Earnings call transcript Q3 2022

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Operator

Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lordstown Motors' Third Quarter 2022 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Carter Driscoll, VP of Investor Relations. ahead. go Please

Carter Driscoll

view Good Motors' operator. supplement thank for website you discussion, deck. and Thank Quarter morning, XXXX Lordstown to IR our Third go To press Earnings joining release please investor you, to and our Conference today's Call.

differ results our posed our for I uncertainties other actual website provision our uncertainties we the and forward-looking and The statements of materially including quarterly statements we outcomes. XX-K, to is from cite by safe begin, content attention the safe for our most posted cause update. identifies Form that may XX-Q filings, and to part of recent that want Before difficulty that risk Form the harbor your is in call reasons SEC to harbor forward-looking future in our factors predicting provision on our

results directly we explanation the measures call, most be of will on press measures our website. use release this and of our An During an financial comparable in appears non-GAAP presenting adjusted our basis. to GAAP reconciliations on

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

Edward Hightower

our everyone. welcome, performance. you, Carter, on very we exciting busy and I was Thank and will on key financial QX provide priorities, update will an a our quarter. stand where review and Adam

the of electric our work partners Endurance partners you EV of diligence like would your all Foxconn around the the for to team of I our at world mission and production. into bringing begin Motors, by and hard Thank accelerating towards Lordstown our the adoption all at for vehicles. Technology commercial of supplier congratulating

at our and of BEV part very production have at and availability a announcement our quarter slow will in began September, As continue Endurance commercial the Engineering rate. quality end third in our first readiness, our timing Lordstown, confirmed pickup truck of plant the XXX to in batch at speed units of Ohio deliveries. the of built ramp-up Technology have first production date. XX and govern EV and been up to of of the Foxconn to the

supplier towards We As close we production in units half of we are pedigree the this the of will the to by and that with subject additional issues, to end will the built increase approximately rate XX first remainder the month. part out of availability built estimate be end the of XXXX, commercial XXXX financing. able remaining

is expect certification to to We to quarter, which our start customers. and this continue homologation receive required vehicles to full shipping

certification. has EPA the filed receipt are paperwork both and awaiting and been Our of we CARB

As previously reported, testing all FMVSS ongoing. and noncrash remaining crash testing completed has been is successfully FMVSS

allow to a customers even great is will our any drive experience. to vehicle new vehicle give accumulate hands vehicles capability update The will help engineers in customers. software miles find ensure and and complete Endurance's launch, it that on after updates with we improvements us of resolve As and add any over-the-air continue commercial fleet the test our issues potential our and the to to

and competitor Endurance XX as Year North Truck the the vehicles American weeks evaluation. of semifinalist conducted extended NACTOY, automotive over of drives Three part ago, journalists of the or

articles. Our these both and from feedback journalists, by during team and other their the the pleased is and in excited drives early initial

Year fleet and of I that work and January. Media made The maneuverable Endurance Smith radius makes of and winner more feel commented example, competition easy stated that the For vehicle. Eric Car "Pretty Endurance maintenance, announcement motors X-wheel the forward of Stafford next for to our I Hagerty spec to other trucks." look the and quote, ideal from "Designed from meant be, turning and the hub We is tight phase is much the work is Driver the and for quote, Steven the to noted and rig novel the this in than is hard." a Cole endurance the what it Truck

We was truck Show Show the until the from the to Endurance Vegas. SEMA recently Santa NACTOY see you Auto The at Angeles booth in shown through at the at invite now California, new at November Exhibit XX Electrified XX our Los Fleet the and Las November in SEMA Forward upcoming Clara, at the Show XX.

cost is our this previously initiatives up hard tooling, materially selling As production limiting price. because anticipated with suppliers to of and Investments bring BoM scale to we higher VA/VE discussed, batch are building Endurances would we our XXX first than of down. vehicles our in have cost production

