery look like? Here is an example. This would be a battery of nearly 300 volts, nominal voltage, and energy content of 2 kilowatt hours. This would be a battery of a size that is suitable for a hybrid electric vehicle. The energy content, as I mentioned already, is 2 kilowatt hours. The power capability of this battery is about 25 kilowatts, which is sufficient for delivering the power for acceleration for hybrid electric vehicle. The total weight is about 42 kilograms or 90 pounds and the volume roughly 40 liters.

What you see on the front side of the picture above, is the battery management system. The side view actually doesn't show you the cells very well, but it shows the connectors between the individual cells as a total of 80 cells in to this battery package.

So, our core expertise is that we have developed in the GAIA brand of cells, cells with the highest power of commercial lithium-ion cells, at least in the Western Hemisphere. I need to explain Western Hemisphere it's very difficult for us to assess what is happening in the lithium-ion development, especially in Japan. We have good information what's happening in the U.S. and Europe, but less in Japan. So, the power that we can deliver in our large cells is roughly 2400 watts per kilogram, more than that is required for a hybrid electric vehicle.

We also have developed very large cells and systems. I mentioned already the 500 amps per hour cell and I'll show you a picture of those later, which is to our knowledge at least again in the Western Hemisphere, the largest lithium-ion battery developed.

One of our other strengths is that we work with the customer for each application to engineer battery packs based on the cells that we produce to meet his requirements and standards.

Let me take you back a bit to the manufacturing process which I shortly mentioned as one of our strengths in the beginning. We use a different process to make the electrodes which are the fundamental building block of the electrochemical cells by a process that's called extrusion. Here on the picture you see a process schematic both for the negative electrode on above and for the positive electrodes below.

In both cases, we take the active ingredients and some additives which we buy as powders from chemical companies and mix them together in a dry process. That dry mix is being fed into an extruder. And we extrude the electrode as a thin ribbon on to carrier foils.

The advantage of this process is that you do not use organic solvents, so there is no problem with the emission of solvents. That's why this process is as I mentioned before more environmentally friendly than the processes used by the rest of the industry.

Also from a cost point of view this is a more cost-effective process, because of the lack of organic solvents there is no issue of explosion proofing the installations.

The second step of the electrode manufacturing is to recall lamination. There the extruded ribbons are laminated on to a metal carrier that is used in the cell to collect the current from the electrodes. You see on the lower left picture, a part of the laminator; the lower right picture shows you the finished product or the finished electrode.

After fabricating the electrodes, the next step for making cylindrical cells is a winding process where the electrode ribbons, the anode and the cathode; anode’s minus, cathode is plus. Together with a separator that is required to separate plus and minus electrically are wound on to a core to form what's called in this industry a jelly roll. So the jelly roll continuously winds with those four components.

We wind the jelly rolls so that plus and minus connections on the opposite sides of the cylindrical jelly roll. We then make connections to the plus and minus pole of the cell on the opposite sides. The jelly roll that is being housed in a stainless steel casing which is laser welded [trap]. So you end up with a hermetically sealed cell with plus or minus connection on the opposite sides.

After explaining about our technology and our manufacturing process, I'd like to say a little bit about the markets that we are targeting. We have three major markets that are being targeted by LTC. First its military and national security market. There, at present is where more than half of our business lies.

The military is known to be an early adopter for advanced technologies. What the military requires and what we can deliver is our custom designed batteries that either very high powered or very high energy content depending on the application. Typical applications are unmanned vehicles, both on land and on the water, and also aerospace applications.

Our second target market is transportation. I've always used hybrid electric vehicles and electric vehicles as examples to illustrate the advantage of our technology. The last market we're interested is stationary power, potentially the largest one of all of the markets.

Stationary means that the batteries remain in one location. We see a great potential and have started to make inroads into the markets of power generation through wind and solar. Other applications in stationary are power backup systems, for example, for telecom installations.

