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REE Automotive Ltd.
5/15/2025
Good day and thank you for standing by. Welcome to the Re-Automotive's fourth quarter and full year 2024 Financial Results Conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I will now hand the call over to the company. Please go ahead.
Good morning, and thank you for joining us on today's conference call to discuss Re-Automotive's fourth quarter and full year 2024 results. During the course of this call, management will make, express, and imply forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. federal securities laws. These forward-looking statements include, but are not limited to, those statements regarding the company's financial condition, including the impact that it will have on REIS' future business and plan, its ability to implement its current business, including as impacted by the going concern, its plan to address its going concern, including through a significant reduction in operational expenses, which includes a reduction in force, its need to obtain significant additional financing, the growing demand for REIS products and technology from OEMs and technology companies as reflected in expanding customer reservations and deepening engagement with OEMs, the ability to generate revenue from REAI Cloud, the implementation of the next phase of our mission, REIS' ability to generate software-based revenues, both in the near term and long term, REIS' software-based business being less capital intensive, REIS' ability to license its technology and its broader transition toward a subscription-based revenue model, its plans regarding production of a P7 lineup, REIS' ability to integrate our software alongside existing products from OEMs and technology companies, delivery of initial trucks to its North American customers and the timing thereof, its ability to improve its operational efficiencies, impact of US tariffs and trade policies on its business in 2025, addressing our supply chain and reassessment of production, including to tariffs uncertainty and our Q1 2025 expected cash. Such forward-looking statements and their implications involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements during the course of this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in REIS' annual report on Form 20S for the year ended December 31st, 2024, filed with the Securities and Exchange Commission and elsewhere in subsequent filings with the Securities and Exchange Commission. Today's call is hosted by Daniel Burrell, REIS' co-founder and CEO, and High of Eve, REIS' chief financial officer. I will now turn the call over to Daniel Burrell.
Welcome everyone, and thank you for joining us today. We are pleased with our performance in 2024. We began this journey over a decade ago, and I'm encouraged by the progress we made this year. The milestones achieved have laid a solid foundation for RE as a differentiated technology company in the automotive industry. I'd like to take some time to recap our 2024 and provide you with some recent updates. We saw demand increase significantly for our technology and we reached several critical technology milestones, reinforcing our position as a leader in the SDV space. Notably, we received the first federal motor vehicle safety standards certification for a full by-wire vehicle in the US. Also Airbus, in collaboration with us, successfully completed the first autonomous drive on an active runway using our SDV technology. We launched RE-AI Cloud in collaboration with Geotab, introducing vehicle services and advanced data analytics that provide predictive maintenance and optimize operations, opening up a path for what we see as a new software revenue opportunity. 2024 was a breakthrough year for RE. Our achievements point to one thing, our vision for RE is coming to life. Our technology has been tested on the road, under real world condition, and within a commercial framework. This is a critical time in the industry as we see it converge of electric, autonomous and connected vehicles, all of which we see as an opportunity to tap into through our scalable software-driven platform. With that said, while we entered 2025 with this positive momentum, we have recently experienced unprecedented and unpredictable challenges. The current US tariffs and trade policy has significantly impacted our supply chain, similar to many in the global automotive industry. More specifically, over 2024 and the beginning of 2025, we have tirelessly worked and deployed our race capital towards hitting the key milestone needed to work out ways towards putting vehicles on the road. We achieved the first FMVSS certification for a full bio-vehicle in the US. Advanced production of certain vehicles worked to prepare US facility for scale manufacturing, including product tooling, solidified our order book and signed a significantly large non-binding MOU to integrate our technology into a customer's autonomous shuttles. Unfortunately, the US tariffs and trade policy created an environment that make it significantly challenging to continue to move our original plan forward for the time being. As such, we have made the difficult but prudent decision to temporarily pause, not stop production until the situation stabilizes, until we see the uncertainty around the broader tariffs environment settle. We are focusing on what's in our control. Once the tariffs and trade situation stabilizes, we would look to address our supply chain accordingly and reassess our post-production. In the meantime, we remain in active dialogue with our suppliers and customers, and we are looking at solutions to elevate the pressure that we and the entire auto industry are experiencing currently. We are also in discussion with technology companies on new autonomous programs and are restructuring