Lordstown Motors Reports Third Quarter 2022 Financial

LORDSTOWN, Ohio, Nov. 08, 2022 (GLOBE NEWSWIRE) — Lordstown Motors Corp. (Nasdaq: RIDE), (“Lordstown Motors” or “LMC”), an unique tools producer (“OEM”) of electrical mild responsibility automobiles centered on the business fleet market, immediately launched its third quarter 2022 monetary outcomes and offered a business replace.

Third Quarter and Recent Business Highlights

• Start of business manufacturing of Endurance^TM automobiles on the Foxconn Ohio meeting plant, at a really gradual fee
• Successful collaboration between LMC and Foxconn groups over the past 12 months
• Endurance^TM not too long ago pushed and evaluated by over 30 journalists, as semi-finalist within the North American Truck of the Year (NACTOY) competitors. Team is happy with journalist’s favorable preliminary suggestions
• Ending money stability and short-term investments of $204 million, above inside expectations, as a result of continued sturdy spending self-discipline
• Reported working lack of $154.8 million features a $74.9 million non-cash asset impairment cost, a $30 million accrual for historic litigation, and a $16.2 million cost to replicate the online realizable worth (NRV) of stock
• Adjusted working loss¹ excluding the above objects of $33.8 million, 33% decrease than adjusted working loss in 2Q22 on the primary full quarter with out plant working prices and different reductions

^{1) See “Non-GAAP Measures” beneath.}

Outlook²

• Reaffirming This autumn begin of deliveries of Endurance, topic to full homologation and required certification, which is anticipated later this quarter
• Awaiting approval from EPA and CARB. All FMVSS crash testing has been efficiently accomplished; remaining non-crash testing ongoing
• Continue to focus on preliminary manufacturing batch of as much as 500 models; in search of OEM partnerships to scale Endurance
• Pre-development work on subsequent automobile has begun by LMC, in collaboration with Foxconn EV ecosystem, together with MIH consortium
• Foxconn has agreed to make an extra funding in Lordstown Motors of as much as $170 million, topic to sure phrases and situations
• Target 12 months finish money and short-term investments of $150 to $165 million, together with Foxconn preliminary funding, and excluding contingent liabilities and different financings

^{2) Please seek advice from “Forward Looking Statements” beneath.}

Executive Commentary

Commercial manufacturing of our Endurance BEV pick-up truck started within the 3^rd quarter, at a really gradual fee. Engineering readiness, high quality, and half availability have and can proceed to control the pace of manufacturing and our ramp up and the timing of our first deliveries. Twelve of the primary batch of as much as 500 models have been constructed on the Foxconn EV Technology plant in Lordstown, Ohio so far. Production is anticipated to extend in direction of the tip of the month because the remaining provider half pedigree and availability points are resolved. Approximately 30 business models of the primary batch are estimated to be constructed by the tip of 2022, with the rest constructed within the first half of 2023.

Full homologation and certification is anticipated later this quarter, which is required to start out transport automobiles to our prospects. As beforehand reported, all FMVSS crash testing has been efficiently accomplished and remaining FMVSS non-crash testing is ongoing. As with any new automobile launch, engineers will proceed to drive and accumulate miles on check automobiles to seek out and resolve any potential points and assist be sure that we give our prospects an ideal expertise.

Three weeks in the past, over thirty automotive journalists carried out prolonged drives of the Endurance and opponents as a part of the North American Truck of the Year (NACTOY) semifinalist analysis. The workforce is happy and excited by the preliminary suggestions from the journalists, each throughout the drives and of their early articles, and appears ahead to the following part of the competitors and the announcement of the Truck of the Year winner in January.

“I am very proud of how far our capable, disciplined, resilient, and collaborative LMC/Foxconn team has advanced this vehicle over the last year, as we prepared for commercial production,” stated Edward Hightower, Lordstown Motors’ CEO and President.

As beforehand mentioned, the primary manufacturing batch of Endurances shall be restricted to as much as 500 automobiles, as a result of the invoice of supplies (BOM) price is materially increased than our anticipated promoting worth. Investments in laborious tooling, constructing scale with manufacturing suppliers, and VA/VE initiatives would deliver this price down, however have been deferred to handle the stability sheet and restrict the quantity of recent capital wanted to attain preliminary manufacturing targets. LMC continues to hunt one or two OEM companions to assist scale the Endurance. As one of many only a few full-size, all electrical pickup vans available in the market, the Endurance gives different OEMs the chance to enter the market shortly and at comparatively low price.

