REE Automotive Ltd.

Thank you all for joining our second quarter 2021 conference call. We hope that you've seen our press release issued earlier this morning at investor.ree.auto. I would like to remind you that today's call may include forward-looking statements. Any statements describing our beliefs, goals, plans, strategies, expectations, projections, forecasts, and assumptions are forward-looking statements. Please note that the company's actual results may differ from other anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filing with the Securities and Exchange Commission, which identified the principal risks and uncertainties that could affect our business, prospects, and future results. We assume no obligation to update publicly any forward-looking statements. In addition, we will be discussing or providing certain non-GAAP financial measures today, including adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, and EPS. Please see our release and filing for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures. Joining me today is our co-founder and Chief Executive Officer, Daniel Burrell, who will provide an overview of our business and give an operations update, as well as our Chief Financial Officer, Hai Aviv, who will continue with the discussion on our financial results and outlook before we open up the call for your questions. At this point, I will turn the call over to Daniel. Daniel, please.

Thank you, Limor. Given this is our first earning release and conference call as a public company, I would like to briefly outline the re-story before we get into the business overview. When we started REE eight years ago, everybody was talking about the future of mobility and yet building cars the same way for over a century. Now approximately two years after we came out of stealth mode and unveiled the REE Corner technology to the world, our EV platforms can be used to build zero emission EVs. This will help create a greener, more sustainable world that will allow our customers and partners to lower their carbon footprint and achieve their financial and environmental goals faster as well as more efficiently. In recent quarters, we are seeing an acceleration in the acceptance of EVs as a sustainable solution with growing tailwinds coming from governments around the globe. For example, earlier this month, the US government announced a target for electric vehicles to make up 50% of all vehicle sales in the US by 2030, which we believe leading automakers are aligned to meet. Industry experts expect the pace of targets to quicken the adaptation of electric vehicles in the US. Given that re-differentiated modular EV platforms reduce time to market for new EVs, we believe This is yet another driver that supports our ability to grow significantly in the coming years. As I stated earlier, not a lot has changed in the manufacturing process of vehicles, whether that is supported by combustion or electric. Today, vehicles are still being built to original configuration, where the only material difference is the substitution of an internal combustion motor for an electric one. The rest of the vehicle and system are essentially unchanged. The components are still between the wheels, which constrains modularity and functionality. At REE, we are fundamentally changing the approach of EV design and manufacturing based on differentiated value-added approach. Re-corner patented technology integrating critical vehicle components such as steering, braking, suspension, powertrain, and control into a single compact module located between the chassis and the wheel. Our fully flat EV platforms are geared to serve as the underpinning on top of which EVs and AVs will be built. RIS EV platforms are designed to provide greater interior space and volumetric efficiency than vehicles built on either internal combustion or conventional electric vehicle architectures. RIS modular EV platforms are thus capable of carrying more passengers, more cargo, and serving longer, translating into major cost savings, lower TCO, total cost of ownership, and even higher revenues to our customers. Thanks to its differentiated characteristics, our technology is future-proof and can be used for building vehicles to serve virtually any application, from delivery and logistics to taxis to passenger shuttles. EVs and AVs powered by REIT are agnostic to vehicle size, shape, power source, and driver mode. They can be operated on either battery or fuel cells and in any drive mode, both human-driven and autonomous, while affording complete design freedom. The ReCorner and ReBoard are designed to be manufactured using a novel manufacturing model via multiple production lines around the world, feeding our global network of integration centers. We do this by partnering with the world-leading T1s to exclusively manufacture the relevant subsystems we require based on current and available production capacity. This means not only faster time to market and a significant lower capital investment required, but also secured supply chain capacity and quality control. Capitalizing on that, we aim for REIT to be the standard for automotive industry. Same as Intel Insight that powers everything from laptops to data centers, our re-corners and EV platforms are intended to power EVs in all shapes, sizes, weights, and dimensions, from small short-range delivery vehicles on one end to long-range delivery trucks or mid-size shuttle bus on the other end. Whatever EV technology wins, RE will succeed. We look at two strategic metrics for deepening our industry penetration as we focus on executing our business plan. One, growing our effective market share. And two, expanding the various vehicle types powered by REIT. This process is already underway as we have signed multiple strategic collaborations with OEMs and other leaders across automotive and mobility sectors. Our approach is to complete, not compete, with OEMs by providing critical EV platforms on top of which they can build any type of EV. We are excited that major corporations such as Hino, Toyota Truck Arm, Magna, JEB Poindexter, a global logistic company, and Navia are starting to choose our technology and platforms and actively working to build their future vehicles with re-insight. In parallel to deepening our industry penetration, we continue to advance production readiness. We announced five different re-corner architectures and opened and staffed a global engineering center in the United Kingdom, which is responsible for engineering design, validation, and testing, as well as regulatory compliance. We also recently announced the location of our first commercial production site, which will be our first integration center and our North American headquarters in Austin, Texas, which will allow us to be close to our partners and customers. With supply chain solidification in mind, we continue to grow our secured global vetted vendors network built from the world's leading T1 suppliers, such as Musashi, Maxion, KYB, and others, with which we collaborate on development and manufacturing of our subsystems to be integrated and assembled in our integration centers. A good recent example to this is our agreement to jointly develop a new lightweight and efficient electric propulsion system with American axle that will support multiple customer vehicle programs and production goals. We continue to make progress and execute in accordance with our plans by creating a multitude of opportunities that will enable us to become the EV industry standard as we continue to build long-term value for our stakeholders. With that, I will turn the call to Chaim.

