REE Automotive (REE) 16 Nov 222022 Q3 Earnings call transcript

Greetings, and welcome to the REE Automotive Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Kamal Hamid, Vice President of Investor Relations. Thank you.

You may begin.

thank call. for and quarter our operator, conference XXXX you, you joining all third Thank that have investors.ree.auto. hope issued We you earlier investor release this presentation and morning at seen our press

variety during beyond to the may statements. We referring uncertainties and expectations, results by like publicly remind company's and affect our different except statements. our that to will on you projections, refer beliefs, Please of obligation assumptions identifies and other of the future anticipated forward-looking reasons, today. call actual XX-F as include statements statements, to required presentation forecasts XX, to that could may results. March be many today's which which note and Securities our Any control. from I that filed risks prospects Form no the company's are be such a the update business, goals, would Exchange Please forward-looking statements forward-looking webcast are assume with law. describing forward-looking We XXXX, any Commission, the strategies, plans, by principal for

EPS. addition, see for will these In GAAP measures. measures providing including non-GAAP adjusted earnings discussing certain our EBITDA, to we non-GAAP or most a and loss reconciliation measures directly comparable financial release net non-GAAP be of their today, non-GAAP Please

our update; and Tech, Chief operations; Operating to our will turn results David this I Joining me guidance. update Financial outlook today provide with call margin Goldberg, a over and is our At Co-Founder remarks with discussion on on who and conclude and Daniel. our Josh financial will a Officer, prepared will the CEO, company’s point, Daniel the Officer, Barel, commercial who you will Chief additional

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new initial in of We receive coming The relationships, prospective We months, our fleets that a will after providing at the larger customers test these validating operators milestone And discussions prospective Commercial as that data customers first perspective. announce crucial will long-term on initial be These way we will large these will multiple as believe of expect the test orders be in these from REE talking not these logistics to truck scale very REE that significant in new well delivery, putting customers the with to America. the to importance has call, only to are To continue vehicle. the a will by and be efficiency. that options. a adoption vehicle very test last some feedback. vehicles orders clear, owners Delivering also driver introducing series without testing. duty than highly customers sensitive will by of e-commerce the task durability fleets to world's fleets We road-worthy better we're during beginning fleet to once, and rental vehicles vehicles orders in orders. not vehicle be have fleet. collect of into electrified fleet believe and their Introducing largest is adoption retailers mentioned be commercial positive some and of have operate I that scale make and North mark test our current test reach customers. is sense all the fleet And Power to of and and a are multiple about cycles. business to prototypes. uptime, or

working our how I like will look commercialization. to and With an customers we fleet sharing we pass to requirements. Our operations. meeting getting overall engineering more ensure be head that, resources fits will how and I perspective. on with we operational time And to and from to we towards are their them you are be to alongside technology would updates devoting will Josh? forward call their into Josh, the significant as there describe who understand

Thank everyone. you, Daniel. morning, good And

report XXXX, build of As this Daniel mentioned, I'm we out year. capacity finalizing in After have quarter are the our end expected the and from to engineering and center engineering is of the standpoint. both quickly all in moving a integration established products with that third by competencies the first process been to major pleased capacity place. functions our Also built all equipment have required out place at in core

assembly products the advantages an strategy line. will As in automated cells. stations and deploying work production facilities scalability autonomous cells, this There between and assembly robots up assembly several is approach. line much vehicles will production a to make than can line. both flexibility stations mobile for to that manual while reminder, our our cells REEcorner sub-assemblies will guided the used we're and provide in end-of-line autonomous traditional auto-boxing move electrical processed These are bring where assembly, tests An manufacturing and alternative in cell a greater robotic these