our technology teams to focus on software programs. We are encouraged with the accelerated progress that our software business has made, which we now view as mature and gaining traction in the market as we are actively engaging with OEMs that are interested in our software. Our view is that SDV is the cornerstone of the technology, which we find to be incredibly important for the future of mobility. It's not just about the EV itself, but rather about intelligent vehicle and the intelligence they can bring to both passenger and commercial marketplace. We are focused on generating revenue across both the near-term and long-term for our software business. In the near-term, we are working closely with OEMs and technology companies to integrate our software alongside their existing product, ensuring a seamless fit within their platform and accelerating adoption. Looking further ahead, we're advancing our strategy to license our technology as part of our broader transition for the subscription-based revenue model. This dual approach not only meets what we see as core and market demand, but also position us for sustained recurring revenue. In addition to pausing production and accelerating the prioritization of our SDV business, we will be laser-focused on cost reduction. We intend to significantly reduce our monthly burn by reduction of operating costs and adjustment of headcount and leadership structure. As you can see, while the broader macro environment has negatively impacted our business plan and all the excellent work and progress we made in 2024, we remain nimble in our exploring path to deliver for our shareholders while working in parallel to accelerate our software offering, which we'll go into more details about later in the course. I'd like to turn the call over to Hai to discuss our financial milestones and the review of our financial results.
Thank you, Daniel. And hello, everyone. In 2024, we strengthened our financial position. Our liquidity improved to $72 million, inclusive of 18 million credit facility at the end of the year, reflecting the impact of two successful registered securities offerings. These offerings raised approximately $60 million in gross proceeds, including $45 million from M&G and Madison Group in September 2024 and an additional $50 million earlier in 2024 from M&G. In the first quarter of 2025, we raised an additional $36.5 million in gross proceeds through two more registered offerings, each led by M&G and Madison Group. During the last 12 months, we have spent approximately $75 million on production readiness and R&D completion. Looking ahead, we will continue to prioritize enhancing our capital position with plans to extend financing options that will enable us to accelerate our technology-driven strategy. Now, turning to the P&L. For the full year, our gap net loss was $111.8 million, a slight improvement from 114.2 million net loss in 2023. This was primarily driven by lower engineering and R&D expenses as we completed substantial portion of the P7 program R&D phase, along with operational efficiencies that helped to reduce overall operating costs. However, we were impacted by non-cash losses related to the remeasurement of warrants and derivative liabilities. On a non-GAP basis, our net loss improved to $70.3 million from $98.3 million in 2023. This improvement was driven by reduction in engineering and R&D expenses and operating efficiencies as mentioned earlier. In Q4 2024, our gap net loss was $37.3 million compared to $38.5 million in Q3 2024 and $35.2 million in Q4 2023. The -over-quarter improvement was primarily driven by lower non-cash losses related to remeasurement of warrants and derivative liabilities partially offset by higher cost of revenues associated with the production of the P7 vehicle. The -over-year increase in net loss was primarily driven by non-cash losses from the remeasurement of warrants and derivative liabilities partially offset by increased non-recurring engineering development costs in Q4 2023. Our non-GAP net loss in Q4 was $19.8 million compared to $16.8 million in Q3 2024 and $32.2 million in Q4 2023. The -over-quarter increase was largely driven by the higher cost of revenues associated with the production of P7 vehicles. The -over-year improvement was mainly attributed to higher non-recurring engineering development costs in Q4 2023 compared to Q4 2024. A reconciliation of -non-GAP measures have been provided in the financial statements tables included in our earnings press release. We continue to narrow our free cash flow burn -over-year thanks to the operational efficiencies and the completion of significant R&D efforts. As part of our ongoing financial review, due to the recent changes in the macroeconomic environment, entire situation, negatively affecting our ability to bring our P7 to the market as planned and affecting our ability to raise debt, which directly impact our revenue forecast. Management has determined that there is substantial doubt about our ability to continue the going concern for the next 12 months. Our plans to alleviate these going concerns include temporarily pausing production and significantly reducing costs, adjusting headcount with a view to optimize the corporate structure to become more flexible in the face of industry uncertainty. We will announce details of this in the near future, but for now, investors should expect significant reduction in operational expenses alongside the production pods. We'll be announcing Q1 results promptly, but our expected Q1 2025 cash and cash equivalent balance is approximately $79.6 million, including credit facility of $80 million. And we remain committed to providing OEMs with differentiated technologies that we have custom built over the years. I'll now turn it back over to Daniel for his closing comments before going to Q&A.
