Q4 2021 Microvast Holdings Inc Earnings Call
Yes.
[music].
Thank you for standing by. This is the Conference Operator. Welcome to the MicroBast fourth quarter and full fiscal year 2021.
Thank you for standing by this is the conference operator, welcome to the Micra Bos fourth quarter and full fiscal year 2021 earnings call.
As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1, on your telephone keypad. Should you need any assistance during the conference call, you may signal an operator by pressing star, then 0.
As a reminder, all participants are in a listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need any assistance during the conference call you may signal, an operator by pressing Star then zero.
I would now like to turn the conference over to Sarah Alexander, Microvast General Counsel. Please go ahead.
I would now like to turn the conference over to Sarah Alexander Microsoft's General Counsel. Please go ahead.
Okay.
Sarah Alexander: Thank you operator. Welcome and thanks everyone for joining us today. Mr. Yang Wu, President and Chief Executive Officer and Leon Zing, Chief Financial Officer are hosting today's call. Sasha Kelterborn, our Chief Revenue Officer is also on the line to discuss the product launch we announced last week.
Operator, welcome and thank everyone for joining us today, Mr. Yang Lu President and Chief Executive Officer, and Liang, Zhang Chief Financial Officer, our hosting today's call, especially counter born our Chief revenue Officer is also on the line to discuss the product launch we announced last week Dr wins, one matters.
Sarah Alexander: Dr. Winjuan Mattis, Chief Technology Officer, and Shane Smith will also be available to participate in Q&A.
Chief Technology Officer, and Shane Smith will also be available to participate in Q&A.
Sarah Alexander: Ahead of this call, Microvast issued its fourth quarter and full fiscal year 2021 earnings press release, which can be found on the Investor Relations section of our website, ir.microvast.com.
Out of this call microburst issued its fourth quarter and full fiscal year 2021 earnings press release, which can be found on the Investor Relations section of our website IR Dot microburst dotcom.
Sarah Alexander: As a reminder, please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
As a reminder, please note that on this call we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
Sarah Alexander: These statements reflect our views only as of today and should not be relied upon as representative about views as of any subsequent date.
These statements reflect our views only as of today and should not be relied upon as representative about views as of any subsequent date.
Sarah Alexander: We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.
We undertake no obligation to revise or publicly release the results of any revision to these forward looking statements.
Sarah Alexander: These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations for further discussion of the material risks and other important factors that could affect our financial results. Please refer to our filings with the SEC, including our annual report on Form 10-K filed earlier today.
Sarah Alexander: For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our annual report on Form 10K filed earlier today.
Sarah Alexander: In addition, during today's call, we may discuss non-GAAP financial measures, which we believe are useful as supplemental measures of microVast performance.
In addition, during today's call we may discuss non-GAAP financial measures, which we believe are useful as supplemental measures of microbiome performance.
Sarah Alexander: These non- GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAP results.
These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP result of.
Sarah Alexander: A webcast replay of this call will also be available on the Investor Relations section of our company website. With that, I'll turn the call over to Mr. Wu.
A webcast replay of this call will also be available on the Investor Relations section of our company website with that I'll turn the call over to Mr. Hu.
Thank you Sarah and good afternoon, everyone.
Woo: 2021 was a challenging year with an anticipated head
She was on maybe what was a challenging year, we've done unanticipated headwind.
Woo: In spite of those headwinds, our team brought it together to grow revenue of 41% compared to 2020.
Despite those headwinds our team rallied.
Together to grow revenue of 41% compared to 2020.
Woo: and proud of the accomplishments of our
I'm proud of the accomplishments of our team.
Global supply chain disruptions were in a bedroom a challenging 2021.
Woo: Global supply chain disruptions were a major challenge in 2021.
Well micro valves.
The impact was largely indirect.
Woo: the impact was largely indirect. The global semiconductor shortage caused the many of our OEM customers to delay certain projects.
The global semiconductor shortage caused many of our OEM customers to delay certain projects.
Woo: which in turn also ship in demand for certain of our products to the right.
Which in turn also shipped because demand for it so I think all of our product to the right.
Did you laid broke out remain you know woke up the concept of revenue and we expect them to begin seeing more revenue from those larger contracts. In later this year and it wasn't a renting up in 2023.
Woo: The delayed projects remain in our focus concept of revenue, and we expect to begin seeing more revenue from those large contracts in later this year and the further ramping up in 2023. The timing of the project.
The timing of those projects.
Woo: Lining up with our ongoing manufacturing capacity expansions.
Lining up with our ongoing manufacturing capacity expansions.
Do you like fishing to supply chain challenges, we also faced increasing raw material prices.
Woo: We also face increased raw material price throughout the 2021. Unfortunately, this is a problem that we expect to continue into 2022.
Throughout 2021 Unfortunately.
This is a problem got it we expect to continue into 2022.
Woo: We are taking steps to mitigate the impact of regional material prices where possible.
We are taking steps to mitigate the impact.
Raw material prices where possible.
Woo: including entering into long-term supply contracts and seeking additional sources of raw materials in some instances.
Prudent.
Green into long term supply contract and seeking additional sources of raw materials in some instances.
Woo: And at the same time, we are discussing the possibility of price adjustments with our customers as a direct result of those.
I mean, it's been fun, we are discussing the possibility of price adjustments with our customers.
As a direct result.
Inflationary pressures.
Woo: We are well-reviewed our financial performance in more detail in a few moments. However, I would like to touch on a few highlights.
Yeah, well review, our financial performance in more detail in a few moments however, I would like to touch on the few highlights.
Woo: In the first quarter, we challenged our production team to meet demand, which included a seasonal influx of quick-turn orders.
In the fourth quarter, we challenged our production teams to meet demand.
Which included so.
Seasonal influx of quick turn orders.
Woo: It was not easy, but as a team executed and it turned in a solid Q4 revenue performance of 6.8 million.
It was not easy, but as the team executed and it turned in a solid Q4 revenue performance.
Six 6.8 million weighted.
Woo: which represent 39% growth over the sem quarter of prior year.
Which represent 39% growth over the same quarter of prior year.
It is worth noting that our revenue growth substantially in each of the.
Woo: It is worth noting that our revenue growth substantially in each of the
Woo: each of the four physical quarters in 2021 compared to 2020.
Each of the four physical quarters in 2021 compared to 2020.
Our full year basis.
Woo: This achievement is translated to 152 million in revenue representing 41% growth comparing to the prior physical year and achieving the guidance range. We established it in August 2021 following our business combination.
This is a German translated to 152 million in revenue.
Presenting 41% growth comparing to the prior fiscal year.
Achieving the guidance range, we established in August 20.
Only one fully our business combination.
Woo: We ended a big year with a strong backlog of 140.5 million.
We ended the year with a strong backlog.
<unk> hundred $45 million.
Woo: representing 161 percent growth over 43.8 million in backlog at December 31, 2020.
Representing 161% growth over $43 8 million on your backlog at December 31, Tucson poorly.
Woo: And it's the crucial growth of 117 percent over 52.7 million in back along at September 30, 2021.
And a sequential growth of 117% over $52.
7 billion your backlog at September 32021.
