NASDAQ:REE REE Automotive Q3 2023 Earnings Report $2.80 +0.04 (+1.27%) Closing price 03:58 PM EasternExtended Trading$2.82 +0.03 (+1.07%) As of 06:15 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast REE Automotive EPS ResultsActual EPS-$2.39Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AREE Automotive Revenue ResultsActual Revenue$0.21 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AREE Automotive Announcement DetailsQuarterQ3 2023Date11/30/2023TimeN/AConference Call DateThursday, November 30, 2023Conference Call Time8:30AM ETUpcoming EarningsREE Automotive's Q4 2024 earnings is scheduled for Thursday, May 29, 2025Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Earnings HistoryCompany ProfilePowered by REE Automotive Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 30, 2023 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the Rie Automotive Q3 2023 Financial Results. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kamal Hamid, Vice President of Investor Relations. Operator00:00:40Please go ahead. Speaker 100:00:44Thank you, operator, and thank you all for joining our Q3 2023 conference call. I hope that you have now seen our press release and shareholder letter issued earlier this morning at investors. Ree. Auto. If you haven't, I encourage you to review it as it has additional insights into the topics we will talk about on the call today. Speaker 100:01:03I would like to remind you that today's call may include forward looking statements. Any statements describing our beliefs, goals, plans, Strategies, expectations, projections, forecasts and assumptions are forward looking statements. Please note that the company's actual results may be different from anticipated by such forward looking statements for a variety of reasons, many of which are beyond our control, such as the ongoing military conflict in Israel. Please refer to the company's Form 20 F filed on March 28, 2023, with the Securities and Exchange Commission, which identifies principal risks and uncertainties that could affect our business, prospects and future results. We assume no obligation to publicly update any forward looking statements except as required by law. Speaker 100:01:50In addition, we will be discussing or providing Certain non GAAP financial measures today, including non GAAP net loss and non GAAP operating expenses. Please see our shareholder letter our CEO and Co Founder. Speaker 200:02:13Thank you, Kamal. Hello, everybody, and thank you for joining us today. I'm pleased to share that we have had a strong Q3. We continue to see strong market demand for the P7, which was converted into the extension of our authorized dealer network and North American footprint, which now stands at 20 partners and more than doubling Our initial order book value to $43,000,000 in the last 3 months. As evidenced by our achievements this quarter, we continue to receive strong positive market feedback on our unique P7 vehicle with their robust feature set, value proposition and low total cost of ownership. Speaker 200:02:59The first batch of customer demo trucks are in advanced stages of build, and we are on track to finalizing our SMVSS and CORP Certification, which follows our recent EPA approval and X by Wire Certification feasibility. We expect to ship the 1st demo units to our customers by Christmas. Support is a critical part in commercial trucks. Therefore, we have built a strong customer experience team who will work together with and support our customers as they put our vehicles to the test in their fleets. As we grow our order book, we continue to strengthen our balance sheet with additional selective financing. Speaker 200:03:48These efforts are part of our risk averse plan to secure in advance the working capital funding required to produce the expected binding orders of our growing order book. I'm particularly encouraged by the continued confidence and support from our shareholders, which have resulted in a capital raise of $8,000,000 with favorable terms led by a long standing institutional investor in a very challenging environment, as we shared a couple of days ago. Operationally, we continue to demonstrate strong financial discipline by remaining on track while decreasing our euro near GAAP net loss by 28%, partly because of the efficiencies around R and D and SG and A as well as government grants received. We believe we are scaling up responsibly, building vehicles to order and not for inventory, as we work to bring our production tooling online. We currently plan to have this operational by the end of 2024, which we believe will enable us to reach bill of materials breakeven on the 1st scale production batch. Speaker 200:05:07In line with our philosophy of complete, not compete, We are in advanced stages of nominating a U. S. Contract manufacturer to assemble our P7 lineup in the U. S. To help us facilitate economical mass production. Speaker 200:05:25We believe we will be able to scale production up to a rate of 4 to 6 trucks a day by the end of 2024, with a max capacity of up to 5,000 trucks per year. We look forward to providing you with an update on this soon. Before we open for questions today, I wanted to end with this. In the past 3 years, we've seen a pandemic, challenging market conditions and now war. But today, more than ever, we are strong, focused and committed to deliver no matter what. Speaker 200:06:06It is so inspiring to see our teams around the world working together as one to continue delivering, especially with the recent war in Israel, which affects us all in different ways, but is not expected to have a material impact on our operations. Our teams in the U. K. And the U. S. Speaker 200:06:27Are supporting our people in Israel, and we are thankful For the 100, if not thousands of messages of support we have received from our partners, customers, suppliers, shareholders and even people we have never met or done business with before. Your support is everything. As ever, I thank you all for your continued good wishes. We recently held a very productive Q and A session with our retail investors. So we have invited our retail investors to share their questions for this quarter. Speaker 200:07:04Today, in addition to analysts' question, we will also answer several of the retail investors' questions. Therefore, I would like to open the call for questions, where we will be joined by our Chief Financial Officer, Yaron Zasman Our Chief Business Officer, Tali Miller and our Chief Operating Officer, Josh Tan. Operator, you can now open the line for questions. Operator00:07:35Thank We will now take the first question. It's coming from the line of Mike Slitsky from D. A. Davidson and