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scale on can production also meaning we Second, variant’s down a end scale automated line demand. up that the modular or and highly flexible, is future

be plug at and and lifted as centers and one global assembly integration efficiently lines format. apply Finally, as sales future production required standard using the can we play installed

subsystems far us our traceability global to visibility we Axle the centers. our provided integration achieve a production production build by cloud-based enabling Unlike scale be a solutions. significantly of flexibility. preassembled and us facility, where third to a requirements top companies, with our of assembly line on full perspective size view us our line line-side American giving allows can an with approach and It's controls. CapEx-light execution to allows overarching integrate and working and integration us are into the degree will supplier de-risks We REE other locally control, This along that centers from linked as partners, for optimize manufacturing many we solutions, such and to central party partners to are of our all and Brembo. across deploying operations to greater These complete use

for before, electric are REE level. record the for track responsible at us vehicle as certification the on shared the we Homologation vehicles and of manufacturer making homologation and certification itself As activities of a progressing platform. is establishing

are functional anticipation our of core the enabled mission-specific design and the safety test validation of UK in fourth development Additionally, the miles intent and fleet accumulate progressing production engineering software in In variations the elements quarter. according control meantime, the key to continues by start in development for to REEcorner testing system of plan.

fleet will in test In take place currently addition complete building our REE early validation which in running for XXXX, vehicles to is test Sweden. test vehicle through winter actively levels,

first we in plan David? Our automated XXXX. on winter In to to order manufacturing cells. and REE's of begin We're efficient will financial our to as commence test assembly to to half comprised XX production methodically production be safety vehicles be production modular of second and quality, are expectations, able meets production the excited produced a scale ensure we intent line line to that line ramp assembly vehicles rapidly efficient remain the on evaluate will highly hand track teams validate I REE’s goal highly carbon-neutral of at hard optimize that, over the future. results. CFO like would processes REE to this and center end world operating towards and David the discuss their the dedication With across we more as world move making the for as a a and towards safe work thank Goldberg, integration with we sustainable I our fully-electric call vehicle to a financial to capacity.

Josh, you, and good Thank morning.

for that our Before third reviewing the you low breakeven volume believe quarter prices I'd is Proxima results with REE Center. provide up truck, early to briefly can investor as annual production capacity input for the the ready a With expected facility with required vehicles our economics initial production. the XXXX financial to gross reiterating this volume company's and margin, of intent able by of is a give breakeven unit reach XXXX, contribution of we plans are With next like recent when competitive and box initial year. that to question guidance we market discussions. expectations for a the achieve Powered largely known, scale analyst designed we you and economics to we has sense achieve PX-B unit and for positive margin and has the vehicle for production with our orders, share guidance a Integration in come our costs vehicles. for in our this It production XX,XXX thousands discussions pricing provide at Remember, Coventry

XXXX. the a of The second operating related along development net Now turning increase to income net million lower million XXXX, $XX.X quarter the GAAP with the of compared quarter of is to Non-GAAP quarter higher of expense net XXXX the second in production to costs. to mainly to and results the quarter company capacity a in increased related loss expenses. our of timing from the in recognition due The loss quarter. in third million for of $XX.X $XX.X compared $XX.X third reported of to of primarily warrants XXXX re-measurement loss million

issued the company its outstanding of of and the simplified both A million related The ordinary to exchange XXXX, announced for company's Class capital impact quarter the previously and private all and exchange During in potential the of and its exchange to offer structure third company dilutive ordinary shares the warrants. X.X public shares warrant placement public purchase reduced completed private warrants A pricing warrants. the Class

shelf the portion raise business under did of not registration program third the milestones. $XX and to that allocated at financial million the the REE use intend Finally, to ATM REE program any S-X of filed under opportunistic discretion. to ATM to equity shelf flexibilities plan a ATM do in currently and on based aftermarket a XXXX. Form the issue with We provides the up of company an us program our a allows shares the to own issue not additional total program program. The company's shares

no had we approximately million As of of $XXX debt. September and and of liquidity comprised cash investments, short-term XX,

commercial take related meet second range of as XXXX expenses. $XXX some half $XX capacity both remain and of in to and are UK is budget million approximately funding the sufficient These are committed $XXX to largely operating of included have establishment incurred the year. expenses inclusive cash production. to that million mainly This the may portion operating guidance expenses. to a effectively to continue of our We related not spending is for of establishing integration being I through capitalized in range. in recorded the the in be PX production investments initial center. and will be note million of to program the our of this on-track Investments at We capital to XXXX