LMC continues to make progress within the planning and pre-development work on its subsequent automobile, which shall be co-created with the Foxconn EV ecosystem and the MIH Consortium.

Yesterday, LMC introduced that Foxconn has agreed to make further fairness investments in LMC (collectively, the “Investment Transactions”) of as much as $170 million within the type of $70 million of LMC’s Class A typical inventory and as much as $100 million of a newly created Series A Convertible Preferred Stock (“Preferred Stock”). Upon completion of the Investment Transactions, Foxconn is anticipated to carry all of LMC’s excellent Preferred Stock and 18.3% of its Common Stock on a professional forma foundation, and could have the best to designate two members of LMC’s Board of Directors.

Lordstown Motors will use the proceeds from the sale of Common Stock for normal company functions and the proceeds from the sale of the Preferred Stock to fund improvement and design actions for a brand new electrical automobile program in collaboration with Foxconn (the “EV Program”). The $100 million direct Preferred Stock Investment replaces the three way partnership funding beforehand introduced by Foxconn and LMC.

Foxconn’s Common Stock funding shall be funded in two tranches. The first tranche of roughly $22.7 million is anticipated to shut on or about November 22, 2022, topic to customary closing situations. The second tranche of roughly $47.3 million is topic to regulatory approvals, together with clearance by the Committee on Foreign Investment within the United States (“CFIUS”), in addition to different customary closing situations.

Foxconn’s Preferred Stock funding shall be funded in three phases. The first $30 million shall be funded, topic to satisfaction of sure closing situations, concurrently with the closing of the primary tranche of Common Stock. The remaining shares of Preferred Stock shall be bought by Foxconn primarily based on reaching sure EV Program funding milestones to be agreed-upon by the events.

Foxconn’s further funding in LMC is a powerful signal of confidence in our workforce’s product improvement and engineering capabilities and can assist speed up the EV ambitions of each firms. We proceed to imagine that deep collaboration with Foxconn, as its most well-liked North American automobile improvement accomplice, and Foxconn’s EV ecosystem, together with MIH, is vital to our firm’s long-term success.

“We are proud of the accomplishments of the Lordstown and Foxconn EV Technology teams in bringing the Endurance into commercial production. While we have more work to do, our entire team cannot wait to get the vehicle in the hands of our customers. We are also extremely excited by the additional investment and expanding relationship with Foxconn and the opportunities it provides beyond our first vehicle,” stated Edward Hightower, Lordstown Motors’ CEO and President.

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Third Quarter 2022 outcomes

Third quarter working lack of $154.8 million included $121.1 million in non-cash expenses consisting of a $74.9 million asset impairment, a $30 million authorized accrual, and a $16.2 million cost to replicate the online realizable worth (NRV) of stock. Excluding these expenses, adjusted working loss was $33.8 million, of which analysis and improvement (“R&D”) and promoting, normal and administrative (“SG&A”) prices represented 19.8 million and $13.9 million, respectively.

R&D bills had been $19.8 million within the second quarter of 2022, representing a lower of 31% in comparison with the second quarter of 2022, on an as adjusted foundation. The lower was associated to the elimination of the prices to function the Lordstown, OH, plant, which was bought to Foxconn on May 11, 2022.

SG&A bills had been $60.1 million for the quarter, and as adjusted to exclude the NRV and litigation accrual, had been $13.9 million, 35% decrease than second quarter of 2022 on an as adjusted foundation. The discount was primarily associated to personnel prices together with different authorized charges.   

At the tip of the quarter, money and short-term investments available was $204 million, roughly $32 million decrease than the second quarter of 2022. The change in money displays The change in money contains $49.6 million in money used for operations, together with an $8.6 million working capital profit, $10.5 million in capital expenditures and $26.7 million in money proceeds from fairness issuances.

Please seek advice from “Non-GAAP Measures” and “Forward Looking Statements” beneath.

Conference name Information
Lordstown Motors will host a convention name at 8:30 a.m. Eastern Time immediately (Tuesday, November 8, 2022). The name will be accessed by way of a reside webcast that’s accessible on the Events web page of Lordstown Motors’ Investor Relations web site, in addition to the investor presentation deck, at https://investor.lordstownmotors.com/. An archive of the webcast shall be accessible shortly after the decision.