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

continue OEM or to X scale the seek X We partners help Endurance. to

of the all-electric other in one quickly few pickup the offers the As to enter market market, the very at opportunity Endurance trucks full-size OEMs a relatively cost. the low and

our and in preferred X in future the phases developing $XX stock million joint partners. Foxconn and in LMC this $XXX fund program form conditions. will direct to the collaboration expanding last that in LMC In next investment Foxconn co-creating call. to Foxconn. predevelopment in Motors Endurance, used work in the vehicle we investment of focus venture of Lordstown of the we announced an its Yesterday, and that progress the discussed make approximately $XXX make we on to be we certain our will team's planning MIH the earmarked launching continue regard, LMC be While investment on Foxconn subject the electric additional with Foxconn consortium. the This that for with our are next million originally terms million, with vehicle replaces are our to in has agreed vehicles also convertible to and and we work

the LMC to first a X.X%. or to of Foxconn scheduled tranches, company in ownership The is direct common November of will purchase on in remainder and investment Foxconn's X take common approximately stock stock the XX will tranche close be about of

that of $XX stock first also funded The at be preferred purchase will time. million

which subject would common current CFIUS outstanding is ownership to to on take tranche, XX.X%. shares approval, approximately based The stock second Foxconn's

Board to X members also designate of second closing, the the have Following our of tranche Foxconn Directors. right will

right Foxconn have the are of XX.X%. of While securities common to with summary to transaction transaction filed holdings, stock and under conditions the cap and A its subject vote detailed terms purchased both well of documents copies the will preferred voting a been the SEC. its rights have as as the

help a of of investment additional EV in team's in LMC ambitions confidence sign Foxconn's will both the and companies. is capabilities our accelerate strong

success. We its MIH company's including EV continue that as partner Foxconn and believe vehicle is with development collaboration to ecosystem, to deep our long-term American preferred North its key

I'm Lordstown Foxconn into and teams Technology accomplishments in the the bringing the In of EV proud Endurance of closing, commercial production.

the will to more team provides our our also hands outlook. and by I to have work opportunities first the the we Adam our our to of present financial relationship with our expanding entire get our it our beyond extremely vehicle. QX wait to Foxconn performance We're over the customers. floor While now excited vehicle do, and in Kroll, turn cannot CFO,

Adam Kroll

we today, partner at in strong agreement principle where less we with with Thank call, morning, Good automotive flexible year has joining you, us. and to OEM the company. I with more of Foxconn Foxconn. led the a strategic been right and I one after for my Edward. everyone, Preparing incredible first announced capital-intensive transformation started thank on are which for reflected that Lordstown, you us has the for a

we Given playbook took execute this expectations. our and over have to a flow capital constraints, The the discipline. cash of continue enabled actions prudence to our us of course we year exceed

addressing team, yesterday's in a our to confidence is show capital our Foxconn from injection announcement step of in strong addition important needs. In capital the regarding an

to of call the As our quarter QX not numbers. results, out turn I is want any I fourth our to a Foxconn in therefore, and event that transaction

quarter. quarter $XXX which million preannounced the million short-term and end with before above the of ended what approximately We cash just in $X we is investments the

from quarter expenditures equity position change working represents million including for of cash a The million the million decrease $X.X capital includes benefit, million second $XX.X issuances. an used in XXXX. $XX.X in in capital million cash from $XX.X proceeds operations, $XX of cash and cash in Our

aware, the on all non-GAAP More can lot or release the As year, press be IR over last in will reconciliations our as a site. in found call noise out our results of operating results. deck earnings in which our I detail I through you you're there's our the walk

loss $XXX impairment. included Our which litigation NRV, from of million million, operations $XXX PP&E in quarter for third totaled almost charges inventory and a our the accruals

reported gain on million in OpEx our we a benefit an almost in included the reimbursement of from XQ, less and the sale in million smaller onetime the litigation a of Removing $XX.X APA, plant, a quarter compared operating the to second million For or from from of reduction $XX.X $XXX smaller was charge the $XX Foxconn improvement a of approximately million adjusted million. under that quarter $XX.X R&D from loss profit P&L third these NRV the of XX% XXXX, items, affect. operations

on that point estimates note are of our Focusing of certain a on actual accrual which could litigation is differ XXXX, quarter current million the million million, to a losses potential $XX third litigation accrual SG&A These charge included results important time, and the $XX in charge. a totaled as NRV based cases. only It's of in $XX.X view and materially.

