The Lion Electric Company Common Shares

Good morning, ladies and gentlemen. Welcome to Lions' first quarter 2021 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. At that time, if you'd like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, please press the pound key. As a reminder, this conference call is being recorded. I would now like to turn the call over to Isabel Ajahi, Vice President, Investor Relations and Sustainable Development. Please go ahead, Ms. Ajahi.

Thank you, and good morning, everyone. Bonjour, tout le monde. Welcome to Lions first quarter 2021 results conference call. With me today are Mark Bédard, our CEO funder, and Nicolas Brunet, our Executive Vice President and Chief Financial Officer. Before we begin, I would like to mention that during today's call, we will make certain forward-looking statements regarding our future business expectations, which involve risks and uncertainties. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and certain material factors and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements made on this call. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to our filings made today and to the risk factors contained in our final non-offering prospectus filed on CEDAR on May 6, 2021, and to our other filings made on CEDAR and with the Securities and Exchange Commission including our registration statement on Form F-4. Forward-looking statements speak only as of the date they are made. You are cautioned not to put under reliance on forward-looking statements. We undertake no duty to update this information unless required by law. Finally, please note that we report in US dollars and under IFRS. Comments today may refer to certain non-IFRS financial measures, such as adjusted EBITDA, and certain performance metrics, such as the companies of the book, which are defined, further described, and in certain cases reconciled in our earnings release and MD&A issued this morning. With that, I will now hand the call over to Mark Bedard.

Mark? Thank you, Isabelle. Good morning, everyone. My name is Marc Bedard. I am the CEO and founder of Lion Electric. Thanks for joining us today on Lion's first conference call as a public company. This is the start of a new chapter in Lion's history, as we became the first manufacturer of all electric medium and heavy-duty urban vehicles to be listed on both the NYSE and the TSX. There are mainly three key elements that I would like you to remember from today's Q1 results announcement. Number one, we successfully completed our public listing and related private placement for a net trace of approximately $490 million, which is available to support our key growth initiatives. Number two, Lion has a strong momentum with clients. Despite the continued impact of COVID-19, we are seeing a positive trend in our order book with accelerating deliveries as shown by the significant order of 260 school buses that we announced earlier this morning. And number three, We continue to execute on our strategic plan. We announced the building of a U.S.-based, large-scale, 20,000 electric vehicles manufacturing capacity per year plant in Joliet, Illinois. We also announced the construction of a highly automated 5 gigawatt hour per year battery plant, which we announced with both the Prime Minister of Canada, Mr. Trudeau, and the Premier of Quebec, Mr. Legault. This battery plant has the capacity to provide batteries for approximately 14,000 Lion vehicles per year. We opened two additional experience centers and we incurred sustained growth in our employee count along with many strategic hires. I will provide an update on each of these items and then pass it on to Nicolas Brunet, who will discuss financial performance for Q1 2021. First, for those of you who don't know us, here's a very brief summary of Lion. Lion is a well-established leading manufacturer of all electric medium and heavy duty urban vehicles. benefiting from over 10 years of all-electric vehicle R&D and manufacturing experience, and targeting a total addressable market, a TAM, of over $100 billion per year in the U.S. and Canada. We put clients at the center of everything we do. And today, even if we just started delivering our trucks within the last few months, we already count multiple Tier 1 clients, such as Amazon, Pride Group, IKEA, SoBase, and Canadian National Railways in the truck sector, and Student Transportation of America, National Express, First Student, Transdes, LA Unified School District, Twin Rivers, Keolis, Montreal Airport, and Seguin, just to name a few in the bus sector. As their EEV strategic partner, we pride ourselves for offering our clients turnkey solutions for all aspects of their fleet electrification, including vehicle selection and specs, ride and drives on our trucks and buses, charging infrastructure selection, grant support, training, and ongoing maintenance and telematics. We create, design, and manufacture all-electric Class 5 to Class 8 commercial urban trucks and all-electric buses and minibuses for the school, paratransit, and mass transit segments. Today, Ryan has approximately 390 real vehicles on the road with over 7 million miles driven. Our vehicles have a favorable total cost of ownership as compared to diesel vehicles. All Ryan vehicles are purpose-built for electric with our own chassis, bus body, and truck cabin, and proprietary battery system technology. We have seven purpose-built electric truck and bus models available for purchase today, with eight new models in development. With our first deliveries of Lion 6 and Lion 8 trucks now behind us, we expect to add 10 types of vehicles on the road by the end of 2021, as we expect to add this year the Lion V school bus and the Lion 8 bucket and tractor trucks to our portfolio. Also, we plan to start delivering five additional new types of vehicles by the end of 2022, namely the Lion 5, the Lion 5 and 6 utility, the Lion 7, the Lion 8 boom truck, and the Lion electric ambulance. Our existing manufacturing facility near Montreal has currently a capacity of 2,500 vehicles per year. We also recently opened a new assembly facility close to our current manufacturing plant that will enable us to optimize vehicle production. This plant will be used for the manufacturing of our Lion-A and Lion-M minibuses. Let's now come back to the purpose of the call and discuss the three main items I highlighted at the beginning. First, our public listing. We successfully became a publicly traded company on both the NYSE and the TSX