Exro Technologies Inc.

Good day everyone and welcome to the EXPRO Technologies Q2 earnings call. At this time all participants are in listen only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask questions by pressing the star and 1 on your telephone keypad. You may withdraw your question by pressing star 2. Please note this call may be recorded and it will be sending by should you need any assistance. It is now my pleasure to turn the conference over to Jeff O'Dowd. Please go ahead.

Good morning, and thank you for joining us today. We will discuss our performance of the second quarter, followed by a Q&A session. Joining us this morning are Sue Ozdemir, our CEO, and Gerald Bishop, our CFO. During this call, we will make forward-looking statements. Actual results could differ from those expressed or implied. We undertake no obligation to update or revise any of these statements. Relevant factors that could cause actual results to differ materially from those four looking statements are listed in our MD&A for the quarter that ended June 30, 2024, which can be found on CDAR and on our website. In addition, during the call, we may refer to specific non-IFRS measures. These measures are also defined in our MD&A for the quarter ended June 30, 2024. Our MD&A includes a reconciliation of non-IFRS measures to the most directly comparable IFRS measures. Management believes that these non-IFRS measures provide useful information to investors regarding the corporation's financial condition and results of operations as they provide additional metrics of performance. These non-IFRS measures are not recognized under IFRS, do not have any standardized meaning prescribed under IFRS, and may differ from similarly named measures reported by other issuers. Accordingly, they may not be comparable. These measures should not be considered as a substitute for related financial information prepared under IFRS. With that, I will now turn our call over to our CEO, Sue Ostermeyer.

