Lightning eMotors, Inc

Good afternoon and welcome to Lightning eMotors second quarter 2021 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Nick Bettis, Director of Marketing and Sales Operations for Lightning eMotors. Thank you. You may begin.

Thank you, Operator, and thank you, everyone, for joining us today. Hosting the call today are Lightning's co-founder and CEO, Tim Reeser, Chief Revenue Officer, Cash Sethi, and CFO, Teresa Covington. Ahead of this call, Lightning issued its second quarter 2021 earnings press release and presentation, which we will reference today. These can be found on the Investor Relations section of our website at lightningemotors.com. On this call, management will be making statements based on current expectations and assumptions which are subject to risk and uncertainty. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of factors discussed in today's earnings news release, during this conference call, or in our latest reports and filings with the Securities Exchange Commission. These documents can be found on our website at lightningemotors.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's second quarter 2021 earnings press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures. With that, let me turn it over to Tim.

Thank you very much, Nick, and good afternoon, everyone. For today's presentation, we will be referring to the slides that were posted to the investor relations section of our website earlier this afternoon. As this is our first earnings call since the closing of the business combination with Gig Capital 3 in May, I would like to start by thanking our employees for their contributions to Lightning's success. I would also like to thank shareholders for their patience and support towards the completion of the transaction. Becoming a public company was an important milestone for Lightning. and the transaction provided us with the capital needed to execute on our strategy and expand capacity to address an estimated $67 billion of total addressable worldwide market. Now turning to slide five with today's agenda. First, for investors not familiar with the Lightning story, I'll start off by giving a brief introduction of the company and its market opportunities. Second, I will then highlight what differentiates us from other industry players and how we are adapting to challenges facing the industry and plan to execute on our vision. Third, Cash will discuss our foundational agreement with Forest River and provide an update on our backlog and pipeline. Wrapping it up, Teresa will provide financial highlights from the second quarter and our 2021 financial outlook. We will then hold a question and answer session. Moving to slide seven, We founded Lightning in 2008 to address the lack of availability of hybrid and electric specialty commercial vehicles available to urban medium-duty fleets. Today, Lightning Motors is the only full-range manufacturer of Class III through VII battery electric and fuel cell electric vehicles in the market, including ambulances, shuttle buses, utility trucks, and motor coaches. We have built a modular software and hardware architecture that allows us to serve this highly segmented and customized market with a cost-effective solution. Turning to slide eight, what separates us from our peers is that we deliver today purpose-built, end-to-end commercial electric vehicle solutions for fleets. In addition to full vehicles, we sell powertrain systems to vocational and commercial vehicle OEMs, as well as the partners like ABC companies who install them in repower applications. Historically, our process began with a Ford, Hino, Isuzu, or General Motors chassis, which are produced at high volumes with low differentiation and are certified for our customers. As we announced in our earnings release, we have a path for addressing the industry chassis shortage with our own Lightning-branded strip chassis and cab chassis products. We then build out the battery electric and fuel cell electric powertrain systems customized to each customer's vehicle, route, and duty requirements. Next, we customize the design and software to fit the vocational requirements of each vehicle, a process that requires specialized software, engineering, and manufacturing skills that were not previously required with internal combustion vehicle manufacturing. This high level of software and hardware customization is something that legacy OEMs have not historically performed, are not well suited for, and that is both of high value and necessary for the products and markets that Lightning serves. We integrate our proprietary data and analytics hardware and software platform on every vehicle we make. We've spent the last eight years developing and refining this industry-leading technology. Our customers and our fleet service teams receive data about their vehicles in real time, enabling actionable intelligence and helping to prevent or reduce downtime for their fleets. Further, Our software includes key vocational attributes, such as proprietary compliance reporting for HVIP, LCFS, CARB, and other grant and subsidy programs, as well as key efficiency and safety data. Our customers appreciate these software capabilities as evidenced by the 100% of tax rate on every