was a charge inclusive $X million quarter NRV second litigation of SG&A a and Our million $X.X $XX.X accrual. million,

share prior professional was SG&A decline outside a million quarter, consultants. XQ fees certain the decrease, $XX.X XX% in a large we reliance reduced the was accruals, as adjusted our of it which $XX.X X/X of was apples-to-apples, and So versus of timing million as personnel-related on a representing in

of million. our third R&D XXXX May. It's was R&D. to of sold the for to Turning full facility quarter in cost $XX.X the without quarter Lordstown operating first Foxconn the Total

operating was the engineering second adjusted at related the as million other engineering $X.X versus lower related. increase million Again, plant million costs, the of the $XX.X of costs, decrease The is second than $XX.X as increase were full-time of OpEx looking the eliminating million R&D of $X.X $X which QX. million to basis additional $X.X R&D compare and including part of reflects quarter, million on testing totaled over were slightly which in the an of $XX.X million $XX.X $X.X the services The sale, was reimbursement personnel costs down million sale. plant The an The of $X.X personnel, decrease million impact more quarter. was excluding the in apples-to-apples of remaining entirely consisted million to way half in the quarter plant, and R&D cost second which an in XQ this in personnel staff. and

quick our machinery, explanation in the equipment were held commercial tooling, and accordance Prior at impairment. processed in construction to of other all cost a and assets GAAP. production, commencing Lastly, with

$XX a production and was exited PP&E. determined our we commercial the phase million the Based needed. impairment reviewed in entered noncash analysis, R&D on As our of value QX, book we we

Turning Foxconn to our The does liquidity. not tightly focus from capital and managing change near-term spending. cash our and new outlook on

start you As it relates X NRV we will P&L, of cost to COGS already will given remind reporting that the a then we margin begin essentially taken. selling vehicles, goods reflect material I'll the sold. direct once

newly to in Endurance along for additional sales our to Endurance of the funding costs depreciation. prior anticipate will batch to NRV plan with be take there However, ramp, majority inventory execute year-end a of quarter, Despite initial on production to other and expected modest the of vehicles acquired as produced our vehicles. related slow we inventory manufacturing the well as

the expenses fourth of which timing of will versus uptick quarter. third the quarter, some into costs Our certain CapEx is operating pushing and

is any excluding first preferred an contingent however, should with quarter the share investments to million for As ending $XXX up Foxconn development, to previously anticipate cash we to the I quarter we'll which third with million, EV will year-end guided, earmarked our call, the expect noted, incremental flow roughly fourth we through cash cash $XX program enter quarter higher or ended raises. beat investment and for tranche short-term provided Together fourth investments. be a the more that than proceeds the capital earnings new as of On million ramp short-term specifically $XXX we investment, from to and the of be XXXX. first likely from outlook It liabilities stock quarter.

and I to EV a adoption. our closing, Operator, In my we'll take to questions. work in truck you. for accelerate colleagues are and supplier this sincere to our along us all with partners all hard-working journey want now who Thank market the great potential customers bring express valued supporting appreciation engaged

Operator

[Operator Instructions].

of Mark Sachs. line Your first question from is the with Goldman Delaney

Mark Delaney

Yes.

the mentioning, preferred EV The there's Motors. around first investment million of was $XXX next was the to were will into Lordstown program And venture. now investment potentially developing, be a will the understanding the you be go my joint way that as previously will

work a on how So to investment will take forward. more maybe venture? to helpful. would Lordstown? you can there more spending on that Lordstown talk us the Any Is have in being given mechanics of the Does joint still going put through be the color

