Canoo Inc.

Greetings and welcome to Canoe's second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Nick Cunningham, Senior Vice President of Investor Relations and Capital Markets. Thank you. You may begin.

Great. Welcome to Canoe's quarterly earnings conference call. This is Nick Cunningham, and I'm the SEP of Investor Relations and Capital Markets at Canoe. One of the things that makes Canoe so unique in this stage of our development is how close we are as a team. Getting to see the progress we make on a daily basis is really exciting for me, and I'm looking forward to seeing everyone's reaction as we get closer to SOP. Today I have with me investor, chairman, and CEO, Tony Aquila. Interim CFO and Chief Accounting Officer, Ramesh Murthy, and SVP of Corporate Development, Kunal Bala. Tony will provide an update on our business. Ramesh and Kunal will then run through our financial results for the quarter, and they will turn it back to Tony for closing remarks. We'll then open the call up for questions. 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 10Q and 10K and other reports that we may file with the SEC, including Form 8Ks. All of our decisions 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 . 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. Now, please navigate to the webcast landing page and access the video link toward the bottom left of the page. We will pause briefly while you watch the video. Great. So today we're going to be covering some key themes during the call. We're going to do an update on orders and our sales pipeline, financing strategy, our recent investor roadshow, our gamma phase completion and testing update, a recent partnership announcement with Walmart, a manufacturing update, and then the announcement around our contract with the U.S. Army, while Ramesh and Kunal will cover our financial results. Based on the video, I think you can see why... and all of us here at Canoe are so excited about our technology. For those of you that joined us in Boston and New York, I'm sure you can appreciate the sentiment. And now I will hand it over to Tony.