according It plan mostly is communicated. technical to comprised of our the PX OpEx we and execution spend have will that the product our to programs required mirror execute engineering of to milestones. important our timelines Our is remember costs

those defined MOUs business The expanding or/and accelerate. or programs in example, Today, may For on to scope, executing additional opportunities focused require pipeline deliver plan. we commitments may liquidity our other clearly remain opportunities. spending existing convert company firm to our

significant the towards budget opportunity executing allocated While our the we commercialization are a the platform we REE today, targeting believe Europe. and PX in U.S. markets been of the beyond exists vast majority the for has of

we Before we that for to remind open I'd you I up have call like model. CapEx-light Q&A, and conclude a the business

this earlier, that very multi-thousand described lines. a different company Josh than As is full with large framework builds factories a vehicle production

different very many of Our liquidity needs than our are therefore peers.

of without we our up With and committed product customers. on responsibly deliver to would compromising to to Operator? headcount our grown have we Additionally, that, are we our retaining the questions. lean like profile quality the the open call to

comes Mike We Instructions] first & will from question. D.A. from [Operator It the line of Shlisky now take Davidson the Company.

Just of model? ordered? been you B commentary tell each Can for that order the you what And of of points couple number and of of approximately us Daniel. finer customers the some what have a boxes number made,

Hey, good morning.

course. Of

significant Powered placed. orders orders are ever world the So, we've orders with vehicles, right? are received largest the the And by volumes. orders largest for For Proxima fleets EV These both PX-B. they’ve and both from customers the that are the several in REE, these

of matters which think those don't that the opportunity REE the I vehicles That here extremely long-term and the think with order for and initial us the be it's what in by but gives it's years. ability the magnitude EVs is them, their Powered for validated important over Now, scale ramping putting up supplier it the of I to fleet, size customers.

last with an couple Fords in you part X that to of a hoping you be and Or at different let X I fight the vehicle you were company manufacturer. with also I do class plan EAVX GMs of it saw space? to And platform one the that? that Were model? model additional class a out that over announced Proxima a This the days. looking believe

or The PX X. is class Xs designed platform is to for aimed

we class would we're but I sides. down a is So on imagine it's would currently top I Xs X. looking and class North And EAVX X focused class not America. them, mean relationship to PX, company, built exclusive in of totally and for the road, laser Xs. of is JB course, And Group at the hand both us largest, is Poindexter that builder between great later be course which

still see their third-party And then platform their maybe around artwork last plan to I've you to a years. chassis to add? the me. companies EV vehicles help in Can plan other you're similar in started the other coming a one offer would EAVX how companies use platform. of vehicles the just or outside their eventually with in a that's it’s maybe in for imagine to who that I one REE many use talking PX future they

current with about EAVX commentary or companies the time? chatting that beyond you're other number some at Just also

assume Yes, that, collaborate where we hand OEMs REE exactly a Powered chassis in complete, Powered built to faster to few there to are so with on we And compete are a to chassis move a that that looking The electrification. right want companies under it for quite towards looking are any brand top the by actively there. right? and course would and we be as REE to manufacturers of whole them -- able looking strategy vehicles, and their want market REE order would on by offer few exploring we're out speaking be path to to not is have

that will those. guys right active we the on there But when is is time you matter. update can the naturally So on discussions say I

Thank you.

the We from ahead. line question. and will next Osborne It the go comes now of Jeff Cowen Please from take Company.

