LORDSTOWN, Ohio, Aug. 4, 2022
/PRNewswire/ -- Lordstown Motors Corp. (Nasdaq: RIDE),
("Lordstown Motors" or "LMC"), an original equipment manufacturer
("OEM") of electric light duty vehicles focused on the commercial
fleet market, today released its second quarter 2022 financial
results and provided a business update.
Second Quarter and Recent Business Highlights
- Ending cash balance of $236
million is above internal expectations and extends our
runway, due in part to disciplined expense controls and rigorous
program management
- Closed Asset Purchase Agreement with Foxconn ("APA"), generated
$107.5 million cash proceeds in 2Q22
and $257.5 million in total
proceeds
- Reported operating profit of $61.3
million, inclusive of a $101.7
million gain on sale plus a $18.4
million reimbursement of certain operating expenses related
to the plant sale
- Core operating expenses1, excluding the impact of
the APA, were $58.8 million or 33%
lower than 1Q22, and down 47% versus 2Q21
- Closed Contract Manufacturing Agreement, transferred the plant
and approximately 400 manufacturing employees to Foxconn, reducing
operating complexity and cost, and solidifying path to a less
capital intensive and highly variable cost structure
- Formed a Joint Venture with Foxconn – LMC becomes Foxconn's
primary development partner for electric vehicles in the North
American commercial market
- Continued progress with testing, validation and certification
activities to prepare the Endurance for Q3 commercial release
production and Q4 customer deliveries
- Appointed Daniel Ninivaggi as
Executive Chairman, promoted Edward
Hightower to CEO and added several automotive veterans to
strengthen senior management team
- Targeting a limited number of strategic fleet customers for the
Endurance and anchor customers for the first vehicle to be produced
with Foxconn through our joint venture
1) See "Non-GAAP
Measures" below.
|
Outlook
- Reaffirming third quarter 2022 target for start of commercial
production of the Endurance and commercial deliveries expected in
Q4
- Expect lower 2H 2022 total operating loss and capital
expenditures of between $140 and
$150 million, excluding contingent
liabilities, reducing the minimum capital raise in 2022 from
$150 million to $50 to $75
million
- Balanced approach to allocate existing capital on the critical
path items to get the Endurance to market
- Production ramp plan will be aligned with bill of material cost
reductions and capital raising
- First vehicle program from our Foxconn joint venture expected
to be announced in Q4
Please refer to "Forward Looking Statements" below.
Executive Commentary
"Over the past year, we have recruited and developed an
experienced senior management team, made significant progress
towards launching the Endurance, transitioned to a less capital
intensive and flexible business model, established a new vehicle
development platform with Foxconn, and raised some additional
capital," said Daniel Ninivaggi,
LMC's Executive Chairman. "While these were critical
foundational steps, we realize that much work remains to be
done. Our immediate focus moving forward will be on
completing the successful launch of the Endurance; identifying
partners, including other OEMs, to jointly scale the Endurance;
defining the first vehicle program under our Foxconn joint venture;
securing significant customer support for that program; and earning
the support from our investors required to raise the additional
capital necessary to execute our business plan," Ninivaggi
continued.
"I am excited by my expanded role as CEO of Lordstown and the joint venture with Foxconn.
In Q2, we made significant progress towards our plan to launch the
Endurance in Q3 of 2022 and begin sales in Q4. We look forward to
getting the Endurance into customers' hands, as we think they are
going to love it," said Edward
Hightower, CEO of Lordstown Motors. "We have also
started pre-development work on the first vehicle under our joint
venture. Our team is excited to create and launch future products
while leveraging the Foxconn EV ecosystem."
"We are pleased with the outcome of the quarter. The
rigorous program management, disciplined cost controls and intense
focus by our team allowed us to end the quarter in a better cash
position than planned. We have more runway and will need to raise
less capital in 2022 than previously forecasted," said Adam Kroll, Chief Financial Officer of
Lordstown. "However, our success
and ability to execute our plan remains dependent upon our ability
to raise additional capital."
