Q2 2021 Lordstown Motors Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Lloyds Town Motors second quarter 2021 earnings conference call. At this time all participant lines are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press Star then one on your telephone.
One.
Please be advised that today's conference maybe recorded if you require any further assistance. Please press Star then zero I would now like to hand, the conference over to your host today Carter Driscoll head of capital markets and Investor Relations. Please go ahead Sir.
Thank you operator, good afternoon, and thank you to all for joining Lordstown Motors second quarter 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.
It's posted on our website and as part of our quarterly update.
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-Q, and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes.
Joining us today, the Lordstown Motors executive chairwoman Angela stream.
Didn't Rick Smith, and interim CFO back to you Bruce.
Andrew will provide a strategic update on the business followed by rich will give a more detailed update on production and then Becky will cover the financial results.
Hi, Angela will provide our outlook and closing remarks.
With that I'd like to turn the call over to Angela <unk>.
Thank you Carter and to everyone for joining us today.
Our strengthened leadership team has been in place now for less than two months and has thoughtfully broaden our go forward commercial strategy.
We have identified five critical strategic priorities for Lordstown motors that put us on our path to profitability.
Today, our goal is to tell you as much as we can about the strategic priorities as we believe they will unlock the value of both our physical facilities and our technology.
We will also provide you with the latest available information on the commercialization of the endurance on our continuing efforts to raise additional capital and on the other initiatives that our leadership team has undertaken.
I want to start by highlighting how our key assets are moving us forward.
An experienced team are tremendously large and highly flexible plan and the breadth of technologies we've developed.
First we have become more convinced than ever about our innovation and the inherent value of our technology.
Lordstown tremendous engineering team with its close partner La Fe has expanded our unique hub motor design.
Many of you on this call today are familiar with in wheel hub motors, but since more and more people are now only hearing about us I want to take a moment to explain.
In wheel drive puts a motor completely inside each wheel and is controlled through integrated software to make them all work together safely powerfully and efficient.
Rather than replicating a gas engine powertrain with inefficient transfer cases axles and differentials, we have a motor and each wheel and a centralized mind that controls them, providing unrivaled all wheel drive control with exceptional performance tour.
So turning and Tcs.
So we at Lordstown take a clean sheet approach to where the power should really come from and in electric vehicles. Since we have no legacy mindset or assets tied up to the past.
We believe that form should follow a function and our relentless about meeting customer needs.
We feel it's the way you build a work truck if you're starting from new.
We are now redoubling, our efforts to explain our hub motor technology to the market and to potential investors. We believe that the more our hub motors are proven out through continued testing the more investors and customers will appreciate lordstown unique technological value proposition.
Second we are accelerating actions to unlock the full potential of our factory in Arkansas.
Lordstown controls a $6.2 million square foot manufacturing plant on 650 acres of land and a great location in Ohio voltage valley with access to suppliers rail and a highly trained workforce.
The plant itself was kept form by its prior owner and this year, we have upgraded the factories such that it is completely vertically integrated.
With our commission battery and soon to be commissioned hub motor lines.
As a result, we are now well positioned to produce our endurance track.
But even more than that we have seen the multiple opportunities that are manufacturing facilities and our large surrounding campus present other companies that are seeking ready to go manufacturing capabilities for their products.
This is a significant market.
Serious discussions are now underway with several potential partners and we expect that many more will become attracted to the potential of our factory as word of our decision to unlock its full potential spreads through the marketplace.
This is a critical strategic pivot for US a decision that we believe will lead to significant new revenue opportunities for lordstown at the same time as production of the endurance is ramping up and the endurance portion of the factory.
Simply put because of our factory and our campus lordstown is uniquely positioned to accelerate production both for our partners and for the endurance.
Third we have gained an even deeper understanding of the broader potential marketplace and are more convinced than ever about our ability to penetrate important opportunities in this space.
We believe that lordstown endurance can address both the commercial and direct to consumer segments in the electric pickup truck marketplace.
Initially the commercial fleet segment is one where we have every reason to believe boards Townsend <unk> can succeed in a big way.