Woo: This backlog creates a solid foundation going into 2022.
This backlog creates a solid foundation going into 2022.
Woo: Our business development team has done an excellent job of generating long-term multi-year sales contracts with new customers and expanding existing relationships.
Our business development team has done an excellent job.
Generating long term bogey ear sales contracts with new customers and expanding existing relationships.
Woo: This is evidenced by growth in our forecast to contract revenue from 1.5 billion in February 2021, the date when we, you know, they merged
This is evidenced by growth in our forecast the contra revenue from $1 5 billion in February 2021 day, one week.
You know as they emerge.
Along.
Woo: and to $2.5 billion at it year end.
And then choose to sell them to $2 5 billion at year end.
Woo: When we refer to forecast counter-revenue, we are describing backlog plus management estimates for revenue we expect to realize from existing contractual relations.
When we refer to poke up Contra revenue, we are describing backlog slide managements estimates for revenue we expect to realize.
From existing contractual relationships with customers.
Woo: Most of those contracts include estimated volume requirements, however, they do not typically include
Most of those contracts to include estimated volume requirements. However.
That you're not tied to call it incurred a volume commitment.
Woo: We expect that you realize current forecast contract revenue between 2022 to...
We expect that you realized current forecast contra revenue between <unk> 22 to <unk>.
On 31.
We continue to have success with large Oems in the commercial vehicle sector.
Woo: We continue to have success with large OEMs in the commercial vehicle sector and are excited for the journey ahead.
Sorry for the journey ahead.
Next.
Woo: I will provide an update on the construction progress at our various manufacturing operations. We are pleased.
I will provide an update on the construction progress at our various manufacturing operations.
We are pleased with the progress.
Woo: So the environmental is certainly tough to a student construction project, given labor shortage, inflation, logistic hurdles, and other challenges.
So the environment is certainly talk to execute a construction project.
Given labor shortage inflation logistics hurdles and the other challenges.
As you know we're in the process of constructing a new building on our existing campus in who don't China.
Woo: As you know, we are in the process of constructing a new building on our existing campus in Hudo, China.
Which we referred to as the phase III.
Woo: The program at this site has been impressive.
The probe route at this site has been impressive.
Woo: from a green field site in July 2021 to finishing the root installation in less
From a greenfield site in July 2021, she finishes their roof installation in less than six months.
Woo: We posted an updated timelapse video to our social media account in later January .
We posted an updated time lapse video to our social media come in later January .
Woo: was completed. This building will feature approximately 700,000 square feet of manufacturing
Once competed at this building while future approximately 700.
<unk> in square feet of manufacturing space.
Woo: The manufacturing equipment has been ordered, and we will be ready to begin serious
The manufacturing equipment has been ordered.
And we will be ready to begin serious.
Woo: material production by the first quarter of 2023.
Serial production by the first quarter of 2023.
Woo: completion of this initial phase will bring our global capacity in China up to five gigawatt hour per year. In addition,
Completion of this initial phase will bring our total capacity in China off two five gigawatt hour per year.
In addition.
We have space for more growth.
Woo: new facility is large enough to expand our total manufacturing capacity in China to approximately 12 gigawatt hours per year. We are also making progress
As the new facility is large enough to expand our total manufacturing capacity in China to approximated a 12 gigawatt hour per year.
We are also making progress in the trucks wheel.
Woo: The focus of the project has been renovating and remodeling the internal of the existing building. We expected the delivery and installation requirements in Clarksville to last our project by approximately six months. We expect.
The focus of the protocol has been innovating and remodeling the internal of the existing building.
We expected the deliberate deliberate area installation of equipment.
That's real to lock all of who do project by approximated six months.
We expect to begin <unk>.
Woo: serial production in mid-2023 at this site.
Serial production in mid 2023.
At this site.
In Orlando.
We have been actively.
Woo: Activate a recruiting personnel for the research and development facilities.
Activator, a recruiting personal for them.
Research and development facility.
We have also begun the.
Woo: We have also begun the detailed planning process to convert the existing space into laboratories suitable for future global R&D projects.
Detailed planning.
Process to convert their existing space into laboratories suitable for future global R&D projects.
Our module and the pack facility in Berlin.
Woo: Germany is complete and is in production as a project with European OEM began to ramp up. This facility retina receive ISO and IATF certification.
Germany is complete and in production at the project, whereas European Oems begin to ramp up this facility resumes received ISO and the IH Yep certifications.
We distributed a press release allows the two new leased on battery cell as well as our June for battery pack last week.
Woo: We distributed pressure relief along the two new instant battery cells as well as our GIN4 battery pack.
Woo: We are excited about our customers' response to the performance of those cells and expect those solutions to become important revenue drivers in future years.
We are excited about our customers' response to the performance of those cells and expect those solutions to become important revenue drivers in future years.
Speaker Change: Before turning the call over to Liang to discuss our financial results, I would like to invite our Chief Revenue Officer, Sasha Kalibron, to discuss those new solutions in more detail.
Before turning the call over to Leon to discuss our financial results.
I would like to invite our chief revenue officer, Shakeel kindergarten to discuss those new solutions in more detail.
Thank you Mr. Hu, it's my pleasure to be here today to discuss this exciting development.
Shasha Con: Thank you, Mr. Wu. It's my pleasure to be here today to discuss these exciting developments.
Shasha Con: By introducing the new MPCO 48 MPH and the HPCO 53.5 MPH cells.
Introducing the new MPC O 40 on 48 hour and PHP 53.
<unk> sells to a cost of our commercial customers can now select the battery solution based on the operational requirements. We can now provide a high power or a high energy battery with what we believe is market leading performance in each category. This new cells are built to offer overall.
Shasha Con: to our commercial customers can now select the battery solution based on their operational requirements. We can now provide a high power or a high energy battery with what we believe is market-leading performance in each category. These new cells are built to offer overall better performance with optimized energy density, cycle life, and total cost of ownership, while reserving the important fast-chiping capability
Performance with optimized energy density cycle life, and total cost of ownership, while reserving the important cost type thing capability.
Shasha Con: Both cells are available in the same dimension and can be integrated into the new standard MicroVus Gen 4 battery packs.
Oh cells are available in the same dimensions and can be integrated into the new standard Microsoft Gen for battery packs. The new packs have the same black box design as our old generation battery packs.
Shasha Con: same black box design as our old generation battery packs. This high level of comparability of the new series allow us the OEMs to switch batteries based on the technical requirements without changing the power plane design or the internal
High level of comparability of the new series allow us the Owens to six batteries.
On the technical requirements without changing the power kind design flaws yet for the interfaces.
Shasha Con: Compared with the Gen 3 battery pack, the new version delivers around 20% more energy and power. The new pack has additional safety features at the model and pack level to improve thermal management and meet the toughest safety requirements.
Compared with the Gen III battery packs, the new version deliver around 20% more energy and power.
The new back half additional safety features at the module and pack level two.
From a management and meets the toughest safety requirement.
Shasha Con: The Gen4 battery packs will be certified to meet global cross-regional batteries.
The Genco battery packs will be certified to meet global Cross regional battery centers.
