AYRO(AYRO) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q2 2020 were $286,000, a 28% decrease compared to Q2 2019, primarily due to delays from the COVID-19 pandemic [27] - Gross margin percentage increased from 22% to 28% quarter-over-quarter due to sales of higher margin products [27] - Net loss was approximately $1.5 million on a GAAP basis, an improvement from a net loss of approximately $1.8 million in Q2 2019 [29] - Adjusted EBITDA totaled a negative $683,000 compared to negative $1.1 million in the prior year period [29] - Cash at June 30, 2020, was $7.9 million, a significant increase from $641,000 at December 31, 2019 [30] Business Line Data and Key Metrics Changes - The company has two primary vehicle models: the four-wheeled vehicle known as the 411 and the three-wheeled vehicle known as the 311 [14] - The partnership with Club Car has expanded the sales funnel, with the company currently in about half of the commercial dealers for Club Car [37] - The 311 model is being developed specifically for food delivery, targeting a market where restaurants are looking to reduce costs associated with third-party delivery services [40] Market Data and Key Metrics Changes - The market for low-speed electric vehicles is estimated to be a multi-billion dollar market with significant growth potential over the next decade [13] - The demand for home food and restaurant delivery has increased due to COVID-19, creating new opportunities for the company's vehicles [17] - The restaurant delivery market is expected to grow by nearly 7% annually through 2024, indicating a strong potential for the 311 model [22] Company Strategy and Development Direction - The company aims to leverage strategic partnerships, such as with Club Car, to enhance growth and market penetration [20] - The focus is on B2B sales, targeting fleet operators rather than individual consumers, which allows for larger orders and reduced costs [63] - The company is investing in redesigning the 311 vehicle to enhance its features for food delivery applications [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by COVID-19 but remains optimistic about future demand and growth opportunities [11] - The company is confident in its ability to execute growth plans with sufficient capital and a strong backlog of orders [9] - Management emphasizes the importance of adapting to new market norms, particularly in food delivery, as a result of the pandemic [10] Other Important Information - The company completed a business combination with DropCar on May 28, 2020, allowing it to trade on NASDAQ [23] - The company has expanded its factory capacity to handle up to 600 electric vehicles per month, a 200% increase in production capacity [19] Q&A Session Summary Question: What are the obstacles in expanding the dealer base with Club Car? - The company works closely with Club Car to expand the dealer base, which includes 535 locations, with 167 being commercial [35] Question: What captive markets is the company looking at? - The company is exploring opportunities in food services and is developing vehicles for sports stadiums and universities [39] Question: Can you comment on the ASP for the 311 model? - The expected ASP for the 311 is around $10,000, which is competitive compared to similar vehicles [42] Question: What is the impact of tariffs on the company's supply chain? - The company faces challenges with tariffs on components sourced from China, including batteries [46] Question: What is the expected revenue potential in the next few years? - The company believes it can generate revenues in the $50 million to $100 million range with the right market conditions and product lineup [55]