Earnings Transcript for RIDE - Q4 Fiscal Year 2021

Operator: Greetings. Welcome to the Lordstown Motors Fourth Quarter and Fiscal Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. . Please note this conference is being recorded. At this time, I'll turn the conference over to Carter Driscoll, Vice President of Corporate Development, Capital Markets and Investor Relations. Carter, you may now begin.

Carter Driscoll: Thank you, operator. Good morning and thank you to all for joining the Lordstown Motors fourth quarter and fiscal year-end 2021 earnings conference call. To supplement today's discussion, please go to our IR website to view our press release and investor deck. Before we begin, I want to call your attention to our safe harbor provision for forward-looking statements that is posted on our website and as part of our quarterly update. The safe harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements for the reasons that we cite in our Form 10-K and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be Lordstown Motors CEO, Dan Ninivaggi, President; Edward Hightower; and CFO, Adam Kroll. With that, I'd like to turn the call over to Dan.

Daniel Ninivaggi: Thank you, Carter, and welcome, everyone. To begin with, I'd like to thank the entire Lordstown team for their extraordinary efforts in Q4. I'm pleased with the progress we've made towards launching the Endurance and our financial results for the quarter. Our number one priority of course remains the successful launch of the Endurance full size pickup truck. While we’ve experienced some supply chain challenges in building our pre-production vehicles or PPVs, I'm pleased to report that final engineering design validation and testing are underway and we continue to target startup commercial production and sales in the third quarter of 2022. Ed will provide more detail on where we are and what remains to be done to achieve full homologation. In terms of customer demand, we continue to see strong interest in the commercial fleet market for electric vehicles of all types, including pickup trucks. Despite the acceleration in competitors’ EV pickup truck product plans, we believe the market will be underserved for the foreseeable future and will continue to grow. We believe that demand will be particularly strong among commercial fleet customers, given their focus on total cost of ownership and specific work requirements. The Endurance with its in-wheel hub motor design is truly unique and will offer superior combination of handling, traction control, torque and turning radius that hard working fleet customers will really appreciate. With fewer moving parts than more conventional propulsion systems, we also believe the Endurance will have advantages in overall maintenance costs. Our commercial sales plan will be driven primarily by our expected production volumes. We'll undertake limited production this year, balancing the importance of getting the Endurance into customers’ hands with the need to manage their balance sheet as their bill of material costs at launch will be significantly higher than our anticipated selling price. Our BOM will improve over time as the benefits of our tooling, moving from prototype to production suppliers, the Foxconn transaction and other initiatives kick in. As a result, at least initially, we’re focused on selling vehicles to a relatively small number of strategically partners who offer the best opportunities for long-term relationships. While the exact number of vehicles we produce will depend on several factors, including the timing of our BOM cost reduction actions, and future financings, I would expect production to be limited to about 500 units in 2022 and up to 2,500 units in 2023. For post-sales support, as mentioned on our last earnings call, we're continuing to work with Cox Automotive. Cox Automotive service marketplace has more than 6,000 service centers, 3,000 partner location and 800 mobile technicians nationwide. Now, turning to our long-term strategy. As I mentioned on our last earnings call, the conversion to electrified power trains presents OEM startups like LMC with a very unusual opportunity to penetrate the automotive market and gain meaningful share, particularly in certain underserved segments. The success requires that we deliver scale, a differentiated commercial plan, an innovative product, a competitive cost structure, and a vehicle development platform that brings products quickly and efficiently to market. I believe our