About Lordstown Motors Corp.
Lordstown Motors is an unique tools producer (OEM) of electrical automobiles centered on the business fleet market, with the Endurance all electrical pick-up truck as its first automobile being launched on the Foxconn EV plant within the Lordstown, Ohio facility. Lordstown Motors has engineering, analysis and improvement amenities in Farmington Hills, Michigan and Irvine, California. For further info go to www.lordstownmotors.com.

Contacts:

Investors
Carter W. Driscoll, CFA
[email protected]

Media
Colleen Robar
[email protected]
313-207-5960

Financial Results

Lordstown Motors Corp.
Condensed Consolidated Statements of Operations
(Amounts in hundreds, besides per share information — Unaudited)

¹ Research and improvement bills for the 9 months ended September 30, 2022 are internet of $18.4 million in working expense reimbursements underneath the APA.

Lordstown Motors Corp.
Condensed Consolidated Balance Sheets
(Amounts in hundreds besides share information — Unaudited)

Lordstown Motors Corp.
Condensed Consolidated Statements of Cash Flow
(Amounts in hundreds — Unaudited)

Non-GAAP Financial Measures

In addition to the outcomes offered in accordance with accounting rules usually accepted within the U.S. (“GAAP”), this launch contains non-GAAP measures, together with Adjusted Operating loss (earnings), Adjusted R&D and Adjusted SG&A, to current working outcomes on an adjusted foundation to eradicate the influence of the closing of the Foxconn APA, internet realizable worth (NRV) changes, PP&E impairment and litigation accrual, as administration believes these have an effect on the comparability or underlying business traits between quarters. The desk beneath gives a reconciliation of Operating loss (earnings, R&D and SG&A, probably the most straight comparable monetary measures calculated and offered in accordance with GAAP, to Adjusted Operating loss), Adjusted R&D and Adjusted SG&A, respectively. The Company believes that these non-GAAP measures, when reviewed together with GAAP monetary measures, can present extra info to help buyers in evaluating historic traits and the present interval efficiency. Items could also be excluded from GAAP monetary measures when the Company believes this gives helpful supplementary info to administration and buyers in assessing the working efficiency of our business. However, the Company’s inclusion of those adjusted measures shouldn’t be construed as a sign that its future outcomes shall be unaffected by uncommon or rare objects or that the objects for which it has made changes are uncommon or rare or won’t recur. A non-GAAP monetary measure ought to be thought of along with, and never as superior to or as an alternative choice to the GAAP monetary measures offered on this earnings launch and the Company’s condensed consolidated monetary statements and different publicly filed studies. In addition, any non-GAAP monetary measure the Company gives will not be the identical as or corresponding to comparable non-GAAP measures offered by different firms.

Lordstown Motors Corp.
Non-GAAP Reconciliation from Operating Loss (Income) to Adjusted Operating Loss
(Amounts in hundreds — Unaudited)

Lordstown Motors Corp.
Non-GAAP Reconciliation from Research and Development (R&D) Expenses to Adjusted Research and Development (R&D) Expenses
(Amounts in hundreds — Unaudited)

Lordstown Motors Corp.
Non-GAAP Reconciliation from Selling, normal and administrative (SG&A) Expenses to Adjusted Selling, normal and administrative (SG&A) Expenses
(Amounts in hundreds — Unaudited)

