RIDE - Earnings call transcript Q2 2022

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Operator

Good day ladies and gentlemen and welcome to the Lordstown Motors Second Quarter 2022 Earnings Call. All lines have been placed in a listen-only mode and the floor will be open for your questions and comment following the presentation. [Operator Instructions] At this time, it is my pleasure to turn the conference over to your host Carter Driscoll. Sir, the floor is yours.

Carter Driscoll

Thank you, operator. you XXXX for earnings thank Motors' the and quarter second conference morning to joining all Lordstown Good call. release To to supplement investor press our go deck. and IR website today's to view discussion, please our

actual in predicting directly earnings be to want for forward-looking financial non-GAAP provision earnings information as to our to release. in uncertainties of provision in future including is results outcomes. part I begin, An filings, our on that may risk an we Also, the reconciliation our cite presenting most call certain attention adjusted conference factors update measure release and Safe on forward-looking of statements website and a Form GAAP to will of our other basis. our our on from Harbor during the our quarterly use materially SEC The identifies we financial the that difficulty your posed that our posted by of we website. reasons Safe explanation and Harbor appear the our this and comparable cause differ on included Before and measure XX-K content statements call,

Hightower; Dan I'd be Ninivaggi; Crowell. Adam us the Dan. Executive to Joining President, call Edward today turn Lordstown that, Motors and like CEO will Chairman, CFO and With over to

Dan Ninivaggi

quarter review priorities. begin highlights was in significant the strategic QX several on like the made entire thank achieving QX. will our begin, later very though Lordstown where and call. to to Carter, we review their like you, objectives. I'd the everyone. and for Adam stand the extraordinary quarter in welcome and in Thank efforts To and few operational busy with progress for team a detail Edward we a quarter I'd and key in

the most a manufacturing, of First, are engineering, and announcement corporate our additional role experience the would over commercial, culmination CEO. our the and truly three ago and Hightower, This hires of talent announced of and recent we collectively was Edward recruiting the automotive year of President senior leaders. on best two exceptional have almost in and three appointments industry, that the management years developing alone in take industry. Edward additional weeks XXX

transactions in we and a us Foxconn, as providing QX, Second, and contract closed a less capital. our additional a development well more with vehicle manufacturing business flexible scalable with partner, world-class model, as capital-intensive platform

has Third, improved that over management implemented team process the significantly past disciplined year, has and execution. our program rigorous a operational

July, assess constructive conducted During gateway OEMs and Fourth, reviews without partnerships, of smaller view. my do strategy our positive requires quarter we the a into strong number can't and in largely to second launch them readiness. business

our partnership jointly other partners addition the with to In actively to Endurance. broad developing OEMs the Foxconn we're including seeking consortium, MIH further and scale

few customers partners strategic the substantially for at joint the the of through and number with all opportunity Foxconn size the the offers other Endurance and pickup low Endurance limited will quickly full to is one trucks development our anchor market, the the We're As market electric vehicle that enter since work a produced very be seeking of costs relatively fleet complete. be in OEMs first to also venture. for our

capital in are markets we a capital-constrained. Finally, difficult live very environment and clearly

control. manage continue our what our to liquidity and spending can disciplined in will We for be we

have call, our near-term lengthened As our and will discuss cut needs supply. later our in efforts runway Adam the capital

work recognize execute plan. excited or still must continue including our but the that, I'll However, team we transactions I In and quarter, leadership support Edward strategic to and through during work the home. progress over I'm to to closing, it our work investments support us. other of have about ahead we our turn new the With forward to continue In capital business outstanding look role, Hightower. with we've pursue my also to significant bring CEO, partnerships to made it

Edward Hightower

Motors, to accelerate delighted venture as discuss a Foxconn. and with and topics. status be the development you of I'm Lordstown capacity morning. our mission would three two, the One CEO electrification. to strengthened company's transition Good our towards I speak with the to joint like Today, growing and venture with in of my product I with continue today launch; joint team. inspired Endurance of CEO Foxconn; you by added to our three,

