Arrival(US:ARVL)2022-08-11 15:53Financial Data and Key Metrics Changes - The loss for Q2 2022 was $90 million, compared to a loss of $56 million in Q2 2021, indicating a significant increase in losses year-over-year [13] - Adjusted EBITDA loss for the quarter was $76 million, up from a loss of $41 million in the same quarter last year [13] - Capital expenditures in Q2 2022 were $95 million, compared to $79 million in Q2 2021, with $60 million allocated to capitalized R&D and $35 million for microfactory CapEx and tooling [14] Business Line Data and Key Metrics Changes - The company achieved European certification for its bus and van, marking a major milestone [5] - The focus has shifted to the Van platform, which constitutes the majority of MOU and order volumes, leading to a deferral of further investment in the bus program [7] - Nonbinding MOUs and orders grew to 149,000 units, representing over $6 billion in potential revenue [12] Market Data and Key Metrics Changes - The company is experiencing strong demand for its vehicles, particularly in the North American market, supported by favorable policies from the Inflation Reduction Act [11] - The company plans to start trials in Central London and expects the first deliveries of Vans to UPS before the end of the year [9] Company Strategy and Development Direction - The company has made a strategic decision to downscale operations through at least 2023, focusing on cash preservation and a targeted 20% reduction in spending [6] - A $300 million at-the-market equity offering platform has been established to extend the cash runway [7] - The company aims to produce multiple vehicle platforms in hundreds of microfactories, each generating over $100 million in annualized margin [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging economic environment, including supply chain issues and rising costs, and emphasized the importance of addressing these challenges [5] - The company expects to operate through at least 2023 without needing to raise additional capital, aside from the ATM [15] - Management expressed confidence in achieving production targets and maintaining a strong demand pipeline despite current challenges [12][24] Other Important Information - The company is undergoing a restructuring that includes a targeted 30% reduction in its global workforce [14] - The transition to a single product, single factory, and single shift model is seen as a strategic move to enhance operational efficiency [29] Q&A Session Summary Question: What caused the reduction in delivery expectations from 400-600 to 20? - Management cited the decision to operate one factory instead of two to save cash, supply chain delays, and a conservative approach to cash spending as reasons for the reduction [21][22] Question: When is production expected to start in Charlotte? - Internal plans suggest that production in Charlotte will be quicker due to learnings from the Bicester factory, but no specific timeline was provided [26][27] Question: What is the expected ending cash balance at the end of Q3? - The company expects to end Q4 with between $300 million and $350 million in cash, with Q3 cash burn anticipated to be higher than in Q4 [33] Question: Are there expected cash restructuring costs in Q3 or Q4? - Restructuring costs are expected to be approximately $25 million, primarily occurring in Q3 [37] Question: Has the pricing philosophy changed due to rising costs? - The pricing philosophy remains unchanged, aiming to be competitively positioned between ICE vehicles and electric vehicles, despite rising inflation and supply chain issues [41]