Second Quarter 2022 results
In the second quarter, we generated an operating profit of
$61.3 million, including $120.1 million from the sale of the Lordstown facility, consisting of a
$101.7 million gain on sale and
$18.4 million in operating expense
reimbursement. Excluding the impact of the APA, our core
total operating expenses were $58.8
million, of which research and development ("R&D") and
selling, general and administrative ("SG&A") costs represented
$28.9 million and $29.9 million, respectively.
R&D costs included $10.7 million associated with operating the
Lordstown facility and producing
pre-production vehicles ("PPVs"), $16.7
million for engineering testing and development costs and
$1.5 million for Endurance prototype
components. Costs associated with operating the Lordstown facility and manufacturing PPVs
decreased 51% versus the first quarter of 2022 as the APA closed on
May 11, 2022, resulting in the
Company incurring approximately half the plant operating costs in
the period. Engineering, testing and development expenses in the
second quarter decreased 18% versus the first quarter of
2022. Costs related to vehicle components for building PPVs
and testing fell 93%, or $18.2
million, compared to the first quarter of 2022 as we largely
completed building PPVs in the quarter.
SG&A was $29.9 million in the
quarter, up approximately 15% versus both the first quarter of 2022
and fourth quarter of 2021. These increases were due primarily to a
non-cash charge to reflect the net realizable value for inventory,
partly offset by lower legal and professional fees.
At the end of the quarter, cash on hand was $236 million, approximately $32 million higher than the first quarter of
2022. The change in cash reflects $52.4
million in cash used by operations, which includes
$21.6 million for working capital,
$18.1 million in capital expenditures
roughly half of which was tooling for the Endurance, $87.5 million in proceeds from the plant sale,
and $15.1 million from equity
issuances.
Please refer to "Forward Looking Statements" below.
Conference call Information
Lordstown Motors will host
a conference call at 8:30 a.m. Eastern
Time today (Thursday, August 4,
2022). The call can be accessed via a live webcast that is
accessible on the Events page of Lordstown Motors' Investor
Relations website, as well as the investor presentation deck, at
https://investor.lordstownmotors.com/. An archive of the webcast
will be available shortly after the call.
About Lordstown Motors Corp.
Lordstown Motors is an
electric vehicle (EV) innovator developing high-quality light duty
commercial fleet vehicles, with the Endurance all electric pick-up
truck as its first vehicle being launched in the Lordstown, Ohio facility. Lordstown Motors has
engineering, research and development facilities in Farmington Hills, Michigan and Irvine, California. For additional information
visit www.lordstownmotors.com.
Contacts:
Investors
Carter W. Driscoll, CFA
IR@lordstownmotors.com
Media
Colleen Robar
crobar@robarpr.com
313-207-5960
Financial Results
Lordstown Motors Corp.
|
Condensed
Consolidated Statements of Operations
|
(Amounts in thousands,
except per share data -- Unaudited)
|
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Six months
ended
|
|
Six months
ended
|
|
|
June 30, 2022
|
|
June 30, 2021
|
|
June 30, 2022
|
|
June 30, 2021
|
Net sales
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
29,941
|
|
|
33,793
|
|
|
55,960
|
|
|
48,187
|
Research and
development expenses 1
|
|
|
10,510
|
|
|
76,544
|
|
|
72,374
|
|
|
168,356
|
Gain on
sale
|
|
|
(101,736)
|
|
|
—
|
|
|
(101,736)
|
|
|
—
|
Total operating
(income) expenses
|
|
$
|
(61,285)
|
|
$
|
110,337
|
|
$
|
26,598
|
|
$
|
216,543
|
Income (loss) from
operations
|
|
|
61,285
|
|
|
(110,337)
|
|
$
|
(26,598)
|
|
$
|
(216,543)
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense)
|
|
|
1,991
|
|
|
1,877
|
|
|
499
|
|
|
(17,255)
|
Interest
income
|
|
|
383
|
|
|
260
|
|
|
125
|
|
|
387
|
Income (Loss) before
income taxes
|
|
$
|
63,659
|
|
$
|
(108,200)
|
|
$
|
(25,974)
|
|
$
|
(233,411)
|
Income tax
expense
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
Net income
(loss)
|
|
$
|
63,659
|
|
$
|
(108,200)
|
|
$
|
(25,974)
|
|
$
|
(233,411)
|
Income (loss) per share
attributable to common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.32
|
|
|
(0.61)
|
|
|
(0.13)
|
|
|
(1.33)
|
Diluted
|
|
|
0.32
|
|
|
(0.61)
|
|
|
(0.13)
|
|
|
(1.33)
|
Weighted-average number
of common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
200,821
|
|
|
176,585
|
|
|
198,674
|
|
|
175,595
|
Diluted
|
|
|
201,015
|
|
|
176,585
|
|
|
198,674
|
|
|
175,595
|
1)
|
Research and
development expenses for the three and six months ended June 30,
2022 are net of $18.4 million in operating expense reimbursements
under the APA.