on Friday, May 7th. The proceeds of the public listing, including in the private investment, net of transaction fees amounted to approximately $490 million, which will be largely used to accelerate our growth plan. There are approximately 188 million outstanding common shares of Lion. Our ownership structure consists of approximately 70% ownership by legacy Lion shareholders, 20% ownership by former public Northern Genesis shareholders and SPAC sponsors, and approximately 10% by the PIPE investors. I would like to thank our board members for their contribution and dedication to Lion, and would also like to welcome our new directors, Ian Robertson and Trejo Rapp from Northern Genesis. Now, let me address the purchase order book. In the last few months, Customer feedback has continued to be very positive and level of interest from fleet owners continues to increase. We keep moving from outreach to concrete discussions on specs, total cost of ownership, energy requirements, and delivery timelines. This dialogue already translates into accelerated orders and we feel this is just the beginning. Our order book continues to gain momentum, with truck orders from large fleet owners, including an order for 100 trucks from Pride Group to be delivered over 2021 and 2022, and initial truck orders from sizable fleet owners, such as IKEA's logistic partners Second Placid and Metro Supply Chain Group, Sobase, Heritage, Con Edison, and many others. On the bus side, we have seen the dialogue with fleet operators accelerate, despite continued headwinds from the pandemic. Just this morning, we were pleased to announce that we secured an order of 260 school buses from a leading school bus operator, with deliveries to take place from the second half of 2021 to the first half of 2023. This represents Lion's largest order to date. Also, We secured an initial order from L.E. Unified School District for 10 Lion Seas, the second largest school district in the United States, and another one of up to 60 units from Gopsegang over a period of five years. We have clearly seen an acceleration of dialogue with the largest school bus fleets, who are increasingly turning to fleet electrification. With the announcement of very important government subsidies and funding programs in recent months, Combined with the reopening of schools in key markets such as California, we expect a continued acceleration of the school bus order book, mainly in the second half of 2021. I will discuss the regulatory environment in a few minutes. Altogether, as of May 14, 2021, our vehicle order book stood at 817 all electric vehicles, consisting of 209 trucks and 608 buses, representing a combined total order value of over $225 million. Most of these orders are expected to be delivered within the next 12 months. Let me now spend a minute on Q1 deliveries, which are important as directly linked to revenues. Deliveries, which had slowed down last year in great part due to COVID-19, have begun to regain momentum near the end of last year, as witnessed by our Q4 2020 results, where we delivered 46 vehicles. In Q1 2021, which is traditionally a seasonally low quarter in the school bus space, we delivered 24 vehicles, as compared to two during the same period last year. Q1 2021 deliveries included our first deliveries of six Line A trucks, in addition to 18 school buses. I am also very pleased to say that during the last few weeks, 10 Lion C trucks were delivered to Amazon. Let me also add that selling an electric truck or bus and selling a diesel one is totally different. And this is the reason we have decided several years ago to put together our direct sales model with no boundaries between Lion and our customers. This model is working very well and clearly distinguished Lion as a strategic partner to its clients. This is translating into tangible results, and this is promising to be very successful. That direct sales model is tailored to provide a smooth transition to electric for the fleet operators. First, Lion Energy, our division which assists customers with selecting, purchasing, project managing, and deploying charging infrastructure ahead of vehicle delivery, is gaining significant momentum. When we launched it, our objective was to facilitate the EV transition journey to our customers. Today, we have a current order book at 76 charging stations and related services that represents a total order value of over $800,000. We were also pleased to announce during the quarter that we have signed a reseller agreement with Slow Ad Energy, which adds to the charge point, ABB, BTC Power, Blink, and UV charging infrastructures we are currently offering to our customers. And as a reminder, we are agnostic when it comes to the recommendation of charging infrastructure and seek to offer the equipment that is the most adapted to the needs of our clients. Second, our Lion Grant team is busier than ever, working with customers and potential customers in identifying and applying for grants and subsidies. as we are seeing new attractive funding programs being put in place on both sides of the border. This team, which operates at the forefront of policy and the evolving EV ecosystem, is highly knowledgeable of programs and subsidies that can apply to our clients, helps our customers navigate this complex environment to leverage and secure funding for them. In the last few months, we have witnessed a true desire by government officials to support the cleaner environment. Most recently, a few announcements were made in that regard. President Biden's clean energy plan targeting the electrification of at least 20% of the 500,000 plus school buses in the United States. The recent announcement by Mayor Bill de Blasio to electrify 100% of the New York school bus fleet by 2035. This is without mentioning programs such as the ACT, adopted by Carbon California, which sets clear requirements on manufacturers to sell zero-emission trucks and buses. Fourteen other states and Washington, D.C., have also announced their intention to put similar programs in place. I am pleased to report that with the deliveries in California, we have already started accumulating credit towards the ACT program, and we expect to eventually monetize these credits. Also, Quebec's 2030 plan for a green economy, dedicating $250 million Canadian dollars over the next three years to electrify approximately 2,600 school buses, And starting with model year 2023, new diesel bus purchases will no longer be legal in Quebec. Even if the TCO calculation is favorable