As you've heard today, we made meaningful progress in 2024, technologically, commercially, and financially. REE is and has always been a technology company. Our mission from day one has been to create a scalable, technology-driven mobility platform built on both software and hardware. We were never focused on becoming a traditional OEM. Today, we are accelerating the next phase of that mission, enabling the future of mobility by partnering with OEMs, technology companies, and others to bring vehicles built on our proprietary SDV technology to market faster, with better performance and with more efficient manufacturing. The critical question for REE in recent years has been identifying the most effective business model to bring our technology to the customer who need it most. We are seeing the answer through a path of developing our technology through less capital-intensive means, including licensing and partnership models. We embarked on a journey towards mass production in order to demonstrate our technology and its capabilities. And while this remains important, it is not the only path forward. Given the hindered uncertainty and risk in today's production environment, we've made a strategic decision to focus on our software technology. This decision is rooted in a commitment to being good stewards of capital. Preserving cash today allows us to preserve flexibility for tomorrow, ensuring we can adopt as market conditions evolve. Importantly, we are not resting on laurels. Our technology can be deployed through less capital-intensive means, including licensing and partnership models. We are actively advancing several commercial opportunities along this line, and we remain confident in our ability to pursue potential long-term profitable growth, even in the face of broader industry and trade headwinds. Our future lies in providing the software and intelligence that will drive tomorrow's vehicles. We envision that through recurring revenue and margin expansion, which is increasingly important in today's market. Through our software-first approach, OEMs and technology companies can leverage our modular SDV technology to design and develop vehicles more quickly and cost-effectively without the need for costly hardware design. We are gaining traction in the market, illustrating to OEMs and technology companies that we are here to be a solution for them, not another competitor. The growing interest in our SDV technology, reflected in expanding customer reservation and deepening engagement with OEM, underscores the market validation of risk strategy. We believe that these collaborations strengthen our credibility and position us as a reliable enabler of SDV innovation, giving OEMs and mobility technology providers the confidence that RE can support their growing demand and requirements for the next generation of vehicles. The future of mobility is evolving and so must the way vehicles are built. RE's role is to support OEMs and suppliers with a flexible platform that enables better performance, faster adaptability, and more efficient manufacturing. By doing so, RE is helping others succeed while also building a more sustainable, scalable, and profitable business model for ourselves. We believe that this approach will allow RE to move faster to market and be more profitable, as an essential advantage in today's economic climate. We believe our technology is matured and the customer demand is strong, and we are advancing into a more scalable and profitable phase of our growth, guided by our technology-first model and commitment to supporting the industry's transition to software-defined mobility. With
that, operator, please open the line for questions. Thank you. Thank you. As a reminder,
to ask a question, please press star, one, one on your telephone and wait for your name to be announced. To answer your question, please press star, one, and one again. Once again, please press star, one, and one. If you wish to ask a question, please stand by while we
compile a Q&A roster. We will now take the first question
from the line of Paul Fratt from AGP Alliance Global Partners. Please go ahead.
Yeah, good afternoon, Daniel. Good afternoon, hi. The first question I had was, can you talk about the conversion of the MOU to a definitive agreement, and do these changes potentially push out the timing of that finalization or have any impact
on the
MOU as
you see it right now?