|
Lordstown Motors Corp.
|
Condensed
Consolidated Balance Sheets
|
(Amounts in thousands
except share data -- Unaudited)
|
|
|
|
June 30, 2022
|
|
December 31, 2021
|
ASSETS:
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
235,686
|
|
$
|
244,016
|
Inventory,
net
|
|
|
4,013
|
|
|
—
|
Prepaid expenses and
other current assets
|
|
|
43,080
|
|
|
47,121
|
Total current
assets
|
|
$
|
282,779
|
|
$
|
291,137
|
Property, plant and
equipment
|
|
|
286,928
|
|
|
382,746
|
Intangible
assets
|
|
|
1,000
|
|
|
1,000
|
Other non-current
assets
|
|
|
27,487
|
|
|
13,900
|
Total
Assets
|
|
$
|
598,194
|
|
$
|
688,783
|
LIABILITIES AND
STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
12,979
|
|
$
|
12,098
|
Accrued and other
current liabilities
|
|
|
34,355
|
|
|
35,507
|
Purchase price down
payment from Foxconn
|
|
|
—
|
|
|
100,000
|
Note payable to
Foxconn
|
|
|
13,500
|
|
|
—
|
Total current
liabilities
|
|
$
|
60,834
|
|
$
|
147,605
|
Warrant and other
non-current liabilities
|
|
|
1,601
|
|
|
1,578
|
Total
liabilities
|
|
$
|
62,435
|
|
$
|
149,183
|
Stockholders'
equity
|
|
|
|
|
|
|
Class A common stock,
$0.0001 par value, 300,000,000 shares authorized; 205,871,561 and
196,391,349 shares issued and outstanding as of
June 30, 2022 and December 31, 2021,
respectively
|
|
$
|
21
|
|
$
|
19
|
Additional paid in
capital
|
|
|
1,106,521
|
|
|
1,084,390
|
Accumulated
deficit
|
|
|
(570,783)
|
|
|
(544,809)
|
Total stockholders'
equity
|
|
$
|
535,759
|
|
$
|
539,600
|
Total liabilities and
stockholders' equity
|
|
$
|
598,194
|
|
$
|
688,783
|
Lordstown Motors Corp.
|
Condensed
Consolidated Statements of Cash Flow
|
(Amounts in thousands
-- Unaudited)
|
|
|
|
Six months
ended
|
|
Six months
ended
|
|
|
June 30, 2022
|
|
June 30, 2021
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(25,974)
|
|
$
|
(233,411)
|
Adjustments to
reconcile net loss to cash used by operating activities:
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
6,546
|
|
|
5,780
|
Gain on disposal of
fixed assets
|
|
|
(101,736)
|
|
|
—
|
Other non-cash
changes
|
|
|
9,123
|
|
|
18,261
|
Forgiveness of note
payable
|
|
|
—
|
|
|
(1,015)
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts
receivables
|
|
|
—
|
|
|
19
|
Inventory
|
|
|
(13,413)
|
|
|
—
|
Prepaid expenses and
other assets
|
|
|
5,301
|
|
|
726
|
Accounts
payable
|
|
|
1,197
|
|
|
7,209
|
Accrued expenses and
other liabilities
|
|
|
(2,471)
|
|
|
31,057
|
Net Cash used by
operating activities
|
|
$
|
(121,427)
|
|
$
|
(171,374)
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Purchases of capital
assets
|
|
$
|
(40,043)
|
|
$
|
(175,601)
|
Investment in Foxconn
Joint Venture
|
|
|
(13,500)
|
|
|
—
|
Proceeds from the sale
of capital assets
|
|
|
37,553
|
|
|
—
|
Net Cash used by
investing activities
|
|
$
|
(15,990)
|
|
$
|
(175,601)
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Proceeds from notes
payable
|
|
$
|
13,500
|
|
$
|
82,016
|
Down payments received
from Foxconn
|
|
|
100,000
|
|
|
—
|
Issuance of common
stock
|
|
|
1,853
|
|
|
1,098
|
Proceeds from Equity