Thank you, Daniel. I will address our financials for the second quarter along with some of the milestones we reached. It is important to remember that TRI was not a public company for the entire second quarter and in June 30, 2021. I would now like to spend a moment to connect the dots from many of our milestones achieved so far to the drivers of our financial performance over time. In our commercial agreements, we work together with the customers to assess the market and determine a potential five-year forecast and forecasted volumes. Following their signing, we initiate the program and nominate suppliers from our secured global verified vendor network. The next milestone is customer evaluation of our prototypes on non-public roads. Once completed successfully, the next milestone is customer evaluation of our prototypes on non-public roads. Once completed successfully, this is when the customer would place a firm unit order that will kick in the next milestone of completing a successful public roads testing. After this stage, we are to receive purchase orders from customers, which leads to commercial production and revenue generation. In February, we opened our engineering center in Myra Technology Park in the United Kingdom. The location, at the heart of the British automotive industry, allows us to tap a highly qualified talent pool and grow our local workforce. At the end of June, our engineering center was already staffed with 76 full-time employees, mostly engineers. In April, we entered into an alliance with Toyota truck arm Hino Motors, advancing from an MOU, which was previously signed, and strengthening our long-term relationship that dates back to when we first jointly presented to platform a concept powered by we, at the Tokyo Motor Show in 2019. Our strong alliance with major global corporations, such as Hino, is important as we move to enter the light-mid-duty truck market of Class 4 and 5. In addition, we signed a strategic collaboration agreement with Magna International to jointly develop and bring to market modular EVs as well as established go-to-market teams to identify vehicle development opportunities, markets, and customers. Our collaboration with Magna advances our commercialization plans in Europe and North America, not only in modular EVs, but also in the mobility as a service segment, which is one of the fastest-growing segments in the new mobility market. We also signed a development agreement with Navia, a leader in the autonomous vehicle industry, with operations in 24 countries currently, to develop and manufacture the next generation of autonomous vehicles, which are powered by RE and driven by Navia. Following the quarter end, we established a significant potential foothold in the U.S. walking van market. Think of the mail and package delivery tax you see in your area. With a strategic collaboration with JB Poindexter, EAVX. We closed our merger with Tenex Capital at the end of July and now are listed on NASDAQ. We are well capitalized given our CapEx-like manufacturing model that utilizes access manufacturing capacity via an exclusive global network of tier one partners in over 30 countries with point of sale assembly at our integration centers. Turning to our second quarter results. As we continue to ramp and invest in our business, Our gap net loss for the second quarter was $31.2 million compared to $33.9 million in the second quarter of 2020 and $12.6 million for the first quarter of 2021. The increase is primarily related to $20 million of non-cash stock-based compensation compared to $4.1 million in the previous quarter. Non-GAAP net loss for the second quarter was $11.1 million compared to $2.5 million in the second quarter of 2020 and $8.5 million in the first quarter of 2021. As we continue to advance our technological and engineering capabilities with increased investments in R&D. We finished the second quarter of 2021 with cash and cash equivalents of $30 million as compared to $44.7 million at the end of 2020. With the July close of our merger with Tenex, we received gross profits of approximately $348 million, which we expect will fund our accelerated development, support further strategic collaboration, and position us to achieve the start of commercial production in late 2023. We finished the second quarter of 2021 with cash and cash equivalents of $30 million, as compared to $44.7 million at the end of 2020. With the July close of our merger with Tenex, we received gross profits of approximately $348 million, which we expect will fund our accelerated development, support further strategic collaboration, and position us to achieve the start of commercial production in late 2023. We are reiterating a 35% increase in headcount to achieve target of approximately 250 full-time employees by year-end compared to June 30th, 2021, and expect total annual operating and capital expenditures on a non-GAAP basis in 2021 to increase by roughly 25% or $15 to $16 million. This compares to our previous expectations of $64 million. The change is attributed to increased engineering spend to support growth in additional customer programs. Total expenditures will continue to ramp as we head towards commercial launch in 2023. Regarding our outlook, as provided in our earnings release filed earlier today, we expect to continue to execute on RIS commercial programs, including the delivery of first joint prototypes for non-public road sets, expand industry penetration to additional partnerships, and expansion of a variety of EV types powered by RIS, extending supply chain capacity by executing additional collaborations with leading suppliers, growing our global secured vendor network, break ground on our US headquarters and Integration Center. And with that, we thank you again for joining us. We can now open up the lines for questions, please.