Hey, good morning, sorry. Thanks for the question.
Regarding the MOU, currently we don't see any change in the timeline that we've indicated. We have already started to receive payments from that MOU on services that we've been delivering. And currently we believe that we're on track as to what we previously announced in terms of timeline.
Great, and hi, could you repeat the first quarter cash balance and ignore the credit facility? What is the actual cash that you had on the balance sheet at the end of the quarter?
The first quarter,
that is?
Yeah, thanks both for the question. So it's $61 million excluding the credit facility for the end of the first quarter.
And just if I may, if I could ask about, I know you're gonna release details on the restructuring and your plan going forward. None of these potential changes impacted your run rate in the first quarter, am I correct? And secondly, can you talk about your cash burn, if you will, the starting point from which you're gonna start to cut costs. Can you, is it roughly 18 to 20 million of cash burn in the first quarter that you're gonna look to narrow? Can you talk about headcount at the end of the quarter? And maybe give us a little flavor on, you talked about restructuring the leadership team. Can you talk about how that might shape or how that might change the leadership structure?
Sure, so as we said, we are taking immediate actions to reduce our cash burn, including part of our production discussions with our suppliers and of course, significant reduction in our operating costs. We previously communicated that the anticipated operating expenses will be between five to $6 million a month. We ended, as we said, the quarter with $61 million. And going forward, we plan to reduce the operating expenses over time and to reach an operating expenses of between three to $4 million by the end of the year.
Great, thanks, thank you so much, that's helpful.
Thank you. As a reminder, if you wish to ask a question, please press star one and one on your telephone. That's star one and one, if you wish
to ask a question. We will now take the next question.
From the line of Po Fratt from AGP Alliance Global Partners, your line is open.
Yes, sorry, can... Daniel, can you talk about the reservations and whether these changes potentially change the reservation book, they're non-binding reservations to begin with, but have you seen any cancellations or do you anticipate any cancellations? And then can you just talk about the path to first revenue or the ramp in revenue? Can you just sort of highlight how much that might've shifted out into the future?
Sure,
regarding the reservation, of course we're working with our customers to assess the current production situation and it's basically affecting everybody here in the industry. And we believe it's important to remain in open dialogue and active dialogue and work collaboratively to finding solutions for that. The good news is, you know, the customers are telling us that their interest in our product has increased given our SDV, our software defined vehicle, and not just because it's an EV, with great, of course, characteristics and offering, but the strongest sell point that we hear from our customers is the software defined vehicle technology that we have. Now, we believe that the close to $1 billion in reservation, which of course includes binding orders and capacity reservations, such as the previously mentioned MOU and others, prove that there is a strong demand for our technology. And, you know, due to the fact that we're temporarily pausing production, it's a little bit too early to say when we're gonna be resuming production and therefore to assess when we're gonna be ramping up deliveries and generating revenue from deliveries. With that being said, you know, we've always said that we are a tech company and the technology, it's in our core. And we are very excited by the fact that, you know, we currently believe that the, our technology is mature and we have demand for it. The software defined technology, the software itself, and that actually allows us to move our focus in the interim as we evaluate the macroeconomic conditions and tariffs. We will be focusing more and more on our software business. And it was mentioned also regarding the MOU that there is a good portion there that is also related to that. And we believe that we would be having great products to the market around our software in the meantime, where our goal is to generate revenue from software and software related business in the interim as we continue to assess.
Great, thank you.
Thank you. I will now like to turn the conference back to Daniel Barrell for closing remarks.
Thank you. And thank you everybody for taking the time today. I think we're
seeing, as we said, some challenging times in the industry. And I'm very proud of Team RE and their accomplishment not only in 2024, but the way they have and are handling the current situation in 2025. I see an amazing team of people that gives me a lot of confidence that they're able to manage the current situation well and to generate strong and significant value for our shareholders. And with that, I wanna thank everybody again for the time today. Thank you.
This concludes today's conference call. Thank you for participating. You may now disconnect.