Purchase Agreement with YA, net of issuance costs
|
|
|
13,734
|
|
|
—
|
Net Cash provided by
financing activities
|
|
$
|
129,087
|
|
$
|
83,114
|
Decrease in cash and
cash equivalents
|
|
$
|
(8,330)
|
|
$
|
(263,861)
|
Cash and cash
equivalents, beginning balance
|
|
|
244,016
|
|
|
629,761
|
Cash and cash
equivalents, ending balance
|
|
$
|
235,686
|
|
$
|
365,900
|
|
|
|
|
|
|
|
Non-cash
items
|
|
|
|
|
|
|
Derecognition of
Foxconn down payments for sale of capital assets
|
|
$
|
200,000
|
|
$
|
—
|
Capital assets
acquired with payables
|
|
$
|
1,846
|
|
$
|
14,631
|
Lordstown Motors Corp.
Non-GAAP
Reconciliation from Operating Expenses (Income) to Core Operating
Expenses
(Amounts in thousands -- Unaudited)
In addition to the results provided in accordance with
accounting principles generally accepted in the U.S. ("GAAP"), this
release includes a non-GAAP measure, referred to as "core operating
expenses," to present operating results on an adjusted basis to
eliminate the impact of the closing of the Foxconn APA. The table
below provides a reconciliation of operating expenses (income), the
most directly comparable financial measure calculated and presented
in accordance with GAAP, to the presented non-GAAP financial
measure. The Company believes that core operating expenses, when
reviewed in conjunction with GAAP financial measures, can provide
more information to assist investors in evaluating historical
trends and the current period performance. Items may be excluded
from GAAP financial measures when the Company believes this
provides useful supplementary information to management and
investors in assessing the operating performance of our business.
However, the Company's inclusion of these adjusted measures should
not be construed as an indication that its future results will be
unaffected by unusual or infrequent items or that the items for
which it has made adjustments are unusual or infrequent or will not
recur. A non-GAAP financial measure should be considered in
addition to, and not as superior to or as a substitute for the GAAP
financial measures presented in this earnings release and the
Company's condensed consolidated financial statements and other
publicly filed reports. In addition, any non-GAAP financial measure
the Company provides may not be the same as or comparable to
similar non-GAAP measures presented by other companies.
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
June 30, 2021
|
|
March 31,
2022
|
|
June 30, 2022
|
Operating Expenses
(Income)
|
|
110,377
|
|
87,883
|
|
(61,285)
|
Adjustments:
|
|
|
|
|
|
|
Operating expenses
reimbursement
|
|
—
|
|
—
|
|
18,355
|
Gain on sale
|
|
—
|
|
—
|
|
101,736
|
Core operating
expenses
|
|
110,377
|
|
87,883
|
|
58,806
|
Forward Looking Statements
This release includes forward looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These statements
may be identified by words such as "feel," "believe," "expects,"
"estimates," "projects," "intends," "should," "is to be," or the
negative of such terms, or other comparable terminology.