partnership with Foxconn can help us achieve each of these objectives. Foxconn has ambitions to capture a significant share of the global EV market, not just in contract manufacturing, but in key components as well. In addition to other strategic benefits, the Foxconn partnership would unlock the full potential of the Lordstown plant by getting this to scale faster. At 6.2 million square feet and 640 acres, the Lordstown complex is one of the largest internal combustion automotive plants in North America that has been converted to a state-of-the-art EV manufacturing facility. Foxconn has an excellent opportunity to fill the plant, having already announced that the Fisker PEAR program is intended to be manufactured in Lordstown. LMC and all OEMs whose vehicles are built at the plant will benefit from the increased capacity utilization, use of common components and lower overhead costs. Scaling automotive manufacturing matters a lot. Use of shared space, together with Mobility-in-Harmony or MIH open source platforms that Foxconn has developed, provides smaller and more specialized OEMs the opportunity to achieve the benefits of scale without being a large fully integrated automaker. Partnership with Foxconn should also significantly reduce our raw material, component and other input costs over time. As the largest contract manufacturer in the world, Foxconn has significantly better purchasing power than we would have on our own as well as a global integrated supply chain network and the logistics capabilities necessary to help us reduce vehicle production costs and minimize our supply chain risks. We also stand to benefit from Foxconn's expertise in hardware and software integration critical to EVs given their expertise as a multinational electronics manufacturer. As we grow together, these benefits should only improve over time. Finally, a partnership with Foxconn could extend beyond the contract manufacturing agreement. When we announced the transaction, we stated that Foxconn and LMC would explore a joint venture arrangement for the development of new electric vehicles utilizing Foxconn’s MIH common platform. This is an important part of the deal, because in our view, LMC would greatly benefit over the long-term from a scalable vehicle development platform for future vehicles that will allow us to compete with much larger vertically integrated OEMs. The use of common vehicle architecture systems and components off of MIH provides us that opportunity. In addition, a commercial relationship with Foxconn could open up opportunities to utilize LMC developed vehicles for markets outside of North America for both MIH vehicles and potentially Endurance-based vehicles. Since our last earnings call, we have made substantial progress on the terms of the contract manufacturing agreement with Foxconn. We’ve also had ongoing discussions regarding a joint product development agreement under which we would develop new vehicles in collaboration with Foxconn off the MIH platform. In connection with the joint development agreement, we have considered capital raising alternatives and made a specific proposal to Foxconn. While our discussions with Foxconn have been constructive and are ongoing, at this stage no definitive product development agreement and funding arrangement has been reached. We and I believe Foxconn understand that reaching a conclusion as soon as possible on this element of the transaction is important for the overall success of our partnership. I also believe that a joint product development agreement with an appropriate funding structure would greatly enhance our ability to raise the additional capital necessary to not only fund new vehicles, but to bring the Endurance into production in Q3. Clearly, we and Foxconn have more work to do. In closing, notwithstanding the challenges in front of us, I am pleased with the progress we have made on moving the Endurance towards launch-readiness and building our relationship with Foxconn. We have a unique vehicle and our entire team remains totally energized by the compelling market opportunity. With that I'll turn the call over to our President, Edward Hightower. Edward joined the team shortly after our last earnings call. He has 30 years’ experience serving new product development, engineering, manufacturing, commercial and senior executive roles between Ford, BMW and GM, including leading GM's $15 billion global Crossovers business as the Executive Chief Engineer and vehicle line executive. Ed?

