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spk00: Please be advised we may make forward-looking statements based on current expectations. These are subject to significant risks and uncertainties, and our actual results may differ materially. For discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release and on our most recent Form 10-Q and 10-K and reports that we may file on Form 8-K with the SEC. All of our statements are made as of today and are based on information currently available to us. Except as required by law, we assume no obligation to update any such statements. During this call, we'll discuss non-GAAP financial measures. You can find the reconciliation of these non-GAAP financial measures to GAAP financial measures in today's earnings release, which can be found on the IR section of our website. With that, I will turn the call over to Tony.
spk02: Thanks, Nick, and welcome to the team. And thanks everyone for joining us as we report the fourth quarter and the final fiscal year 2021 wrap up. As we kick off fiscal year 2022, it is the perfect time to make clear who we are and who we are not. We are not a traditional OEM. We are a high tech advanced mobility company. I believe you're all starting to put the pieces together and the best is yet to come. So I want to thank all of our supporters because you are also innovators and you see the same future we do. We are in it to change it, to build a company that is valued as a true high-tech, customer-centric, advanced mobility company. We know this takes time, sacrifice, perseverance, and even at times, persecution by those who don't believe enough in the future and how different it will be, but we do. Those who join CANoe, if they have the same ethos, they will make it here. They find their home, passion, and mission to build a high-tech, cost-affordable, long-life ecological platform that is built upon diversity and inclusion from the very beginning. We're not looking to create the next GM or Ford. We respect them, but we have no desire to be like them within our culture and or the long-term outcome for investors. That said, we want all American OEMs or those working in advanced mobility to win. For us, this isn't just about competition to win. It's about competition for American innovation and ingenuity to win. Those that are looking for just a job and some stock options are like travelers passing through on their way back to Detroit. At the very least, we hope to leave them more inspired. We've decided to make our home in the heartland amongst many great founders and founding families that are innovators generation after generation that have protected the cost of living, higher education, affordable housing, health care and inclusion, blended with art, culture, and the adventure of American nature. We are grateful and proud that Oklahoma and Arkansas and the Cherokee Nation are where we will make our platforms and our new home. These three coming together allows us an amazing workforce, people that understand what it's like to do what we do. By bringing two states and a nation together, we have greatly decreased our risks and accelerated our ability to grow. Before I get into the big news or no news, I'd like to give a few shout outs. One, to Governor Kevin Stitt for the State of the State speech, especially the announcement to pass a bill for veterans to not pay state income tax and his commitment to increase taxpayers and not taxes. Two, to Governor Asa Hutchinson for his commitment to electric charging stations across the state of Arkansas and for the creation of the Council on Future Mobility. And to VDL and the Vanderlei family and Willem in particular Thank you for your support and partnership as we made the decision to bring back manufacturing to America ahead of our schedule. We remain here to help you in any way possible, and we hope your new deals come together. And especially to the team of CANoe, those members who have embraced both the re-founding and the aggressive execution of our plan. Bringing manufacturing back to America was an important decision, as we can all tell by the geopolitical backdrop that is developing in front of us and will be with us for some time to come. At the time, I know the decision was not popular to many of you, but as you can see now, it was the right decisive action to take. Just to give you one point of how it's mitigating our risk, Those that are still focused on manufacturing abroad and bringing products to the US are facing rapidly growing shipping costs, supply chain disruptions and risks, labor cost increase due to inflation, and a great amount of currency risk. We believe many others in the coming quarters will have to explain their actions to mitigate increasing cost and volatility. We believe that could be impacting by up to 25% in weeks to months of additional lead time. We are located in the heartland, where we can reach anywhere in the country in the least amount of time by road, rail, or water. We believe this to be an important arbitrage that will be significant in the years to come. There is a reason why many of the greatest companies are quietly dug in to the heartland. This part of the country delivers a disproportionate amount of goods to American households every day. We are inspired by their disciplined approach to creating value for America. So let me recap some of our key decisions. We secured a lease for our advanced manufacturing facility in Bentonville, Arkansas, and broke ground on the second expansion. 40% of the equipment that is slated for Bentonville is already purchased and being used for our gamma builds. And a majority of the remaining 60% is already on its way. 70% of our machinery and tooling capex will be located in America, and we will continue to build upon this. And we have started laying the foundation for our mega microfactory in Pryor, Oklahoma, We've begun clearing ground, selected our group of partners that are helping us to execute the project. I will share more details with you as appropriate. Sourcing and supply chain. Manufacturing in America isn't just about assembly. It's also about sourcing. We are grateful to be one of the first companies that is 91% partnered and sourced with American and or allied countries. 750 parts of our 1800 parts in our bomb from the LDV is sourced in the US and we will continue to bring back more to America. We are now 93% sourced for our LDV. I would like to thank OESA for recently hosting us at an event with more than 250 primarily American and allied nation suppliers to explore future partnerships. Now on to supply chain. What's happening here shows the wise decision to pull forward and build in the US. If you look at our moves, our RBIs speak for themselves. As we've said before, we need two to three times less parts to produce our vehicles, which puts us at an advantage compared to a typical OEM. We are seeing some supply chain issues, but they are isolated to some of the semiconductor chips where we are seeing a 35% increase in lead times. We will continue to closely monitor and update you on these developments. The geopolitical and pandemic impacts have proven out our strategy to accelerate bringing production back to the US. For a Gamma build update, as you know, we are now in the middle of our Gamma builds, and I would like to share some progress. To date, we have built nine