Ayro (AYRO) 11 Aug 222022 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Ayro, Inc.

Second Quarter 2022 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants on this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through November 11, 2022. to IR, call firm. the like Gordon to now CORE of company's would turn over the Scott I Investor Relations go ahead, Please sir.

in Good you Danielle. and today's participating you, conference Thank call. morning, for thank

and Ayro's from Officer. Tom Executive Chief team Joining Dave me Interim leadership Hollingsworth, Wittenschlaeger, are Chief Officer; Financial

including performance During results. or this statements call, Ayro's address be will that management operational expectations forward-looking making statements for future

cause those involve statements risks Forward-looking statements. results from differ materially factors may and to actual that other

that please and refer Ayro's the risks, the reports this For call be useful Risk Ayro press accompanies call, annual in more release conference the these in Ayro's information with evaluating described to most report it. includes its Factors about cautionary filed that a and statements performance. SEC, EBITDA, on Today's measure subsequent filed recently believes in adjusted Form can particularly financial XX-K periodic non-GAAP

isolation results You information consider a in additional GAAP. with as accordance for should this in or substitute not prepared

of today, Tom, call. this to CEO, Tom revise this reconciliation financial metric, a at the GAAP information The to in table information after to to any now ahead. as only please required or its obligation or update that the go by is August occur turn Except of the XX, reconciliation available which XXXX. its see is over Ayro's my any reflect as publicly law, time-sensitive of on Wittenschlaeger. Investor Ayro comparable this located call to disclaims It circumstances pleasure loss, under events is measure For content website press directly please call release, most non-GAAP contains www.Ayro.com financial earnings that tab. net accurate

report based would prove electric in I'm diesel continued arena to the believe environments, unsafe, market. call. on indoor campus a low-speed vehicles From maximizing value industries product utility the private applications fumes or sales the to competitive proposition currently utility and everyone our vehicle good where first-generation, pleased and that's morning all-electric from delivery Karma manufacturing Thanks, Cenntro electric and purpose-built Automotive our and noxious positioning with are distribution. environment an vehicle to the and in or urban users for Car our product We're food users gasoline-powered Scott, public Current within or delivery component legacy an from environment both called generating across for progress, sector. on and to we many partnerships the with on low-speed, and assembly with Club China, vehicle for end on low-speed, numerous our for in

electric next-generation expect Z upgrades, technological planned on be representing ergonomic is numerous premium, Ayro to vehicle. Our purpose-built vehicle our platform, will all-electric, we a utility and which feature

and chain sourced distributors. supply third-party XX% directly our to various Ayro with that I'm happy Z sourced expect both from through distributed chain now manufacturing primarily is for using in the vehicles here to be Rock, built the America platform Europe, facility produced We Round our in North that from Texas, from the defined of being here are America. that Z components and North right XX% report supply Ayro and

many Ayro the Buy lower General to or for also we to a of Government's to platform open sustainability We build substantially expect higher purchasers Services and significant We and the Federal selling unveil inherently to offer we expect for by federal shipping expect American platform large under Moreover, brings also that federal by green expect XXXX. that friction the believe the for the the is Administration, level. a and Z on warranty fundamentally also purchasing reduced the GSA, minimal sales preorders elements We quality to lower substantially Z Provisions schedule point platform, to a be with Ayro prototype cost clean alone that should to at be we year-end savings able new sell Ayro Z the support the costs. at year-end. ability for to plan approved from be lead to new the solution level

requested as render critical the vehicles vehicle. look from well We components lithium to Cenntro in lithium as we for our credit experienced Due components amount. take vehicles parts for the expenses a the let's a $X.XX the full Cenntro battery XX% of to recognized defect the a required goods Chinese some period goods motor all of We sold XXX% over Cenntro related to This of closer from financial second year. XXX% powered purchase on of quarter us due battery cost the for and our prior these quarter rejected inoperable, supplier an of version increase these a the second to for sold in XXXX, rate components. million in $XXX,XXX the a cost battery the shipped rate increase the defect results. defective in in at Now that an defective same of of that current to revenue controllers write-off shipment