The opportunity is substantial and it is just a subset of the overall 90 billion dollar potential market for electric light duty pickup trucks.
And while there are already competitors, including big brands. The EV pickup market is so underserved that there is plenty of room for all.
With our particular focus initially on the commercial fleet market as well as strategically targeting delivery trucks military vehicle programs and technology licensing of our batteries hub motors and skateboard platform. We believe lordstown has a wide and clear road forward into a lucrative and expanding PV market.
Please.
Fourth our strengthened leadership team is determined to build the endurance the right way.
As everyone knows the last months have been difficult for vehicle manufacturers generally shortages of semiconductors and vehicle parts of all kinds has created enormous production challenges for even the most established traditional OEM.
And we at Lordstown are not immune from these acute supply problems are team is adapting and will continue to adapt to these short term challenges and to making the best decisions for our stakeholders first.
First and foremost is production readiness.
We will be prudently ramping production to ensure a quality product and to accommodate supplier realities in the near term. We are on track to begin limited production at the end of September and complete vehicle validation and regulatory approvals in December to January.
This will be followed by deployments with selected early customers in Q1 in advance of commercial deliveries in early Q2 with the ramps became the second half of next year.
This responsible commercial plan is important for three reasons.
One to ensure that we provide our fleet customers with the time necessary to experience and then build out the required charging infrastructure for larger deployments.
Two to manage our supply chain challenges prudently, particularly as shortages and COVID-19 impacts persist through the next few quarters.
And three to further fortify our capital position to fully support our commercial launch.
Finally, our fifth strategic priority our experienced leadership team has embarked upon a comprehensive effort to raise the new capital that will be necessary to ensure lordstown ultimate success.
We have already announced an equity purchase agreement for up to $400 million. The agreement was the first of what we believe will be several steps to ensure that the company has the financing at the.
To succeed to profitability we.
We are now exploring a variety of other financing options, including non dilutive private strategic investments and debt.
We look forward to updating all of you as we reach agreements regarding these new financing option.
I will now turn the call over to rich.
Thank you Angela and good afternoon to everyone on the call I'm Rich Smith, President of Morristown Motors, and I'm happy to provide an update on production engineering and quality.
First in terms of management changes I want to reiterate the strong team we have always had in place in production and in engineering.
Second the endurance betas, we've completed our beta builds and we are using the betas for a crash durability and other validation tests.
We are past multiple crash tests and are achieving the standard requirements to meet.
SaaS and plan for a five star crash ratings for our vehicles as someone who has over 30 years experience building cars and trucks at many different plants and for many different Oems around the world.
I say that to be this far advanced and crash tests.
And our first pass using the beta vehicle is unique and a testament to the team's innovative use of CAE and design innovation speed and our vehicle technologies.
Third we continue to refine the components for cost and quality and production validation and preproduction vehicles.
We are launching a mix of soft and hard tools to protect these improvements.
Is complete we will lock in with our tools, which are production equipment needed to build trucks and mass scale cost efficiently.
We will use preproduction vehicles for Nitsa crash testing and validation once the final steps before we go to commercial production.
Recall that <unk>.
We will have production process with.
Batteries and hub.
Motors built in house as well as pain sub assembly and frames all completed here in our plants.
We are retooling the plan to be flexible to ensure bill multiple vehicle platforms vehicle platforms and expensively from trucks to cars we.
We have made substantial progress on this since last may when we last spoke.
The stamping body in paint shop reconditioning as are all complete General Assembly is also on track for September production readiness, and we have installed the new chassis marriage mine.
With the flexibility considered upfront and are retooling, our current debt footprint utilizes about 30% of the planned $6.2 million square foot. So we have ample room for potential partners to build vehicles for us to build vehicles for others and for additional LNG vehicle platforms as well as other opportunities such as selling bad.
<unk> of motors, and our complete skateboards to other companies.
Shifting focus to propulsion, we started installing the first electrical motor line on site and it is currently undergoing commissioning and advance of limited production builds.
First battery pack module and pack Assembly line are now fully commission.