Endurance launch. Firstly,

in calls, said engineering will readiness, I've govern launch. and previous the availability earnings part our quality, As of speed

line report of that QX pre-production builds customers so Lordstown, am initially after the certification. in year, on the commercial very of this we production our release in plant a Sales and Ohio vehicle in Foxconn on and at full start as I third slow track fleet remain We rate. our are now have planned to quarter production completed pleased commercial homologation to

earnings first last testing, final our in we phases emissions, of EPA completed testing. vehicle Our certification, calibration Since white the powertrain tests testing. certification level and have all in body pre-certification we and and complete May, call is for are non-crash

the also our crash conduct have this all certified and completed preliminary We testing successfully month. development crash tests during we'll

Endurance round month Our vehicles cloud. this are conduct which weather has We're to embedded Valley, of Death been scheduled has experiencing integration summer. high final in we hot progressed our testing in of cloud-based able from temperatures to this software the our also especially monitor test diagnostics and the

set more not of done with issues transparency, we to more The test complete the vehicles issues might on on the has to we to calls impact customers chain resolve what to starting The the PPV to our our to done. be more on on deliver vehicle that our as team's customers. management You We supply impact on what highest risks? previous XXX% are earnings of a to and is deliver we testing. delivering emphasis timing have builds customers learn are miles the progress are we open be significant the the made discussed vehicle of completion will our in more miles ask -- say we vehicles, Consistent QX. I and our our quality still downstream intend the but accumulate able before

addition we to to robustness. vehicle testing, continue to software ensure also test In our

As the know, powertrain, advanced each with likely and vehicle. together various subsystems have electric you modules proper work cetera. the Endurance vehicles computing of must safety, HVAC, of functioning like modules communicate dozens controlling chassis, may et the These infotainment, other for

in be may our glitches accept and vehicles we the While much smartphones, to higher. bugs is for standard able software

integrated software continue all We level. at the to subsystem test fully the and vehicle at component

Reliability MISRA and aligned is ASPY or protocols software with including Industry testing [ph]. top the Our Software the Motor Association,

disclosed, to Endurance the price. higher first materially our XXX have previously the BOM production of As Endurances We're than limiting of cost our vehicles. batch approximately we therefore of is selling anticipated

plan and our have costs through over VAVE time scale a to We production BOM suppliers, tooling, initiatives. investments in reduce hard with building

and new initial off larger hard tooling capital to investments achieve our amount needed on held to and have order we production the targets. manage our However, sheet other balance the in of limit

Our capital be Adam our tied timeline production will Endurance later. and scaling for to raising discuss that strategic will actions partnership

parts pedigree each our address continues negative supply purchasing proper quality. quantity, chain. approximately in it capable with incorrect or complete -- X,XXX part part an the part on a to and team replace of part and important that vehicle add impacted parts. it Endurance, the is issues build an availability, to have experienced with With retrofit Completed a a have can impact than build to missing of pedigree having Our

team chain weakest supply Our must manage links. the

March. Our ready are the Foxconn for plant manufacturing partners at in Ohio

of first starting in While issues. batch production Endurances release commercial to the are we we of are slowly ramping up mitigate these QX,

accelerate to XXXX. the first with in production QX vehicles built majority of in initial XXX expect We part the the of

of full-size this hands hub design, to be pickup of Endurance cannot and lower several impressive in best remains customers. Our responsive total going Endurance on few the connectivity, ownership, wait they're fall strategy market. focused of our The expect get the to commercial we it. we its With sales years. the the We think fleet market and love in-wheel the over trucks motor into next will handling, agile, cost the one

markets and fleets, sales management this expertise, from including and fleet to several strategic of California, interest plan batch and we centers We initial companies in where Michigan, have of of Ohio. vehicles commercial concentrate have

batch service this now will strategy. our with align relationship venture. like growing Foxconn the initial with I'd customer to and strategy joint development geography-focused sales discuss for Our product our

mid-May, first funded companies. XX announced joint in million QX. an venture action additional which $XXX another end commitment, of ambitions at support in Foxconn $XXX million of in Our the of was in XX/XX the Of this million committed capital, is the EV both

