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spk01: Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the ARO, Inc. First Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To require a question, please press star, then two. Participants of 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 one hour after the call through August 2, 2022. I would now like to turn the conference over to Scott Gordon of CoreIR, the company's investor relations firm. Please go ahead, sir.
spk03: Thank you, Keith. Good morning, everyone, and thank you for participating in today's conference call. Joining me from ARO's leadership team, are Tom Wittenslager, Chief Executive Officer, Dave Hollingsworth, Interim Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address ARO's expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in ARO's most recently filed annual report on Form 10-K, subsequent periodic reports filed with the SEC, and ARO's press release that accompanies this call, particularly the cautionary statement in it. Today's conference call includes adjusted EBITDA, a non-GAAP financial measure that ARO believes can be useful in evaluating its performance. You should not consider this additional information in isolation or or as a substitute for results prepared in accordance with GAAP. For reconciliation of this non-GAAP financial measure to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in ARO's earnings press release, which is available on its website at www.aro.com under the investor tab. The content of this call contains time-sensitive information that is accurate only as of today, May 2nd, 2022. Except as required by law, ARO disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO Tom Wichslager. Tom, please go ahead.
spk04: Hey, thanks, Scott, and good morning to everyone on the call. In our fourth quarter and year-end 2021 conference call a few short weeks ago, I spoke about our targeted focus on the low-speed electric vehicle market and our desire to move quickly to maximize the value creation for us in that sector. Our strategy's cornerstone involves creating a new North American-centric supply chain to avoid the costs and delays that have become the historical norm with the company's Asian supply chain. I also talked about how expense control would be paramount even as we were developing our new Aero-Z model year 2023 refreshed low-speed utility vehicle. Lastly, I also mentioned that we still expected record revenue from the club car current in both the first and second quarters of 2022. Well, I'm happy to say that we executed quite well on all those fronts, and our corporate outlook, strategy, and timelines remain consistent and unchanged from our previous discussion. Revenue in the first quarter of 2022 was $1.03 million, a 30 percent year-over-year improvement and a 26 percent sequential improvement from the fourth quarter of 2021. This was also record revenue for the company and the first time quarterly sales surpassed $1 million. Despite the global supply chain challenges faced worldwide in nearly every vertical, our internal team and corporate partners delivered exceptionally well. We continue to expect higher sequential revenue in the second quarter. Due in large part to reduced headcount, the elimination of many consultants previously used, and careful general expense control, we reduced our net loss by another million dollars to $4.6 million in the first quarter versus a net loss of $5.6 million in the first quarter of 2021. This is a continued dramatic improvement in net loss under my tenure. $7.4 million in reduced net losses versus a quarter six months ago, and $3.2 million in reduced net losses versus the fourth quarter of 2021, even as we enjoyed record revenue in each of the last two quarters. Expense control remains a vital part of our strategy even as we now focus on ramping design and production efforts for the Arrow Z. A 62% decline in the net loss in my first two quarters, along with a 41% sequential reduction in net loss from the fourth quarter to the first quarter speaks well to our team's ability to execute and maintain cost discipline. Additionally, we expect the net loss to narrow sequentially again in the second quarter. Our balance sheet was quite strong at the end of the first quarter, with $63.5 million in cash and marketable securities and no debt. And we believe we're well positioned financially to fully execute our strategy of designing, manufacturing, and launching the ROZ. The design phase of the ROZ continues to progress, and we continue to be on time and on budget for a launch by year end. We've identified suppliers for over 70% of the components of the Aero-Z. And the first Aero-Z unit, or what we refer to as the mule, is currently in fabrication. We've also begun configuring our factory floor in Round Rock so that we will be ready to begin scaled production later this year. This factory startup will take some months to fully prepare and complete. But this can be done in parallel with other phases of the Aero-Z's design and the mule fabrication. Our team at Aero is quite experienced at such startup and manufacturing operations. And again, at this point, we are on track with our development timelines and budget. The Aero-Z will offer major technology upgrades over the current light duty electric vehicle we offer in the marketplace. We believe it'll be ideally suited for campus or arena environments or any indoor environments where the creation of fumes from traditional combustion engines would be an impediment or hazard. It'll also move towards redefining the term sustainability in the low-speed electric vehicle space by being lighter, less emissive of various toxins, and comprised of a greater mix of sustainable materials other than alternatives existing in the market today. Additionally, in many urban environments with low speed limits, we believe the ROC will be an excellent vehicle for food delivery, given the numerous food box architecture, configuration solutions, and other enabling technology infrastructure, such as telematics, logistics support, and route optimization we intend to offer. That concludes my opening remarks. I'd now like to turn the call over to Dave Hollingsworth, who will review our financial results.
spk02: Dave? Thanks, Tom, and good morning, everyone. Here is a summary of our fiscal first quarter 2022 financial results. Revenue for the first quarter ended March 31st, 2022, with $1,026,846, an increase of 30% year-over-year and 26% sequentially. The increased revenue is attributed to increased unit sales and deliveries of the club car current light duty EV. The total operating expenses in the first quarter were approximately $4.4 million as compared to $5.8 million in the first quarter of 2021 and $5.2 million in the fourth quarter of 2021. The sequential decrease in total operating expenses was driven by an overall repositioning of engineering, design, and manufacturing partnerships. Adjusted EBITDA, a non-gap measure, in the first quarter of 2022 was a loss of approximately $4.2 million versus a loss of $3.8 million in the year-ago quarter and a loss of $7.1 million in the fourth quarter of 2021, representing a sequential improvement of approximately $2.9 million. Net loss in the first quarter was $4.6 million, which was an improvement from the net loss of $5.6 million in the third quarter of 2021, and a net loss of $7.8 million in the fourth quarter of 2021. The improved year-over-year net loss in the first quarter is primarily attributable to the decrease in total operating expenses following management's strategic review and implementation of cost reduction measures. Cash and marketable securities at March 31, 2022 was $63.5 million versus $69.2 million at the end of 2021. Total debt was zero at March 31, 2022 as it was at December 31, 2021. As of March 31, 2022, the company had 36,909,956 common shares outstanding. That concludes my prepared remarks, and I'd like to turn the call back over to Tom for any remaining remarks.
spk04: Hey, thank you, Dave. In summary, our team is executing our strategy quite efficiently, as indicated by our first quarter results. Revenue surpassed $1 million for the first time and reached a record in the first quarter. Expenses are down dramatically. Our net loss has been reduced by 62% from the quarter before I arrived to the most recent quarter. And we're in the thick of developing a new vehicle with new components that would be sourced in North America and manufactured at our own facility right here in Round Rock, Texas. We expect sequentially higher revenue in the second quarter of 2022. and improved net loss sequentially, and we will continue to maintain discipline in our total expenses. I'd like to thank our shareholders for their support. I look forward to sharing additional accomplishments and developments as they unfold. And with that, I'd like to turn the call over to the operator so we can begin the question and answer session. Operator?
spk01: Yes, thank you. At this time, as mentioned, we will begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. This time we will pause momentarily to assemble our roster. And once again, please press star, then 1 if you would like to ask a question. Just one final time, pressing star and then one will allow you to speak. All right. At this time, then, I would like to return the floor back over to Tom Vintenschlager for any closing comments.
spk04: I'd like to thank all of you for participating on today's call and for your interest in Arrow. We look forward to sharing our progress on our next quarterly conference call when we report our second quarter results in August. Thanks to all. Have a great day.
spk01: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
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