Finally, we continue to develop and refine our hub motors, we want to develop multiple motor sizes and different platforms and use cases and broaden this involves increased torque.
On capacity and energy efficiencies improved.
Improvements to the motors were developed in house in conjunction with our partners Alafi. We believe the performance improvements should open up our opportunity set within the commercial space.
Our innovative technologies are leveraging <unk> in many different ways for moorestown, including the power of our unique truck skateboard and to expand our use of our revolutionary.
<unk> across many vehicle applications because of our technology, we have no doubt that we will be at the center of the discussion as fleet customers and consumers look at electric pickup differently.
And with that I will hand over to Becky to take you through the financial results. Thank you.
Thank you rich good afternoon, and I also want to thank everyone for joining today's call I am Becky roof interim Chief Financial Officer, and I will review, our second quarter 2021 results I've mentioned and other items as well.
But before I do that let me note some of the actions I am taking to both bolster our team and address our auditors concerns.
First we are adding several experienced financial personnel and accounting treasury and controller functions.
Second we are implementing additional financial software tools to enhance our reporting and control processes that will also support our sox compliance testing that will be taking place over the balance of the year.
Our financials are presented in accordance with GAAP.
In the second quarter of 2021, we recorded a net operating loss of $108.2 million versus $125.2 million in Q1.
Our expenses consisted of $33.8 million in SG&A versus $14.4 million in Q1, or an increase of $19.4 million.
Our R&D expenses were $76.5 million compared to $91.8 million in Q1, or a decrease of $15.3 million.
<unk> included in the Q2 amount is $3.9 million of stock compensation expense.
The quarter over quarter increase in SG&A expenses is principally driven by higher legal consulting and payroll expenses.
Our legal expenses were $9 million higher than Q2 than in Q1, largely due to the special Committee and SEC investigations.
Consulting fees were $6.2 million higher largely due for the same reasons and vehicle development expenses.
We believe that much of the increase in legal and consulting expenses as nonrecurring in nature for.
For Q2, we believe that as much as $13 million is nonrecurring.
Payroll expenses were $2.8 million higher as a result of adding team members as we head to limited production.
The quarter over quarter decrease in R&D expenses was driven principally by lower prototype components expense of $28.9 million related to the completion of purchases for our betas and a decline in purchases of preproduction vehicle components as many of those purchases were made in prior.
Quarters.
We also experienced lower supplier services fees in the amount of $1.4 million.
These reductions were offset by higher total payroll cost of $7.3 million for increased head count as we ramp up our manufacturing team and also by increased operating expenses, including utilities building maintenance and supplies and shipping <unk>.
<unk> $4.8 million we.
We anticipate the quarter over quarter R&D expense should continue to trend downwards over time as our external service activities and vehicle development are concluded.
Turning to the balance sheet. We ended the second quarter of 2021 with a total cash position of $367 million.
We have total assets of $687 million, largely consisting of our cash position plus $286 million in pp and E and construction in progress.
On the liabilities and equity side, we have $88 million in total liabilities, mainly accounts payable and accrued expenses and $599 million in shareholders' equity.
From a cash flow perspective, we used $98.8 million in cash from operations.
$121.3 million in investing activities from purchases of capital assets and generated point out $5 million from financing activities.
Our combined cash used in operations and investments was $221 million.
We ended the quarter with approximately 177 million shares outstanding.
All outstanding warrants were converted today, we would have approximately 180 million diluted shares outstanding not counting employee stock options.
As Angela mentioned, we are pleased to have recently announced an equity line of credit with a notional amount of $400 million.
This gives us the flexibility to raise capital quickly and at our discretion.
We recognize there is dilution from utilizing this instrument and we want to balance our future capital needs using less dilutive instruments.
We are in discussions with multiple parties and exploring access to other types of capital, including public instruments, such as DAP strategic.
Strategic partnerships and we are continuing our discussions with the department of energy loan program office regarding our obtaining an <unk> or advanced technologies vehicle manufacturing lines.
Angela mentioned unlocking our value.