Forward-looking statements are statements that are not historical
facts. Such forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties, which could
cause actual results to differ materially from the forward-looking
statements contained herein due to many factors, including, but not
limited to: the need to raise substantial additional capital to
execute our business plan, achieve our production targets for the
Endurance in 2022 and beyond, achieve scaled production of the
Endurance, to continue ongoing operations and remain a going
concern, and our ability to raise such funding on a reasonable
timeline and with suitable terms; the cost and other impacts of
contingent liabilities such as litigation, regulatory proceedings,
investigations, stockholder letters and claims and availability of
insurance coverage and/or adverse publicity with respect to these
matters, which may have a material adverse effect, whether or not
successful or valid, on our liquidity position, cash projections,
business prospects and ability and timeframe to obtain financing;
our limited operating history and our ability to execute our
business plan, including through our relationship with Foxconn; our
ability to raise sufficient capital in order to invest in the
tooling that we expect will enable us to eventually lower the
Endurance bill of materials cost, continue design enhancements of
the Endurance and fund any future vehicles we may develop; the
rollout of our business and the timing of expected business
milestones, including our ability to complete the engineering of
the Endurance and Foxconn's completion of the conversion and
retooling of the Lordstown
facility, to establish and maintain appropriate supplier
relationships, to successfully complete testing, homologation and
certification, and to start production and delivery of the
Endurance in accordance with our projected timeline; our ability to
successfully identify and implement actions that will lower the
Endurance bill of materials cost; supply chain disruptions,
inflation and the potential inability to source essential
components and raw materials, including on a timely basis or at
acceptable cost, and their consequences on testing, production,
sales and other activities; our ability to obtain binding purchase
orders and build customer relationships; the risk that our
technology, including our hub motors, does not perform as expected
and our overall ability to deliver on the expectations of customers
with respect to the pricing, performance, quality, reliability,
safety and efficiency of the Endurance and to provide the levels of
service and support that they will require; our ability to conduct
business using a direct sales model, rather than through a dealer
network used by most other OEMs; the effects of competition on our
ability to market and sell vehicles; our inability to retain key
personnel and to hire additional personnel; the ability to protect
our intellectual property rights; the failure to obtain required
regulatory approvals; changes in laws or regulatory requirements or
new or different interpretations of existing law; changes in
governmental incentives and fuel and energy prices; the impact of
health epidemics, including the COVID-19 pandemic, on our business;
cybersecurity threats and compliance with privacy and data
protection laws; failure to timely implement and maintain adequate
financial, information technology and management processes and
controls and procedures; our ability to remain in compliance with
our debt covenants, our ability to repay the obligations when due,
and the risks associated with having pledged significant assets as
collateral for recently obtained indebtedness; and the possibility
that we may be adversely affected by other economic, geopolitical,
business and/or competitive factors, including the direct and
indirect effects of the war in Ukraine. In addition, the transactions entered
into with Foxconn are subject to risks and uncertainties. No
assurances can be given that we will successfully implement or that
we will realize the anticipated benefits from the recently
completed transactions with Foxconn, including the contract
manufacturing agreement and the joint venture to jointly develop
additional EVs for launch. If we are unable to maintain our
relationship with Foxconn or effectively manage outsourcing the
production of the Endurance to Foxconn, we may be unable to ensure
continuity, quality, and compliance with our design specifications
or applicable laws and regulations, which may ultimately disrupt
and have a negative effect on our production and operations. The
success of the joint venture depends on many variables, including
our ability to utilize the designs, engineering data and other
foundational work of Foxconn, its affiliates, and other members of
the MIH consortium to commercialize, industrialize, homologate and
certify a vehicle in North
America, along with variables that are out of the parties'
control, such as technology, innovation, adequate funding, supply
chain and other economic conditions, competitors, customer demand
and other factors that impact new vehicle development. If we are
unable to develop new vehicles for ourselves and potentially other
OEM customers, our business prospects, results of operations and
financial condition may be adversely affected. We will need
additional funding to execute our 2022 business plan and achieve
scaled production of the Endurance. As we seek additional sources
of financing, there can be no assurance that such financing would
be available to us on favorable terms or at all. Our ability to
obtain additional financing in the debt and equity capital markets
is subject to several factors, including market and economic
conditions, the significant amount of capital required, the fact
that our bill of materials cost is currently, and expected to
continue to be, substantially higher than our anticipated selling
price, uncertainty surrounding regulatory approval and the
performance of the vehicle, meaningful exposure to material losses
related to ongoing litigation and the SEC investigation, our
performance and investor sentiment with respect to us and our
business and industry. Additional information on potential factors
that could affect the financial results of the Company and its
forward-looking statements is included in its most recent Form 10-K
and subsequent filings with the Securities and Exchange Commission.
All forward-looking statements are qualified in their entirety by
this cautionary statement. Any forward-looking statements speak
only as of the date on which they are made, and Lordstown Motors
undertakes no obligation to update any forward-looking statement to
reflect events or circumstances after the date of this release.
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SOURCE Lordstown Motors Corp.