Foxconn's business model, locations facility more for experiences other at have EV programs footprint, be to and innovative commercial and vehicles America, growing As These in partner contract reduce Foxconn built vehicles faster co-develop Lordstown's new around utilizing Foxconn including achieve world. manufacturing Foxconn's OEMs at collaborate North is with development EV this will to costs the platform a the Lordstown America benefits smaller flexible and and ecosystem, the with Ohio other fleet customers, opportunity potentially JV commercial scale of lower development volumes manufacturing for for Under global MIH the Consortium the primary a time-to-market. new would OEMs. North

as Chairman, weeks two serve Taiwan of joint Liu team. in CEO I As and Foxconn Foxconn also spent his I the recently with Young venture,

ecosystem. launch capabilities leverage had our in with JV meetings development we several Foxconn and on EV how concert best country, in to the While operationalize through the concept vehicle

These Donna's become President several Donna primarily the nearly Andrew Sales, latest us electric strengthen a also Supply up-fitter commercial will Product both is coming joins We first fleet I'm continue from also Executive of appointments JV, announce about and and Reyntjes, vehicle Senior experience team. we to months. defined XX-year expertise business which veteran Chain also to floor to Bell, present and our excited the our I I support Motor an to CFO, attributes QX for discussions contributions OEM. valuable Service at increasingly and would advisor like Vice EV to the forward years' will Ritson-Parsons as the innovation leadership company. to about the her I'll senior automotive very Vice for side. team Dr. the turn key experience management the Ford had Andrew's Engineering Jane President functions performance our product to now of to of us continued suppliers. program outlook. for Vice XX and leadership in to OEM we technology at help as leading with team XX over business' Marketing the a decision-making. years will play roles in vehicle features leaders Human cultures commercial Company. Creation, our People development Coniglio-Kirk, roles strive leadership Jill in customer and of our hope the creating become and put with be by new and the for especially and leadership for software. work will Adam? Resources Culture focused over and Kroll thank automotive performance the her as world-class across look and company center many Adam fleet I our high financial joins President

Adam Kroll

Edward. driving force you the thank about you, for last role. He morning, the behind seen the quarters. we Edward's I'm expanded Thank have been over everyone enthusiastic Good results three joining has and us. engineering

While eye on of our capital. intensely to as taken transactions managing ball Endurance and to with the as preserve quarter, cash number focused were much not spending our financial strategic while additional discipline key remained events possible, we position raise the closing priority I commercial production seek as Foxconn liquidity off remains this of launching the one our we and have

like in additional of down sale million and of for $XX.X Before resulted total complex, payment I P&L, $XXX.X as to million the cash of certain million our million. the headline transaction the we you to well. that in are quarter. operating bit closing for we statement, break the cash and reimbursement reimbursement. part see In proceeds and the proceeds expense January second proceeds results, proceeds reported which Lordstown down receiving I'd plus the of the $XXX.X million the small million, payments. add on a amount purchase was in million gain the so million in million and a discussed and expenditure reimbursement. in activities, was accounting remaining the the took summary, million review period; year-to-date report $XXX and investing a in transaction the $XX sale; flow third as I'd Recall get of gain proceeds; report of reimbursement total two in in planned the for $XXX.X reflect $XX.X place consisting operating which May The we into were operating $XXX.X for price payments the was place proceeds The follows. January In activities, The the of April. capital we a XXXX, for receipt we represents final like of activities, capital. an our facility will XXXX, we in was quarter cash a May. the received from income timing inclusive The XXXX, $XXX for November million reimbursement, In result total as of million, finance a reduction of of on April down $XX our million down $XX $XX.X associated sale back in assets $XXX.X $XXX At the the $XX.X as million, the in price, and you R&D million and taking settlement representing sale plus anticipate as of of

XXXX. million sale of Endurance, half proceeds million cash quarter working and million for for which equity the and operations, our than management for cash, rigorous of which $XX.X million, includes and to had starting our the with of the disciplined The position use contributed pleased $XX.X for Now, in end approximately higher expense turning $XX.X that by controls the reflects was program from At our cash roughly million $X.X million I'm exceeding on $XXX the tooling hand $XX.X from plant expenditures, internal quarter our forecasts. to first the of change we capital, million $XX cash [ph] in results issuances. capital in quarter, liquidity meaningfully in with

shifting earnings. to Now,

million For the $XXX.X sale. from we income million reported the operations plant second of including quarter, in income from $XX.X