We have a large and strategically located campus.
Our plants have the past, making vehicles of the future.
We are reporting a book value for land buildings machinery, and equipment and vehicles and an amount of $45.5 million. We have invested an additional $240.1 million and construction in progress assets as we continue our plant readiness preparation.
We believe that when coupled with billions of dollars that the former owner invested before lordstown Motors acquired the facility that the fair market value far exceeds what we are reporting on a GAAP basis. We are in the process of engaging third party appraisers to opine on this valuation.
Finally, and in connection with the delivery and placement into commercial service of our zero emission vehicles or is that.
Under various federal and state rules and standards, we will earn tradable credits that can be sold to other Oems.
We intend to take advantage of these regulatory frameworks by registering in selling these credits.
In addition, we have entered into an emissions credit agreement with GM pursuant to which and subject to the terms of which during the first three annual production model years, wherein we produced vehicles at least 10 months out of the production of model year GM will have the option to purchase such a mission critical.
At a purchase price equal to 75% of the fair market value of such credits.
Please see our 10-K a for a detailed description of <unk> additional terms related to these bev credits.
Thank you and I'll now turn the call back over to Angela who will provide our outlook and closing remarks and guidance.
Thank you Becky as.
As we made everyone aware during <unk> week, we are committed to our values of teamwork technology and transparency.
Now on to guidance as we have already indicated our expense our expenses have exceeded prior management's expectations for the reasons laid out earlier and the pace of our commercial production ramp will depend on multiple factors.
We are updating the outlook for full year 2021 that was provided last quarter.
First we have chosen to build a limited number of early production vehicles in the fourth quarter for validation and regulatory clearance as well as gaining real world experience with customer pilots and demonstrations.
This prudence will allow us to mitigate supply chain ramp up risk and expense and achieved more favorable cost of goods targets prior to moving into commercial production and launch in Q2.
Second.
Our full year guidance, we expect between $375 million and $400 million in capital expenditures up from $250 million to $275 million largely due to prepayments for hard tool purchases.
On the operating front, we now forecast $95 million to $105 million in SG&A up from $55 million to $60 million of which 8 million is stock compensation expense.
$310 million to $320 million in R&D up from $2.80 to 290 million of which 12 million is stock compensation expense.
Third for our liquidity position, we expect our cash at the end of the third quarter to be in a range of $225 million to $275 million before giving effect to any financing.
As noted above the equity line gives us flexibility to access capital and we will do so as needed. While we also continue to explore other financing and strategic option.
We remain in discussions for multiple strategic and financing opportunities. In addition, we also remain in due diligence for an application for an ATV emblem.
And we continue to seek and pursue opportunities for other tax credits and grants across multiple jurisdictions.
We want to thank all of our talented employees for their hard work and dedication across our offices in Lordstown, Ohio, Farmington Hills, Michigan in Irvine, California, we are proud to be part of the voltage Valley Renaissance in Ohio, creating good jobs that help address climate change and.
Ability issues.
In summary, our mission to bring to market. The first full sized all electric pickup truck is reinforced by our five strategic priorities stated previously.
Our technology, our plant our commercialization plan, our production capabilities and importantly, our team we see numerous paths to unlock the value of our business with additional vehicle platforms contract manufacturing opportunities and multiple and diverse revenue streams.
Lordstown is a company with heart that is building a real truck with real people and a real plan and our future is very bright.
Thank you for your time and we very much look forward to talking with you again in November.
Operator, we will now take questions.
Thank you as a reminder to ask a question you will need to press Star then one on your telephone to with.
Your question. Please press the pound key please standby, while we compile the Q&A roster.
Our first question comes from the line of John Murphy with Bank of America. Your line is now open.
Good afternoon, everyone. This is aileen Smith on for John.
First question on the <unk>.
For the Capex outlook for this year when we compare it to the outlook that was provided a few months ago is it fair to interpret the <unk> outlook.
Perhaps encompassing a more conservative budget as the team was focused on maintaining appropriate liquidity levels and therefore this new outlook reflects what would've been in your internal expectation now that you wind up incremental capital with the equity purchase agreement or is there something more operational in the capex outlook that reflects a significantly higher level of spending.
