Canoo Inc.

Greetings and welcome to the CANoe fourth quarter and full year 2022 earnings release 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 the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Kunal Bala, Senior Vice President, corporate development, and capital markets. Thank you. You may begin.

Thank you, and welcome, everyone, to Canoo's quarterly earnings conference call. Today, I have with me investor, chairman, and CEO, Tony Aquila, along with CFO, Ken Bangett, and CAO, Ramesh Murthy. Tony will provide an update on the business. Ken will then run through our capital rate strategy, and Romesh will share the financial results for the quarter. We will then open the call-up for questions. Please be advised, you 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 in 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 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. Now, please navigate to the webcast landing page and access the video link towards the bottom left of the page. We will pause briefly while you watch the video. As many of you already know, our discipline is big news or no news. This means we're focused on meaningful milestones and impactful news. We're focused on long-term growth and value creation for all our stakeholders. Turning it over to Tony to talk about some big news, but not all news. Over to you, Tony.

Thank you, Kunal. And thank you, everyone, for joining us for our Q4 and full year 2022 results. Before getting into it, I'd like to thank all our associates for their hard work and dedication to our mission. We are pushing the envelope on technology, innovation, and what an EV means to consumers and fleets. That requires a specific mindset, skillset, and focus on milestones as we continue our journey to create a high-tech advanced mobility company in an extremely volatile macroeconomic climate, I'd like to recap some of our significant achievements during the last year. If you look at the steps that we have taken since I became CEO, we immediately jumped in and started the verification and realignment of the strategy. I'd like to sincerely thank our believers, all stakeholders that hung in there with us while we have worked through the transition. And to those that were focused on headlines, they can now focus on the milestones achieved. As you can see in our earnings release, we have now reached a conclusion on the SEC investigation. The resolution includes an agreement to pay $1.5 million. Our agreement with the staff still needs to be approved by the commission itself. something we hope will happen in the next few weeks. This ends a significant chapter from the company's past management and paves the way for us to focus entirely on the work of our refounding. Our entire management team continues to work hard to address all legacy issues and the sacrifice for shareholders is not lost upon us. The transition from legacy canoe to today has been expensive for our associates and all stakeholders, as reflected in the price of our shares. Legacy matters have been a big distraction. And as we continue to eliminate these legacy matters, it only increases our ability and efficiency in achieving future milestones. And we are increasingly excited about the direction of the company. I'd like to remind everyone that as the largest shareholder and long-term focused investor, we invest continuously on many levels to help de-risk the business and increase its opportunities for success. Our just-in-time discipline has helped us become more efficient, especially during the realignment However, it has added more complexity as we and others access the capital markets in the current market conditions. We see this as a portion of the long-term cycle, but just a portion of accessing the capital markets. Our aim is consistent with the long-term investor's view. It's to look back at the strategy with the goal of having managed a better return on capital dilution and total value creation. We led the charge by alerting investors about the risk factors that the EV industry faces, not only to talk about the opportunities and advantages, which are great. As we have shown, we have signed up world-class customers and we will continue to focus on our three-stage customer engagement model and on growing a solid customer pipeline. We have remained focused on event and milestone-driven, just-in-time capital raises as we work to put the legacy and the realignment of the business behind us. We will now enter the next phase, and that phase will be more focused on milestones versus event-based or just-in-time. This will lower the cost, make more efficient use of capital, and allow us to focus on long-term sources. We navigated the volatile economic environment in 2022 with a mixed view of our performance as we reflect back, but let us walk you through the key milestones. U.S. manufacturing and job creation. You know, we believe there, as you know, we led the charge to bring jobs and manufacturing to the U.S. heartland, which we are very proud of. Completed our phase one SOP in Michigan, announced vehicle manufacturing facility in Oklahoma City, and kicked off phase two SOP OKC, including establishing and EV battery module manufacturing facility in Pryor, Oklahoma. Partnering with the state of Oklahoma and the Cherokee Nation to establish workforce training programs. Committed to hiring up to 550 employees to support our manufacturing ramp as we scale production. IP protection. We reduced our resilience on China by focusing on US and allied nation source components. We had previously stepped in to lead the share purchase from the Chinese investor to address the CFIUS