The Lion Electric Company Common Shares

Good morning, ladies and gentlemen, and welcome to Lion's Electric second quarter 2023 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. As a reminder, this conference call is being recorded. To register for a question, please press star followed by one on your telephone keypad. I would now like to turn the call over to Isabelle Ajahi, Vice President, Investor Relations and Sustainable Development. Please go ahead, Ms. Ajahi.

Good morning, everyone. Welcome to Lions' second quarter 2023 results conference call. Today, I am here with Max Bédard, our CEO funder, and Nicolas Brunet, our EVP and CFO. Please note that our discussion may include estimates and other forward-looking information, and that our actual results could differ materially from those implied in any such statements. We invite you to review the cautionary language in this morning's press release and in our MDNA, which contains important information regarding various factors, assumptions, and risks that could impact our actual results. With that, let me turn it over to Marc to begin. Marc?

Thank you, Izada. Good morning, everyone. Today, we are pleased to share our Q2 2023 results and key updates that will shape our path to continued growth and profitability. First and foremost, we successfully closed, earlier in July, a $142 million financing round, providing us with the flexibility needed to execute our growth plans for the foreseeable future. Second, we posted positive gross margins in Q2, which was largely driven by higher revenues and an increase in average selling prices. our continuous tight control over the bill of material and other expenses. And finally, not only was Q2 a record quarter in terms of revenues, but we also improved truck deliveries. We will now provide color on each of these items before we open the line for questions. Let's start with our recently announced financing transactions. On July 19th, we closed concurrent financing transactions resulting in gross proceeds of $142 million. Simultaneously with these financings, we extended the term of our $200 million senior credit facility to August 2025, and we also canceled our ATM program. With this key liquidity milestone behind us, we now have the required flexibility to execute our growth plans for the foreseeable future and continue our path to achieving profitability. In this regard, We are gross margin positive in Q2, definitely showing that our business model is scaling well and does not need extraordinary volumes to be successful. This positive gross margin is a significant step towards our overall objective of being EBITDA positive and generating free cash flow. Let's now delve into the details of our Q2 deliveries and our purchase orders. During Q2, we posted record quarterly revenue of $58 million, with the deliveries of 199 vehicles, including 33 trucks. 14 of the 33 trucks delivered during the quarter were ordered by Bolt, a leader in sustainable logistics and a repeat customer for Lion. Note that the delivery of 50 additional school buses that were ready to be delivered to one of our customers and which the customer was ready to receive was deferred until the final approval of the ZTF subsidy by the Canadian federal government. Delays were mostly due to this application being the first sizable order under the ZETF program to go through the final application process. We expect the subsidy to be approved and those vehicles to be delivered in the coming months, leading the way for several other deliveries under ZETF. In terms of purchase orders, our PO book consists of 2,559 vehicles, comprising 304 trucks and 2,255 buses, representing $625 million. Worth mentioning is an order from CAFU for five Lion 5 trucks, which we launched in May and is slated for production before year-end. Last, our Lion Energy PO book stands at 275 charging stations and related services, amounting to $5 million. Which takes me to an update on the Joliet factory and the battery plant. On July 21st, we officially inaugurated the Joliet manufacturing plant, the largest electric vehicle plan for medium-duty and heavy-duty vehicles in the United States. We were honored to host more than 500 attendees, including government officials such as Governor Pritzker, Senator Durbin, and Senator Duckworth, as well as customers, analysts, climate change advocates, community and policy leaders. They all reiterated their commitment to Lyon and the EV sector, which is further demonstrated by funding programs such as the EPA Clean School Bus Program. Round two of the EPA program, which consists in $400 million in grant funding, opened last April. We are working closely with school districts and operators to help our clients secure grant funding under this program. This is just one example out of many others, as we are seeing new programs and legislations, including in Texas, Michigan, Illinois, among others. Back to our activities in Julian. During the quarter, We continue to manufacture lines units for customer deliveries and continue the setup of school bus working stations and installation of equipment. Everyone on site at the grand opening was able to realize that the building and all tenant improvements had been completed. We plan to gradually ramp up production in Joliet, including the start of Liongate production this year. Our objective remains to have a manufacturing capacity of 2,500 school buses per year in Joliet at the end of this year. Regarding the Lion Campus in Mirabelle, during the quarter, we transferred and installed an additional portion of the battery production line from JR Automation's facility and continue to ramp up the production of our battery packs. Our objective is to bring production capacity to 1.7 gigawatt hour per year by the end of this year. This will be enough to power approximately 5,000 of our vehicles in a mix of school buses and trucks. Our Line 5 truck as well as our Lion-C and Lion-D school buses, will be the first vehicles to feature our proprietary Lion battery packs. Our goal is to progressively integrate our Lion battery packs into our vehicles and gradually reduce reliance on third-party batteries. At the end of Q2, we had approximately 2,700 BMW battery packs in inventory. Nicolas will now further discuss our financial performance for Q2. Nicolas.