Q2 2023 Arcimoto Inc Earnings Call

Participants

Christopher W. Dawson; CEO & Director; Arcimoto, Inc.

Presentation

Christopher W. Dawson

Hello, everyone. This is Chris Dawson, CEO of Arcimoto. Welcome to Q2 2023 report out.
Here's our forward-looking statements. Naturally, everything short of historical data as presented are forward-looking statements and what we believe to achieve as we accomplish our goals.
In Q2, we were able to produce 94 units, at least -- well, for the first half of the year. In 2023, we were able to produce 94 units. Of that, we delivered 65 customer vehicles in the second quarter with an average sales price of $22,700 and delivered 102 year-to-date. In June, we're excited to produce our 1,000th vehicle, and as of June 30, we had 665 customer FUVs on the road, 39 vehicles allocated for marketing, R&D and internal fleet use and another 90 vehicles in the Arcimoto rental fleet for revenue generation.
Tilting Motor Works completed delivery of 11 TRiO kits to customers with an average sale price of 14.2 -- that's $14,285 and achieved -- and Arcimoto achieved 954 rides for demo drives and rentals combined during the second quarter. Arcimoto also launched the modular utility vehicle or MUV, the first on-road modular utility vehicle in the company's lineup of small footprint electric vehicles, dedicated professional and commercial use.
I would really like to applaud the Arcimoto team, we delivered a solid quarter, sharp execution and improving operational efficiencies generated $1.7 -- just over $1.7 million in revenue and that's up 17% from 2022. We're continuing to see strength in our industrial and military markets with the MUV and our recent Matbock deal and are confident in the pipeline deals coming to fruition.
We also announced today our intention to sell our U.S. manufacturing facility contingent upon lease agreement. This allows us to be very strategic and tactical about the space being used to keep the areas we need and relinquish those that we currently do not. This allows us to free up the capital, so -- that's currently locked up in the factory -- so that we can apply that to growing current production to meet the oncoming demand.
Capital from the sale, coupled with our recent raise of $6.7 million, $4.3 million of which has already been received and a follow-on $2.4 million in Q4 upon shareholder approval. These funds will be used to extend our runway and allow us to continue working toward our goals.
Financial results for Q2. Total revenues for the second quarter of 2023 increase of 17% to $1.76 million as compared to the $1.5 million in the second quarter of 2022. Year-to-date, June 30, 2023, revenue increased by 45% to $3.1 million as compared to $2.1 million in 2022. The company incurred a net loss of approximately $13.2 million or approximately $1.0 or -- $1.71 per share. In the second quarter of 2023 compared with a net loss of $17.4 million or $8.80 per share for the same year period. The company had $53.1 million in total assets, $1.3 million in cash and cash equivalents and $32.7 million in total liabilities as of June 30, 2023.
That's it for the report out, we did also have some questions submitted, so I'll run through. I think we've got 9 of those, and I'll run through those.