Edward Hightower : Thank you, Dan. I joined Lordstown Motors as President last November and I am very excited to be part of the team and to participate in my first earnings call. When I joined the company, I was in complete alignment with Dan and the Board in that we had two objectives

Adam Kroll : Thank you, Edward. Good morning, everyone. I share both Dan and Edward's enthusiasm for our progress in the fourth quarter and the opportunity we have going forward. I'm also quite focused on our challenge. As all of you are seeing with LMC and our peers, launching a new vehicle is an incredibly challenging endeavor, made more complex when it's your first and only vehicle as a startup. We had a very active year on all fronts, operational, engineering, financial and strategic, particularly in the fourth quarter. I am delighted by how our team members have navigated through 2021 given the macro headwinds, our strategic shift, executive changes and COVID-19. Let me begin by reviewing the financial considerations of our proposed partnership with Foxconn. In late September, we announced the agreement in principle for the sale of our plant and intention to create a deep alliance. About six weeks later, we announced the definitive asset purchase agreement regarding the sale of the Lordstown facility for $230 million, plus reimbursement of certain expenditures incurred between September 1, 2021 and transaction close. To date, we have received $200 million from Foxconn, including a $50 million common stock investment in October and an aggregate of $150 million in downpayments of the Lordstown plant purchase price in Q4 and the early part of Q1 '22. Now turning to our results. We ended the fourth quarter with $244 million in cash on hand. That is $79 million more than the midpoint of our guidance of $150 million to $180 million. The outperformance is the result of disciplined spending generating permanent savings, along with certain deferred capital and operating items, favorable working capital and additional equity raises. The permanent savings were largely associated with capital investments in the plant. We delayed our planned Q4 investments in hard tooling, commencing the spend in the first quarter of 2022. In total, during the fourth quarter we raised $182 million of financing, $150 million related to our agreements with Foxconn with the balance being primarily common stock issued under our equity purchase agreement. For the full year we expended $674 million for operating cash flow and capital expenditures and raised $288 million from financing activities. The capital raises consisted of the $150 million from Foxconn, $82 million from the exercise of warrants and almost $56 million from the equity purchase agreement and employee option exercises. Turning back to Q4, our net loss of $81 million continued to meaningfully improve sequentially from the first, second and third quarters. Our R&D costs of $59 million were relatively in line with Q3 and meaningfully lower when compared to Q1 and Q2. In Q4, in comparison with Q3, we spent more on vehicle components as we procure the materials for our PPV build, along with personnel in both engineering and manufacturing, offset by lower outside engineering support. The improvement compared to the first and second quarters was primarily driven by a decrease in prototype component costs, as we moved from consuming parts for testing to building PPV. In addition, like everyone, we are experiencing elevated freight costs as supply chain issues are driving up our need to use expedited freight. SG&A expenses of $26 million declined to 17% quarter-over-quarter, due to lower legal and outside consulting costs partially offset by higher personnel insurance and IT infrastructure investments. We continue to incur significant legal expenses resulting from ongoing litigation and the SEC investigation. For the quarter our legal costs were approximately 30% of total SG&A and more than 8% of total operating expenses. That's down from over 40% of SG&A in Q2 and Q3. Unfortunately, I anticipate the current level of spending to persist until we are able to resolve some of the larger matters. In addition, we continue to invest in our people, processes and technology to establish the proper infrastructure for our future that will contribute to higher SG&A going forward. As we seek to hire permanent staff and get new systems running, our consulting and professional fees will be elevated. For the full fiscal year, we reported a net loss of $410 million. Total operating expenses were well below guidance due to the fourth quarter results as discussed. R&D of $284 million compared to our guidance range of $320 million to $340 million. SG&A was $105 million at the bottom end of our $105 million to $120 million guided range. Included in our net loss were non-cash charges of $42 million for stock comp, intangible amortization, and the warrant mark-to-market. Looking forward to 2022, we are focused on launching commercial production in Q3. As Dan mentioned, we anticipate a limited production of about 500 units this year. We have always expected our bill of materials would be above our anticipated price for the Endurance at launch and over the medium term. It is simply a function of a low volume launch environment, where we leverage a higher share of prototype components and tooling in conjunction with disciplined financial management and continuous design enhancements. Hard tooling represents the largest opportunity to drive down our bill of materials. If we are able to raise sufficient capital to fund all the planned investments in hard tooling, most of which are expected to occur in 2022, we will begin seeing lower piece prices and the overall bill of materials per vehicle in late 2022 and into 2023. As previously disclosed, even with the sale of the Lordstown facility, we will require substantial additional capital well ahead of reaching a commercial launch of the Endurance to execute our business plan. And as Dan mentioned earlier, we believe a joint product development agreement with Foxconn with an appropriate funding structure is critical to our ability to raise the capital we need to launch the Endurance production in Q3 and to expand our product portfolio. With our advisors, we continue to evaluate additional financing alternatives, including private or public equity transactions, debt financing, and program finance structures, among others. We are entering a critical phase for the company. While the Endurance is on the cusp of commercial production, the Foxconn transaction is not yet where we needed to be and we do have to raise significant capital in the coming months to execute our business plan. Our 2022 outlook depends on many operational, engineering, macro, supply chain, geopolitical, regulatory and other factors that together with our ability to raise capital will influence how we execute our plan and deploy capital during the year. With that, I'll ask the operator to open up for questions.

Operator: Our first question is from the line of Joseph Spak with RBC.

Joseph Spak: I guess, just a bunch of questions here. But maybe let’s just start on some of the delivery numbers you threw out, Dan. So, 522, I'm assuming that's pretty fourth quarter weighted, given you're not starting till the third quarter. And then up to 2,500 for '23. So if we think about like an average build rate in '23, it's not that meaningful step up from probably what you're exiting '22. And I'm just trying to understand, is that something to do with the operations and sort of switching over to Foxconn, is it a supply stem issue? Or what sort of -- how should we sort of think about that sort of production rate exiting '22 into '23?