Co. Please go ahead. Speaker 300:08:14Yes. Hello. Good morning. Thanks for taking my question. And I'm glad everyone's safe over there in Israel, at least. Speaker 300:08:22And then, so I want to ask quickly about some The comments you made about having a 3rd party contractor doing the production to start. Can you just clarify, are they just going to be doing the corners And then you'll be building the actual vehicle itself within a Ree facility or they're going to be building the whole thing? Can you kind of just give us an overview of how it's going to work at this point? Speaker 200:08:47Hey, Mike. Good morning. Thank you for the Kind wishes. Yes, on the contract manufacturer, I think It's very simple. The core technology for Ree is our BioWire technology, right, the Ree Corners. Speaker 200:09:05That remains within Ree And will always remain within RII. The contract manufacturer will be assembling a full truck, whether it's going to be a cam The strip chassis or full truck powered by Ree and that will be in the U. S. So the full assembly will be done In the U. S, the corners will be shipped from the U. Speaker 200:09:30K. From our already set integration center. Speaker 300:09:36I see. So it's the other way around. They'll be receiving fully assembled ready to go corners from you and they'll be the ones Correct. I get it. Thank you. Speaker 300:09:44Perfect. And then I wanted to clarify some of your comments that you mentioned how you're going to be Building to order and not building to inventory, I guess when you say inventory, do you mean you won't be building final products That will be on Re's books and there will be inventory at the dealership level or will nobody have inventory? We won't have inventory At the normal dealers unless they're specifically ordered from the customer. Speaker 200:10:16Yes. So when we say we're building to order, it means that We're building only for binding orders that we're receiving. So our customers can have Of course, they would need to have some sort of inventory, especially our dealers. For our growing dealer network in the U. S, They'll have an inventory of trucks, but Ree itself is not going to be building inventory sitting up in parts and lots Waiting for this to be taken. Speaker 200:10:46We're building only for the orders that we are accepting From our customers. Did that answer your question? Just to give you more. Speaker 300:10:59Yes. Perfectly, yes. Yes. And maybe one last one for me. Have you got any change in Tone from any of your California customers in the last quarter or so. Speaker 300:11:12I mean, at this point, they're a month away from being forced to adopt EVs. Are they asking you about like January 1 delivery dates if possible? Or I don't know if you could deliver at that time, but are they asking in a more urgent manner for their Vehicles? Speaker 200:11:30Yes. We see very, very strong demand Across the U. S, but of course also in California. And we've also seen yesterday a change More relevant to smaller fleets in California On the level of payment that they can receive a reimbursement. But maybe, Tali, you want to add something more on that? Speaker 400:11:59Yes, sure. Thanks, Mike, for this question. It's a good opportunity to share with you that we definitely see very strong demand for the Powered by Ree vehicles. We see Our customers, so the dealers as well as fleets are asking for are anxious to receive Our demo vehicles because they see the advantages of the technology, the powered by Ree, X by wire technology with the different advantages of the Operation efficiency, safety and others, we see this demand in California, but not only, so across U. S. Speaker 400:12:36And Canada. Speaker 300:12:39Okay. I'll leave it there. And again, my best wishes to everyone. Stay safe. Thank you. Speaker 200:12:44Thank you. Operator00:12:46Thank you. We will now take the next question from the line of Colin Langan from Wells Fargo. Please go ahead. Speaker 500:13:00Great. Thanks for taking my questions. Just want to follow-up. In the press release, you talk about a grant that helped Q3 results. Any size of how much that helped? Speaker 500:13:11And then is that sustainable? Are we going to is that going to continue? Or is that just a one time thing? Speaker 600:13:18Hi, Colin. Good morning. It's Yaron here. So the grants are following with us this year, and they will be with us also next year. We cannot give too much information about the amount, but it's not a meaningful amount. Speaker 600:13:32But it will stay in the Same fate as we are right now, also in the next quarters going forward. Speaker 500:13:39Sorry, it would be in the next quarters going forward? Speaker 600:13:42So also for next year, we still expect to get the grant from the government. Speaker 500:13:49Sorry, is it a continuing every quarter? Or is it just you get once a year, you'll get this grant? Speaker 600:13:54No, no. It's part of the plan that we are getting For this year and also for next year, the payment is depending on the timing. But in general, it's existing plan that's also following us for next year. Speaker 500:14:10Okay, got it. And then the press release also mentions that you need $20,000,000 of funding To execute your 2024 plan, when do you need to get that funding by? Is that By mid year next year, is that by January 1 that you need to get that $20,000,000 And what are your current options to get that needed funding? Speaker 600:14:33So it's our decision when to take it, right? It's based on the way that we prefer to work. We want to be In the safe side all the time. We reported right now that we have a liquidity of $100,000,000 and that is before The additional $8,000,000 that we raised after the end of the quarter. So it's not that we need money tomorrow morning or we have any Issue of liquidity at all. Speaker 600:15:00But in general speaking, we want to be always on the safe side when we are planning the next year ahead And when we want to make sure that we have all the capital and all the money we need upfront before we are starting the mass production in the U. S. Speaker 500:15:19Will you be able to hit your target of getting capacity ramp by the end of next Share without the $20,000,000 or would it be delayed? Speaker 600:15:27No, no, no. In order to ramp up to the amount of size that we want to, we will need to raise Over the next year, the additional funding of $20,000,000 Speaker 500:15:39Okay. Okay. And then just in general, maybe you could just remind us how should we think about the multiyear outlook of sort of volume growth you're expecting? So you talked about breakeven, but that's in the low 100, so 100 and then we kind of progressed to the