Question and Answer Session

Christopher W. Dawson

Question one, as you just joined Arcimoto CEO in April, how has the process been so far and what have been your key focuses?
So having held a seat -- having held a seat prior on Arcimoto's board before becoming CEO has led me to hit the ground running, really understanding a lot of the problems from day 1. My immediate focus has been on accelerating strategic partnerships, capital formation, to the scale of continued refinement and growth of our sales efforts.
This past quarter, I have helped the team facilitate a $6 million -- $6.7 million, and I'm continuing to lead a strategic restructuring of the company. So really it's getting production lined up and efficient and getting our cost savings down on the bond and now we could scale out with sales and now you're starting to see that with things such as the Matbock deal.
Question two. Can you tell me about the recent production and manufacturing activities?
So currently, as we just kind of reported out, the Arcimoto team's delivered a pretty solid quarter. I said, $1.76 million in revenue, which puts us up 17%, and we're considering to see that strength, especially with the MUV and the military applications. So we really see that pipeline filling up here in the near future.
In May, we unveiled the MUV, so that's a new category for us and really offering a true piece of capital equipment that is the right tool for the right job. It's never really existed previously. So as far as activities, those would be the really biggest hits.
Next question. I saw that your manufacturing facility is up for sale. Why is that?
I touched on that a little bit in the brief but, predominantly, that factory is currently not being utilized by Arcimoto, I'd say, even more -- if we look at it just from an under roof perspective, right nearly 250,000 square feet of that, we're using maybe 10%, 15% really using, and then it's a 10-acre facility. And if you really look at that -- or a 10-acre plot of land, if you look at that whole 10-acre footprint, we're maybe using 5% of that.
And so there's a huge opportunity for someone who wants to develop that land as well as increase overall dollars per square foot by conducting more contract manufacturing work, which we've been leveraging over the last few quarters. And that's continuing to grow and provide another revenue opportunity for us. And then the sale leaseback will allow us to access those funds that are really just hung up in the equity of that plant and allow us to really leverage those into the production, which is -- we're built to generate profit, right? Being a vehicle manufacturing company, we should be allocating all capital into that, and we're not at a stage where we should be investing in real estate.
Question for Arcimoto secured $6.7 million in funding this week. How do you plan to use these funds to strategic move and a propelling Arcimoto's mission of revolutionizing transportation?
The funds raised from the sale will play a pivotal role in scaling the production, investing in Arcimoto-owned dealerships and advancing our cost-out efforts, which with some of the data that I just briefed you can see that we're clearly on the right path and that is indeed working.
Question 5. You recently announced a partnership with Matbock, this is military efforts. Can you tell me more about that and how the partnership came to be?
So this partnership brings together Arcimoto's expertise, electrical infrastructure, systems, architecture and energy storage. With Matbock overall leadership and design in the military space, they brought many, many products to market and recently rolled out a tactical vehicle prototyping arm. And so when the opportunity presented itself to provide them with some electrical architecture, BMS and other electrical type components for current projects as well as future projects, we actually jumped at the chance to do that. And the team has been working incredibly well together on both ends. So it's been an incredible relationship from the onset and we're really looking forward to what's going to come from that partnership.
Next question. Arcimoto had a net loss of $13.2 million. How do you plan to balance costs of production and vehicles in order to achieve profitability?
There's a drastic improvement from previous year, right, $17.4 million. Confirming that our efforts to working on this that we're on the right path, right? It's moving in the appropriate direction. That is a really big swing to see year-over-year. So the cost reduction on the bond and the manufacturing process, which we believe will tip into build a material profitability come the fall, which is exactly what we promised at the NASDAQ briefing in May. So we're on track, and we're doing exactly what we said we were going to do.
Next question, Arcimoto's total revenues this quarter increased by 17% compared to the same period in 2022, what factors contributed to this growth?
It's sharp execution on improving operational efficiencies as well as leveraging underutilized manufacturing equipment. We've got quite a bit of unencumbered manufacturing equipment that's not being utilized as it could have been. So one of the big things that we did since I came on was starting to roll that up, ramping those production efforts as it's a shorter-term revenue opportunity that allows us to really put a foot in the CM space and generate revenue while we continue to scale up the rest of the factory. I mean, in that, so with one continuing to scale production and leveraging that equipment is really what helped us generate that $1.76 million in revenue that's got us up 17% from 2022.
Next question. How do you feel about reaching the significant milestone of producing your 1,000th vehicle -- for your 100th vehicle?
I'm very proud of this, naturally, it's a big milestone. I think the last data that I looked at, we community-driven 1.2 million miles so this is a -- it's a product that's out there solving really -- real problems for real customers. It's road tested, and it's got a bright future with that many vehicles operating on the road today.
And then last question is, how do you envision the path to financial stability and long-term success in the EV market?
Our long-term goal is to offer the market, one of the most cost-effective, most efficient last mile human and goods mobility platform for the future road of what we really see the future being. We intend that our platform will provide a ready foundation for driverless technology development and are demonstrating that capability today. And so we -- I mean we here at Arcimoto, we understand that we're ahead of the curve, and we think that this is what the future of mobility will look like. And we're seeing that more so internationally, we know that here state side that will eventually come around to intersect that, and we'll be there and ready to catch it with technology has already developed and ready to go.
So we're really excited about what the future holds for Arcimoto. I'm really proud of the team for pushing so very hard to keep us on the path, on the track and allowing us to continue to deliver on what we said we're going to deliver on.
So with that, I'd like to conclude the earnings call. Thank you for everyone who submitted questions. And I look forward to talking to you guys in the next three months. Thank you, everyone.