Your line open. is

on end orders. Are up curious mind, deposits Thank taking the where those of you. would you if the don't sheet? great. you and on show questions Okay, was my on couple A I balance Daniel.

of financial taking accordingly upon would not be deposits. assume We're recognized deliveries. would to orders. We're all, the requirements So good on Jeff. taking deliveries I they --according first And of our morning, payments

update then if to could be as of six are the I didn't What on should the us And the months? you you the know next it. second half seven that move watching over into milestones homologation we timing production. Got

That's a good point.

of XXXX. the we for PX So half of chassis on in in undergoing on the Proxima second both track course, vehicles order the homologation, chassis. REE, the and road on the to Powered is by are Homologation the for put PX-B

look milestone be of our We that in next towards year should the And winter of homologated quarter year. plan. that next then certification third by the quarter the major for will of happen to second should think according you beginning tests the fully next I year. is the

then Got the you've don't ones. vehicles quick that that number are be you XX, would the I testing? give Any it. fleets. –digits? other know this two helpful? point to at a XX, of of Is number of fleets the engaged And sense or scope of number actually want of give perspective this us single you Could sold in

not evaluated on my having digits double don't to that It's numbers, just course. make important want to And concentrating and sure we're book. points the been order the that significantly Europe. in products we're of tested Of we've I prioritizing prioritizing those in give the and we're XXs want what companies both and I doing deliveries And the U.S. that have our our significantly in is view. in

and are on extremely emphasize not orders. the as to or production. It's everything The production. headline. we we it's a and receiving accepting be move orders that think to are orders put orders important literally into take It's are shelf I those for what

numbers given is concentrate in is those and delivering course, the you for I the to lowest our to them deliver your that deliveries just do the delivered. down especially order that time the on capacity This we going initial be to it's disciplined those those us believe I of production accepting world, is have want why customers is important question. of that, on answers thing in this most in why really, quality, that, for and itself. the orders. orders I to then orders and less leading and think hope the very prioritize the really, really manner to be because important the to TCO. line And capacity, each received on to of the produced So And we on

to year? about I you 'XX had OpEx one as last we $XX profile hopefully just, relative next million of should And didn't for guided? CapEx you give bit Coventry update XXXX, cost really an Austin, and decline of a we the similar And that but of think the for is a helpful. development That's that you in on assume this about costs then a year

Yes.

guys I those When when of economics very think deploy relevant UK naturally And for at it quality the maturity integration best line first we in scalability of the operates of when all I spend delivering as way control at there important we'll second the from on you then for should integration needed with center. unit that see vehicles. it's the look making center, stabilizing Austin, we it is, in to guidance think demand to initial at you high January Austin, kick-off sure on the give will look order quality and line. look it for orders, our and those. level of the we well the And maturity the to and

you. Thank

We will next the comes from Please DiMatteo from of question. It line Tyler BTIG. go the ahead. take now

open. Your is line

Good like, Can deep on you you different how in the that add you are to up -- or made prioritizing doing you customer about morning. Are just it. on about order contracts color prioritizing that would everyone. other Thank thinking the before? wanted bases? to I the you. Daniel, delivery just think the book. some taking any question. Thanks certain are require about of there comment Hi, for how more appreciate follow I those terms color

this I is very And think important a question. Sure.

of road We a is as the about we want the it as on our be enough everybody place is, counts, And to them, to up. ramp everything an EV because in we bit ramp to that. And the the do to has need in else, putting the we customer prioritizing Like make our most we make you side going road. we they of Taking phase. we putting not are sure that or interested second infrastructure to difficulty] get [Technical the I that The take. a infrastructure on have customer that -- it, you largest mind they a that directly to produce course it, sure and very the each think with vehicles last course, in the and you vehicle because customer most deploy we that want in and serious peak order least, that the complicated biggest are test think serve know road. fleet are we putting orders of of our keep it's production, be moment up and Prioritizing the of be have. the to nobody they the needed to able that but orders to work is big serious only commitment on then that going customers on

they're requires And Sometimes of is, three -- that a on are highest fleet. new that only a it's of all them, not time place. that vehicle customer those a the a to that I and resources, the very taking we're orders we goal this quality. levels the mentioned on that new -- and with fact deliver just behind the acceptance reasons financials it for and lot prioritizing is from when reason the And adopting decisions of the and