low 1000 over the next few years? Speaker 600:16:02So I think we need to divide it to the breakeven on the gross margin and then Positive EBITA in general. So in order to have a breakeven on the gross margin or on the BOEM level, we need the low 100s Of vehicles, this is the way that we have a plan based on our CapEx flight model. In order to be in a positive EBITDA, which means In general, a positive cash flow as a company will need to gain low thousands of vehicles in order to be on that phase. Speaker 500:16:38And when you're thinking low 1000s to be a couple of years out? Speaker 600:16:43So I think Our plan, as we said to the market, that we plan to be in the low-1000 vehicle somewhere in the year of 2025, which means we are aiming to be in the breakeven EBITDA in the last quarter of year 2025. Speaker 500:17:02Okay, great. All right. Thanks for taking my questions. Speaker 200:17:04Of course. Operator00:17:06Thank you. We will now take the next question from the line of Jeff Osborne from TD Cowen. Please go ahead. Speaker 700:17:20Yes. Thank you. Good afternoon, Daniel. I was wondering if you could Just to be more specific on the FMBSS and CARB timing, is that something you would expect in the next month or 2? And then I'm just trying to understand once that's achieved, how quickly we should anticipate a final nomination of Speaker 200:17:46Yes, of course. And good morning. Thank you. And these are actually 2 great questions because they also came quite high with our retail A question that we received, so good opportunity to answer that as well. So to your first question on SIRTT, I'll start and probably Josh can step in. Speaker 200:18:06But we will be we're planning to deliver The first pilot vehicles, demo vehicles to customers or ship them actually this year. That means we intend to claim SIRT this year, as in 2023 before we ship, right, because you can't Ship them without. So that's how quickly we're talking about. And we're in the very last stages of doing that. And that's on the heels of the previously announced ex by wire set feasibility of investor, third feasibility that It was a very big milestone that we had and I think last quarter. Speaker 200:18:53So that's on your first question. On the second one, I think we want to be Nominating the Centimeters early next year because we want to start ramping up, as we said, for the end of the year when the production tooling comes online. But do you want to shed some more color on that maybe? Speaker 800:19:22Yes, yes. We're in the so on the Centimeters again, we're on the final stages of negotiations with very capable partners to assemble the P7 in the U. S. Again, Keep in mind, we're on a CapEx light strategy, both internally and with the Centimeters. So to get to 4 to 6 trucks a day, It's very light investment. Speaker 800:19:39It will still be heavily manual assembly with the technical tooling for traceability, quality and things like that. So Yes. We believe as long as we're nominating by Q1, we can easily get up to that plan at NSCM. So we and we'll be announcing that as ASAP and To everybody. Speaker 700:19:58That's helpful, Josh. And then the $20,000,000 of expenditures needed, is Any of that for the Centimeters or is that once the Centimeters name that tooling is put in place that I assume any CapEx is on their dime In exchange for commitment. I'm just trying to understand sort of the timing of when that $20,000,000 is needed similar to Colin's question. Speaker 600:20:19Hi, Thieron here again. So the funding of EUR 20,000,000 is mainly for the CapEx investment in the tooling. And in general, we have enough resources to start Without raising the funding, right? We have $100,000,000 as we just reported. The general issue for us is to raise additional funding Not because we don't have money for the tooling, just because we want to pay also the BOM cost upfront and to be always on the safe side and not to get Any risk at all when we are starting the mass production. Speaker 600:20:55So in general, we would like to do it as Fast as we can, but it's always depending on the situation in the market. And it's not that we have an issue that we need to do it tomorrow morning. We'll do it over time based on the market condition. Speaker 700:21:12Got it. My last question is just as Carlton on the board and Tali The team are out speaking to fleets. What readiness do they have on charging? You're hearing stories of 12, 18 month delays in putting in charging infrastructure. So it's great that you have all the dealers, but as the dealers look to sell directly Two fleets, so you're approaching fleets direct as well. Speaker 700:21:36Are they already going through the process of putting in charging requests with their local utilities Given the interconnection delays? Or is that a potential roadblock that might stem growth in the second half of the year? Speaker 200:21:51Yes. Great question. And the answer is yes. As I said, we're building to order, Which means that all of our very much expected trucks are being awaited for, right? And we make sure that Both the dealers and their customers are fully prepared to receive them. Speaker 200:22:12It makes no sense for anybody for any truck to be sit idle without the ability to charge. So we're in very close relationship and contact with our dealers and their customer through the dealers and The fleet customer to the dealer in order to understand what is their level of readiness. Some Have capabilities in house, some use our capabilities to connect them to our partners in charging, which we also said publicly a while ago, and we're helping them get the right charges in place. But we're definitely prioritizing Predominantly those who are ready to receive EVs. Speaker 700:22:57Perfect. That's all I had, Daniel. Thank you. Speaker 200:22:59Pleasure. Thank you. Operator00:23:01Thank you. One moment please. We will now take the next question from the line of Andres Schepard from Cantor Fitzgerald. Please go ahead. Speaker 900:23:19Hi, good morning. Good afternoon, Daniel. Thanks for taking our question. Congrats on the quarter and again, I echo everyone's best wishes. Just maybe quickly, you mentioned in here you have you were chosen for a multiyear program with an aerospace company. Speaker 900:23:38Just wondering if you might be able to give us a few more details there as to what it entails and how you see that one ramping up? Thank you. Of course. Speaker 200:23:47Thank you and good morning. So we can't provide any more details on what we've shared, And I am looking forward to sharing more soon. I can say that we have seen I can say it's an autonomous program, And we've seen an uptick in autonomous program that