Daniel Ninivaggi: Yes, I mean, it's driven primarily by the BOM glide path. So as we get the BOM costs down, we will accelerate production. So even in '23, it’s back end weighted. And we'd see a higher production rate the back half of the year. So we're just balancing the BOM costs, the need to get vehicles into the hands of customers with the costs of producing the vehicle while the BOM costs is really being reduced.

Joseph Spak: So maybe that's a good sort of segue into the next question. I mean, like -- it sounds like the biggest factor here is getting the funding and securing that hard tooling. My understanding is with sort of this new arrangement with Foxconn, when I just wanted to sort of complete it, it's kind of a much more sort of variable model, right? So what can the '23 exit gross margin rate look like?

Daniel Ninivaggi: Yes, we're not giving guidance on that. I mean, the biggest impact on the BOM cost is going to be hard tooling, and other VAVE initiatives. And those words, I think Adam mentioned, we deferred some of the CapEx spend in Q4 into early Q1, Q2. So that some of that benefits delayed. So that's the biggest influence on the BOM costs, not the handover to Foxconn.

Joseph Spak: Okay. And maybe this is sort of my lack of understanding about the sort of transaction but about the sort of transaction. But why is sort of the hard tooling -- is that your responsibility or Foxconn's responsibility?

Daniel Ninivaggi: It's our responsibility.

Joseph Spak: And then it's handed over to them?

Daniel Ninivaggi: No, no. Manufacturing is being handed over to them. But we're the ones investing in and owning the hard tooling, the component tooling.

Adam Kroll: Which is -- Joe, it’s Adam. That's the standard way. Every OEM owns their tooling, right? That the tooling itself is like…

Daniel Ninivaggi: Joe, this is Edward. In addition to that, over time, we'll be able to optimize our supply chain, those with more higher-volume suppliers as we make those transitions from soft tool to hard tools. So that will contribute to our BOM costs going down as well.

Operator: Our next question is from the line Emmanuel Rosner with Deutsche Bank.

Emmanuel Rosner : So I guess it seems like the priority number 1 in addition to making progress on trying to ramp up towards production is to secure some capital. Can you give us a sense of how much capital you think is needed in the short term?

Adam Kroll: Yes, Emmanuel, this is Adam. So we built an operating plan that expects us to get through the year and continue to fund the tooling. There's obviously levers we can pull and conserve liquidity, which always come with significant trade-offs like we talked about the impact on piece price. But to execute our operating plan for the year, we need to raise in the range of $250 million.

Emmanuel Rosner: Okay. And that would include financing the hard tooling for the launch?

Adam Kroll: Yes.

Emmanuel Rosner: Okay. And I guess, as you approach various potential sources of capital, I think the -- probably the story that we want to hear is what are the ultimate economics of sort of like a new business model, the contract manufacturing economics both shorter term but also if you're able to expand the relationship with Foxconn, are you able to give some details around what it is that an investor putting capital into Lordstown could expect over time?

Daniel Ninivaggi: Yes. So that's why the joint development agreement with Foxconn is an important component of the overall transaction. It does a number of things for us. I mentioned in the call. It gives us a competitive vehicle development platform. It gives us the benefits of scale gives us a broader access to a broader product portfolio, licensing and commercial opportunities with Foxconn inside and outside the U.S., stronger supply base, including components that are sourced originated and manufactured by Foxconn. So that, to me, is the -- is what makes it investable the future vehicle development platform. There's also -- we're not giving up, obviously, on the Endurance. We need to get that into production. Full-size pickup truck is going to be a unique product out there. And we think that there could be derivatives and future vehicles built off that platform as well. But that is the story that makes, I think, the company investable, which is why this joint product development agreement is so important. And quite frankly, I am disappointed that we're not further along. The relationship with Foxconn is very positive and the discussions are ongoing, but we need to bring that to a conclusion. And I'm hopeful that we'll get there.

Emmanuel Rosner: Okay. And just to understand, I guess, where -- what has already agreed upon and what is being discussed. So the part that is agreed upon is essentially the contract manufacturing for the pickup. The part that isn't is an agreement on utilizing their platforms for future vehicles?

Daniel Ninivaggi: That's right. And an appropriate funding arrangement around that.