Shasha Con: In addition, the lightweight and long life pack design combined with the new battery cells present an attractive value proposition in terms of total cost of ownership to our customers.
In addition, the lightweight and long life pack design combined with the new battery cells present, an attractive value proposition in terms of total cost of ownership to our customers our new series of battery cells and pet cover the common and future demands of commercial vehicle Oems. In addition, we have a brief new product.
Shasha Con: our new series of battery cells and pack cover the common and future demands of commercial vehicles.
Shasha Con: In addition, we shared a brief new product video on our social media piece yesterday.
With you on our social media piece yesterday.
With having said that I would like to turn the call to my colleague Liang Zhang our CFO to discuss our financial performance.
Speaker Change: With having said that, I would like to turn the call to my colleague, Leon Zheng, our CFO , to discuss our financial performance.
Neonzang: Thank you. Good evening, everyone. I will spend a few minutes discuss the result of our operations in 2020, despite many industrial wide and global.
Thank you Safra could you given your everywhere.
Spend a few minutes to discuss the resolve of our operations in 2021.
Spire, many industrial why are global.
Neonzang: successfully grew revenue in every quarter during 2021 compared to the same period in 2020.
We successfully grew revenue in every quarter during 2000 tonnes of what compared to the same period in 2000.
Neonzang: The achievement calculated in 39% revenue goes to 66.8 million in Q4 2021, compared to 48.1 million in Q4 2020.
So it will chew Linda probably call it call me make it clear.
39% of revenue goes to six to $6 8 million in Q4 2000 tonnes of what compare the 248 upon the web needed in Q4 2020.
Okay.
Oh revenue 41%.
Neonzang: 107.5 million in 2020 to 152 million in 2021.
For 107.5 meetings in 2020 to 152 immediate in 2000 in terms of what.
Neonzang: We posted gross profit 1.2 million in Q4 2021 compared to gross profit 8.7 million in the same period.
We posted a gross profit $1 2 million in Q4, 2000, and federal way compared to gross profit eight 7 million in the same period.
Neonzang: attributable to include service-accommodation expense or crucial warranty expense, inventory impairments.
The attributable to increased share based compensation expense.
Through the warranty expense inventory impairment.
The price increase.
Book.
Neonzang: loss was 0.7 million compared to the gross profit of 17.1 million in 2020. The change was largely due to the increase in product warranty expense of 49.5 million.
Ooh loss was.
On the $7 million compared to the gross profit of 17 1 million in 2020.
The changes with a lot of it deals with the increase in product warranty expense of 49 five of many.
Mhm of approximately 17 needed which awards religion.
Neonzang: of approximately 17 million, which were related to the importance of the data.
Started in prior quarter.
Edition.
Sure.
Cost of.
Neonzang: and in 2020.
Hum.
Beginning in 2000 and tell you what.
Neonzang: I screwed up one expense and the inventory impairment related to legacy products as well as share business conditions. We would have had both profits 28.1 million in 2021. This translates to a good margin of 18.5 percent for the full year of 2000.
Hi, Scott.
On the expense and the inventory impairment.
They're two legacy product as well and should be able to come and visit with all of the highway Bill.
Perfect.
Upon the 1 million in 2000 tonnes of what this says to me too.
Gross margin of 18, 5% for the full year of 2000.
Neonzang: expensive, or 50.2 million, compared to
Expenses were 52.
Me too.
And then finally what compared.
Neonzang: on the sixth in the prime year period for the full year.
Politics.
The prior year period.
For the full year.
Neonzang: operating expenses were 157.4 minutes compared to 42 minutes in 2020.
Operating expenses were 157 4 million compared to four.
$2 million in 2000.
Neonzang: increase operating expenses, we now can start this to come to this end.
Increased operating expenses were non cash stock based compensation.
Okay.
Neonzang: for the quarter and 78.6 million the full year of 2021.
For the quarter.
78 upon six immediate for the full year of 2000 tonnes of what.
Neonzang: In addition, the company increased the hedge card to support his planned groups in ECQ and also incurred additional expenses related to operating as a public company.
In addition, the company increased headcount to support his planned the coolest initiative and also incurred additional expenses.
Let me tell you that to operating as a public company.
Neonzang: in the world, and that was 260,000 years ago.
Yeah.
What that.
It was 206.
Neonzang: compared to that loss of 33.6 million in the prior period.
Compare that to let law.
Three 6 million in the prior year period.
The shark fin.
Okay.
Okay.
All groups.
As we discussed above.
Neonzang: As Mr. Wu mentioned, we had a backlog of 114.5 minutes at the end of the year 2021.
As Amir mentioned, we had a backlog of 114 call. It five minutes at the end of the year 2021.
Neonzang: was up more than double year over year as well as sequentially.
What's up with more than double year over year as well as the consortium.
Neonzang: This gives us confidence going into 2022.
This gives us confidence going into 2022.
Moving to the balance sheet.
Neonzang: We ended the fiscal year of 2021 with approximately 536.1 million cash equivalent and restricted cash.
I ended the fiscal year of 2001 with approximately 536 1 million in cash cash equivalents and.
The restricted cash.
And we are continuing to use the capital to expand our manufacturing capacity.
Capital expenditure totaled eight to seven 9 million in 2000 tons to one compared to 18 6 million in 2020, the increase was largely to do with fiber.
On your furniture capacity expansion.
We expect the spending to further.
1022.
And <unk>.
Our capital expenditure.
Expenditure will be between 300 $350 million.
Commenting fixed for India.
Neonzang: With that, I would like to wish to go to discuss our business problems. Thank you, everyone.
With that.
Mr Walk to discuss our outlook.
Thank you Leon.
The last several years has been for all the challenges.
General which were unprecedented.
Neonzang: Our team pushed forward and we are continuing to build a strong foundation for future growth.
Our team pushed forward and we are continuing to build a strong foundation for future growth.
Neonzang: We believe our business can sustain a strong growth rate going forward. Our preliminary guidance for the upcoming year is 30 to 45 percent growth compared to 2021.
We believe our business can sustain a strong growth rate.
Going forward, our preliminary guidance for the upcoming year.
Is 30% to 45% growth compared to 2021.
Neonzang: We are optimistic about our opportunity in 2022. However, development over the last several weeks have added a
We are okay make mistakes about our over 22 in 2022 however.
Developments over the last several weeks.
<unk> added a level of uncertainty.
I am pleased to note.
Neonzang: that we do expect a strong start to the 2022 physical year.
Data, we do expect that strong start to the 2000.
22 physical year.
Neonzang: We anticipate that our revenue for the first quarter will be between 32 million to 34 million.
We anticipated that our revenue for the first quarter will be between 32 million to $34 million.
This is representing 115% to 128% growth over <unk>.
Neonzang: This representing 115 to 128 percent growth over 14.9 million for the prior quarter.
$14 9 million for the prior quarter.
Speaker Change: Thank you all for your time today. Before I turn this call over to Sarah, let's pray for...
Thank you all for your time today before I turn this call over to Sarah.
Let's pray for peace.
Sarah Alexander: Everyone deserves to have a beautiful and peaceful life.
Everyone deserves to have a beautiful and peaceful life.