we're looking into recently. I think that being the I would say to our best knowledge, the most mature by wire Commercial player out there give us the ability to support autonomy very well through our BioWire system. And through those a few tests that we've run recently with several Parties, I think the feedback is that they like what they see, the testing is successful, the implementation of BioWire and AD It's successful. Speaker 200:24:49The integration is rather straightforward, which is important. And I think that speaks Volumes of itself, and we'll share definitely more when we can. We're very excited by that. Speaker 900:25:02Got it. Thanks, Angel. That's very helpful. And maybe as a second question, I wanted to come back to the road map, The 2 phases roadmap that you provided last quarter, I just wanted to confirm, You are still targeting about $1,000,000,000 in cumulative sales between $24,000,000 in 20 6, And is the goal there, I think in the past you had mentioned targeting breakeven gross margins by the end of 2024. So just wanted to See any changes there or if that's still Speaker 600:25:36the case? It's Pierre Andre again. So currently, we are not Changing the target, we don't see any reason to change any information we gave until now for the market, and we are working based on the plan. Just as a reminder, when we are talking about $1,000,000,000 of revenues, we are talking about 1,000 of vehicles. This is what it needed in order to reach That amount of sales. Speaker 600:26:05And when we are talking about breakeven, it's on the low 100 Of vehicles, as we plan to start the mass production in the U. S. By the end of year 2020 4, when we started Already on the 1st batch, we should have a breakeven gross margin. And as we are increasing And the production going to U220 5, all once will go also to be in a we are aiming to be in also a positive EBITDA In the last quarter of year 2020 5. Speaker 200:26:36Yes. Maybe I'll add to that. Thanks, Johan. Maybe I'll add to that just two things, two points. We see very strong demand and I think being able to demonstrate that we more than doubled our order book Value in just 3 months speaks for itself. Speaker 200:26:53But the fact that it is very strong demand actually make it We believe it makes it even more important to scale up responsibly and do it in a very In a deliberate manner. So the idea is that we want to go and start the demo program and make sure that we've reached and touched the right Points with the voice of the customers and the customers have the ability to try it and like it, right. And we feel comfortable confident that they will from the relationship that we have. And then we're going to ramp up towards the second half of next year and last quarter where our Production tooling comes online. And again, that's deliberate, as we said earlier, because this is that we expect would allow us to Rich material breakeven, which is important because it means that we're not losing money on the production of each vehicle from the beginning. Speaker 200:27:48And If we're doing low 100s in a quarter, that naturally means we can do low 1,000 with more or less the same production rate over a year, right, in 2025. And that will allow us, We believe at this point in time that by the end of 2025 to get to like your onset EBITDA Breakeven and generating cash flow. Speaker 900:28:21Got it. That's very helpful guys. And maybe one last One for me. I know we touched on this before, but the $20,000,000 in external funding, Any sense of whether that would be something to do in the first half versus the second half of next year? And how are we thinking about it in terms of equity or debt Thank you. Speaker 600:28:45Hi, it's Juan here again. So it's our decision what kind of funding To make and I think we are in situations that we can elaborate and choose whatever we think it's the best For our existing shareholders. So when to raise up funding and in what kind of source We will explore we will look on it probably in the next few months and then we'll make a decision based on the terms of the market. The intention for us is to do it not to delay it to the second half of next year because as we said, In order for us to ramp up by the end of next year, we need to have everything in place and also all the bonds that need to be ordered as well. And therefore, the aim is to do it the latest by half of this year. Speaker 900:29:43Got it. Thank you very much. Congrats again. I'll pass it on. Thank you. Speaker 200:29:47Thank you. Operator00:29:49Thank you. I would now like to turn the conference back to Daniel Barel for closing remarks. Speaker 200:29:57Thank you, operator. So first of all, thank you everybody for taking the time Thank you for the great questions. I'd like to thank I think start by thanking our retail shareholders For the question they submitted over to the technology platform over the past week. And I believe we addressed most of them during this Q and A session. Thank you guys for the continued support. Speaker 200:30:28I want to end today's call With a final word of thanks, really thanks to our teams around the world who continue to deliver Even in the most challenging situation, I'm very proud of you guys, all team Ree, for doing that and Excited to bring the hard work and education to fruition in the coming days. So looking forward to sharing updates with everybody soon. And thank you again for joining. Goodbye. Operator00:30:59This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallREE Automotive Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K) REE Automotive Earnings HeadlinesREE Automotive Ltd. (NASDAQ:REE) Short Interest Up 20.0% in AprilMay 5 at 3:59 AM | americanbankingnews.comIntegral Metals Reports Preliminary Geomicrobial Results from Burntwood Project, Highlights Biological Pathfinder Potential for REE ExplorationApril 30, 2025 | globenewswire.comHere’s How to Claim Your Stake in Elon’s Private Company, xAII predict this single breakthrough could make Elon the world’s first trillionaire — and mint more new millionaires than any tech advance in history. And for a limited time, you have the chance to claim a stake in this project, even though it’s housed inside Elon’s private company, xAI.May 7, 2025 | Brownstone Research (Ad)REE Automotive Ltd.: REE Automotive Provides 2024 Business Update; Reschedules Date for its Fourth-Quarter and Fiscal Year 2024 Earnings ResultsApril 28, 2025 | finanznachrichten.deREE Automotive Q4 2024 Earnings PreviewApril 28, 2025 | msn.comREE Automotive Provides 2024 Business Update; Reschedules Date for its Fourth-Quarter and Fiscal Year 2024 Earnings ResultsApril 28, 2025 | globenewswire.comSee More REE