Emmanuel Rosner: Understood. And then wanted...

Adam Kroll: To be clear, sorry, Emmanuel, the contract manufacturing agreement is not finalized.

Daniel Ninivaggi: We've made significant progress. We filed a draft with CFIUS, but it's not yet final.

Emmanuel Rosner: Okay. And then a final one. I guess the -- on the Endurance, so 500 units already as soon as this year, can you give us a sense of who do you think -- who do you expect these trucks to go to? Do you have -- are you able to disclose customers? Is it a lot of truck to a few customers? Is it many customers taking a couple of trucks each? Any sense of who your early customers are?

Daniel Ninivaggi: Yes. I mean we're talking to all the fleet management companies, but in particular, the larger fleets and which customers we sell to will depend on a number of factors, including where we have service and maintenance. We'll try to do it in an efficient way. But as I mentioned in my comments, we want longer-term strategic relationships with customers. So it will be -- given 500 vehicles for the year, it will be a fairly limited group.

Operator: Your next question comes from the line of Mark Delaney with Goldman Sachs.

Mark Delaney: I was hoping to start maybe with the pricing to think about for the Endurance cost has gone up quite a bit for the industry. You're talking about cost challenges now for Lordstown. So should we be thinking about a much higher price point in terms of pricing for the pickup truck?

Edward Hightower: This is Edward. Thanks for the question. We feel that our value proposition for the Endurance plus the economics availability of battery electric full-size pickups in the market right now really justifies our price point where we're launching the vehicle with a significant amount of standard options. And that's how we -- the price that is in our filing reflects that.

Mark Delaney: Got it. Okay. That's helpful. And then you're thinking about the $250 million of capital needed support the hard tooling in the plan for this year. Would you envision that supporting a positive gross margin later in '23 with that level of hard tooling?

Adam Kroll: Well, not quite into '23. I think as Dan said, the guidance is up to 2,500 units next year. We've got a glide path that will bring the bottom down towards breakeven, but it's probably over 18 months. We need to make -- there's opportunities to make design improvements, supply chain enhancements, other VAVE efforts. The Foxconn relationship as well looking into their supply chain and partners to bring down costs. So we think it's over probably 18 months.

Daniel Ninivaggi: Or even into 2024. Yes.

Mark Delaney: Okay. That's very helpful. And maybe just help us think about how modular hard tooling costs are, right? You talked about what's necessary for capital to get to the -- up to 2,500 for '23. But if it was 5,000 or 10,000, how much CapEx might that cost?

Daniel Ninivaggi: Well, I think Adam provided a number of $200 million, $250 million range for all in.

Adam Kroll: The tooling isn't all of that. So we haven't gone out with an exact number on how much tooling we need, but the tooling varies. I mean you're talking different tools for different suppliers, some tooling has a greater investment than others, depends on where in the vehicle. I mean, you might need a tool for the trailer hitch. I mean there's pieces of the vehicle door hinges, things like that. So they can range from small to large.

Daniel Ninivaggi: Yes. The way we approach it is we look at the breakeven point, we look at the breakeven point for any tooling investment in terms of the number of units we need to produce to breakeven. So obviously, the high priority tooling is the low breakeven points and then as we go from there. So you asked how modular it is. We can dial back certain tooling that has a longer payback if we need to. But again, as Adam mentioned, there are trade-offs in terms of how quickly we get the BOM cost reduction. So that's the kind of the balance we're trying to strike. So it's not all at once. It's over time.

Operator: Our next question is from the line of Adam Jonas with Morgan Stanley.

Adam Jonas: So Dan, we -- regarding the contract manufacturing agreement with Foxconn, which is still in progress towards an agreement. It's my understanding that -- am I correct in my assumption that securing a contract manufacturing agreement is a prerequisite for consummating the sale of the plant to Foxconn. Is that correct?

Daniel Ninivaggi: That is true. It's a condition.

Adam Jonas: Okay. Understood. And in any event, however, likely or unlikely, that you do not reach an agreement with Foxconn, what's the plan B for the Lordstown plant? Is there -- are there contingencies in place? And I'm curious if there's any breakup fees associated with that, let's call it unlikely event or possible, but with that.