Thank you Mr. Lou I'd like I'd now like to turn the call back to the operator to moderate the question and answer session.
Sarah Alexander: Thank you, Mr. Wu. I'd now like to turn the call back to the operator to moderate the question and answer session.
Thank you.
We will now begin the question and answer session.
Sarah Alexander: the question queue you may press star then one on your telephone keypad you will hear
Joining the question queue you May Press Star then one on your telephone keypad.
You will hear a time acknowledging your request.
Sarah Alexander: If you're on speakerphone, please pick up your handset before pressing any key.
If you're on Speakerphone, please pick up your handset before question any key.
Sarah Alexander: to withdraw your question, please press star, then 2
To withdraw your question. Please press Star then two.
Speaker Change: your first question comes from Adam Jonas from Morgan Stanley . Please go ahead.
Your first question comes from Adam Jonas from Morgan Stanley . Please go ahead.
Adam Jonah: Hey everybody. Good evening and thanks for doing the call. Mr. Wu, thanks for those really very kind.
Hey, everybody.
Good evening.
And thanks for doing the call Mr. Woo, thanks for those very kind.
Adam Jonah: and thoughtful comments and the prayer at the end. That's, I wish more people did that. Thank you. Just a couple of questions. First, on the capital strategy,
And thoughtful comments on the prayer at the end that's I wish more people did that thank you.
Just a couple of questions first on the capital strategy.
Adam Jonah: And I think just your capex alone will spend, of course, well over half your cash balance. So I think if you add some reasonable amount of cash operating expense over the year that be able to do that, you're going to be able to do that, you're going to be able to do that, you're going to be able to do that, you're going to be able to do that, you're
I think just your Capex alone will spend of course, well over half of your cash balance. So I'm I think if you add some reasonable amount of cash operating expense over the year that.
Adam Jonah: If I were to grow it, let's say in line with your growth of revenue just for discussion, you're going to consume maybe two-thirds or more of the cash. So tell us what's your capital strategy in terms of debt or equity or government loans or grants and your minimum cash balance, please.
If I were to grow at let's say in line with your growth of revenue just for just for discussion.
Youre going to Youre going to consume maybe two thirds or more of the cash so tell us what's your capital strategy in terms of debt or equity or government loans or grants and your minimum cash balance. Please.
Adam Jonah: that you would expect you to run the business, what you would not want to go below.
That you would expect you to run the business what you would what you would not want to go below.
Thank you.
Speaker Change: Do you want to answer this question?
Yeah do you want to you want to take this question.
Speaker Change: Sure, definitely. Thanks for the question.
Sure.
That's quite.
Quite a bit.
No.
As you know about many hydro wind and so many of us thinking that we are facing.
Speaker Change: As we are, you know, there are many headwinds and so many uncertainties we are facing, we will not, we could not give you very detailed quantitative figures. But from our side, you know, we end up with more than 536. So, ciao.
We will not we cannot give you the detailed quantitative figures.
But.
From our side you know, we end up with too.
<unk>.
Okay.
536.
So.
So.
Okay.
It is.
200.
Okay.
I, though.
And Oh, we should have hail a minimal cash balance around the 200 million or at all.
Speaker Change: we should have a minimum cash balance around 200 million or above. Okay.
Okay base, we need to be.
Speaker Change: Okay, I'm having great difficulty hearing you. I'm so sorry, but your connection is not great. I heard you said a minimum cash balance of $200 million. I just wanna confirm that. And I didn't know if you had any strategy or even at a high level how you would approach
Okay.
We're having great difficulty hearing you I am I'm, so sorry, but your connection is not great. I heard you said a minimum cash balance of $200 million I just wanted to confirm that and I didn't know if you had any strategy or.
Yeah, even at a high level, how you would approach.
Speaker Change: bringing in more capital before you need it. You know, it's always better to bring in capital when you have a growth opportunity before you reach a minimum cash balance.
Bringing in more capital before you need it.
It's always better to bring in capital when you have a growth opportunity before before you reach a minimum cash balance.
Speaker Change: So I'm curious how you prioritize the various sources, please.
So I'm curious how you prioritize the various sources please.
Speaker Change: Sure. Sure. Sorry. I just wanted to see what I said. I couldn't hear it.
Sure sure I'm sorry.
Thank you you know what I said.
I Couldnt hear it I apologize.
How are you.
Speaker Change: Hello. Yeah, your phone, you know, the interoperate, you know, the almost every sentence and it's not continue speaking.
Hello, Yeah, it would be on your phone.
The interrupted or you know the almost every sentence.
And it's not yet and you're speaking.
My apologies can you hear me now.
Yeah, well, we'll try it again and then otherwise we'll ask a different question and we can follow up.
Speaker Change: Yeah, we'll try it again and then otherwise we'll ask different questions and we can follow up.
But we can hear you.
Speaker Change: But we can hear you. Why don't you try again, please?
Try again.
Ill.
Speaker Change: I think so, so let's continue. Thank you.
Yeah, I think so so let's let's let's continue.
Thank you okay.
Speaker Change: Okay, sorry, sorry, but then, you know, better communication, it just, you know, I would like to repeat what I said. So, thank you for our.
Okay sorry.
But they did not buy the communication.
I would repeat what I said so thank you for your time of our call.
Speaker Change: Based on our current estimate, we do believe by end of this year, we should have minimal cash balance is 200 million or more. So regarding our capital funding plan going forward.
Based on our current estimate we do would be a little under half of the year. We hired we should have had minimal cash balance is 200 million or more so.
So regarding our.
Our capital funding plan going forward.
Speaker Change: What do we do? They say we expect to read the certain we get this get a certain amount of bank finance so from local bank in in China at the same time we also.
What do we do basically we expect will lead to certain we would get this.
Certainly the amount of bank of Atlanta.
So from a local bank.
In China at the same time, we're also.
Speaker Change: active negotiator with the U.S. financial QG to get the additional loans before the end of this year. So if we are able to get additional finance, so our cash balance will be even larger than the minimum amount we counter-projected.
I can do it and negotiate with the.
You asked about Q2 to get the additional loans.
Before the end of this year, so equal we are able to gather additional buyback.
So our case, a balance that will be even larger than that minimum amount, we cant project it.
Speaker Change: Thank you, Leon. And just one more follow-up for me, if that's okay. The CAPEX guidance of 300 to $350 million for fiscal year 22, is this CAPEX ready to be spent right now? Meaning, is that expenditure based on any
Thank you Leon.
And just one more follow up for me if that's okay.
The capex guidance of $300 million to $350 million.
For fiscal year 'twenty two.
Is this.
Capex ready to be spent right now meaning is that expenditure based on any.
Further.
Speaker Change: further final investment decision environmental approvals or is it contingent upon any
Final investment decision environmental approvals or is it contingent upon any.
Speaker Change: financing commitment including some of the loans that you've that you're pursuing that have yet to be finalized.
Financing commitment, including some of the loans that you've that.
That you are pursuing that have yet to be finalized.