Automotive Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like REE Automotive? Sign up for Earnings360's daily newsletter to receive timely earnings updates on REE Automotive and other key companies, straight to your email. Email Address About REE AutomotiveREE Automotive (NASDAQ:REE) operates as an automotive technology company in France, the United Kingdom, the United States, and internationally. The company offers REEcorner, a compact module that integrates critical vehicle drive components comprising as steering, braking, suspension, powertrain, and control between the chassis and the wheel; and REEplatform that allows for the addition of a modular and customizable top hat/cabin design based on customer specifications, without requiring modification to the platform. It also provides P7-S Strip Chassis for commercial delivery vehicles and walk-in vans; P7-C Chassis Cab and Cutway Chassis, a class 4 chassis cab fully electric commercial truck for delivery and a range of vocational applications; and P7-B Box Truck, a class 3 box truck built on a P7 cab chassis with its all-wheel drive and all-wheel steer for vehicle control for better handling and safety in adverse conditions. It serves original equipment manufacturer, delivery and logistic fleets, dealers, e-commerce retailers, new mobility players, mobility-as-a-service providers, and autonomous drive companies. The company is headquartered in Herzliya, Israel.View REE Automotive ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Disney Stock Jumps on Earnings—Is the Magic Sustainable?Archer Stock Eyes Q1 Earnings After UAE UpdatesFord Motor Stock Rises After Earnings, But Momentum May Not Last Broadcom Stock Gets a Lift on Hyperscaler Earnings & CapEx BoostPalantir Stock Drops Despite Stellar Earnings: What's Next?Is Eli Lilly a Buy After Weak Earnings and CVS-Novo Partnership?Is Reddit Stock a Buy, Sell, or Hold After Earnings Release? 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There are 10 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to the Rie Automotive Q3 2023 Financial Results. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kamal Hamid, Vice President of Investor Relations. Operator00:00:40Please go ahead. Speaker 100:00:44Thank you, operator, and thank you all for joining our Q3 2023 conference call. I hope that you have now seen our press release and shareholder letter issued earlier this morning at investors. Ree. Auto. If you haven't, I encourage you to review it as it has additional insights into the topics we will talk about on the call today. Speaker 100:01:03I would like to remind you that today's call may include forward looking statements. Any statements describing our beliefs, goals, plans, Strategies, expectations, projections, forecasts and assumptions are forward looking statements. Please note that the company's actual results may be different from anticipated by such forward looking statements for a variety of reasons, many of which are beyond our control, such as the ongoing military conflict in Israel. Please refer to the company's Form 20 F filed on March 28, 2023, with the Securities and Exchange Commission, which identifies principal risks and uncertainties that could affect our business, prospects and future results. We assume no obligation to publicly update any forward looking statements except as required by law. Speaker 100:01:50In addition, we will be discussing or providing Certain non GAAP financial measures today, including non GAAP net loss and non GAAP operating expenses. Please see our shareholder letter our CEO and Co Founder. Speaker 200:02:13Thank you, Kamal. Hello, everybody, and thank you for joining us today. I'm pleased to share that we have had a strong Q3. We continue to see strong market demand for the P7, which was converted into the extension of our authorized dealer network and North American footprint, which now stands at 20 partners and more than doubling Our initial order book value to $43,000,000 in the last 3 months. As evidenced by our achievements this quarter, we continue to receive strong positive market feedback on our unique P7 vehicle with their robust feature set, value proposition and low total cost of ownership. Speaker 200:02:59The first batch of customer demo trucks are in advanced stages of build, and we are on track to finalizing our SMVSS and CORP Certification, which follows our recent EPA approval and X by Wire Certification feasibility. We expect to ship the 1st demo units to our customers by Christmas. Support is a critical part in commercial trucks. Therefore, we have built a strong customer experience team who will work together with and support our customers as they put our vehicles to the test in their fleets. As we grow our order book, we continue to strengthen our balance sheet with additional selective financing. Speaker 200:03:48These efforts are part of our risk averse plan to secure in advance the working capital funding required to produce the expected binding orders of our growing order book. I'm particularly encouraged by the continued confidence and support from our shareholders, which have resulted in a capital raise of $8,000,000 with favorable terms led by a long standing institutional investor in a very challenging environment, as we shared a couple of days ago. Operationally, we continue to demonstrate strong financial discipline by remaining on track while decreasing our euro near GAAP net loss by 28%, partly because of the efficiencies around R and D and SG and A as well as government grants received. We believe we are scaling up responsibly, building vehicles to order and not for inventory, as we work to bring our production tooling online. We currently plan to have this operational by the end of 2024, which we believe will enable us to reach bill of materials breakeven on the 1st scale production batch. Speaker 200:05:07In line with our philosophy of complete, not compete, We are in advanced stages of nominating a U. S. Contract manufacturer to assemble our P7 lineup in the U. S. To help us facilitate economical mass production. Speaker 200:05:25We believe we will be able to scale production up to a rate of 4 to 6 trucks a day by the end of 2024, with a max capacity of up to 5,000 trucks per year. We look forward to providing you with an update on this soon. Before we open for questions today, I wanted to end with this. In the past 3 years, we've seen a pandemic, challenging market conditions and now war. But today, more than ever, we are strong, focused and committed to deliver no matter what. Speaker 200:06:06It is so inspiring to see our teams around the world working together as one to continue delivering, especially