Now, I would like to give you some examples of engineered solutions that we have supplied to some of our customers. First, set of batteries from very early stage of our involvement with various customers. For example, on the upper left, you see a battery, which went into a military application which is Silent Watch. So, it's operating a surveillance device. In the middle up there you see a battery that's we supplied to the university which took part in a solar race competition.

Some larger batteries are seen below. On the lower left is battery that went into an underwater vehicle application. This is a fairly large battery. The total energy content of this battery was 46 kilowatt hours. To give you an example, 46 kilowatt hours that is more than a normal household would use in electrical energy in a day or an example in an electric vehicle, if you would put this battery in electric vehicle you probably could drives something like 300 miles on electricity alone, so it's a fairly large battery.

There are some smaller vehicle applications that we've equipped with our batteries, electric bikes, a small ATB and a battery for wheelchair.

As I mentioned before, especially, for our military customers, we engineer batteries that quite often has to fit into a special compartment or a special space that is given in that application. Here is a high power battery that has to fit in a cylinder, so it has an overall cylindrical design. And this is a battery that is required to give off very high current pulses at a high voltage of 360 volts.

Again, this is a underwater application. This is a 300 volt battery for whale watching buoy. Here you can see also there is a battery in the assembly stage, not completed. Here you can see also very well the electronics that is required to manage the battery system on top of the battery system.

As I mentioned before these batteries, this hermetically sealed batteries are also being used in aerospace applications. Here you see a battery that is powering a robot. This robot is used by NASA as a repair vehicle to repair solar panels on satellites.

Going to applications in hybrid vehicles; this is a picture of a battery that is from a project with a British company for a Plug-in hybrid vehicle. It has energy content of 8 kilowatt hours. This has enabled that plug-in hybrid to drive about 40 miles on electricity alone. I mean 40 miles without using gasoline.

One interesting application as I mentioned before are unmanned land vehicles or robots. This is an example of two security robots that were develop by a German company to provide security for objects, which is a right hand robot and the left hand robot also can be used with various accessories, for example for bomb diffusal.

One of this security robot has and actually been used during the Soccer World Cup last year in Germany to provide stadium security. It is one of the larger battery systems we've built, as an example for a stationary battery. This is a high power battery that's used in the military installation to provide high power for a weapon system.

I hope I have given you a good overview over our present business. We see our large growth opportunities continued in the military, we have a development contract with Europe's largest builder of a non-nuclear submarine Thyssen-Krupp for a battery to propel a diesel-electric submarine. There you see a picture of the 500 amps per hour cell which I mentioned before.

The total size of this battery will be about 5 to 10 megawatt hours. So we are talking about a factor of a 100 over what I've shown you before.

In this contract we have completed Phase I, successfully; Phase I was the development of the cell that I showed you. And we are now in Phase II where we will deliver modules with a total of 320 kilowatt hours. And the next step then would be the full size submarine battery which I mentioned would be about 5 to 10 megawatt hours.

We assess total value of this business with about a turnover of 20 million Euros per year. The biggest potential is certainly a hybrid electric vehicles. We have done a number of pilot projects there. An example here is work with a British auto industry supplier named Zytek. We supply three battery systems for the conversion of three ton [probably] Smart to plug in hybrid electric vehicles. This vehicle has a limited electric driving range about 10 miles, but does get a very good gas mileage of about 88 miles to the gallon. This is a full electric vehicle that was done with a Dutch engineering company. The vehicle has a range of about 250 kilometers on batteries alone.

This is an example of our efforts in the renewable energy. This is a picture of a 2.5 megawatt wind generator here. Our lithium-ion batteries I have specified in as power backup in case of a power failure to remain in control of the pitch of the blades of the wind generator.

We also have a project to provide energy storage for photovoltaic power generation. Here we have a development contract to supply long-lived, low-cost lithium-ion battery technology that will allow you to store solar generated power during, obviously for times that the sun does not shine.