Forward Looking Statements

This press launch contains forward-looking statements. These statements are made underneath the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements could also be recognized by phrases comparable to “feel,” “believes,” expects,” “estimates,” “initiatives,” “intends,” “ought to,” “is to be,” or the negative of such terms, or other comparable terminology. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained herein due to many factors, including, but not limited to: the need to raise substantial additional capital to execute our business plan, achieve our production targets for the Endurance, achieve scaled production of the Endurance, develop additional vehicles, to continue ongoing operations and remain a going concern, and our ability to raise such funding including under current arrangements on a reasonable timeline and with suitable terms; the cost and other impacts of contingent liabilities such as litigation, regulatory proceedings, investigations, stockholder letters and claims and availability of insurance coverage and/or adverse publicity with respect to these matters, which may have a material adverse effect, whether or not successful or valid, on our liquidity position, market price of our stock, cash projections, business prospects and ability and timeframe to obtain financing; our limited operating history and our ability to execute our business plan, including through our expanding relationship with Foxconn; our ability to raise sufficient capital in order to invest in the tooling that we expect will enable us to eventually lower the Endurance bill of materials cost, continue design enhancements of the Endurance and fund future vehicles that we may develop; the rollout of our business and the timing of expected business milestones, including the ability to ensure the completion of tooling, to establish and maintain appropriate supplier relationships, to successfully complete testing, homologation and certification, and to continue ramp up of commercial production (which is currently expected to be slow) and start delivery of the Endurance in accordance with our projected timeline; our ability to successfully identify and implement actions that will lower the Endurance bill of materials cost; supply chain disruptions, inflation and the potential inability to source essential components and raw materials, including on a timely basis or at acceptable cost, and their consequences on testing, production, sales and other activities; our ability to obtain binding purchase orders and build customer relationships; the risk that our technology, including our hub motors, does not perform as expected and our overall ability to deliver on the expectations of customers with respect to the pricing, performance, quality, reliability, safety and efficiency of the Endurance and to provide the levels of warranty coverage, service and support that they will require; our ability to conduct business using a direct sales model, rather than through a dealer network used by most other OEMs; the effects of competition on our ability to market and sell vehicles; our inability to retain key personnel and to hire additional personnel; the ability to protect our intellectual property rights; the failure to obtain required regulatory approvals; changes in laws or regulatory requirements or new or different interpretations of existing law; changes in governmental incentives and fuel and energy prices; the impact of health epidemics, including the COVID-19 pandemic, on our business; cybersecurity breaches and threats and compliance with privacy and data protection laws; failure to timely implement and maintain adequate financial, information technology and management processes and controls and procedures; our ability to remain in compliance with our existing financial obligations; and the possibility that we may be adversely affected by other economic, geopolitical, business and/or competitive factors, including rising interest rates and the direct and indirect effects of the war in Ukraine.

In addition, the Investment Transactions and other relationships entered into with Foxconn are subject to risks and uncertainties. No assurances can be given that we will successfully implement or that we will realize the anticipated benefits from the Investment Transactions or other recently completed transactions with Foxconn, including the contract manufacturing agreement. The funding transactions under the Investment Agreement are subject to closing conditions including regulatory approvals and further negotiation of development milestones. The EV Program will require additional funding and the establishment and implementation of the program requirements, among other matters, and may not be consummated, sufficiently implemented or provide the benefits we expect, which could have a material adverse effect on our business, operating results, financial condition and prospects. The success of the EV Program depends on many variables, which could include our ability to utilize the designs, engineering data and other foundational work of Foxconn, its affiliates, and other members of the MIH consortium as well as other parties to commercialize, industrialize, homologate and certify a vehicle in North America, along with variables that are out of the parties’ control, such as technology, innovation, adequate funding, supply chain and other economic conditions, competitors, customer demand and other factors that impact new vehicle development. If we are unable to develop new vehicles for ourselves and potentially other customers, our business prospects, results of operations and financial condition may be adversely affected. If the Investment Transactions are consummated, Foxconn will own a significant percentage of our equity securities and have rights that enable it to influence our actions, operation of the Board and actions requiring stockholder approval. If we are unable to maintain our relationship with Foxconn or effectively manage outsourcing the production of the Endurance to Foxconn, we may be unable to ensure continuity, quality, and compliance with our design specifications or applicable laws and regulations, which may ultimately disrupt and have a negative effect on our production and operations.

We will need additional funding and will seek strategic partnerships to execute our business plan and to achieve scaled production of the Endurance and development of other vehicles. There can be no assurance that such financing or partnerships would be available to us on favorable terms or at all, due to several factors, including market and economic conditions, the significant amount of capital required, the fact that our bill of materials cost is currently, and expected to continue to be, substantially higher than our anticipated selling price, uncertainty surrounding regulatory approval and the performance of the vehicle, meaningful exposure to material losses related to ongoing litigation and the SEC investigation, our performance and investor sentiment with respect to us and our business and industry. Additional information on potential factors that could affect the financial results of the Company and its forward-looking statements is included in its most recent Form 10-K and subsequent filings with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement. Any forward-looking statements speak only as of the date on which they are made, and Lordstown Motors undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.