REE Automotive Ltd.

Good day and thank you for standing by. Welcome to the RE Automotive Q1 2024 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1, 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brandon Friedman, Capital Markets Council. Please go ahead.

I would like to remind you that today's call may include forward-looking statements. Any statement describing our beliefs, goals, plans, strategies, expectations, projections, forecasts, and assumptions are forward-looking statements. Please note that the company's actual results may be different from those anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control, such as the ongoing military conflict in Israel. Please refer to the company's Form 20F filed on March 27, 2024 with the Securities Exchange Commission which identifies principal risks and uncertainties that could affect our business, prospects, and future results. We assume no obligation to publicly update any of these forward-looking statements except as required by law. In addition, we will be discussing or providing certain non-GAAP financial measures today, including non-GAAP net loss and non-GAAP operating expenses. Please see our financial results press release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. Listeners and those on our webcast are invited to follow along with our presentation today, which is available on the investor relation portion of our website, or investors may access the link to the presentation directly from today's press release. Today's call is hosted by Daniel Burrell, REIS CEO and co-founder. Following Daniel's comments, we will be joined for a Q&A portion of our call today by our CFO, Jeroen Zaltzman, our COO, Josh Tech, and our Chief Business Officer, Talby Miller. We will start the formal presentation of our first quarter highlights. I will now turn the call over to Daniel Burrell, REIT's co-founder and CEO.

On behalf of everyone at REIT, I welcome current and new investors alike to our first quarter 2024 conference calls. We started 2024 with strong momentum and catalytic milestones. We believe that this is an ideal time for those new to REIT to get involved because the future of tracking is changing today. During the first quarter, we commenced deliveries of the world's first full-by-wire, software-driven, certified medium-duty demo trucks to customers across North America. including some of the biggest fleets in the world, namely U-Haul and Penske. Our go-to market strategy of complete, not compete, which has already gained traction in Q1 and continues to grow, includes working with the largest fleets operators in the US, working with automotive manufacturers and selling through our network of 20 dealers and 66 sales and service centers and access to a potential of over 200 fleets. We are proud to partner with Penske, having them starting to offer our electric trucks to their customers and being U-Haul's first solution to support the electrification of their fleet. We believe this demonstrates our leadership in the industry and the value of our technology delivers. During Q1, our P7C became the first full-body wire truck to achieve U.S. FMVSS certification, now eligible for customer incentives of up to $100,000 per truck. These world-first prove we are effectively executing on our aims to expedite and solidify the electrification of commercial trucks through software-driven trucks powered by REIT. Beyond tracking, We are very proud that Airbus has selected the Powered by RE vehicles to develop and validate fully autonomous driving. We believe the very strong market response to our Powered by RE and RE Corner technology demonstrate our potential to lead the commercial vehicle segment driven by highly favorable economics for our customers and buoyed by the state certification we've received. easy tax incentives, and regulation requiring the electrification fleet. After certifying our vehicles in the U.S., this quarter we started shipping our demo trucks to dealers. This is a significant milestone for our company, and we want to make it clear how we expect these deliveries to translate into further expansion of our $50 million order book, represented orders from dealers and fleet. Subsequent to quarter end, more than 120 demo rides were performed with multiple prospects with the aim to generate follow-on orders based on continued positive feedback received from fleets. REIT's total cost of ownership advantages are clear, and we believe it is a core driver for the adoption, augmenting this economics benefit. As more fleets are experiencing our software-driven powered by re-electric trucks, we are hearing great reviews and reactions. We expect dealers to increase their order size as fleets make purchases from them. In addition to our growing dealers network, as we shared last week, Penske Truck Leasing has started to offer re-trucks to its vast customer base. We believe Penske will have significant effect on our sales. In addition, as we pursue our strategy to complete and not compete, we are in discussions with several automotive manufacturers across the transportation ecosystem to incorporate re-corner by wire technology into their electric offering. Naturally, this will take a bit longer to mature as with all strategic partnerships, but we believe this will have the strongest effect on the large-scale adaptation of our Powered by REIT technology in the industry, and we'll have the potential to expand our product offering across all vehicle categories. A core strength of REIT and what we believe to be a key driver of adaptation of our technology is our high degree of flexibility in how our product is brought to market. Currently, we offer three ways that fleets and automotive manufacturers can electrify their trucks. One, the integration of re-corners into any existing platform. Two, to purchase of a re-street chassis upon which a cab and a box truck can be built and customized. Or three, the purchase of a full P7C cab chassis upon which the box cargo area can be built and customized. On the autonomous driving front, we are very pleased to announce that we have been selected by Airbus to develop and validate fully autonomous programs based on our full-by-wire technology. This further solidifies REIT's technological leadership and opens REIT to autonomous vehicle driving market. As autonomous markets continue to expand, full-by-wire systems for integration and autonomous control systems and the development of peripheral systems is expected to become more prevalent. This year, our operational focus is on managing a smooth transition into ramping manufacturing and deliveries to supply against our order book and meet sales goals. As we stated last quarter, we believe that the most of the heavy lifting is behind us. Our efficient capex light operation means we believe we can achieve bill of material parity upon production in the low hundreds. of vehicles and EBITDA break-even when producing in the low to mid-thousand. Our two-step manufacturing approach involves continued production of recorders at our automated UK facility, which has an annual capacity of 10,000 vehicle sets. We plan to bring U.S. production online by the end of 2024 and through 2025. We are currently evaluating mainly working capital financing options to allow us to scale production. As we execute on the tremendous opportunity to electrify the commercial truck market, we continue to advance our technology application across different vehicles. I'll touch on some financial highlights and Yaron Zaltzmar, a CFO, will be available on the Q&A to elaborate as needed. Re-ended Q1 2024 with liquidity of $77.5 million, comprised of cash, cash equivalents, and short-term investments. This includes a $15 million long-term credit facility. Our GAAP Q1 net loss narrowed to $25.2 million, a 29% decrease quarter over quarter and 12% decrease year over year. Non-GAAP net loss in the first quarter decreased by 33% quarter-over-quarter to $21.7 million and decreased by 10% year-over-year. Free cash flow burn continued to decrease in Q1 2024 with 6% reduction quarter-over-quarter, consistent with the trend in full year 2023 when we realized a 25% year-over-year decrease. With the strong start of 2024, and with the majority of the heavy lifting behind us. We believe that our real corner technology uniquely positions us in a lucrative portion of the commercial EV value chain. As we set to lead the future of automotive, we are thankful for the support we receive from our investors, and we are excited to welcome those new to ring.