<unk> assumed a few months ago.
I appreciate the question Yeah, I think you are on right track in terms of the <unk>.
Ordering of our tools and the prepayments were along the lines of the budget before the increased expenses. So we're really back to what the plan was in the first quarter.
Okay got it.
Then I wanted to dig in a little bit into the strategy with the strategic partners that you've referenced a couple of times and get a little clarification is that more of an effort by large time to get into contract manufacturing or rather opening up significant capacity within the facilities for your partners to use as they see fit and as either offering more or less.
Ideal for large talent and how do you think about the economics of working with those partners.
Thanks for the question.
We are exploring multiple partnership construct that includes contract manufacturing that includes licensing in addition to producing our own vehicles.
And so of course, you understand I can't disclose partnerships that are in discussion, but broadly we're discussing with multiple Oems who are interested in exploring how they can leverage the assets that we have today.
Okay understood and then a final one if I may in some of the recent management changes and resignations can you talk about some of the customer our partner feedback you've received with the <unk> development and in terms of the search process for us.
Our new CEO and CFO do you have a thought process on some of the priorities on candidates that you want to bring into the company, meaning those with more automotive experience technology experience.
Thank you for the question I'll take the second part first.
We are in an active recruitment process for our CEO and CFO and that process is proceeding.
And there are a diverse range of candidates that we're evaluating and that are evaluating us at the present time.
The second as to the customer and stakeholder response to the new expanded leadership team.
As you know we hosted more than 450 people.
During lordstown week and that was a very diverse range of investors policymakers customers and suppliers and the response has been extremely positive and we've really been able to accelerate our momentum in specifically now that they understand that we're committed to the long term viability of the company.
And also really to unlocking the full value not just for the endurance, but also for the other assets that we have at our at our disposal.
Okay, Great. That's very helpful. Thanks for taking the questions.
I appreciate it. Thank you. Thank you.
Thank you. Our next question comes from the line of Emmanuel Rosner with Deutsche Bank. Your line is now open.
Hi, good afternoon everybody.
I don't Emmanuel.
Hi, Doug.
Well thanks.
So it's encouraging to hear but.
Coming in limited production in the fourth quarter, both for validation and also for customer pilots can you talk about.
Which customers will be piloting some of this.
Early models, and then any update you're able to provide on.
Shape of demand beyond that when your stock.
Actual production and deliveries I don't know if its in terms of order book have you started taking some deposits just anything that helps us in terms of how to think about it once you start delivering your vehicles.
Sure. Thanks for the question it was nice to meet you by the way at Lord Stanley.
In terms of the customers, we and I'm sure you understand we're not disclosing the specific list of customers, but the contours.
In addition to home and IRI, who you we've already disclosed we have a vehicle purchase agreement with.
We will be working with fleet management companies and understanding that they are important because they also serve their own fleet as.
As well as fleet customers directly and we're hitting all of the major segments telecom utility construction as well as municipal and we'll be working with.
Across those segments.
In the first quarter as we move to commercial ramp in the second quarter, perhaps for the second part of the question I'll ask Carter to comment yes. Thanks Emmanuel.
We've always felt comfortable with is that we build a truck that is the quality product and it meets the specs that our customers demand and at a price point, that's attractive we're never really concerned with demand we feel very comfortable that.
There will be demand will most likely outstrip our production capabilities for the first couple of years.
<unk> to put a number around it as you know because of the way that we have.
Discussed our order book in the past.
We'll get a lot more feedback as we give some of those customer.
Demonstrations and trials and we expect to continue to pursue expanded vehicle purchase agreements as that process evolves.
That's fair, so I guess Josef.
If you could give us a sense of where you are in that process have you already started taking some.
Firm orders or the one thats required deposits or is that something that would be coming later on.
Yes, we're still in terms of the timeframe. We're very cautious we don't we don't have a product right. So we've always said until we have a product available we can't meet Rev recognition.
