Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Exro Technologies Inc (EXROF, Financial) achieved record revenue of $5.3 million in Q2 2024, a significant increase from nil in Q2 2023, driven by technology sales.
- The company successfully completed a transformational merger with SEA Electric, accelerating growth and expanding access to top OEM contracts.
- Exro Technologies Inc (EXROF) has implemented substantial cost reductions, achieving USD7.5 million in annualized savings within the first 100 days post-merger.
- The company has made significant progress in integrating its proprietary coil driver motor technology, which provides increased system efficiency and cost reductions.
- Exro Technologies Inc (EXROF) has a strong focus on profitability, with a clear path to achieving it within 12 months post-merger, supported by strategic partnerships with Blue Chip OEMs.
Negative Points
- The company faced challenges in ramping up production due to supply chain inefficiencies and a software recall, impacting the pace of deliveries.
- Exro Technologies Inc (EXROF) reported a high cost of goods sold at $8.0 million, attributed to supply chain inefficiencies and logistical costs.
- Operating expenses were substantial at $32.2 million, with a significant portion attributed to non-cash depreciation expenses.
- The integration of SEA Electric has been challenging, requiring significant efforts in aligning supply chains and implementing strategic sourcing.
- Exro Technologies Inc (EXROF) is still working towards consistent week-over-week growth in deliveries, with some risk in meeting short-term targets.
Q & A Highlights
Q: Can you provide an update on the 40 units in inventory and the expected ramp-up in deliveries?
A: Sue Ozdemir, CEO: We anticipate a ramp-up from the 36 units delivered in Q2. Initially, we aimed to deliver 75 units in the first 90 days post-merger, and with the inventory on hand, we met that target. However, we still face challenges and are working towards consistent week-over-week growth. While we're aiming for our targets, there are risks, and we're not providing specific guidance today.
Q: Are there any risks of customers delaying SEA drive purchases until the coil driver is integrated?
A: Sue Ozdemir, CEO: No, we don't see any risk of delays. Our customers are asking for the coil driver, and we plan to integrate it into the SEA drive system by the second half of 2025. The integration is progressing, and customers see the benefits of cost reduction and performance maintenance.
Q: How should we think about the ramp in sales volumes over the next few years, particularly in the commercial sector?
A: Sue Ozdemir, CEO: We are on track with our ramping plans, focusing on profitability and setting up for volume growth. The demand in commercial trucking is strong, and we are backed by Blue Chip OEMs. Our infrastructure investments allow us to scale effectively.
Q: Can you elaborate on the passenger vehicle strategy and whether it involves licensing technology to OEMs?
A: Sue Ozdemir, CEO: Our passenger vehicle strategy is a "licensing plus" model, where we provide a small module of the coil driver technology. OEMs handle the design and integration, allowing us to focus on core technology while leveraging OEM expertise.
Q: What is the status of the Linamar deal and the next steps?
A: Sue Ozdemir, CEO: We recently showcased at the ACT show in Linamar's booth. We are currently working on a co-marketing program to highlight the coil driver's differentiation. The program is slightly delayed but remains on track with our financial expectations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