with the recent war in Israel, which affects us all in different ways, but is not expected to have a material impact on our operations. Our teams in the U. K. And the U. S. Speaker 200:06:27Are supporting our people in Israel, and we are thankful For the 100, if not thousands of messages of support we have received from our partners, customers, suppliers, shareholders and even people we have never met or done business with before. Your support is everything. As ever, I thank you all for your continued good wishes. We recently held a very productive Q and A session with our retail investors. So we have invited our retail investors to share their questions for this quarter. Speaker 200:07:04Today, in addition to analysts' question, we will also answer several of the retail investors' questions. Therefore, I would like to open the call for questions, where we will be joined by our Chief Financial Officer, Yaron Zasman Our Chief Business Officer, Tali Miller and our Chief Operating Officer, Josh Tan. Operator, you can now open the line for questions. Operator00:07:35Thank We will now take the first question. It's coming from the line of Mike Slitsky from D. A. Davidson and Co. Please go ahead. Speaker 300:08:14Yes. Hello. Good morning. Thanks for taking my question. And I'm glad everyone's safe over there in Israel, at least. Speaker 300:08:22And then, so I want to ask quickly about some The comments you made about having a 3rd party contractor doing the production to start. Can you just clarify, are they just going to be doing the corners And then you'll be building the actual vehicle itself within a Ree facility or they're going to be building the whole thing? Can you kind of just give us an overview of how it's going to work at this point? Speaker 200:08:47Hey, Mike. Good morning. Thank you for the Kind wishes. Yes, on the contract manufacturer, I think It's very simple. The core technology for Ree is our BioWire technology, right, the Ree Corners. Speaker 200:09:05That remains within Ree And will always remain within RII. The contract manufacturer will be assembling a full truck, whether it's going to be a cam The strip chassis or full truck powered by Ree and that will be in the U. S. So the full assembly will be done In the U. S, the corners will be shipped from the U. Speaker 200:09:30K. From our already set integration center. Speaker 300:09:36I see. So it's the other way around. They'll be receiving fully assembled ready to go corners from you and they'll be the ones Correct. I get it. Thank you. Speaker 300:09:44Perfect. And then I wanted to clarify some of your comments that you mentioned how you're going to be Building to order and not building to inventory, I guess when you say inventory, do you mean you won't be building final products That will be on Re's books and there will be inventory at the dealership level or will nobody have inventory? We won't have inventory At the normal dealers unless they're specifically ordered from the customer. Speaker 200:10:16Yes. So when we say we're building to order, it means that We're building only for binding orders that we're receiving. So our customers can have Of course, they would need to have some sort of inventory, especially our dealers. For our growing dealer network in the U. S, They'll have an inventory of trucks, but Ree itself is not going to be building inventory sitting up in parts and lots Waiting for this to be taken. Speaker 200:10:46We're building only for the orders that we are accepting From our customers. Did that answer your question? Just to give you more. Speaker 300:10:59Yes. Perfectly, yes. Yes. And maybe one last one for me. Have you got any change in Tone from any of your California customers in the last quarter or so. Speaker 300:11:12I mean, at this point, they're a month away from being forced to adopt EVs. Are they asking you about like January 1 delivery dates if possible? Or I don't know if you could deliver at that time, but are they asking in a more urgent manner for their Vehicles? Speaker 200:11:30Yes. We see very, very strong demand Across the U. S, but of course also in California. And we've also seen yesterday a change More relevant to smaller fleets in California On the level of payment that they can receive a reimbursement. But maybe, Tali, you want to add something more on that? Speaker 400:11:59Yes, sure. Thanks, Mike, for this question. It's a good opportunity to share with you that we definitely see very strong demand for the Powered by Ree vehicles. We see Our customers, so the dealers as well as fleets are asking for are anxious to receive Our demo vehicles because they see the advantages of the technology, the powered by Ree, X by wire technology with the different advantages of the Operation efficiency, safety and others, we see this demand in California, but not only, so across U. S. Speaker 400:12:36And Canada. Speaker 300:12:39Okay. I'll leave it there. And again, my best wishes to everyone. Stay safe. Thank you. Speaker 200:12:44Thank you. Operator00:12:46Thank you. We will now take the next question from the line of Colin Langan from Wells Fargo. Please go ahead. Speaker 500:13:00Great. Thanks for taking my questions. Just want to follow-up. In the press release, you talk about a grant that helped Q3 results. Any size of how much that helped? Speaker 500:13:11And then is that sustainable? Are we going to is that going to continue? Or is that just a one time thing? Speaker 600:13:18Hi, Colin. Good morning. It's Yaron here. So the grants are following with us this year, and they will be with us also next year. We cannot give too much information about the amount, but it's not a meaningful amount. Speaker 600:13:32But it will stay in the Same fate as we are right now, also in the next quarters going forward. Speaker 500:13:39Sorry, it would be in the next quarters going forward? Speaker 600:13:42So also for next year, we still expect to get the grant from the government. Speaker 500:13:49Sorry, is it a continuing every quarter? Or is it just you get once a year, you'll get this grant? Speaker 600:13:54No, no. It's part of the plan that we are getting For this year and also for next year, the payment is depending on the timing. But in general, it's existing plan that's also following us for next year. Speaker 500:14:10Okay, got it. And then the press release also mentions that you need $20,000,000 of funding To execute your 2024 plan, when do you need to get that funding by? Is that By mid year next year, is that by January 1 that you need to get that $20,000,000 And what are your current options to get that needed funding? Speaker 600:14:33So it's our decision when to take it, right? It's based on the