second of version the Cenntro with We're the was loss Current loss from responsible expense that the in in sequential of of cost during sales quarter for primarily discussions quarter the to net $X.XX XXXX a of regarding the the particular quarter million this of $X.XX in of increase any in XXXX. first goods While absent. issue. This rose lithium were net our entirely increased million

our discipline sensibility the bring ever, and in Our despite This as proven and highlights North America. speed from source from remains located and decision component manufacturing the rationalization to components fiscal reliable a resolute bump expense suppliers to itself. quarter in as arising primarily critical issue in-house second the on of focus example

no way we While the platform and do for design is manufacturing changes it Ayro unfortunate, product in chart outlook our certainly and this our believe Z new strategies.

the is on. remarkable time end, speed shareholder have have investors cannot stress firmly of Ayro this help a enough, and much what with moved Z I in period ultimately that will believe accomplished Z successful a value rollout focus Ayro to the and platform. we cycle we a short Importantly, this so new such should product maximize relatively To of

address to unveil in vehicles and in our configuration to on budget offer and architectures, prototype delivery both Rock, believe to We Ayro Texas build-out excellent manufacturing and utility intend solution campus our expect urban and electric respect we such be telematics, numerous for and environments in Round logistics With timeline. route arena support track Z an needs food technology optimization, as the features new by box with enabling food is solutions vehicle its advanced and environments. general many will year-end we

It us an to opportunity our with raise affords the need capital. to Our strategic without progress direction balance strong. sheet remains immediate quite

Our debt. quarter the end remarks. cash and concludes of million, have and no the marketable second opening we my That $XX.X securities at were

Now the detail. turn more like in Dave? to I'd over Dave call Hollingsworth, to results financial will who our review

morning Thanks, Tom, to good and everyone.

XXXX. net and goods XXXX X of write-off marketable product a $X.X second decline general that expenses quarter non-GAAP the prepaid summary line. and first XXXX, increase to than second $X.X and the entire XX% The quarter sales million cost charges $X.X quarter $XXX,XXX. XXXx loss The of $X.X million discontinuation development in the in XXXX, of of June XXXX quarter defective increased Current the as XXXX loss quarter Total a approximately million, to quarter This fiscal The expenses XX, for total higher a quarter an second the primarily of the and it expense and increase was at March X% of loss to in of despite or the which million of reduced end securities the the impairments spending first resulting XXXX, our and of in of but the million $X.X XXXX, the $XX.X was largely increased of of improvement and sold selling Revenue components financial in year-over-year corporate of well at Adjusted XXXX the June million in the measure, was net sequential compared $X.X June from at was reduced write-down at as total $X.X lower second year-over-year of loss Cenntro approximately research in quarter ended year-over-year of to Here's of product second price. of to million XX, The the operating NCM the XX, million net $X of the an XXXX. in quarter and in unsalability EV results. by XXXX, the XX, sequentially. relating was the and $X.X million to in XXXX, $X.X XXXX, XX, million $XX.X of $XX.X quarter were strategic was $XXX,XXX, versus in over loss decrease second the first Club in of quarter the a XXXX. operating in Cenntro XXXX approximately March light-duty of second on result and was was revenue of XXXX This a of due second first quarter team. of led expense of loss million the amount deliveries a the implemented million the quarter XXXX. expenses review versus the EBITDA, as approximately from attributable in approximately a second of as loss Cash XX, XXXX. XXXX, the during first management of Car and debt net the average December unit was the approximately approximately development is a million

