Lordstown Motors Corp.

Good day and welcome to the Lordstown Motor's first quarter 2022 earnings conference call. All participants will be in listen-only mode. To give you assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Carter Driscoll, Vice President, Corporate Development, Capital Markets, and Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning and thank you to all for joining Lordstown Motors' first quarter 2022 earnings conference call. To supplement today's discussion, please go to our IR website to view our press release and investor deck. Before we begin, I want to call your attention to our Safe Harbor provision for forward-looking statements that is posted on our website and is part of our quarterly update. The Safe Harbor provision identifies risk factors and uncertainties that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our form 10Q and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be Lordstown Motors CEO, Dan Inovagi. President Edward Hightower and CFO Adam Kroll. With that, I'd like to turn the call over to Dan.

Thank you, Carter, and welcome, everyone. To begin, I'd like to thank the entire Lordstown team for their extraordinary efforts in Q1. I'm pleased with the progress we've made towards launching the Endurance, particularly in light of the unprecedented supply chain challenges the industry has faced. Our number one priority, of course, remains the successful launch of the Endurance full-size pickup truck. While we've experienced some delays in building our pre-production vehicles or PPVs, I am pleased to report that final engineering design validation and testing are underway, and we continue to target start of commercial production beginning in the third quarter of 2022. Edward will provide more detail on where we are and what remains to be done to achieve full homologation and commercial deliveries. In terms of customer demand, We continue to see strong interest in the commercial fleet market for electric vehicles of all types, including pickup trucks. We believe the market will be underserved for the foreseeable future and that demand will be particularly strong among commercial fleet customers given their focus on total cost of ownership and specific work requirements. The North American BEV full-size pickup truck and van segments are expected to grow at 30% CAGR over the next 10 years. The Endurance will be one of the few full-size EV pickup trucks in the market over the next few years. With its in-wheel hub motor design, the Endurance is truly unique, and we believe will offer a superior combination of handling, traction control, torque, and turning radius. With fewer moving parts than more conventional propulsion systems, we also believe the Endurance will have advantages in overall maintenance costs. A commercial sales plan will be driven primarily by our expected production volumes. As Edward and Adam will discuss later in the presentation, our bill of material costs at launch will be significantly higher than our anticipated selling price. We have a plan to reduce our BOM costs over time through investments in hard tooling, moving from prototype to production suppliers, VAVE initiatives, and realizing the benefits of the Foxconn transactions. However, at least for the time being, we plan to hold off on the larger hard tooling and other investments in order to manage our balance sheet and limit the amount of new capital needed to achieve our initial production targets. As a result, over the next 12 months or so, we'll be focused on selling vehicles to a relatively small number of strategic fleet partners who offer the best opportunities for long-term relationships. On our last call, we forecasted an initial production run of approximately 500 units in the back half of 2022. We continue to expect to produce the 500 units although some deliveries are likely to occur in the early part of 2023. Following the closing of our transaction, we expect to jointly evaluate with Foxconn the ramp-up plan for the endurance, the scope and timing of our BOM cost reduction actions, potential supply chain initiatives, and other opportunities to scale production, including through strategic OEM partnerships. As Adam will discuss in more detail, ramping production will be capital dependent, but we will be prepared. Now turning to our long-term strategy. As I mentioned on our last call, the conversion to electrified powertrains presents OEM startups like LMC with a very unusual opportunity to penetrate the automotive market and gain meaningful share, particularly in certain underserved segments. But success requires that we deliver scale, a differentiated commercial plan, an innovative product, a competitive cost structure, and a vehicle development platform that brings products quickly and efficiently to market. I believe a partnership with Foxconn can help us achieve each of these objectives. Foxconn has ambitions to capture a significant share of the global EV market, not just in contract manufacturing, but in key components as well. In addition to other strategic benefits, the Foxconn partnership would unlock the full potential of the Lordstown plant by getting it to scale faster. At 6.2 million square feet and 640 acres, The Lordstown complex is one of the largest internal combustion automotive plants in North America that is being converted to a state of the art EV manufacturing facility. Foxconn has an excellent opportunity to fill the plant. LMC and all OEMs whose vehicles are built at the plant will benefit from the increased capacity utilization, use of common components, and lower overhead costs. Scale in automotive manufacturing matters. Use of shared space together with the mobility and harmony or MIH open source platform that Foxconn has developed provides smaller, more specialized OEMs the opportunity to achieve the benefits of scale without being a large, fully integrated automaker. A partnership with Foxconn also should significantly reduce our raw material component and other input costs over time. As the largest contract manufacturer in the world, Foxconn has significantly better purchasing power than we would on our own, as well as a global integrated supply chain network and the logistics capabilities necessary to help us reduce vehicle production costs and minimize our supply chain risks. We also stand to benefit from Foxconn's expertise in hardware and software integration, critical to EVs, given their expertise as a multinational electronics manufacturer. As we grow together, these benefits should only improve over time. Finally, a partnership with Foxconn would likely extend beyond a contract manufacturing agreement. When we announced the transaction, we stated that Foxconn and LMC would explore a joint venture arrangement for the development of new electric vehicles utilizing Foxconn's MIH common platform. This was an important part of the deal because in our view, LMC requires a scalable vehicle development platform for future vehicles that will allow us to compete with much larger vertically integrated OEMs. The use of common architecture systems and components off MIH would provide us that opportunity. Since our last earnings call, we have made progress on the terms of a contract manufacturing agreement and an agreement under which we would develop new vehicles in collaboration with Foxconn off of the MIH platform. While definitive agreements have not been reached and may not be reached, I believe we're close, and our relationship with Foxconn remains very solid. This past weekend, Foxconn agreed to extend the down payment repayment deadline under the APA from May 14th until May 18th, the day before our annual shareholders meeting, to provide a little more time to conclude our transactions. In closing, I'm pleased with the progress we've made on moving the Endurance towards launch readiness and building our relationship with Foxconn. We have a very unique vehicle, and notwithstanding tremendous challenges, we're very close to achieving very important milestones. With that, I'll turn the call over to our president, Edward Hightower.