way that we prefer to work. We want to be In the safe side all the time. We reported right now that we have a liquidity of $100,000,000 and that is before The additional $8,000,000 that we raised after the end of the quarter. So it's not that we need money tomorrow morning or we have any Issue of liquidity at all. Speaker 600:15:00But in general speaking, we want to be always on the safe side when we are planning the next year ahead And when we want to make sure that we have all the capital and all the money we need upfront before we are starting the mass production in the U. S. Speaker 500:15:19Will you be able to hit your target of getting capacity ramp by the end of next Share without the $20,000,000 or would it be delayed? Speaker 600:15:27No, no, no. In order to ramp up to the amount of size that we want to, we will need to raise Over the next year, the additional funding of $20,000,000 Speaker 500:15:39Okay. Okay. And then just in general, maybe you could just remind us how should we think about the multiyear outlook of sort of volume growth you're expecting? So you talked about breakeven, but that's in the low 100, so 100 and then we kind of progressed to the low 1000 over the next few years? Speaker 600:16:02So I think we need to divide it to the breakeven on the gross margin and then Positive EBITA in general. So in order to have a breakeven on the gross margin or on the BOEM level, we need the low 100s Of vehicles, this is the way that we have a plan based on our CapEx flight model. In order to be in a positive EBITDA, which means In general, a positive cash flow as a company will need to gain low thousands of vehicles in order to be on that phase. Speaker 500:16:38And when you're thinking low 1000s to be a couple of years out? Speaker 600:16:43So I think Our plan, as we said to the market, that we plan to be in the low-1000 vehicle somewhere in the year of 2025, which means we are aiming to be in the breakeven EBITDA in the last quarter of year 2025. Speaker 500:17:02Okay, great. All right. Thanks for taking my questions. Speaker 200:17:04Of course. Operator00:17:06Thank you. We will now take the next question from the line of Jeff Osborne from TD Cowen. Please go ahead. Speaker 700:17:20Yes. Thank you. Good afternoon, Daniel. I was wondering if you could Just to be more specific on the FMBSS and CARB timing, is that something you would expect in the next month or 2? And then I'm just trying to understand once that's achieved, how quickly we should anticipate a final nomination of Speaker 200:17:46Yes, of course. And good morning. Thank you. And these are actually 2 great questions because they also came quite high with our retail A question that we received, so good opportunity to answer that as well. So to your first question on SIRTT, I'll start and probably Josh can step in. Speaker 200:18:06But we will be we're planning to deliver The first pilot vehicles, demo vehicles to customers or ship them actually this year. That means we intend to claim SIRT this year, as in 2023 before we ship, right, because you can't Ship them without. So that's how quickly we're talking about. And we're in the very last stages of doing that. And that's on the heels of the previously announced ex by wire set feasibility of investor, third feasibility that It was a very big milestone that we had and I think last quarter. Speaker 200:18:53So that's on your first question. On the second one, I think we want to be Nominating the Centimeters early next year because we want to start ramping up, as we said, for the end of the year when the production tooling comes online. But do you want to shed some more color on that maybe? Speaker 800:19:22Yes, yes. We're in the so on the Centimeters again, we're on the final stages of negotiations with very capable partners to assemble the P7 in the U. S. Again, Keep in mind, we're on a CapEx light strategy, both internally and with the Centimeters. So to get to 4 to 6 trucks a day, It's very light investment. Speaker 800:19:39It will still be heavily manual assembly with the technical tooling for traceability, quality and things like that. So Yes. We believe as long as we're nominating by Q1, we can easily get up to that plan at NSCM. So we and we'll be announcing that as ASAP and To everybody. Speaker 700:19:58That's helpful, Josh. And then the $20,000,000 of expenditures needed, is Any of that for the Centimeters or is that once the Centimeters name that tooling is put in place that I assume any CapEx is on their dime In exchange for commitment. I'm just trying to understand sort of the timing of when that $20,000,000 is needed similar to Colin's question. Speaker 600:20:19Hi, Thieron here again. So the funding of EUR 20,000,000 is mainly for the CapEx investment in the tooling. And in general, we have enough resources to start Without raising the funding, right? We have $100,000,000 as we just reported. The general issue for us is to raise additional funding Not because we don't have money for the tooling, just because we want to pay also the BOM cost upfront and to be always on the safe side and not to get Any risk at all when we are starting the mass production. Speaker 600:20:55So in general, we would like to do it as Fast as we can, but it's always depending on the situation in the market. And it's not that we have an issue that we need to do it tomorrow morning. We'll do it over time based on the market condition. Speaker 700:21:12Got it. My last question is just as Carlton on the board and Tali The team are out speaking to fleets. What readiness do they have on charging? You're hearing stories of 12, 18 month delays in putting in charging infrastructure. So it's great that you have all the dealers, but as the dealers look to sell directly Two fleets, so you're approaching fleets direct as well. Speaker 700:21:36Are they already going through the process of putting in charging requests with their local utilities Given the interconnection delays? Or is that a potential roadblock that might stem growth in the second half of the year? Speaker 200:21:51Yes. Great question. And the answer is yes. As I said, we're building to order, Which means that all of our very much expected trucks are being awaited for, right? And we make sure that Both the dealers and their customers are fully prepared to receive them. Speaker 200:22:12It makes no sense for anybody for any truck to be sit idle without the ability to charge. So we're in very close relationship and contact with our dealers and their customer through the dealers and The fleet customer to the dealer in order to understand what is their level of readiness. Some Have capabilities in house, some use our capabilities to connect