Romeo Power, Inc.
Q3 2021 Earnings Call Transcript
Published:
- Operator:
- Hello, and welcome to the Romeo Power Third Quarter 2021 Financial Results from webcast. My name is Charlie, and I will be coordinating your call today. I will now hand you over to your host, Kerry Shiba, Chief Financial Officer. Kerry, please go ahead.
- Kerry Shiba:
- Thank you, Charlie. Good afternoon, everyone, and thank you for joining us today for Romeo Power's Q3 earnings call. By the way, I apologize I have a bit of a scratchy throat, but I'm going to speak as loud as I can. Before we begin, I want to remind everyone that this conference call will contain forward-looking statements, including our expectation of future results, sales, availability, and cost of imports, production capacity, market dynamics, and other items. Our actual results may differ materially and adversely from those projected in these forward-looking statements. Additional information concerning factors that could cause the results to differ materially and adversely from these forward-looking statements are contained in our press release that went out earlier today, as well as the disclosures in our public filings with the SEC. Today's call may also include a discussion of non-GAAP financial measures, as that term is defined in Regulation G. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for financial information presented in compliance with GAAP. Accordingly, at the end of today's press release, we have provided a reconciliation of these non-GAAP financial measures, to the Company's financial results prepared in accordance with GAAP. With that, please welcome Susan Brennan, our Chief Executive Officer of Romeo Power. Susan?
- Susan Brennan:
- Thank you, Kerry, and thank you all for joining. Although I've only been at the CEO helm for 12-week because I was a member of Romeo's Board during the prior 9 months, I hit the ground running. In those 12 weeks, we've made some important progress and taken some very important steps to position Romeo for a successful future. I have led many teams through transformation. I have developed a successful playbook that I'm in the process of applying to the work at Romeo, and we are doing so with an appropriate sense of urgency. My top areas of focus have been
- Kerry Shiba:
- Excuse me. Thanks, Susan, and good afternoon everyone. Revenues were $5.8 million for the third quarter of this year and now stand at $7.7 million for the first 9 months. Third quarter revenues this year were about 8.5 times revenues in the same quarter last year, and reflect the continued ramp up of production as we have been expecting. As Susan discussed, the rate of shipments in the quarter was hampered somewhat by various issues related to components we purchased. For example, while product refinements requested by certain of our customers during the quarter were being analyzed, it limited our ability to commit to build inventory of the parts potentially involved. In addition, we also were affected by general supply chain constraints that have had a broad-based negative impact throughout the economy. We also incurred throughput challenges related to the internal production scale up, which are not uncommon when new high-volume processes are introduced to the operating environment. To address continued growth, we also installed the second production line, which required equipment commissioning and caused some inefficiencies. As Susan commented, we are investing considerable focus of attention at investing in additional talent to address reliability and efficiency of both our supply chain and internal production processes, both of which have shown progressive improvement over the past few weeks. Despite improvements occurring, particularly with respect to our production rates, we also continue to face some uncertainty related to our primary commercial launch. The continuing impact of customer-driven product design refinements and related availability and purchase components involved are variables which may affect us in the fourth quarter. Based on these variables, we are revising our full-year 2021 revenue guidance range to $18 million on the high-end and $15 million on the low-end. These ranges will continue to reflect sequential quarterly revenue growth, but at a lesser pace than previously expected for the reasons I just described. We ended the third quarter of this year with $181 million of cash, cash equivalents, and investments, which I will refer to as cash for the sake of simplicity. This compares to $268 million at the end of the previous quarter. Approximately 3 quarters or $65 million of the quarterly decline reflects the prepayment we made to secure a long-term battery cell commitment we disclosed in a Form 8-K during the third quarter. This prepayment will be recoup fully in the form of a credit against the per unit sell price we will pay, so long as we annually purchase the minimum volume ourselves committed to in the long-term agreement, which we fully expect to do. excluding the $65 million cell pre -payment, cash declined $22 million for the third quarter of this year. While our available cash was still substantial at the end of the third quarter of this year, we do expect the rate at which we consume cash to increase, as production continues to ramp up to support revenue growth and as we make further investments in our organization and facilities. We continue to prepay for both battery cells and many other materials reflective of our trade status as a start-up Company. While we will continue to request trade credit terms from suppliers, we cannot guarantee or estimate to what degree such credit will be made available to us to lessen the working capital requirements. We will also continue to investigate transactions to secure additional committed future supply for bad prepayments to secure such commitments. Finally, as Susan noted, BorgWarner has notified us of its intention to put its investments in our joint venture to Romeo Power. While the value associated with BorgWarner ownership share of the joint venture is uncertain, we also must consider this event in our capital planning. To be prepared to continue funding the various key initiatives supporting growth of the business, we are assessing various options associated with our capital structure and may seek additional capital sometime over the next several months. With that, we will now address your questions so I will turn the call back over to our operator, Charlie. Charlie?
- Operator:
- Susan Brennan:
- Thank you, everyone for joining us today. Go, team Romeo.
- Operator:
- This concludes today's call. Thank you for joining, you may now disconnect your lines.