Canoo, Inc. (GOEV) Q2 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights significant improvements in financial metrics, including revenue growth and reductions in expenses and losses. The strategic focus on commercial fleet and government markets, along with the successful delivery to USPS and expansion into Saudi Arabia, is promising. Despite some supply chain and financing risks, the company's proactive measures and the establishment of a foreign trade zone are positive. The Q&A reflects a constructive dialogue with analysts, although some answers lacked clarity. Overall, the positive financial performance and strategic initiatives suggest a potential stock price increase in the short term.
Key Financial Performance
Revenue $605,000, a significant increase from Q2 2023, attributed to USPS delivery and the Defense Innovation units contract.
Research and Development Expenses $16.8 million, a 56% reduction from $38.6 million in Q2 2023, primarily due to final engineering improvements and support for pilot programs.
SG&A Expenses $20 million, a 16% reduction from $23.9 million in Q2 2023, reflecting improved operational efficiencies.
Adjusted EBITDA Negative $38.6 million, an improvement of 38% from negative $62.3 million in Q2 2023.
Adjusted Net Loss per Share Negative $0.61, an 80.6% improvement from negative $3.14 per share in Q2 2023.
Cash and Cash Equivalents $19.1 million at the end of the quarter.
Net Cash Provided by Financing Activities $38.7 million, down from $76.2 million in the prior year period.
Cash Used in Operations $35.9 million, a reduction from $62.3 million in the prior year period.
Cash Outflow from Investing Activities $2 million, compared to $15.5 million in the prior year period.
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Operating Highlights
Revenue from new product deliveries: Q2 ‘24 was our largest revenue quarter, $605,000, including revenue from the first right-hand drive LDV 190s delivered to USPS.
OTA updates: Successfully deployed our first OTA updates to customers to enhance functionality and benefits to client workflows.
Vehicle testing: Customers logged over 34,000 miles of real-world industrial use cases.
International expansion: Announced a 20 vehicle purchase agreement with Jazeera Paints, with the option to expand to 200 units.
UK market engagement: Debuted LDV 130 and 190 vehicles at 3 commercial fleet shows, engaging with 8 of the 15 largest fleets.
Operational efficiencies: Lowest cash outflow was approximately 50% lower than Q2 ’23.
Cost management: Research and development expenses reduced by 56% from Q2 of 2023.
Supplier engagement: Held inaugural supplier engagement event at OKC facility to align on production ramp-up.
Manufacturing focus: Finalizing build specs and configurations with significant fleet customers for production in 2025 and 2026.
Supply chain harmonization: Targeting large fleet customers in geographies with mandated EV adoption.
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Risk or Challenges
Competitive Pressures: Canoo faces significant competitive pressures in the electric vehicle market, particularly as they prepare for upcoming RFPs, including one from USPS for 10,000 to 12,000 electric vehicles.
Regulatory Issues: The company is navigating regulatory challenges related to manufacturing and supply chain harmonization, especially with the recent approval of their Foreign Trade Zone designation.
Supply Chain Challenges: Canoo is actively working on supply chain harmonization and has held supplier engagement events to align on production needs, indicating ongoing challenges in this area.
Economic Factors: The capital markets remain volatile, which poses risks to Canoo's funding strategies and overall financial stability.
Financing Risks: Canoo's capital raising efforts are designed to minimize shareholder dilution, but the need for creative financing solutions indicates potential risks in accessing necessary funds.
Operational Risks: The company is ramping up its workforce and manufacturing capabilities, which involves operational risks associated with scaling production and meeting customer specifications.
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Guidance & Outlook
Revenue Growth: Q2 2024 was Canoo's largest revenue quarter, generating $605,000.
Cost Reduction: Cash outflow was approximately 50% lower than Q2 2023.
Manufacturing Focus: Finalizing build specs and configurations with significant fleet customers for production in 2025 and 2026.
International Expansion: Announced a 20 vehicle purchase agreement with Jazeera Paints, with potential expansion to 200 units.
Supply Chain Harmonization: Engaged suppliers to align on long-term vision and ramp production.
Workforce Development: Continuing migration of workforce to Oklahoma and Texas facilities.
Adjusted EBITDA Projection: Expected adjusted EBITDA to be between negative $120 million to negative $140 million for the second half of 2024.
Cash Guidance: Reaffirmed cash guidance, coming in at the lower range of previous spend guidance.
Future Revenue Expectations: Focus on upcoming USPS RFP for electric vehicles, estimated at 10,000 to 12,000 units.
Capital Raising: Raised $40 million in Q2 2024, with a total of $104 million year-to-date.
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Shareholder Return Plan
Capital Raised: During Q2, we raised $40 million of capital, which purposely matched our cash outflows.
Total Year-to-Date Capital Raise: Total year-to-date capital raise of $104 million.
Financing Structure: This quarter represents the first time we've raised a material amount of capital from nondilutive sources.