Speaker Change: Let me answer the question. I would like to have our Chief Operating Officer to answer the second part regarding the KPEX progress. I think the short answer to your question is, you know, the KPEX balance we currently are projecting, without considering we get additional balance from the financial institutions, either in the US and in China. So the short answer is, you know, the money with the KPEX balance,
Let me answer the question I would like to have Shea, our chief operating officer to answer the second part of the Italian the Capex progress I think that the short answer to your question is are you.
No.
The cash balance.
We currently project came with other coffee that we'd get a rotation of balances from the finance or <unk> either in the U S and into China. So the short answer is you know.
The money with the tire player to.
Speaker Change: be spent in 2022 will come from the equity we reached the last year.
To be spending in 2022 will come from the equity we have reached the last year.
Okay.
Yeah. So Adam this is Shane Smith, Hi, Shang.
Speaker Change: Yeah, so Adam, Shane Smith. Hey Shane, thanks. Hi. How you doing? Hey, as you know, we're not looking at environmental conditions in terms of putting the money to work. We've outsold what we have capacity for. So of course, we've got to put that capacity in place. We basically have contracts.
Thanks, Mike How're you doing.
As you know, we're not looking at environmental conditions in terms of putting the money to work we outsold what we have capacity for so of course, we've got to put that capacity in place when we basically have contracts.
Speaker Change: in place for $400 million, and what you're seeing is just the payment schedule for either the construction milestones or equipment milestones that we expect, and so some of that money that we've already
In place for $400 million and what Youre seeing is just the payment schedule for either the construction milestones or equipment milestones that we expect and so some of that money that we've already.
Speaker Change: uh put to work just kind of rolls into 2023 and that's why you're seeing uh only the 300 and a little over 300 million that we're paying out this year but uh again the contracts are already in place both on construction and equipment to give what we need to be
Put to work just kind of rolls into 2023, and that's why you're seeing only the 300 and a little over $300 million that we're paying out this year.
Again, the contracts are already in place both on construction and equipment to get where we need to be to execute the plans that the customers are closely watching back to your other question. I mean, we are spending a fair amount of capex, because we have assets in place that if it's fairly easy to get financing for and so we are we have been.
Speaker Change: to execute the plans that the customers are closely watching. Back to your other question. I mean, we are spending a fair amount of CAPEX, so we have assets in place.
Speaker Change: that it's fairly easy to get financing for. And so we are, we've been fairly on the low debt side, if you will.
Fairly on the low debt side, if you will.
Speaker Change: probably too low for a company our size, for the contracts we have in place, and for the capital we're spending, so we're now putting that work
Probably too low for a company our size for the contracts we have in place for the capital we're spending so we're not putting network.
Speaker Change: Putting that money to work in a different way through the assets and and Leon's well on his way of actually she's already inked
Putting that money to work in a different way through the assets.
<unk> is well on its way up.
She was already inked.
Speaker Change: some of those funding options and so I think we have a little, we have more room in that area before we would look at the equity market, if you will. I think the equity market's more of a, hey, we keep winning business.
Some of those funding options and so I think we have a little we have more room in that area before we would look at the equity market. If you will I think the equity markets more of a hey, we keep winning business.
Speaker Change: is where you'll hear that story, and so far, so good.
You'll hear that story and so far so good.
Speaker Change: That's a likely story maybe in the next eight months, but you know the market's going to receive that message.
That's a likely story maybe in the next AGM answer, but you know the market is going to receive that message well.
Speaker Change: understood. I really appreciate that, Shane. And can I just squeeze in one more for Professor Mattis, please, on the supply chain, if that's okay? Dr. Mattis, I hope you're well. Good to hear your voice.
Understood I really appreciate that chain and can I just squeeze in one more for professor matters. Please on that supply chain. If that's okay. Dr. Maddox already yeah.
Yeah, Hi, hope you're well good to hear your voice.
DR mattis: Um, Dr. Mattis, Dr. Mattis, so tell, tell me, um, tell us what, um, could you elaborate a bit more on, you know, supply chain?
Well, we have got dramatic doctor matters. So.
Tell me tell us what.
Could you elaborate a bit more on the supply chain.
DR mattis: prices. And I understand you can do LFP and Nickel Rich, which gives you flexibility because your technology is material agnostic, if you will, which is great. But you mentioned long term supply contract.
And I understand you can do LSP and nickel rich, which gives you flexibility because your technology is.
Yeah.
Cereal agnostic, if you will which is great.
So, but you mentioned long term supply contracts.
Speaker Change: I'd be curious any capital commitments that you've need to make to make that secure and I'd love your thoughts on how we should think about pass-through particularly of lithium which you cannot avoid which is up about 5x. Price is 5x in China if I understand lithium carbonate so a little more detail that would be really helpful and that's that's my last question I do appreciate the opportunity. Thank you.
I'd be curious any any capital commitments that you need to make to make that secure and I'd love. Your yes, I'd love your thoughts on how we should think about pass through.
Particularly of lithium, which you cannot avoid which is up about five X.
Yeah.
<unk> in China, I find my understand lithium carbonate. So it's a little more detail there would be really helpful. And that's my last question I do appreciate the opportunity. Thank you.
Speaker Change: Yeah, sure. Yeah, so the supply question would actually better refer to this business, but I would like to talk about my point of view. So, as for the castle, the material pricing in the China market, it went up to 2.5 times.
Yeah sure yeah. So the.
So my question would actually bad for sure Mr. Shen Smith, but I would you like to talk about it my point of view, so as for the cathode material pricing.
You know China markets, even when happy to quantify the times and nevertheless, the other materials such as the P. D D S lithium.
Speaker Change: and nevertheless the other materials such as the PVDF, the lithium PF-16 electrolytes, those all ramped up. And as for micrologics, the strategy
Electrolyte those all ramped up.
And as micro launch strategy.
Speaker Change: The most expensive components in the lithium-ion battery is the cathode material, and by making our own material, not only it increases the capacity, increases the safety, and also saves
The most expensive components in the lithium ion battery is a cathode material and by making our own material not only increases our capacity increases the safety and also save.
Speaker Change: More than two digit percentage for micro in terms of the call.
More than two digits percentage for microbiome too in terms of the cost to <unk>.
Speaker Change: and we do have the strategic collaboration conversations already started in the United States, in Europe for the long-term collaboration in terms of the recycling of our product, and also in recycling the scrap material in the cell production line.
We do have the strategy to a collaboration conversations already started in United States Youll route for that long term with collaboration in terms of the recycling of our products and also in recycled that's great material in the cell product your line yeah.
Speaker Change: Yeah, so those topics are well on the way. And by this point, maximum vast was not limited by the supply chain change. The interruptions currently have spread out in the world. I will pass this call to Mr. Smith for more accurate.
So those topics are well underway and biodiesel acquainted microvascular was not limited by the supply chain change the interruption so current pretty hot.
I will pass it is called to a mutation Smith for more accurate.
Speaker Change: So, Adam, it is, as Mr. Wu alluded to in his opening comments, it is one of the areas that we're closely watching. We're trying to engage how long of a contract to get in, because we are doing a little bit of, uh, do you think when a, when a price is going to go down, is this a trend we're going to continue to see? Right now, I'm, I'm saying it's a, it's a continued trend that will go through 2022 and into 2023. And that's the way we're, um,
So Adam is as Mr. Woo alluded to in his opening comments. It is one of the areas that we're closely watching we're trying to engage how long of a contract to get in because we are doing a little bit of a do you think when winter prices going to go down or is this a trend we're going to continue to see.