Thanks, Nick, and welcome everyone to the call. Thank you all for joining. We wanted to share that video so you could see for yourself our vehicle's unique attributes and how well it performed in those extreme tests. In the quarter, we achieved some important milestones while navigating a tightening environment. We announced significant commercial partnerships, including our agreement with Walmart, a catalyst and market validation of our technology platform's competitiveness as we pull forward our LDV program. Our gamma vehicles are already in the hands of our partners and customers, both current and future. Over the past five quarters, we have worked to guide the market to understand our different approach and that we are a technology-first, customer-centric, advanced mobility company. And we understand true total cost of ownership because we come from the service maintenance repair technology side of the industry. We have always had a focus on minimalism with maximum functionality. with a commitment to be America first and key allied nations sourced and built. We are proud to have been the one leading the charge to bring it back to America. We are also very pleased to see the Inflation Reduction Act move forward and is another event that validates our strategy and approach. Last quarter we shared we are able to build vehicles on our platform using only 1,800 parts in our BOM using our technology-first approach, and we believe we will achieve an industry-leading standard of just 1,600 parts by the time we go to full-scale SOP, which has a meaningful long-term impact on TCO. This approach has aided us in dealing with the inflationary and supply chain environment which not only affect the first owner, but every owner thereafter, allowing us to demonstrate that the future is about becoming a TEM, not just an OEM. During the quarter, we saw many legacy OEMs struggling with quantity and quality issues in their BOM costs and their reliance on Chinese-made parts and technologies. As you have seen in the videos and over the last few quarters, the majority of our focus to date has been on technology and real product validation. Our decision to prioritize domestic manufacturing at the end of last year was the right move, and to win higher margin business with commercial fleet operators. Over the course of the quarter, Our operations and manufacturing processes started to mature as we continue to work through the typical SOP challenges by using a slow build process and leveraging advanced technology, which helps us improve the efficiency of automation and enhance quality. We have invested the time and resources to build a strong product foundation. which will reduce or prevent issues in manufacturing. But you must learn to crawl and then walk before you run. With the acceleration of the LBB, we have partnered with a third party for limited production while our facilities come online. Our sales pipeline is now over one billion and approximately 60% of that has been organically developed across our product portfolio. 5,500 Stage 3 orders from Grade A credit partners across state, federal, and private enterprises. One of our large customer orders consists of a higher margin, less complex version of our platform, the Lifestyle Delivery Vehicle, or the LDV. These vehicles will be uniquely upfitted by us for use in last mile delivery applications. In one move, we have secured orders for up to 10,000 vehicles and more. Our Stage 2 orders stand at over 27,000, a 56% increase from the prior quarter. We are continuously focused on lowering our cost of capital in the long term, and that requires balancing the business with just-in-time capital and maintaining financial flexibility. We made two moves which reduce cost of capital and increase both capacity and access to capital. We filed a $300 million prepaid advanced facility and established a $200 million ATM facility. I will let Ramesh and I'll talk to you in more detail about our capital raising philosophy and explain these financing facilities in greater detail. And we can also discuss it in the Q&A. Now let's discuss our progress on our gamma program. Our vehicles have performed extremely well across a multitude of tests, and our unique design results in a highly stable and safe structure. We have completed another important milestone, which is the handoff for certification to meet federal motor vehicle safety standard requirements. Our gamma build accelerated last quarter with 36 properties built during the quarter, an increase of 177% over the previous quarter from improving our build process. We have built a total of 89 gamma properties since the beginning of the program, more than doubling the number of vehicles since we last reported. We completed 90% of our first phase crash tests and have proven the structure of our car, our vehicle crash platform performance. Assuming our progress remains on track, we will meet all regulatory requirements and certifications. We completed over 265 tests related to crash and safety in Gamma. Our Gamma fleet over 9,000 miles across real and simulated driving scenarios. It was great to see many of you during our very first in-person Investor Roadshow in Boston and New York City. You experienced our gamma vehicles, and some of you have been aggressively drove them in various real-world environments. We welcome others to come visit us and experience our platform. Driving our vehicle gives you more insight on what our technology platform can unlock and is much better than I could ever put into words. Stay tuned for our plans to be on the road again soon. Within weeks of signing, we already are performing our advanced delivery tuning for four LDVs with fully upfitted rack systems that are currently making deliveries for Walmart in the Dallas Metroplex area. It was an interesting weather season. With 95 to 110 degree weather, we have made 307 real-world deliveries and driven over 1,150 miles. The driver's feedback has been positive across overall comfort, safety, ease of driving, load and unload speed and driver ergonomics driver productivity means our platform is potentially able to unlock additional employee satisfaction and deliveries per day for walmart while reducing total cost of ownership the first agreement represents 300 million of potential revenue for us with an additional path of deeper partnership opportunities to generate revenue for us with our new partner. Use of our gamma vehicles for this program is a milestone that our platform is in its final market-facing readiness phase and positions us to focus on delivering vehicles in early 2023 to Walmart. With the acceleration of the LDV, we have partnered with a third party for limited production while our facilities come online. We are in current negotiations for additional facilities near our core locations in Bentonville and Pryor for additional capacity to help with our increasing demand. Our SOP remains in Q4 2022, but we have modified our initial deliveries into the first quarter of next year, starting with LDBs to fulfill the Walmart and other anticipated orders to be announced. We will proceed cautiously as our team continues to work hard on securing on-time delivery of our build of material components and semiconductor chips for SOP. The Lifestyle Vehicle, or LV, will be available in 2023 after we have ramped up initial low-volume production. We are very focused on a 20,000 vehicle run rate by the end of 2023. While our facilities are coming online with the production likely weighted towards the end of the year, we are now focused to be able to double that production by 2024 to keep pace with the growing demand. Based on a competitive process, the Army recently selected canoe electric vehicle for analysis and demonstration. We are very proud to be one of the two that the Army selected to participate in the program as they focus to electrify their fleet. So it is an honor to be selected for this program. The Army is evaluating and harnessing the latest technologies to strengthen the operational effectiveness and speed of our military while being sensitive to the environment. This engagement with the US Army follows our partnership with NASA to provide the first electric crew transportation vehicle for the Artemis lunar exploration launch in 2023. Further suggesting that our design and validation from the US government is intact for future programs. We were honored to visit Kennedy Space Center on May 11th to demonstrate our innovative electric vehicles and to engage key NASA leaders on how best to adapt them for the needs of the Artemis astronauts. The team remains focused on delivering multiple lifestyle vehicles to NASA for the Artemis crew transportation by June of 2023. Overall, it was an exciting quarter, but there is much more to come, so I look forward to keeping you updated. I will now hand it over to Ramesh. Ramesh?