Good morning, everybody. And thank you for joining us today. In April of this year, Exro completed the transformational merger with C Electric, accelerating our organization into the next stage of growth as we deliver electric propulsion systems to top blue chip OEMs and fast tracking the deployment of EXRO's core disruptive motor and battery control technology. Today, we will provide an update on our core strategy and progress on the key milestones of our first 90 days where we have increased revenue, path to profitability, and technology integrations. Overall, we are excited and pleased with our significant progress post-marger. We delivered record revenue and propulsion systems produced. with more units produced than the cumulative total of sea electric pre-merger while overcoming several operational and unexpected challenges. We also exceeded our merger integration efforts by implementing substantial cost reductions, continued expanding our technology with energy saving solutions to new customers, and achieved UL certification with our cell driver system. Quite frankly, I am tremendously proud of our progress and accomplishments in such a short period of time since the merger. As this is our first earnings call, we wanted to spend a few minutes on key aspects of our strategy. Let's get started with a look over the past three months and how things have progressed since the merger. We're going to start by talking a little bit about the initial deal synergies. The merger marked a transformational next step for our core technology offerings as we saw the opportunity to capture the key aspects of the merger through access to top OEM contracts that were at the inflection point of transitioning from successful pilots to full volume production. A reminder of these initial deal synergies as they formed our core three key pillars over the last quarter. Accelerated revenue growth. This is with production contracts allowing us to quickly recognize material revenue growth through consistent week over week execution. Profitability. Focusing only on programs that have a clear path to profitability and a lens to that profitability within 12 months post close with top global OEMs. And finally, our technology solutions. Progressing technology from IP on paper to volume production is a massive undertaking for any company. Doing so in the automotive space is incrementally harder. Our combined technology portfolio created the opportunity to accelerate our path with integrations into the full C drive propulsion system to capture market with our differentiated, patented, and lower cost USMCA built product. We are differentiated from the incumbents where that was a key aspect to the rationale. Over the past three months, we have been head down focused on execution. So today I will take a few minutes to talk to these pillars. Let's start with the technology disruption because this is what provides the foundation for us to develop and sustain a long term profitable company. Our differentiation is Exros patented technology. It is transformational. to have the opportunity to not only expand our technology offerings with a new stream of revenue through the C drive propulsion systems, but also to integrate our proprietary coil driver motor technology, providing the much needed industry differentiation that allows that performance increase while enabling significant cost out. Once integrated, our USMCA approved technology provides increased system efficiency, An ability to material reduce system cost by removing the dependencies on mechanical components such as large oversized motors and batteries. This means that we are using a smaller motor and battery to achieve that performance and cost out. The merger provided us the platforms to integrate the technology and enable Exro to provide three key technologies to the market. The first is our full electric propulsion system. targeting a turnkey solution that is delivering now to the Class 5-7 commercial trucking OEMs. A standalone traction inverter drivetrain system. This is the motor control, where Exro Coil Driver is paired with an industry-leading motor partner to deliver best-in-class performance. And finally, our new UL9540 certified stationary battery energy storage system for commercial and industrial applications. As we look to how we take this technology to market, our transformation includes a few key shifts in the strategy of the company that provide the foundation for a profitable future. In the short term, we have evaluated all of our partnerships and are now focused on top programs that deliver against our core pillars of incremental growth, profitability, and technology disruption. by providing best in class system efficiencies and tackling the real world issues challenging the mobility sector. This includes but isn't limited to cost out, allowing electric to transition and be at par with combustion, but also the driving of the performance. What good is a commercial truck with a full load that can't climb a hill at full speed without draining the battery? Our recent pilot results in Brazil demonstrated this industry-leading performance and that OEMs don't need to settle for some subpar results by going electric. Electrification can include the performance we need and the profits. This result follows years of development. We are also continuing our innovation developments to support the future licensing strategy with the passenger vehicle market. I am most excited about our developments on using our coil driver to control motors that have no heavy rare earth metals in commercial and passenger vehicles. This is a hot topic with OEMs. It's a geopolitical issue that we should all be thinking about. On our website, you can find a link to a paper that our CTO Eric presented in Munich, Germany in March of this year. This is just one example of how we are bringing to market the next generation of motor control. Our innovation pipeline of automotive passenger vehicle OEMs support the need for technology like ours that provides material cost benefits across the vehicle system and delivers solutions for supply issues like heavy rare earth metals. Our global passenger vehicle program continues to progress and deliver as we had hoped when we started over a year ago. We have also progressed two other programs as we look to expand into hybrid propulsion and demonstrate our system efficiency gains. While the development cycle is longer on passenger vehicles, the reward of multiple platforms combined with our technology being agnostic to electric propulsion type, this means that we can be utilized in hydrogen, hybrid, or full battery electric. This provides large profitable revenue potential. Exro is positioned for success. In Q2, we achieved record revenue directly from technology. The merger has been extremely challenging and there have been lots of things to overcome as we've transitioned and transformed the company. The investments made into our core infrastructure over the past three years and the processes that we had implemented have been instrumental to our results so far. Mergers are tough and this one has been no different. It's taken several weeks to position the supply chain. implement strategic sourcing, combine our teams, and focus on quality by design. While we are below the target set, we are demonstrating the incremental growth needed to win and maintain new business. As we evaluated our performance against the market backdrop, we made the difficult decision to prioritize our efforts and profitability so that we ensure the future is bright. It is an inflection point for Exro, and each month we drive down costs and increase output. We are managing our program development and balancing demand for our technology with that eye to profitability. This means that not every program made the cut, but that all programs that we are currently using resources on have a path to profitability and an eye to week over week growth. It's important to note that from the Exro perspective, not a single one of our programs did not meet the technology milestones that were set. As we look to that profitability, we also ensure that we open up the door to future new OEM programs in both commercial trucks and passenger vehicles as we expand our core technology and scale into multiple partners. Before turning it over to Daryl, we are poised to address the evolving needs of the EV market segment. With differentiating patented technology, consistent deliveries to blue chip OEM customers, a priority and focus on profitability, we are delivering now to the commercial truck sector where we look to build a strong foundation. And we are developing now to scale into passenger vehicle sector in the years ahead. And with that, let me turn it over to Daryl, our CFO, who will provide an overview on our financial results.