Terms so their vehicle purchase agreements we continue to pursue do include.
Some form of deposits either of them are different. So these are all each unique but as we get closer to these demonstrations we will.
Become what more forthcoming.
Description of what those purchase agreements look like but they generally follow the form of what we have talked about in the past.
Understood.
And then second question I guess.
In the last quarterly update I think part of the.
Update revolve around the supply chain constraints and the ability to sort of.
Access to some of the parts that you needed, which prompted and turn some in sourcing some of those.
Some of those parts.
Can you just update us on what Youre seeing in terms of supply chain have you essentially.
Being in the process of in sourcing all of that you need it are there any additional constraints coming out so I would say is the king.
Actually pretty stable going into Europe early production.
I have Richard answer that.
For your question basically is not really any difference and the difference in the supply chain from last quarter. This quarter. We are in sourcing some of the major components that.
Or some of the potential risks last time as we discussed last time, we have brought the frame in house.
Part of that so that gives us flexibility on multiple platforms, which allows us to build.
The technology of our skateboard, which with the flexibility of one building the frame the hub motor in the battery gives us multiple platforms and we can really build off of that platform to multiple vehicle platforms. Other than just the indoor struck if we need to.
Okay.
Understood. Thank you very much.
Thanks Daniel.
Thank you. Our next question comes from the line of Joseph Spak with RBC capital markets. Your line is now open.
Thank you and good afternoon, everyone.
Okay. So.
Just guided second half Opex.
Under $200 million.
Even if I just split that.
<unk> million dollars, we look at your cash balance. So it takes you down to call. It 265, so to get to your third quarter liquidity target. It makes it seem like there is a really big decline in the Capex next quarter can you help us with the cadence of Opex and Capex. So we can calibrate here.
Sure I'll ask <unk> to answer that question.
Thank you Angela and thank you Joseph Cross King the question.
So we made very significant capex expenditures.
In Q2, when compared to Q1. It was one 121 three in Q2 and 54 three in Q1 so.
So the biggest the biggest change in our Capex outlook for the balance of the year is the prepayments on hard tooling that will make either late late third quarter fourth quarter.
And those were not contemplated when we when we <unk>.
Provided guidance earlier earlier this year with regards to liquidity at the end of Q3.
Cash forecasting is always as much of an art as it is a science and we have levers to pull when we make large cash outliers like.
Like the one I just that I've just described we have flexibility in when we make those prepayments for our for our hard tooling.
So we will make these kinds of decisions when we see how market conditions are and what kind of strategic and financial partnership discussions how those are progressing we.
We do have the equity line of credit that we just put in place and we have not yet utilized that line.
Okay.
That's a good segue into the follow up.
So last quarter.
You said youre going to Youre going to end the year $50 to $75 million.
Now you raise spending but you do have the <unk>.
What are you targeting for end of year or maybe put differently like how much do you plan to draw on the lock for the year.
Hello, Thanks for the follow up.
As I've just said.
We put the Lf in place to create a lot of flexibility for us for ourselves and so as our as our other strategic and financial discussions progress on as Angela mentioned, we are in discussions with multiple parties on both fronts.
As we see how those come together, coupled with the availability under the ABL offline, we'll make the decisions that make the decisions about how we how we spend our capex.
Okay, but there is no there is no cash level under your cash level you are targeting as of today.
No because Joe just let me think about just the different levers that Becky was talking about so we've made the commitment to hard tools, because it's incredibly important for us to get to vehicle profitability and they have long lead time components. As you know so we're going to make the appropriate.
<unk> partnership decisions and financial decisions to make sure that we have sufficient cash to execute on our plan, but those are still there is three or four different moving parts.
And we will have a better sense over say the next two months as to where we would be it's a little premature for us to give you a year end cash figure, but we're very conscious of where we stand today and we have a lot of Optionality is what we're trying to say we will update you appropriately in the coming weeks.
Okay.
One more you mentioned strategic partner partners and the Optionality there from.
They are building vehicles for others or it sounds like maybe even sub leasing space, but it's interesting you are calling it strategic partnerships.