Daniel Ninivaggi: Yes. I mean, look, it's certainly possible that we don't conclude an agreement, but I think it's highly unlikely. As I said, the relationship has been good. The discussions are ongoing. They understand, I think, the importance of all the elements of the agreement, including a joint development agreement. And I think I will work hard to get there. But they're really -- we're not considering those contingencies. If we get to a point where we can't get to a joint development agreement or conclude a contract manufacturing agreement, we certainly will have to consider alternatives, but we're not at that point yet.

Adam Jonas: Okay. You understand what I'm asking, I'm just -- because it does seem that Foxconn is in a position to really dictate the future of that plant and of course, the future of your company overwhelmingly, which is fine. But it sounds like we crossed that bridge in that plan A is the focus and getting that across the goal line.

Daniel Ninivaggi: Yes. I mean, look, we are all in with Foxconn and we're very confident that we can make the relationship work. It's got to be a win-win. The concept of the joint venture, joint development agreement for future vehicles and MIH has been on the table from the beginning. It was incorporated in the original deal. There are commitments there for them to work in good faith to reach that agreement. We intend to hold their feet to the fire to make sure they do. And I'm confident we'll get there, but there's always a risk that we don't. And if we don't, then we'll have to do something else.

Operator: The next question is from the line of John Murphy with Bank of America.

John Murphy: I just wanted to follow up on the answer, Adam, you gave to cap raise. I mean I think all of us on the phone has been in this industry for few decades and $250 million is not a lot of money. And we're all -- I mean to get through this year to raise $250 million, it sounds like you're scratching its created still. I mean what's the real number you need? I mean, are you getting more money from Foxconn because you're at a stage in this company where you don't want to just be scraping and scrapping to get by to the next day and the next quarter or that launch. I mean you've got to have capital to blow this company out and really create some good product and grow. I mean, the $250 million might be what you can get through this year, but like what do you really need?

Daniel Ninivaggi: Well, look, I mean, what we really need -- and that's -- again, I'm going to go back to a joint development agreement because that's the -- that is the vehicle development platform going forward, where we can get to the benefits of scale and a competitive product. We can get products to market quicker and cheaper and that sort of thing. But we need deep collaboration with Foxconn to do that. I think what will give investors confidence in that is if we get to an agreement and we have appropriate funding, meaning some incremental investment from Foxconn as tangible proof that they're supporting the venture and they're all in on it. So I think that's what we need to turn the corner I think the -- what we need to do in terms of the Endurance BOM cost is fairly clear, right? We've been at this for a while now. We know what we need to do to get the bond cost down. It's going to require more capital as well. But we have to take one step at a time. First, we have to prove that we have kind of a strategy that's investable and we have a path to get there. I think the $250 million will go a long way to getting us into production and proving that we can actually certify and sell a vehicle. I think the performance of the vehicle is going to be great. I think when people see it and it will be one of the few full-size pickup trucks out there, I think we'll have opportunities to improve the Endurance with a partial redesign over time. And at the same time, in parallel, we can work on the first vehicle or 2 of MIH, which we think we can get to market within 24 months or so. So I think we're building one step at a time, but it starts with this deeper relationship with Foxconn and some support there, and then we'll have a full funding plan around it. But you're right. It's -- we're not going to sit here scrap and buy living quarter-to-quarter. The $250 million, we think we're comfortable that gets us through the year and into 2023 and allows us the time to prove that we can actually execute and then we deserve people's capital for other things.

John Murphy: Okay. A second question on the 3- to 4-month window, you seem to think you'll get carbonates and FMVSS testing and everything done. I mean what is traditionally the window for a truly brand-new vehicle to get regulatory approval? Because 3 to 4 months seems like pretty quick.

Daniel Ninivaggi: No, we have -- John, we have a detailed time line and that does get us through each of the different tests and certifications and our portfolio homologation within that all this summer. We'll complete the build for that tranche of vehicles in April, and we have a time line that maps us out, getting all of that certification by mid to late August.

John Murphy: Okay. But that 3- to 4-month window, is it like for a truly brand-new vehicle, I mean, that -- you've done this a lot. I mean, is that something you've done in the past? Because that sounds -- I mean, you got me it sounds awful quick.

Daniel Ninivaggi: Yes. I mean, the time line is aggressive, but it's underway right now. A fair amount of it has been done. A lot of it has also been analyzed through CA, and so we're confident that we will meet that time line.