vehicle we have produced. We charge customers a fee for these services, which provides a high margin monthly recurring revenue stream. Lightning offers a full suite of charging solutions to customers, including Level 2 and Level 3 chargers, installation, permitting, LCFS monetization, software, and support integration to complement their vehicle purchase. It's important to note that although charging is often viewed as a commodity product, commercial fleets have very specialized needs and use cases that are very different from public charging businesses, and we work with operators to tailor charging solutions to their unique requirements. Finally, we wrap all these solutions together with customer financing. Although many fleet customers make extensive use of financing for their legacy internal combustion fleets, there's limited financing options available for electric vocational vehicles due to limited data on reliability and future residual values. We see bundling financing and charging with the vehicle as an enabler to the vehicle sale, providing customers with a single, end-to-end solution that enables them to recognize the TCO savings on a monthly basis. Now to slide nine. It is important to underscore that the high level of customization enabled and required by our technology and demanded by our customers is also what provides one of our competitive moats. Companies like GM and Ford are building trucks in high volumes and do not have a business model that supports manufacturing for the medium-duty segment. Turning to slide 10. Despite our efforts to highlight our niche position in the EV space, I've heard a lot of people say, hey, it's a crowded market with many EV players having recently gone public. We want to differentiate ourselves and it's important to say what we do, which is we focus on urban, medium duty, commercial zero emission vehicles, which are currently being deployed and have been deployed for the last three years. One of the things I like to say is we build the electric vehicles no one else is building. And in fact, no one else wants to build. And you can see that in this chart. While lightning segments have a large total addressable market, these individual segments between class three and class eight are generally too small for major OEMs and are not targeted by most startups building highly automated, low customization production lines. Now moving to an overview of our supply chain partners and recent supply chain developments on slides 12 and 13. While we are experiencing a strong and growing product demand, supply chain issues have created temporary headwinds for our business. Although our Q2 revenue was constrained by drivetrain component deliveries, we were able to mitigate several other supply chain constrictions and sell 37 vehicles and powertrain systems. While we are working to remedy the supply chain disruptions through the technical and commercial validation of additional suppliers, further supply chain disruptions remain, including battery and chassis shortages. Major chassis OEMs have surprised the industry by shutting down in July for a week or more. It is important to note that although revenue is being pushed to future quarters, we have not lost any sales due to the delays. But we aren't sitting idly by waiting for these supply chain problems to work themselves out. We are in the final stages of negotiations and technical integration and validation with one of the world's largest worldwide battery suppliers. We believe that our work with our battery suppliers may mitigate our supply chain constraints in 2022 and beyond. Further, with the design of our first purpose-building chassis, we are working on addressing the industry chassis shortage with our own Lightning-branded strip chassis and cab chassis products that are not chip-limited. While 2021 has been a challenging year, we are thrilled with the demand outlook and are taking action to help address the supply chain issues, which we believe will allow us to fulfill customer demand and drive substantial vehicle sales and revenue growth in the years ahead. Moving to slide 14, I want to briefly mention our manufacturing capacities and plans. Lightning is in the unique position of having significant and capital-efficient manufacturing capacity online and running today with current facilities, flexible lines, and flex tooling to support up to 1,200 powertrain systems and complete vehicles per year. We added an additional 100,000 square feet nine months ago at our Loveland, Colorado campus and are now procuring and installing the automation and tooling required to grow our capacity to 3,000 powertrain systems and complete vehicles for 2022. Not only are we able to build this capacity with very light CapEx investment, we are also able to expand quickly due to our agile manufacturing approach and the fact that we don't build bodies or interiors, eliminating many of the heavy and long lead time CapEx investments. We have first rights to the additional square footage needed on our 1 million square foot campus to support a potential expansion of 20,000 powertrain systems and complete vehicles by 2024. And now I'll turn it to Kash to provide an overview of recent customer wins and the order backlog and sales pipeline.