Q2 2024 Lion Electric Co Earnings Call Transcript
Key Points
- The Lion Electric Co (LEV) has implemented a batch size manufacturing approach for electric trucks to optimize liquidity and align production with demand.
- The company is transforming its battery operations into a product line, aiming to sell battery packs to third parties, which is expected to contribute to revenues and cash flows next year.
- LEV has certified its second model of battery packs, the Lion HD battery, and is working on integrating these packs into all vehicles and selling them to third parties.
- The company has reached an important milestone with the EPA clean school bus program, finalizing agreements for purchase orders representing $77 million in potential upfront payments.
- LEV has made significant progress in inventory reduction, achieving a $20 million reduction year-to-date and aiming for a $50 to $75 million reduction over 2024.
- The Lion Electric Co (LEV) faces continued challenges with cash flow management due to delays in the Canadian Federal DTF program and a slowdown in US EPA program deliveries.
- Lower deliveries have negatively impacted revenue, profitability, and liquidity, with Q2 revenues at $30 million and a negative gross margin of $15 million.
- The company is reducing its workforce by approximately 200 people to align with current demand, which will impact employees and incur severance costs.
- LEV is subleasing a significant portion of its Joliet plant due to excess capacity, which indicates underutilization of resources.
- The electric truck market demand has been significantly lower than expected, leading to cancellations in the order book and a need to adjust manufacturing strategies.
Good morning, ladies and gentlemen. Welcome to Lion Electric's second-quarter 2024 results conference call. (Operator instructions) As a reminder, this conference call is being recorded.
I would now like to turn the call over to Isabelle Adjahi, Vice President, Investor Relations and Sustainable Development. Please go ahead, Ms. Adjahi.
Good morning, everyone. Welcome to Lion's second-quarter 2024 results conference call. (speaking in foreign language)Today, I'm here with Marc Bedard, our CEO, Founder; Nicolas Brunet, our President; and Richard Coulombe, our Chief Financial Officer.
Please note that our discussion may include estimates and other forward-looking information and that our actual results could differ materially from those implied in any such statements. We invite you to review the cautionary language in this morning's press release and in our MD&A, which contains important information regarding various factors, assumptions and
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