John Murphy: Okay. And then on government support, I mean, Build Back Better plan has some pretty aggressive incentives for UAW built vehicles. Could you just remind us the workforce at Lordstown? And do you think you would qualify for that incremental benefit of unionized labor producing the vehicle or not?

Daniel Ninivaggi: Yes. I mean our workforce isn't unionized at this point. When we transfer the plant to Foxconn, that's really more of a Foxconn issue than our issue. We don't have a view one way or the other towards unions. It's up to our workers to decide whether they want to be organized or not. But to my knowledge, there's no union activity going on in the plant at the moment.

John Murphy: Okay. And then just lastly, I mean it's hard to bet against each of you individually in any way in your functions, given your history and what you've done in the industry. So we have a lot of respect for you. But the -- in each of these startup, EV start-ups, there's traditionally a founder and sort of an alpha person that's kind of just truly pushing things through and has had a vision for the company. Traditionally, that's been the founder and that's certainly not the case the moment the founder has gone. So Dan, I mean, there's this intangible of kind of getting all this stuff done and pulling together and we all know it's a tremendous feat to execute what you've done so far, but to really get this over sort of the finish line and viable, it kind of takes sort of one person to really just spearhead this whole thing I mean, who is that? Is it you, Dan? Or is it Ed? I mean, how should we really think about this? Because when we look at all these other companies, we have this single founder that is responsible for absolutely everything in kind of a wild in saying complicated way, and it's not necessarily a parent here. I mean who is that person? And how confident are you that, that person is really going to be able to get this done?

Daniel Ninivaggi: Well, John, I've known you for 20 years, I'm insulted that you don't think I'm an alpha man.

John Murphy: No, I think you're in alpha male everything you do, but like this is an umbrella that is wide. You know that. I mean I know it's up to a lot. I mean, just -- and the founder sort of in that sort of wild vision has changed here, right? I mean it's become sort of more practical and deal focused, which might be the direction you need to go in. So you might answer it that way. But I mean in these other situations, we have a single person that is truly tasked with everything. And you got a lot of very good players, but I'm just curious than how you think about that.

Daniel Ninivaggi: So look, I've been around the industry for a while. I worked for Carl Icahn for 10 years. I've been through challenges. And this is one of the most challenging situations I've seen. But I knew it coming in, right? I knew what I was getting into when I joined the company, and it's played out pretty much exactly as I thought it would. I'm maniacal, maniacal about getting this done, okay? I believe in the benefits of the Foxconn transaction. I'm not saying, okay, they're going to solve all our problems. We've got to solve our own problems. We've got to execute better. We're as Ed mentioned, I mean, operationally, we're as good as we've ever been. I know what I know, and I know what I don't know. That's why Ed's here. I mean Ed is a 30-year veteran who's launched big programs, who's done things more complicated than this. Adam is a top-notch CFO. We're bringing in engineering talent it's going to be about talent and our own ability to execute. The strategy part is kind of my thing. I think the smaller OEMs, most of them will not survive because scale is, as I said earlier, does matter a lot in this industry, and you're going up against big players. So you've got to pick your spots. You've got to figure out a way to be competitive without being a vertically integrated OEM, $150 billion OEM. And so we're trying to be smart about that. And I think I said early on, we're all in on Foxconn, but we need to actually prove out the benefits of that relationship, and it's got to be a win-win situation. And it's not a done deal. It's not a short thing by any means, but our relationship is strong. I think we're going to get there. And if you want to know who the alpha male is in this company, you're talking to him. It's me.

Operator: At this time, we've reached the end of the question-and-answer session. I'll now turn the call over to Dan Ninivaggi, Chief Executive Officer, for closing remarks.

Daniel Ninivaggi: Thanks, operator, and thanks to all those who participated in the call. I'd like to close by thanking our shareholders for their support. It has not been an easy year. I'd also like to again thank the LMC team for all the hard work that has us where we are today. I'm very proud of the fact that our core team, manufacturing, engineering and corporate has never let the challenges and distractions over wellness. In fact, the program management and business processes have never been better and continue to improve every day. I'm also grateful that we've been able to attract some great new talent to the organization and recruiting the best automotive talent, especially in engineering is our top priority. Thank you and we look forward to speaking with you next quarter,. if not sooner. Thank you, operator.

Operator: You're welcome. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.