Edward Hightower

is Mark. you, Edward. Thank This

So yes, into the first we or be will and the Lordstown, with collaboration that in Foxconn. it product do investment will will focus in on combination

So of team the replace going will collaboration was investment it in in the Lordstown to work with will funding what the the by and JV, Lordstown. Foxconn X tranches to be be will be and

Adam Kroll

Yes. venture, think disbanded. structure. Lordstown being the in And is is investment we with better, of a the simpler, joint standard obagi, direct kind And easier

favorable. it's I So very think

Mark Delaney

guidance. bridge my the just Okay. prior helpful. from at cash second And then That's to the understand to new the balance year-end question, the trying

to $XX $XX was it think I So million. million

end by year. of $XXX million the the it's million to Now $XXX

tranche Adam, think, as equity issuance as investments, the well you of first I Foxconn the done. said, the as

gets new million of previously of $XX million something in million which cash to most to use to $XXX And million? $XXX losses were trying way communicated, bridge And $XX bridge I'm of of like $XX It million around there. maybe that the million sort in sort core $XX thinking $XX less that from of upside to if to it so the less the balance? right million I'm so underlying of cash it's there's like business that thinking is get seems right $XX million maybe to XH it. is cash looks the terms think amount be to from of to the like I additional the the

Adam Kroll

Yes, that's about Mark. right,

Operator

Instructions]. [Operator

You of with the line from Sachs. have a Goldman follow-up question Mark Delaney

Mark Delaney

the analysts Yes. couple in another Maybe for more just if a are me queue. there

much raising XXX, go ahead XXX of of I remind the all In capital that, think for you can batch, us needed. to was planned the you additional with units? there to Maybe terms that raise need you how units believe in do order first to in order XXX

Adam Kroll

our subject it's ramp majority the in of mean inventory So the having the planning the bunch of timing, Mark activities on the so on hand variables and end XXX year. other to for of of all a I the of right? by terms forth, we're of the

a not incremental of amount capital, it on kind of it's other So the business. depends of but elements all huge the

Mark Delaney

you're other to for to elaborate finally me, seeking Endurance. And degree you from Maybe interest the partner the extent able to that. seeing the Okay. potentially to mentioned then can just on from interest OEMs build you're OEMs you of comment on

Edward Hightower

Yes. but to No, There discussions, to comment that. not on going that. we're going not comment are we're on

Operator

Your from Deutsche next Emmanuel question with is the Bank. of Rosner line

Emmanuel Rosner

is, expectations either now dimension could for year-end or between expected you volume XXXX? progression, for any anyway and us delivery question First production and then the

Edward Hightower

XXX. what batch we Emmanuel, we're was first on said to the up of focused

batch availability We we that expect first -- we we pedigree of slow as XXX. of part a rate issues, at but remaining started to slow and rate. production very expect increase that And the still resolve

completed So half XXXX. in of end year of this remainder we the expect the by first XX with would the be

Emmanuel Rosner

about Understood. you what some parts on is And side? a and just the on could with the constraints chain the color spoke then issues bit the supply of What little is parts? you on give situation more tooling,

Edward Hightower

they that Well, managing, we're issues are actively Emmanuel. all

about a going but -- not capable is throughout more that are very get hear we -- and all that, but you into are issues working detail I'm about and So that through they much to team industry too them. have the strong

Adam Kroll

part. with you X mean, produce I a vehicle sell Yes. can't or a vehicle obviously, missing

we're handful a and slow it essentially of with. part can what dealing issues down, So availability that's

Operator

with further remarks. no time, this at continue questions. there any closing And Please are

Edward Hightower

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

Operator

today's for you joining conference Thank call.

now You may disconnect.

Nu Ride (NRDE) 8 Nov 222022 Q3 Earnings call transcript