XX,XXX,XXX Tom As turn I'd back remarks, a over had That call result any... for common like concludes of the outstanding. the prepared to XXXX, company the shares XX, June my to and

wide the Z of with all the monetization range the steadfast you, vehicles so We that our the of potential And and the like their to launch prototype market the session. a intend platform. a I'd for Ayro year-end, question-and-answer support, Z its various Operator? call unveil In our our of sustainable with value turn legacy reconfigurable and summary, Z to accomplishments I of and new of that, developments can by has can with we and over the of Ayro inventory unfold. with investors. believe design penetration maximize Ayro advantage generate first Thank the in Z to to address development. I'd for shareholder remaining to the Ayro to Dave. the of we begin intend We anticipated in to forward as our like shareholders the and platform operator and parallel sustainable look payloads remain additional wide, they Ayro sharing thank result current competitive applications, family we aggressive

[Operator Instructions] Sine of Securities. The first Capital Spartan Barry question comes from

not there Is a you we year-end. that's somewhere? around can preorders Z, wild talked a the actually of more some shipments? So how about into running by prototype there? mind, the that does those On actual mean don't year-end, Presumably, you get what visibility. then we And time in are XXXX, that's if little maybe many Maybe XQ. by if start revenue orders for

So let me answer.

number You of asked questions. a

one me go So and of let by those me one. kind let unbundle

all, So north have you remarks first for that chain we supply XX% our identified today, from of of my might the fundamentally Z. of note prepared

from are the number there accomplishment Ayro running through at what a production we a will the said, Ayro the we're Ayro because obligatory away moment testing. So supply X% the we a around first All Accordingly, build of level verticals, place are that Zs. where chain in chain will build Zs development that go we the supply can homologation and fully really those first XX at means production Z is, of and level. no verticals XX% level having

we them. We'll sale, do a We'll over. take units then sustaining roll things demonstrate we'll handful platform. a exciting very subjected vehicle most engineering them launching So performance, that all high We'll when make and be to remaining sure importantly, them. will a suitable very for further reliable, crash the We'll crush of the we're that high-quality is those and to very them. launch,

question, is to your year-end. we unveil answer would intention the at our to do -- So

in testing vehicle. get those as transitions production in is occur we at going low Our and year. point to we're we completed the commence do volumes aspired some forecast quarter early transition building performance this next production customers the time not but the And time, early at homologation build, And I'm offering soon potential from to production. I point have to. in not that expect on at we to low until -- of have with to payload a what initial we'll rate ensure intention plan initial quality ourselves level first just vehicle, that that configurations from that rate the as we're is full that to on feedback

answers at hope I your of questions. that half least So

couple you question been partners. largely of don't have answers mind. a ecosystem more, strong a I thoroughly. built has that That Ayro if with

of be one, of have be Galaxy, renegotiated, those are if the fine. first tick Some I remodified. to to those partners and presumably that list, And some to down seems relationships going the

You like Club put the think Z. their on I have Car, payload exclusive. they

-- you parallel, you're or selling with vehicles if So if you're outside you'll be to I'm now, Club not replace if Car them. go exclusive and can the assemble of them. Karma the sure allowed going to Z still

are to quality assume Current your has as unit. it you're have to my then and to go each them And that? the be starting we your they on of Z land on the Are are way if what Element, -- on renegotiated. well might them. and do contracts those. the support see as investors question we not presumably, with can like So sure issues can so mines potentially phasing that those you're Cenntro, I'm you -- out sounds what as through

the will and And number to great in I've right offshoring our a to matters a previous of a like answer onshoring there fact, negotiation changes various support. you strategy you've of is be way a accurate. And have of what outsourcing quality is of strategy certain -- now. some in-sourcing to is, that I disclosed There postulated strategy disclosures Barry, your things strategy to Well, from clearly, there those And way of what shift final be fundamental things in certain are question would under production, some relationships. the assembly, fundamentally and means it relationships. repositioning of is, that is, the will captured quite

Although we year. this you're will sunset quarter explicitly, pass say XXXx is and of number points this question -- making legacy the debate because in on answering at any will the negotiations, production third to that I we're I that time. would not amidst discussions of the point I although in What a of intend

we sunset it be Round here as the will standing in XXX production production, Rock, So the of up that simultaneously Texas. means we