concerns in the settlement, mitigating potential IP leakage risk. We also focused on BOM optimization, the build of materials, reduced part counts to under 1800 parts, one of the lowest even for EV vehicles. We reduced supply chain risk. This will come further into focus as we begin manufacturing and delivering vehicles. We believe there is still more room to optimize and achieve on a continuous basis. Fleet cells, one cell, thousands of vehicles orders has been our strategy. And our product has received multiple points of validation. Now we're very proud to have customers like Walmart, Ziba, King Bee, recently Schindler Elevator, and CBRE to add to the names of our customer partners. Our product is being well received in the market, and we are excited to help electrify the working fleets in America and beyond. American Innovation, we delivered the US Army Light Tactical Vehicle, the LTV. We achieved an order to deliver the LTV and we did it in 101 days. This validates our highly modular platform architecture and our ability to rapidly develop specific use cases. These actions have been supported by both current and past administrations. The IRA bill is validation of our strategy and provides a strong tailwind. For commercial vehicles placed into service in 2023, Canoe Fleet customers will benefit from the maximum allowed credit of $7,500 per unit. Under new IRA sourcing rules, most vehicles don't qualify for the consumer credit. This validates the realignment of our strategy to first focus on large fleet and government use cases. As we stand here today and reflect, we struggled and underestimated the complexity of some of our milestones, especially taking into account the legacy impacts and the microeconomic backdrop. We struggled with the transition and timely resourcing of components as we shifted away from China exposure. Delays in bringing up onshore manufacturing. We over, under, and mishired in certain areas. Timing and cost of capital being desynchronized with the realignment of the strategy was also a constraining factor. As we started to put the legacy matters behind us, we will be better focused on our future. Let us walk you through some of our strategy and recent milestones. Our capital raising strategy is maturing, especially as we remove legacy matters like the SEC overhang, which improves our access to low-cost, long-term, non-diluted capital. We have all been through a lot. these last 16 months and some of us even longer. As we continue to mature, migrating from an R&D design and pre-market delivery to a manufacturing and market launch organization, hitting these milestones will better help us manage the current market turbulence based on our growing track record of achieving important milestones. The shift from R&D design and pre-market delivery to manufacturing and market launch will come with some organizational changes and risks. On the good side, our cost per FTE is going down as a result of changes in our mix as we align with our continuing R&D becoming more focused on certain segments like customer innovation and fleet, government, military, Department of Defense, and very specific geographic expansion markets. We are fortunate that our realignment allows us to be one of the first to access the benefits for our customers and ourselves in the newly implemented IRA bill. Now, let me share some of the fourth quarter and recent highlights. We received 217-mile EPA certification for the LDV, which we will continue to focus on improving. This is already up to 50% higher than what is targeted by many of those in our customer base. Further, our advanced deliveries with Walmart proved excellent range and retention in triple-digit heat and below freezing temperature conditions. We remain persistent in making our vehicles among the most durable and reliable. We now have a $2.8 billion order book. We had 5% growth over the last quarter and 323% growth since this time last year. Others have been flat or declining. We continue to see strong demand for our product, and it's a tribute to the hard work of our design, manufacturing, engineering, and customer journey teams. So, they're very proud. Initial phase of the international expansion, we announced that with GCC Oleon as our distribution partner in Saudi Arabia. We will share and make more clear how our geographic expansion strategy aligns with our North American strategy in the coming quarters. Oklahoma City manufacturing readiness continues to progress and we remain focused on exiting 2023 at a 20K run rate. General assembly lines have arrived at OKC. Other equipment is being put in place. Highly automated high-speed battery line has arrived at the prior facility. We will update you on the progress in the coming weeks and quarters. IP monetization. The US Department of Defense has awarded us a battery systems and technology contract currently for advanced testing in multiple environments. This additional use of our technology speaks to the TEM technology equipment manufacturer versus an OEM, which is an original manufacturer, original equipment manufacturer. and the versatility of multiple different layers of our technology that can be scalable and adaptable to important and emerging use cases and markets. We continue strengthening the management team. We announced Ken Mangat as CFO and added Tony Elias as our EVP of operations. Kim and Tony in their respective areas bring a wealth of experience in capital raising, strategic finance, and manufacturing. Ken will introduce himself shortly and provide an update with Ramesh on the results and financial guidance. And now, I'd like to take this time to introduce Ken.