What I haven't shown you on these pictures is our latest technology. We just have shown yesterday to the selected group. We have now developed batteries for hybrid electric vehicles based on a new chemistry. This chemistry is different from the one we have now and that it offers also potential of higher safety than the present system, the potential of longer cost and also the potential of longer life.

This system which we have jointly development with a Canadian chemical company called Phostech, has been endorsed to some extent by the American car industry as being a desirable system to power hybrid electric vehicles. We are proud to say that we are the first ones who have delivered this chemistry in the large format which is capable of powering hybrid electric vehicles. We have introduced a Toyota Prius, that was equipped with cells with this chemistry that is capable of about a 30 mile all electric range and should get a mileage of more than 100 miles per gallon in a mixed electric, hybrid electric [mold].

In summary, Lithium Technology Corporation has developed large format, high power lithium-ion cells, and has engineered large batteries that have very impressive performance both from an energy, the specific energy up to 150 watt hours per kilogram as well as specific power up to 240 watts per kilogram.

Our present business consists mostly of delivering engineered battery packs both from our German facility and the U.S. facilities. But for military and transportation stationary markets, those are batteries up to 600 volts. Large growth opportunities have been identified in hybrid electric vehicles and electric vehicles in large scale military applications like submarines and also stationary, and wind and solar energy generation.

We have managed to increase both production volumes and [explicit] sales on revenues steadily. As a [dossier] we have developed, we doubled our production capacity over the last 12 months, and we are right now in the process of doubling again within the next few months.

Thank you very much for your attention, and I hope I have given you an overview of Lithium Technology Corporation’s capabilities and business.

Question-and-Answer Session

Unidentified Audience Member

Just quickly, could you just briefly describe the companies in the plain field where you are positioned and your marketing strategy? I guess that’s a broad based question.

Amir Elbaz

Okay. You see in the military applications we see a Saft, a French battery company as our main competitor. We believe we are competitive with Saft both on price and on performance. In the hybrid electric vehicles fields, Saft has made a joint venture in this field with Johnson Controls, so certainly that joint venture is a major competitor for us.

We believe we have an edge over Saft-Johnson Controls, with our new chemistry the iron phosphate chemistry. And if you look globally, you certainly have a very powerful Japanese battery company that works closely with the Japanese car industry to develop lithium-ion for hybrid electric vehicles. And in the long run there probably will be some Asian competitors.

But right now in the western world, with our combination of the new chemistry and our capability and the experience in large batteries, we believe we are fairly unique.

Klaus Brandt

Also regarding your marketing strategy of cars, we basically target the car manufacturer themselves and this is then integrated. Most of the car company basically they buy chunks of the whole component. They don’t buy more components and put it together, but buy the drive terrain; the plastics and they just put them together. So we target both. We have development for projects with some of the distant builders who are mostly the drive terrain guys in Europe. And we are targeting the U.S. car manufacturers, and we had initial thoughts and we are sort of fortunate that the U.S. agency has the FreedomCAR, who have chosen it?

Unidentified Audience Member

Alright.

Amir Elbaz

Excuse me, could you take this offline? I think you are interfering with the next person's time. We'd be happy to answer your questions next door.

Moderator

No problem, we can move. We have someone that [probably] will continue. Thanks a lot.

Klaus Brandt

Thank you.

TRANSCRIPT SPONSOR

The Wall Street Analyst Forum, a leading conference host for public corporations to address analysts/portfolio managers and professional investors, sponsors four annual conferences in NYC for large, mid and small-cap companies. Seeking Alpha readers may attend Wall Street Analyst Forum conferences free of charge if you pre-register. See the full conference schedule and attendance information.

Read all Wall Street Analyst Forum conference presentation transcripts here.

To learn more about sponsoring investor conference presentation transcripts see here.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Lithium Technology: Wall Street Analyst Forum Presentation Transcript
This Transcript
All Transcripts