in many cases with our Lion vehicles, those incentives make it easier for the fleet operators to electrify their fleets. Third, shortly after the end of the quarter, we opened two additional experience centers, one in Jacksonville, Florida, and the other one in Terrebonne, Quebec. Our state-of-the-art, highly innovative experience centers are the first fully electric service centers in North America. These dedicated spaces are essential locations where prospective customers, policymakers, and other transportation industry stakeholders can test and drive our vehicles, learn about their specifications and advantages, meet Alliance sales representatives, get charging infrastructure assistance, discuss grant and subsidy with our experts, receive training for drivers and maintenance specialists, and have existing vehicle service. Last but not least, we can also provide long-term financing solutions to facilitate the purchase of our vehicles by our clients, smoothen the transition to electric, and in many cases, benefit from a favorable TCO from day one. As you see, we are more than just a manufacturer of electric vehicles, and we firmly believe that electric transportation will be a major catalyst for improving our society, environment, and above all, our quality of life. Let me now provide an update on our strategic plan and the way we are executing our plan. First, let me address our U.S. manufacturing plant. We recently announced that we will operate our high-volume, state-of-the-art vehicle production plant in Joliet, Illinois, where the construction of our plant is well underway. This plant will be highly automated with a production capacity of 20,000 vehicles per year. The new facility for which a long-term lease has been secured will be the largest production site for zero-emission medium and heavy-duty urban vehicles in the United States. This plant will give us the ability to meet the increasing demand in the marketplace for made-in-America zero-emission vehicles. Our 900,000-square-foot new facility will enable us to gain significant additional production capacity close to our USP customers while reducing production and delivery costs. Facility ramp up is expected in the second half of 2021 and our first vehicles will roll off the production line in the second half of 2022. This will represent an initial investment of at least $70 million. It should at first add a minimum of 745 clean energy direct jobs to the region over the next three years. Now let me give you an update on our battery plant. Last March, we announced the construction of our battery plant intended to result in a highly automated plant assembling proprietary Lion battery modules and packs with an annual capacity of five gigawatt hours, enough to electrify 14,000 medium and heavy duty Lion vehicles on an annual basis. Funding of the battery plant was announced during the quarter. to the effect that approximately 100 million Canadian dollars in funding support will be provided from the Canadian federal government and from the Quebec government, 30 million of which is expected to be forgiven, subject to lie in meeting certain specific conditions. We are still in the process of finalizing the specific location, which we will announce this coming quarter. We remain on track for the selection of our contractor in the second half of 2021, the commencement of construction of the facility in the first half of 2022, and for the initial production of battery modules and packs in the second half of 2022. Producing our own battery modules and packs should result in significant cost savings, provide full control over battery specs and dimensions, and remove key supplier dependency. Let me take a few minutes here to address potential cell shortage, which in the last few months has been a topic of discussion in our industry. Lion has not been impacted by this potential industry shortage. We have a multi-sourcing strategy for our batteries and battery components with multi-year supply agreements with BMW, LG Chem, and Romeo Power, and we also have been building our own battery packs for years. Furthermore, we always maintain a healthy level of battery inventories, which combined with scheduled and reconfirmed deliveries, minimize the risk associated with the potential shortage of battery materials. While we remain vigilant, we do not expect that a battery shortage will impact our operations in the near future. Now turning to staffing. We continue to improve our teams on all fronts. As of May 14, Our total headcount exceeded 650 employees, of which over 200 in engineering and R&D. In our management team, Isabelle Adjaï joined us as VP, Investor Relations and Sustainable Development, and François Duquette joined as VP, Chief Legal Officer and Corporate Secretary. Isabelle brings over 25 years of experience in IR with companies such as WSP and Action Pharma. Francois brings over 20 years of experience at CDPQ, Allen & Overy, and Simmons & Simmons. We also added new key strategic members to the team. Rocco Mezzatesta, a Senior Vice President, Product Development and Vehicle Engineering. Rocco tasked with product development as well as the management of engineering projects. brings over 20 years of engineering experience, mostly in the transportation industry for companies such as Tesla, Ford, and Toyota. He will collaborate with Philippe Leblanc, who has played a key role in the development of products and will now be Vice President, Innovation and Advanced Engineering. Vince Spalafora is joining us today as Vice President, Financial Reporting. Vince, who is joining from Gildan Activewear, has more than 15 years of experience in publicly listed companies. He will oversee all aspects of financial reporting and related compliance. And last but not least, Brian Pearn will join us on June 7th as Chief Commercial Officer. Brian will play a key role in our growth by expanding to new markets, building on long-standing relationships with existing clients, while developing new accounts and expanding market share. Brian is an experienced executive leader with a demonstrated history of working in logistics, fleet, financial services, and electrification industries. He comes to us from XL Fleet, where he led the development of the commercial team. His previous work experience also includes Element Fleet Management and G Capital, where we served as Senior Vice President of Sales at both of these companies. With that, let me now turn the call over to Nicholas, who will comment on our financial performance.