Right now I'm.
I'm, saying, it's a continued trend that will go through 2022 and into 2023.
And that's the way we're.
Speaker Change: forecasting, that's the way we're engaging in our contracts.
Forecasting that's the way, we're engaging in our contracts and.
Speaker Change: And so it's something that we closely watch. On the sales side, we are engaging customers to increase prices, and trying to keep that balance is challenging. So I think that that will be a part of our story in terms of margin pressure. Thanks, Shane. Thanks, everybody.
So it's something that we closely watch on the sales side, we are engaging customers to increase prices and trying to keep that balance is is challenging. So I think that that will be a part of our story in terms of margin pressure.
Thanks, Shane thanks, everybody.
Yes.
To hear from me Adam.
Thank you.
Speaker Change: Once again, if you have a question, please press star, then 1.
Once again, if you have a question. Please press Star then one.
Speaker Change: Your next question comes from Gabe Doad from Cowan. Cowan, please go ahead.
Your next question comes from Gabe Daoud from Cowen. Please go ahead.
Yeah.
Gabe Dode: Hi, thanks for taking my questions. My first question is, do you guys plan on providing any additional details on the backlog regarding regional or customer dynamics and how much of the backlog will be realized in 2015?
Yeah, Hi, Thanks for taking my questions. My first question is do you guys plan on providing any additional details on the backlog regarding regional or customer dynamics and how much of the backlog will be realized in 2022.
Moshe do you want to go ahead and take the question taking my question, Yes. Please.
Speaker Change: Do you want to go ahead and take that question? Yes, please. I will go ahead. Thanks for that question. I mean, most of the backlog, which we have right now will be, will be realized in 2022 partly some backlog could be shifted to 2023, but actually, most of it will be realized.
Thanks for the question I mean, most of that backlog, which we have right now will be will be realized in 2022.
Possibly some backlog could be assistance in 'twenty to 'twenty, three but actually most of it will be realized in 2022. So if you could talk about the poor cost of contract revenue. This is something which will start end of 2022 and move.
Speaker Change: So if we talk about the forecast of content revenue, this is something which will start end of 2022 and move all the way till 2031 as already mentioned. But the increasing factor will start extremely through various, the HEPA project in 23 as well as in 24. Got it. And then the second question I've gotten.
All the way to 2031 as already mentioned, but the increasing pactual Woodstock extremely through various the heater projects in in 'twenty, three as well as in 2004.
Got it and then one question I've gotten.
Yes regional.
Yes.
Okay great.
Yeah regional.
Yeah go ahead please.
Sorry go ahead.
Okay regional it will be it will be dedicated to Europe as well as to the Asia, India, India Asia market, mainly and also to the U S.
Speaker Change: Regional will be dedicated to Europe as well as to the Indian Asian market mainly and also to the U.S.
Oh.
Yeah.
Can you provide any additional.
Percentages or whatnot.
Not I would.
Speaker Change: not at that stage, so it's way easier to shift that in 2023 and 2024 because a lot of projects are just starting. We're building up, as already mentioned in the call, the capacities now for the U.S. market.
We're not at that stage.
Hum.
So it's way easier to shift 2023, and 24, because a lot of projects are starting we are building up as already mentioned the in the in the call the capacity now for the U S market.
Speaker Change: and so mainly it will be dedicated in the first step to Europe as well as to especially also Asia and in the second step it will directly
And and so mainly will be dedicated in the first step to two to the.
In Europe , as well as to especially also Asia.
And then second separately directly move over to the U S.
Speaker Change: Got it. Thank you. And the second question I've gotten from several investors was regarding your lawsuit with a formal general counsel. I was wondering if you could give us an update on where that stands and any plans to get this overhang behind.
Got it thank you and the second question I've gotten from several investors with regarding your lawsuit with their formal general Counsel I was wondering if you could give us an update on where that stands and any plans to get this overhang behind you.
Sure Gabe this is Sarah Alexander.
Speaker Change: Sure, Gabe. This is Sarah Alexander. A trial has been scheduled and postponed a number of times. It's currently now scheduled for May, but yes, we would like to get that behind us and move forward. It's been outstanding for quite some time.
The.
The trial has been scheduled and postponed a number of times. It's currently now scheduled for.
For May, but yes, we would we would like to to get that behind us and move forward.
It's been outstanding for quite some time.
Okay.
Perfect. Thank you.
Speaker Change: Thank you. This concludes the question and answer session. I would like to turn the conference back over to Sarah Alexander for any closing.
Thank you. This concludes the question and answer session I would like to turn the conference back over to Sarah Alexander for any closing remarks.
Sarah Alexander: Thanks, Matt. Before we go, we received some great questions in response to our Ask Microvast campaign. While we don't have time to address every question we received, I would like to take a few minutes to address a few important themes. Thanks to everyone who submitted questions. We appreciate your feedback and keep them coming.
Thanks Pat.
Before we go we received some great questions and response to our asked micro masked campaign well. We don't have time to address every question. We received I would like to take a few minutes to address a few important themes. Thanks to everyone who submitted questions. We appreciate your feedback and keep them coming.
Sarah Alexander: The most frequently asked question was a request for an update on the status of our S1 registration statement.
The most frequently asked question was a request for an update on the status of our S. One registration statement.
Sarah Alexander: To provide some additional color on the timeline of events, our business combination with Tusken closed on July 23rd, 2021. Our understanding is that shortly after the completion of our business combination, the SEC chairman made public remarks directing this SEC staff to quote, take a pause for now on approving the registration statements of certain issuers.
To provide some additional color on the timeline of events our business combination with Tuscan closed on July 20, <unk> 2021, our understanding is that shortly after the completion of our business combination. The SEC Chairman made public remarks directing this SEC staff to quote take a pause for now on improving.
The registration statements of certain issuers.
Sarah Alexander: with a significant portion of their operations in China. We filed our initial S1 registration statement in the middle of this pivot in mid-August. Over the course of the next several months, we received correspondence from the SEC following each of our S1 filings and have responded with amended filings to address those comments.
With a significant portion of their operations in China, We filed our initial S. One registration statement in the middle of this pivot in mid August over the course of the next several months we received correspondence from the SEC following each of our S. One filings and they've responded with amended filings to address those comments.
Sarah Alexander: Most of the comments have related to clarifying certain aspects of our operations in China, as well as the implication or potential implication of current or future laws on our operations.
Most of the comments I have related to clarifying certain aspects of our operations in China as well as the implication or potential implication of current or future loss on our operations. As an example, we were requested to make additional disclosures following the PCA Ob and the FCC's implementation of the <unk>.
Sarah Alexander: As an example, we were requested to make additional disclosures following the PCAOB and the SEC's implementation of the Holding Foreign Companies Accountable Act in the December 2021, January 2022 timeframe.