XX% should of from the expense $XX.X $XX of reported expense were by of expenses impact gross from as the review post-closing covered you totaled component the million, XXth, related the the plant related million million estimated vehicle $XX.X expenses, due costs to costs. along APA, quarter consisted $X operating million million the first other Excluding second represents $XX.X plant the quarter, under costs broke Recall Foxconn as be reimbursement the sale, primarily Total we of the of engineering elimination out million operating operating core of to Cost a down majority sale other facility personnel our sale last of reimbursement costs in finalized our total manufacturing approximately quarter Foxconn of Foxconn the close in which the $X.X million plant, with the for in and the million of recovery period. The R&D XXXX. to less in in of million quarter, $XX.X from think May part beginning [indiscernible] activity. plan. will which testing operate expenses $XX.X on following total manufacturing $XX.X and down million when sequentially costs, and freight, were other

full benefit decrease We in realize expect new the structure. cost we similar quarter a of the third as our

to quarter XXXX of commercial quarter down down second a was and some and XX% All permanent versus due of as million, testing to by million. million other decrease third XX% due XX.X% $XX.X or partly our the $XX.X with XXXX add from by [technical cost due Outside production, a third-party offset latter versus to first of of first and chain million the The testing shift into hires. non-cash as causing we on prototype XXXX. expenses quarter the $X.X quarter of factors, The contracts. million represented fourth legal and decreased largest to activity spend costs ramps other realizable we $X.X versus the first net the fees. up to compared value $X reflect difficulty] Personnel, supply the quarter. or lower QX, decrease, the headwinds outsourcing reduce controls. Edward approached we as R&D reliance professional QX SG&A totaled guided in inventory, components reduce less the town As been to quarter to was charge was lower for we the XX.X% primarily down in to new mentioned,

intense year. prudent saying capital, decisions remain on the our outlook liquidity. execute capital allocation largely management for continue with by hold. day-to-day the for that our plan focus our as and our resulting outlook cash of into based Turning we in begin tooling Endurance I limited rest the Hard investments upon on will we

capital expect We to -- operating half and combined between and second total our loss million $XXX excluding million expenditures of XXXX be liability. $XXX

quarter minimal. Prototype the Our reduces anticipate early difficulty]. operating I are as testing Endurance expense described. be the essentially likely increase [technical before component nothing and QX in as to we plan for execute freight certifications third the other other than all R&D final and of will to the We into costs

some to and we the SG&A expenditures of timing the of the XX% of we fourth and material incorporated anticipate second the other needs tooling carrying smaller the fourth would expect manufacturing anticipate will no manufacturing plant adjust quarters longer warranty, of to general year make the first the Furthermore, third be quarter, in fee, corporate IT costs. value investments up remaining costs, own inventory. related costs be and up capital as move sold the and slightly We In quarter, second half charges we direct under other down we sales the the excluding just the the goods in versus any cost versus impact in contract [ph]. to and half

we XXXX lessen are management, need exercising million remainder to of $XX closer stated the we million to $XX will had cash anticipate this significantly our from I the for need modulating cost our be as previously. and production million. will capital schedule discipline Finally, $XXX year our

reflects and million. level excludes to schedule of contingent $XX million targeted depend this However, will guidance production liabilities. also cash $XX amount ending our our on The

units the management activity, us enabled more substantially deliver In raise we more remaining the costs to cash with to by will finish summary, spending Endurance, program mentioned to the to However, operating our combined have need capital XXXX. capital than and execute for strong and plan the us internal discipline to cover forecasts. XXX with significantly in our Edward working to Dan quarter

our strengthened the out and leadership of the vehicle with are Our Foxconn. incredibly of to successful teams first venture committed announcement launch of Endurance program and dedicated a achieving joint

mission replacing We are clean adoption, committed accelerate to EV with EVs. to internal engines combustion our

we'll you. now in to all I'm are what's come. We together excited this questions. and Operator, take for Thank

Operator

have no [ph] we time, this Edward At We closing Kroll remarks. to for signals. turn

Edward Hightower

like operator. significant thank work the team the towards tireless In thank summary, would launch. for for I Endurance Thank like to shareholders would their upcoming to you our and progress also I their continued you. with ahead relationship opportunities Thank our of team forward we with great support. I Foxconn look growing and us believe and realizing I have our them. potential to executing

Operator

This participation. does you teleconference. We your thank conclude you. today's for Thank

You time. at lines may your Have a disconnect day. this great

Nu Ride (NRDE) 4 Aug 222022 Q2 Earnings call transcript