Cash Position: We ended the quarter with cash, cash equivalents and restricted cash of $19.1 million.
Cash Used in Operations: Cash used in operations for the 3 months ended June 30, 2024, was $35.9 million compared to $62.3 million in the prior year period.
Adjusted EBITDA Guidance: We expect our adjusted EBITDA to be between negative $120 million to negative $140 million for the second half of 2024.
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Key Q&A
Q:In terms of the capital raise, do you expect it's going to be the same every quarter?
A:Yes, I think that's a great question, Dan. We focused on being scrappy, funding the company based on milestones and key events.
Q:Does it feel like the conversations with customers are changing compared to 6 months ago?
A:Our conversations have been advancing right down to the specifications because our platform allows for some built-for-purpose modifications.
Q:Can you provide an update on the supply chain and suppliers moving forward?
A:We are at a place now, and that's why we had the event, which about 52% of the BOM was represented at the event.
Q:What do you think the timing of the delivery schedule with Walmart may be?
A:We see ourselves as a part of their competitive advantage. Eventually, this will become super surprising information.
Q:Can you comment on the SG&A and R&D levels going forward?
A:We're pacing ourselves right now. We're going to be very disciplined about how we deploy capital.
Q:What characteristics are you prioritizing for customers with early deliveries in 2025?
A:We're really trying to pair off all these things, so we're in harmony.
Q:What are some announceable milestones we could see from Canoo?
A:We see ourselves as a competitive extension with our partners of their business.
Q:Can you talk about the relationship with Walmart and how we should think about deliveries over time?
A:They've actually really appreciated the fact that we wanted real testing before we signed up.
Q:Are there any other critical equipment needed to complete the production setup?
A:We have everything else that we need in Oklahoma City to do that.
Q:How should we think about the benefits of the free trade zone?
A:The free trade zone is very, very important.
Q:Can you talk about the OTA update capabilities?
A:We have an amazing software team and their ability to get customer requests and 48 hours turnaround of work flow.
Q:Review of Unclear Management Responses
A:Management's response regarding the timing of the delivery schedule with Walmart lacked clarity, as it was vague and did not provide specific details.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Award
Canoo
Jazeera Paints
Post Office
Red Sea
UK
USPS
United Kingdom
Walmart year
approval
base
cash outflow
client
conversation
degree
deployment
dilution
expansion
factory
hand drive
improvement
mile
phase capital
piece
purpose
return capital
share
software
specification
step
temperature
test
trade zone
vehicle lot
workflow
GOEV Transcript
Canoo Inc. (GOEV) Q3 2024 Earnings Call Transcript
Unknown11-14
The earnings call reveals several challenges for Canoo, including workforce furloughs, supply chain disruptions, and financial instability due to capital raising difficulties. Despite revenue growth and cost reductions, the company faces significant risks, such as regulatory issues and economic pressures. The Q&A section highlights management's uncertainty about financing and production timelines, further compounding negative sentiment. While there are positive aspects like revenue growth and cost savings, these are overshadowed by the broader concerns, leading to a likely negative stock price reaction in the short term.
Canoo, Inc. (GOEV) Q2 2024 Earnings Call Transcript
Positive8-14
The earnings call highlights significant improvements in financial metrics, including revenue growth and reductions in expenses and losses. The strategic focus on commercial fleet and government markets, along with the successful delivery to USPS and expansion into Saudi Arabia, is promising. Despite some supply chain and financing risks, the company's proactive measures and the establishment of a foreign trade zone are positive. The Q&A reflects a constructive dialogue with analysts, although some answers lacked clarity. Overall, the positive financial performance and strategic initiatives suggest a potential stock price increase in the short term.
Canoo Inc. (GOEV) Q1 2024 Earnings Call Transcript
Unknown5-15
The earnings call presents a mixed picture: improved financial metrics and operational efficiencies, but weak guidance and lack of specifics on key partnerships (USPS, Walmart). The Q&A reveals optimism but also highlights capital constraints and supply chain challenges. No concrete timelines or milestones were provided, and management's evasive responses may concern investors. While there are positive elements like reduced losses and strategic opportunities (Saudi Arabia), the lack of strong guidance or partnership details tempers the sentiment, leading to a neutral outlook.
Canoo Inc. (GOEV) Q3 2023 Earnings Call Transcript
Positive11-15
The earnings call highlights significant improvements in cost management and operational efficiency, evidenced by reduced SG&A expenses, narrowed net losses, and improved EBITDA. The Q&A section reveals confidence in achieving production targets without altering timelines due to reduced CapEx, and potential partnerships with strategic investors offer growth opportunities. Despite some uncertainties in management's responses, the overall sentiment leans positive, supported by improved financial metrics and strategic plans. However, the lack of market cap data prevents a more precise prediction.
GOEV Report
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Where does this earnings call transcript come from?
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Why do some answers appear as “Unclear” or “Inaudible”?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