complete platforms and 15 ladder frames, produced 411 modules and 24 battery packs. We also finished 25% of the full slate of battery-packed testing, with the remainder scheduled for completion in Q2. With that said, we had hoped to build more vehicles, but January was a tough month because of Omicron. We anticipated some of these factors. The number of gammas we announced to build was greater than the gammas we needed. This played into our favor as we navigated the impact of the virus. hitting an optimum threshold for testing. But the team worked through it, and we have five gamma properties undergoing critical winter testing that is higher than most OEMs plan for. On the sales side and go to market. On the sales, we have signed a definitive purchase agreement for 1,000 vehicles for the state of Oklahoma. This would be a Stage 3 order by our definition. With respect to our Stage 2 orders, they have now grown to 14,962 units, a 60% increase over what we disclosed in Q2, which includes 1,000 vehicles for the state of Arkansas, which we expect to move to Stage 3. We remain focused on delivering 3,000 to 6,000 units in fiscal year 2022 and 14 to 17,000 units in 2023 for a cumulative of 17 to 23,000 units across this year and next. At this pace, as we advance sales negotiation with several potential partners, we are anticipating being oversold for our production volumes for 22 and 23. We are now shifting our focus to customer allocation and ways we can accelerate our delivery. On the go-to-market side, when it comes to new vehicle launches, consumers have had a consistently inconsistent and unpleasant experience. We have studied this carefully and have experience in entering new markets and scaling them quickly. In my prior life, We achieved rolling out a new region every 60 days. We are initially targeting our phase one rollout in the heartland itself, which would be Oklahoma, Arkansas, Texas, Missouri, Kansas, and possibly Tennessee. We will announce phase two and three at the appropriate time, and these will be tightly aligned with our customer experience and our customer agreements. Moving on to other updates. We are in a capital-intensive business, and we take a disciplined approach to managing our capital, our dilution, and the timing of raising additional capital. We are focused on non-dilutive sources of financing to help fund our growth. To date, we have secured approximately $400 million in non-dilutive incentives from the states of Oklahoma and Arkansas. In the quarter, Oklahoma awarded us, from the Governor's Quick Action Closing Fund, $15 million to support American job creation and infrastructure development. Continuing our focus on non-diluted capital, we are now able to access new sources of financing ranging from asset-backed inventory and working capital-based credit lines. At the appropriate time, we will disclose other capital-raising efforts. Before I turn it over to Ramesh, while we had a pretty good Q4 and a decent January, we continue to remain in a vigilant stance in these evolving times. And now for our financial route. Ramesh.
spk01: Thank you, Tony. Our fourth quarter of 2021 results are as follows. Research and development expenses of $88.2 million for the quarter compared to $90 million in the prior year period. Excluding 3.1 million of stock-based compensation, research and development expense was 85.1 million. SG&A expense was 50.7 million for the quarter compared to 35.7 million in the prior year period. Excluding 15.5 million of stock-based compensation, SG&A expense was 35.2 million. GAAP net loss was $138.1 million for the quarter compared to a GAAP net loss of $9.2 million in the prior year period. GAAP net loss in the fourth quarter of 2021 included a $3.3 million non-cash gain on the fair value change of earn-out shares liability related to the periodic remeasurement of the fair value of a contingent earn-out shares liability. Adjusted EBITDA was negative 120.3 million for the quarter compared to negative 42.5 million in the prior year period. Our fiscal year 2021 results are as follows. Research and development expenses of 246.2 million for the year compared to 142.9 million in the prior year. Excluding 25.8 million of stock-based compensation, research and development expense was 220.4 million. SG&A expense was 194.7 million for the year, compared to 51.6 million in the prior year. Excluding 82.3 million of stock-based compensation, SG&A expense was 112.1 million. GAAP net loss was $346.8 million for the year compared to a GAAP net loss of $86.7 million in the prior year. GAAP net loss in fiscal year 2021 included a $104.4 million non-cash gain on the fair value change of earn-out shares liability related to the periodic remeasurement of the fair value of a contingent earn-out shares liability. Adjusted EBITDA was negative $332.6 million for the year compared to negative $108.3 million in the prior year. Turning to the balance sheet and cash flow, we ended the quarter with $224.7 million of cash and cash equivalents. Cash used in operations for the three and 12 months ended December 31, 2021, was 120.2 and 300.8 million respectively, compared to 42 and 107.1 million for the three and 12 months ended December 31st, 2020. Capital expenditures were 62.6 and 136.6 million for the three and 12 months ended December 31st, 2021 respectively, compared to 6.3 and 7.6 for the three and 12 months ended December 31st, 2020. Tony mentioned two points earlier that I'll share more details on now. First, I'm proud to announce today that we have successfully remediated all five of our material weaknesses in our internal controls over financial reporting. We added to our high quality and experienced staff to accomplish this with our second 10-K filing. I would like to thank each member of my team, the wider canoe teams, and our external advisors for their support as we achieve this important milestone. And the second point I'll expand on is VDL has returned our entire capital, a prepayment of $30.4 million. On a constant currency basis, The return generated is equivalent to creating an additional 11 engineers or 30 manufacturing jobs in the Heartland. We also received an equity investment of $8.4 million. Turning to our guidance. For the first quarter of 2022, we anticipate the following expenditures. approximately 95 to 115 million for operating expenses, excluding stock-based compensation and depreciation, and approximately 60 to 80 million for capital expenditures. Before we open the call up for Q&A, I'll turn it over to Tony for closing remarks.
spk02: Thank you, Ramesh. We are committed to bringing high-paying jobs to local communities. We are honored to place special focus on hiring veterans and Native Americans. And we're thankful to see that come to fruition as we move to stand up our facilities in Arkansas and Oklahoma. I would like to thank all our supporters and partners again. We are doing something different here and all of you are incredibly important to us. We will continue to keep our heads down and stick with our philosophy of big news or no news as we execute. on our vision. Thank you.
spk00: Thank you, Tony. Please navigate to the webcast landing page and access the video link on the right hand side of your screen below your audio player. We will pause briefly while you watch the video.
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