them to our partners in charging, which we also said publicly a while ago, and we're helping them get the right charges in place. But we're definitely prioritizing Predominantly those who are ready to receive EVs. Speaker 700:22:57Perfect. That's all I had, Daniel. Thank you. Speaker 200:22:59Pleasure. Thank you. Operator00:23:01Thank you. One moment please. We will now take the next question from the line of Andres Schepard from Cantor Fitzgerald. Please go ahead. Speaker 900:23:19Hi, good morning. Good afternoon, Daniel. Thanks for taking our question. Congrats on the quarter and again, I echo everyone's best wishes. Just maybe quickly, you mentioned in here you have you were chosen for a multiyear program with an aerospace company. Speaker 900:23:38Just wondering if you might be able to give us a few more details there as to what it entails and how you see that one ramping up? Thank you. Of course. Speaker 200:23:47Thank you and good morning. So we can't provide any more details on what we've shared, And I am looking forward to sharing more soon. I can say that we have seen I can say it's an autonomous program, And we've seen an uptick in autonomous program that we're looking into recently. I think that being the I would say to our best knowledge, the most mature by wire Commercial player out there give us the ability to support autonomy very well through our BioWire system. And through those a few tests that we've run recently with several Parties, I think the feedback is that they like what they see, the testing is successful, the implementation of BioWire and AD It's successful. Speaker 200:24:49The integration is rather straightforward, which is important. And I think that speaks Volumes of itself, and we'll share definitely more when we can. We're very excited by that. Speaker 900:25:02Got it. Thanks, Angel. That's very helpful. And maybe as a second question, I wanted to come back to the road map, The 2 phases roadmap that you provided last quarter, I just wanted to confirm, You are still targeting about $1,000,000,000 in cumulative sales between $24,000,000 in 20 6, And is the goal there, I think in the past you had mentioned targeting breakeven gross margins by the end of 2024. So just wanted to See any changes there or if that's still Speaker 600:25:36the case? It's Pierre Andre again. So currently, we are not Changing the target, we don't see any reason to change any information we gave until now for the market, and we are working based on the plan. Just as a reminder, when we are talking about $1,000,000,000 of revenues, we are talking about 1,000 of vehicles. This is what it needed in order to reach That amount of sales. Speaker 600:26:05And when we are talking about breakeven, it's on the low 100 Of vehicles, as we plan to start the mass production in the U. S. By the end of year 2020 4, when we started Already on the 1st batch, we should have a breakeven gross margin. And as we are increasing And the production going to U220 5, all once will go also to be in a we are aiming to be in also a positive EBITDA In the last quarter of year 2020 5. Speaker 200:26:36Yes. Maybe I'll add to that. Thanks, Johan. Maybe I'll add to that just two things, two points. We see very strong demand and I think being able to demonstrate that we more than doubled our order book Value in just 3 months speaks for itself. Speaker 200:26:53But the fact that it is very strong demand actually make it We believe it makes it even more important to scale up responsibly and do it in a very In a deliberate manner. So the idea is that we want to go and start the demo program and make sure that we've reached and touched the right Points with the voice of the customers and the customers have the ability to try it and like it, right. And we feel comfortable confident that they will from the relationship that we have. And then we're going to ramp up towards the second half of next year and last quarter where our Production tooling comes online. And again, that's deliberate, as we said earlier, because this is that we expect would allow us to Rich material breakeven, which is important because it means that we're not losing money on the production of each vehicle from the beginning. Speaker 200:27:48And If we're doing low 100s in a quarter, that naturally means we can do low 1,000 with more or less the same production rate over a year, right, in 2025. And that will allow us, We believe at this point in time that by the end of 2025 to get to like your onset EBITDA Breakeven and generating cash flow. Speaker 900:28:21Got it. That's very helpful guys. And maybe one last One for me. I know we touched on this before, but the $20,000,000 in external funding, Any sense of whether that would be something to do in the first half versus the second half of next year? And how are we thinking about it in terms of equity or debt Thank you. Speaker 600:28:45Hi, it's Juan here again. So it's our decision what kind of funding To make and I think we are in situations that we can elaborate and choose whatever we think it's the best For our existing shareholders. So when to raise up funding and in what kind of source We will explore we will look on it probably in the next few months and then we'll make a decision based on the terms of the market. The intention for us is to do it not to delay it to the second half of next year because as we said, In order for us to ramp up by the end of next year, we need to have everything in place and also all the bonds that need to be ordered as well. And therefore, the aim is to do it the latest by half of this year. Speaker 900:29:43Got it. Thank you very much. Congrats again. I'll pass it on. Thank you. Speaker 200:29:47Thank you. Operator00:29:49Thank you. I would now like to turn the conference back to Daniel Barel for closing remarks. Speaker 200:29:57Thank you, operator. So first of all, thank you everybody for taking the time Thank you for the great questions. I'd like to thank I think start by thanking our retail shareholders For the question they submitted over to the technology platform over the past week. And I believe we addressed most of them during this Q and A session. Thank you guys for the continued support. Speaker 200:30:28I want to end today's call With a final word of thanks, really thanks to our teams around the world who continue to deliver Even in the most challenging situation, I'm very proud of you guys, all team Ree, for doing that and Excited to bring the hard work and education to fruition in the coming days. So looking forward to sharing updates with everybody soon. And thank you again for joining. Goodbye. Operator00:30:59This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by