customer. weigh or, the just it I is terms other you U.S.? of numbers that of customers, most? logistics given if probably like also type a is So then at side, a fleet you not us give seeing the in an Thank the interest in get would then demand commercial one the general the from level may of Without now And regional getting proportion kind can details, you're kind very update in here, color obviously any be kind what from say strong, the surrounding curious to you. that on just had important, or if my appreciated. of in because of specific would So just any the where that second and be most of sense one look

they North with So working and dealers operating largest the America. span, we're the and have world global U.S. in in Therefore, they're across fleets and a all the

question, be right be would the that and ability it U.S., will the states within infrastructures, New the others. more think the And on and faster part deployment of incentive the of their I York, first in because to second easy, your chain, and moving can California, to manufacture because we I stabilize mean, beginning the the friendly plans assume again UK U.S. in deploy Texas a the then of in whole both in the we U.S. that in and we and into can have once supply global -- the serve from Austin of preliminary it Europe, the

what So not display there global to want margins is one them a our a be. we but us chain, keep going actually to according supply centralized allows be to that to

Langan from We It will now take Colin Wells Fargo. of the next question. comes from line the

any broad or many any of in are these of any test don't of actually you have mentioned, have of orders? how circle XX talking you color I customers mean, though, vehicles, have of we tested, are test sort size context fleet that, Is that And -- three all Any mean, taken It's the Just orders, I orders? of guideposts there is really get? taken we XX think on vehicle? I can over the terms just we could color provide I back. hundreds dozens there? also to talking or sort

are what whom can sure. importantly even the Good on that announcements, size. and ordering. with I on that us I exactly Yes, those more the for is think want to control a been, for we that customers, be mean, side, morning. to significant those both have and order it is able say narrative are that the I for number,

with far customers So I think, partners news coming on in and the we sharing weeks. our will together more that be

Is orders? hundreds hundreds what that is So significant? is then, that of

again, will…. assessment. mean, be And I that fair a we would

these what getting And testing between terms be expecting those convert? is that orders you to sort timeline of and orders? firm of Is actually in to getting are the What going months?

orders sorry, -- I'm to scale you Convert mean? to

to test orders scale orders orders. They -- real were yes to

to more and some that based the way that. to the Because a few in fleets, test [technical some it it test want test than a would at fleets weeks conversion right? customers and look no to for is themselves. And some need are there vehicle customers, would you difficulty] are on for depends customer on think the test for want I the it

product case satisfied So It's they are and and straightforward moment the nominated it's case the happy an approved then to orders are I a by process. start and a think flow. supplier honestly as with we

Okay.

it so could So it's -- longer. not a weeks, be be much it could

is a when price it out then as as vehicles contribution test your could those at same when least so you a normal fleet being on of we Okay. test the or deliverative cost or should basis? maybe the sort more is you're as about they variable And think it ordering, profitable order

it's bit to talk Naturally difficult a Yes. about pricing. little

that – of team test to Here with but we when the we that chips fleets, our to want to the keep product product. be to not extra engineers validation does you an of vehicle, those cost only do say look at us. not -- that the there test negotiation testing would is able with and ensure deploy fleets successful together include the the I and

of get I a test sense customer's guess I I'm here kind a I or perspective, buy a of I a commitment discount getting saying am just from do when their financially?

team. for actually a itself, you're only be for more is I'm you paying because saying expensive little a program are vehicle it's supporting paying not No, the as a

are And paying for supporting those they team?

course. Yes, of

at final hand There time. I this questions phone like over are back would to remarks. the this further for to speakers no on

Yes.

customers team good everybody, So and I our happen. thank in I for us us. and support to want be this to they course, appreciative work for take and very thankful want did you hard and to thank with this all. that, And have their you thank beyond placing day. above of this quarter, call. at order to of extremely everything opportunity want given a going in during And I with have to everybody our confidence REE course that orders And make joining in

for does conclude for you conference Thank today. That our participating.

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