I you number happy more negotiations but a I'll tell sorry, soon you more, tell be our to as conclude. can't of And as

Okay. year. Visibility No, the this for rest that's very helpful. of

times, given the or on So are you've presumably, the some given visibility. shipping being Presumably, long, already got then long times. either and lead lead manufactured units ocean the manufacturing the

going to start also the third sunsetting You've year. that in just the you're this act mentioned quarter

like? does see until start So revenue sequentially what the rest of the this a we to look year Presumably, start to think that it? models? Is way some next fair year to on about Z we decline revenue see ramping

the revenue have a of of about end It's the I Well, Barry, the it and is inventory our way would it I think source in serve our year. always built, through that about we of product, is hands. will way. Current different it, think inventory continued and vehicle an as in And this

XXX we rate that as homologation standing inventory articles and up first transition initial complete deplete we're new we we of the to our as production. platform low inventory, from As

anticipate disposition don't will profile that to fundamentally a will there inventory XQ year. So new remains up in will And be that an existing seen, this the revenue is transition transition be but terms And X. next be where ends year, of introduction XQ a playing of revenue the and of to the transition something I with inventory. a falls that how out circumstance occur

Z of negative really this [XX.X], If margin. over also you cash I cash. and be that just annualize And -- you I levels, the question I you before if will sufficiency you $X.X $XX X.X EBITDA get that unit next last million reported would be loss expecting that, I second run the ramping, the of the do years X.X an reported revenue. shipments generate of just just gross positive at out the a sheet especially million. balance If And in around year ratio is really I'm you'd that's that And Current and vehicle also to margin and that versus cash. of to make My years, half transition. Okay. the gross next math, would, starting expect in current

So out support adequate seems but looks it me that sheet we're the of to of balance the I'd to that management. doing, is to hear what love mouth

way I believe very, your thoughtful. of looking very it at is

Z And have just on margin you that the can gross units? positive you confirm to would expect a

is, working Z be this We're of Well, insanity. -- that to Barry, the leader it so not build platform leader segment. answer a expect we -- a a sustainability way. a quality leader, leader would be definition see and let to to its in me money. what a we a The lose reconfigurability and performance tirelessly to That's expect

every We on margins vehicle only money up rates to ramp. will supply on we expect as time from production as as we and as chain Barry, margins expect -- make we curve progress continue gain leverage. the to jump, rise over the know, and you the production we to those improve vehicles The expect

platform, can and also payload. the So the we're that's on not the that but accompany payload, And -- are the platform, the yes, platform. only on generated applications enabling direction we they'll the or And platform generated also from that the you I the further be separate headed. payload now might revenue earnings and the and on remember the infrastructure

Barry. So I that is insight bit hope a helpful, little

Amazon. comes The Instructions] Cozzie of next [Operator from question Steve

simple had one just question really. I

the included of guys bill? take the the that's do incentive EV voted of bill tax credit is in company? an being you Any any of the being With in being house, sort new and kind advantage on that introduced expect tomorrow

throw you tell would to bill, very we can I that incentive. whatever What that difficult need really the on is, and it's to determine gathered don't full we've going it. I think we're of Well, find

versus Our of in cost engenders platform you vehicle level priced a into the that are is at provides incentives, lot is that fairly does are on vehicles category. a our going where it be these it well and to A balance. not expensive, know, utility the fall that extraordinarily good as

will So tell the right it's we hard understand incentives which those is, now while of be the will to long know we don't incentives, applied. And there to extent just short right now. and it be

that. So answer I'm you sorry, give can't I for accurate an

turn session. to for question-and-answer Tom our the closing back to like would concludes Wittenschlaeger This I over remarks. conference

all I'd your in you and Ayro. participating our November. for in call you. Have our like thank forward on all. third Thank you, results conference quarter to look thank progress of quarterly sharing today's We we on Well, next pleasant report call when for interest a our to day.

Thank now attending presentation. The for today's conference has concluded. you

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