<unk> foreign companies accountable Act in the December 2021 January 2022 timeframe. It's also our understanding that many of the comments. We received were issued by the SEC to many other similarly situated companies during the same time period.
Sarah Alexander: It's also our understanding that many of the comments we received were issued by the SEC to many other similarly situated companies during the same time period.
Sarah Alexander: In addition, we've been informed by the SEC staff that due to the significant increase in the number of recent transactions, the SEC's internal review process and turnaround time is slower than issuers may have experienced in previous years.
In addition, we have been informed by the SEC staff that due to the significant increase in the number of recent transactions. The FCC's internal review process and turnaround time is slower than issuers may have experienced in previous years.
Finally.
Sarah Alexander: The current delay between our last S1A filed in January 28, 2022 is because the financial statements included in that filing were current as of September 30, 2021.
The current delay between our last S. One as filed in January 2028, 2022 is because of the financial statements included in that filing were current as of September 30th 2021, those financial statements became stale in mid February and the document is required to be updated with December 30 <unk>.
Sarah Alexander: Those financial statements became stale in mid-February, and the document is required to be updated with December 31, 2021, results.
<unk> 2002, 2021 results our annual report on Form 10-K was filed earlier today. So we will now turn our focus to the S. One get the financials and disclosures as of 12 31 updated quickly and get the next minute amendment on file as soon as possible. We recognize that this process has taken.
Sarah Alexander: Our annual report on Form 10K was filed earlier today, so we will now turn our focus to the S1, get the financials and disclosures as of 1231 updated quickly, and get the next amendment on file as soon as possible. We recognize that this process has taken longer than is typical, and we fully understand our shareholders' frustrations.
Longer than is typical and we fully understand our shareholder's frustration for moving the process forward as swiftly as possible and we appreciate your patience and understanding as we bring this process toward a conclusion.
Sarah Alexander: We're moving the process forward as swiftly as possible, and we appreciate your patience and understanding as we bring this process toward a conclusion.
Sarah Alexander: In addition, we've had several people ask for clarity about the Holding Foreign Companies Accountable Act and its potential impact on microvast. So I can provide you with a little bit of additional background information on the law, on the regulation, which originally became law in December of 2020.
In addition, we've had several people ask for clarity about the holding foreign companies accountable Act and its potential impact on microvascular.
So I can provide you with a little bit of additional background information.
On the law on the regulation, which originally became law in December of 2020.
Sarah Alexander: Among other things, the statute requires the SEC to identify public companies that have retained a registered public accounting firm to issue an audit report where the firm has a branch or office that is located in a foreign jurisdiction and the PCAOB has determined that it is unable to inspect the books of such accounting firm.
Among other things the statute requires the SEC to identify public companies that have retained our registered public accounting firm tuition to issue an audit report where the firm has a branch or office that is located in a foreign jurisdiction and the PCA Ob has determined that it is unable to inspect the.
E books of such accounting firm.
On December 16th 2021, the <unk> published a list of the accounting firms in mainland China, and Hong Kong that it determined it is unable to inspect that list does include microvax auditor, our mainland China office of Deloitte as well as the mainland China and Hong Kong offices.
Sarah Alexander: On December 16th, 2021, the PCAOB published a list of the accounting firms in mainland China and Hong Kong that it determined it is unable to inspect. That list does include microvast auditor, a mainland China office of Deloitte, as well as the mainland China and Hong Kong offices of other major accounting firms also located in the region.
Of other major accounting firms also located in the region.
On January 10, 2022, new SEC rules became effective which amended the disclosure requirements in annual report for issuers that says that the SEC identified as having an audit report issued by one of the above mentioned accounting firms.
Sarah Alexander: On January 10th, 2022, new SEC rules became effective which amended the disclosure requirements in annual reports for issuers that the SEC identifies as having an audit report issued by one of the above mentioned accounting firms.
Sarah Alexander: The SEC refers to these issuers as commission-identified issuers pursuant to the HFCAA. If an issuer is a commission-identified issuer for three consecutive years, the SEC shall prohibit the securities of the issuer from being traded on a securities exchange.
The SEC refers to these issuers as commission identified issuers pursuant to the HFC AA. If an issuer is it commission identified issuer for three consecutive years.
C C shell prohibit the securities of the issuer from being traded on our Securities exchange.
Speaker Change: MicroVast does anticipate that it will be designated as a commission identified issuer following the filing of its 10K earlier today. But we've also begun discussions with our auditors to determine a path forward and a timeline for compliance as we expand and diversify our global operations.
Microsoft's does anticipate that it will be designated as a commission identified issuer following the filing of its 10-K earlier today.
But we have also begun discussions with our auditors to determine a path forward and a timeline for compliance as we expand and diversify our global operations.
So those are all of the questions that we have time for today. Thanks, everyone for joining and this concludes today's call.
Speaker Change: So those are all of the questions that we have time for today. Thanks everyone for joining and this concludes today's call.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating have a wonderful day.
Speaker Change: Today's conference call you may disconnect your lines. Thank you for participating. Have a wonderful day
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Speaker Change: Thanks for watching!
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Speaker Change: Thank you for standing by. This is the Conference Operator. Welcome to the MicroBast fourth quarter and full fiscal year 2021.
Thank you for standing by this is the conference operator, welcome to the micro Bos fourth quarter and full fiscal year 2021 earnings call.
Speaker Change: As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.
As a reminder, all participants are in a listen only mode and the conference is being recorded after.
After the presentation, there will be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad should you need any assistance during the conference call you may signal, an operator by pressing Star then zero.
Speaker Change: To join the question queue, you may press star then 1 on your telephone keypad. Should you need any assistance during the conference call, you may signal an operator by pressing star then 0.
Speaker Change: I would now like to turn the conference over to Sarah Alexander, Microvast General Counsel. Please go ahead.
I would now like to turn the conference over to Sarah Alexander Microsoft's General Counsel. Please go ahead.
Sarah Alexander: Thank you, Operator. Welcome and thanks, everyone, for joining us today. Mr. Yang Wu, President and Chief Executive Officer, and Leon Zing, Chief Financial Officer, are hosting today's call. Sasha Kelterborn, our Chief Revenue Officer, is also on the line to discuss the product launch we announced last week.
Thank you operator, welcome and thank everyone for joining us today, Mr. Yang Lu President and Chief Executive Officer, and Liang, Zhang Chief Financial Officer are hosting todays call.
Accounts are born our Chief revenue Officer is also on the line to discuss the product launch we announced last week, Dr. <unk> <unk>, Chief Technology Officer, and Shane Smith will also be available to participate in Q&A.
Sarah Alexander: Dr. Winjuan Mattis, Chief Technology Officer, and Shane Smith will also be available to participate in Q&A.
Sarah Alexander: Ahead of this call, Microvast issued its fourth quarter and full fiscal year 2021 earnings press release, which can be found on the Investor Relations section of our website, ir.microvast.com.
Out of this call microburst issued its fourth quarter and full fiscal year 2021 earnings press release, which can be found on the Investor Relations section of our website IR dot micro vast dot com.
Sarah Alexander: As a reminder, please note that on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
As a reminder, please note that on this call we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.
Sarah Alexander: These statements reflect our views only as of today and should not be relied upon as representative about views as of any subsequent date.