<unk> partners now I think last quarter in the prior.
Conversations.
It was called strategic investment or strategic capital. So is that also is that also saw option is that off the table or is the financing more likely to come from.
No.
Financial capital raises as supposed to strategic raises and then.
The the.
Partnership conversations are really more about how they can potentially utilize your assets.
So it's a great question and the answer is it's both and so when we talk about strategic partnerships. They can also come with investments.
As well as financial investors. So I think your interpretation is accurate.
I would separate them I would separate them Joe into two buckets right. There are multiple different financial options and multiple different strategic options and some of those come with financial investments.
Okay. Thank you.
Certainly.
Thank you as a reminder to ask a question you will need to press Star then one on your telephone.
Our next question comes from the line of John Lopez with vertical group. Your line is now open.
Hi, Thanks very much.
I apologize I just wanted to come back to portions of the prior topic and just maybe try and ask it this way.
It seems like based on the cash guidance your combined Opex plus capex has to drop to like sub $150 million in Q3, but then increase to above $2.50 in Q4 is that Directionally right.
I'll ask <unk> to answer that.
So.
I don't think I provided any difference between Q3 and Q4.
And again reiterating that we have a lot of flexibility around when we make our large disbursements and thats not just capex disbursements, but thats also for expenditures that are currently classified as R&D and we will stay R&D until we go.
Into production.
So that's that's how I would how are we to answer. Your question is just the optionality that we that we very carefully put in place.
And think about the timing of it John right some of them straddle <unk>. So some could lead one to the other so it's kind of tough to delineate when it could stretch from end of September and early October.
We put it in that second half bucket without trying to parse it too finely into third quarter, you have a range of third quarter and there is some movement there.
But we have the optionality to be able to move it and part of this is also.
Our anticipation of the types of financing we're going to get.
I see okay that helps us Saar.
I had two other quick ones if I can will hopefully other quick but secondly.
It sounds like the messaging now is commercial production is shifted to the calendar second quarter of 2022.
So could you just if I'm interpreting it correctly. Please correct me, but then I suppose my question underlying that is a lot of the prior management's focus was on sort of like being early being first and to the extent that you push commercial production there.
You are now sort of layering on top of a large competitors timing so.
How do we think about that does that influence your view of the initial opportunity, though the longer term opportunity, maybe just talk to those dynamics for a SEC if he could.
Of course, it's a great question. Thank you.
No.
The distinction I'll make with you are correct that commercial production and commercial production ramp.
Begins Q2, however, the vehicles that we will be deploying with a limited number of customers in Q1, our production quality vehicles.
And the distinction that I will make there is we still plan to be first to market.
Particularly in the commercial fleet space.
And what we've heard from fleet customers and fleet management companies is that based on the performance of the vehicle the configuration. The options. The performance in the TCR will be really well positioned to establish a leading market share and as I mentioned in our prepared remarks, it's a very very large and underserved market.
And there is room for multiple players.
Got you understood Alright, my very last one here I just wanted to talk about motors for a quick second what you guys seem to be highlighting maybe a bit more and I think I heard you guys referencing potentially some licensing opportunities there.
My question is this is I guess, our understanding is that you're licensing the core technology itself from LLC, which you referenced a few times, but then you're also paying workhorse for some past.
Development, there one quarter or another.
Sorry, the question here is.
You said youre going to license something like what exactly is yours to license.
Yes.
Thanks for the question. So you are correct in that we have a licensing partnership with her last day and we are continuing to work with the Lafayette as we develop.
Banded and unique configurations in applications not only for the hub, but the hub integrated into our skateboard and so there are multiple levers that we're pulling there.
Different customers and partners are interested in different configurations.
Okay understood. Thank you very much for the thoughts.
Thanks, John.
Youre welcome.
Thank you there are no further questions I will now turn the call over to Angela Schram for closing remarks.
Thank you again, everyone on behalf of our team at Lordstown Motors. We appreciate your time all of your support today and we look forward to speaking with you again in November.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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[music].
[music].
[music].