These statements reflect our views only as of today and should not be relied upon as representative about views as of any subsequent date.
Sarah Alexander: We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.
We undertake no obligation to revise or publicly release the results of any revision to these forward looking statements.
Sarah Alexander: These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
Sarah Alexander: For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our annual report on Form 10K filed earlier today.
Further discussion of the material risks and other important factors that could affect our financial results. Please refer to our filings with the SEC, including our annual report on Form 10-K filed earlier today. In addition, during today's call. We may discuss non-GAAP financial measures, which we believe are useful as supplemental measures of microvascular performance.
Sarah Alexander: In addition, during today's call, we may discuss non- GAAP financial measures, which we believe are useful as supplemental measures of microVAS performance.
<unk>.
Sarah Alexander: These non- GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAP results.
These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results are.
Speaker Change: A webcast replay of this call will also be available on the Investor Relations section of our company website. With that, I'll turn the call over to Mr. Wu.
A webcast replay of this call will also be available on the Investor Relations section of our company website with that I'll turn the call over to Mr. Hu.
Thank you Sarah and good afternoon, everyone.
Wou: 2021 was a challenging year with an anticipated head
2021 was a challenging year with an unanticipated headwind.
Wou: In spite of those headwinds, our team brought it together to grow revenue of 41% compared to 2020.
Despite those headwinds our team rallied.
Together to grow revenue, 41% compared to 2020.
I'm proud of the accomplishments of our team.
Wou: I'm proud of the accomplishments of our
Wou: Global supply chain disruptions were a major challenge in 2021.
Global supply chain disruptions what are the major challenging 2021.
Well micro valves.
Wou: The impact was largely indirect. The global semiconductor shortage caused the many of our OEM customers to delay certain projects.
The impact was largely indirect.
The global semiconductor shortage caused many of our OEM customers to delay certain projects.
Which in turn also shifted demand for certain of our product to the right.
Wou: which in turn also ship in demand for certain of our products to the right.
Wou: The delayed projects remain in our focus concept of revenue and we expect to begin seeing more revenue from those large contracts in later this year and the further ramping up in 2023. The timing of those projects
The delayed projects remain in our contracted revenue and we expect to begin seeing more revenue from those larger contracts. In later this year and are further ramping up in 2023.
With timing of project Excel.
Wou: Signing up with our ongoing manufacturing capacity expansions.
It's lining up with our ongoing manufacturing capacity expansions.
In addition to supply chain challenges, we also faced increasing raw material prices.
Wou: We also face increased raw material price throughout the 2021. Unfortunately, this is a problem that we expect to continue into 2022.
Throughout 2021 Unfortunately.
He is a problem that we expect to continue into 2022.
Wou: We are taking steps to mitigate the impact of regional material prices where possible.
We are taking steps to mitigate the impact of rising raw material prices where possible.
Wou: including entering into long-term supply contracts and seeking additional sources of raw materials in some instances.
Incurring into long term supply contracts and are seeking additional sources of raw materials in some instances.
Wou: And at the same time, we are discussing the possibility of price adjustments with our customers as a direct result of those.
And at the same time, we are discussing the possibility of price.
Adjustments with our customers.
A direct result of Windows.
Inflationary pressures.
Wou: We are well-reviewed our financial performance in more detail in a few moments. However, I would like to touch on a few highlights.
DIY will review our financial performance in more detail in a few moments however, I would like to touch on a few highlights.
Wou: In the first quarter, we challenged our production team to meet demand, which included a seasonal influx of quick-turn orders.
In the fourth quarter, we challenged our production team to meet demand.
Which included at.
Seasonal influx of quick turn orders.
It was not easy, but as the team executed and it turned in a solid Q4 revenue performance of $66 8 million.
Wou: It was not easy, but as a team executed and it turned in a solid Q4 revenue performance of 6.8 million.
Wou: we should represent 39% gross over the send quarter of prior year.
<unk> represented 39% growth over the same quarter of prior year.
It is worth noting that our revenue growth substantially in each of the.
Wou: It is worth noting that our revenue growth substantially in each of the
Wou: each of the four physical quarters in 2021 compared to 2020.
Each of the four physical quarters in 2021 compared to 2020.
Our full year basis.
Wou: This achievement is translated to 152 million in revenue, representing 41% gross comparing to the prior physical year and achieving the guidance range. We established it in August 2021 following our business combination.
Mr. Chairman translated to 152 million in revenue, representing 41% growth comparing to the prior fiscal year.
And achieving the guidance range, we established in August 2021 fully our business combination.
Wou: We ended a big year with a strong backlog of 140.5 million.
We ended the year with a strong backlog.
$145 million.
Wou: representing 161% growth over 43.8 million in backlog at December 31, 2020.
Presenting 161% growth over $43 8 million on your backlog at December 31, 2020.
Wou: And the sequential growth of 117 percent over 52.7 million in backlog at September 30, 2021.
And a sequential growth of 117% over $52.
7 billion in backlog at September 32021.
This backlog creates a solid foundation going into 2022.
Wou: This backlog creates a solid foundation going into 2022.
Wou: Our business development team has done an excellent job of generating long-term multi-year sales contracts with new customers and expanding existing relationships.
Our business development team has done an excellent job.
Generating long term multiyear sales contracts with new customers and expanding existing relationships.
Wou: This is evidenced by growth in our forecast to contract revenue from 1.5 billion in February 2021, the date when we, you know, the emerged
This is evidenced by growth in our forecast with contract revenue from $1 5 billion in February 2021, the date when we can.
The emerge.
<unk>.
Wou: and to $2.5 billion at it year end.
And at two two to $2 5 billion at year end.
Wou: When we refer to the forecast counter revenue, we are describing backlog and management estimates for revenue we expect to realize from existing contractual relations.
When we refer to poke up content revenue, we are describing backlog slide managements estimates for revenue we expect to realize.
From existing contractual relationships with customers.
Wou: Most of those contracts include estimated volume requirements, however, they do not typically include
Most of those contracts to include estimated volume requirements. However.
You're not tied to counter intuitive volume commitment.
Wou: We expect that you realize current forecast contract revenue between 2022 to...
We expect that you realized current forecast contract revenue between 2022 two.
2031.
Wou: We continue to have success with large OEMs in a commercial vehicle sector and are excited for the journey ahead.
We continue to have success with large Oems in the commercial vehicle sector and are excited for the journey ahead.
Next.
Wou: I will provide an update on the construction progress at all our various manufacturing operations. We are pleased.
I will provide an update on the construction progress at our various manufacturing operations.
We are pleased with the progress.
Wou: So the environmental is certainly taught to a student construction project given labor shortage, inflation, logistic hurdles, and other challenges.
So the environment is certainly tied to SG&A construction project.
Given labor shortage inflation logistics hurdles and other challenges.
As you know we're in the process of constructing a new building on our existing campus in who don't China.
Wou: As you know, we are in the process of constructing a new building on our existing campus in Hudo, China.
Which we referred to as the phase III.
Wou: The program at this site has been impressive.
The progress at this site has been impressive.
Wou: from a green field site in July 2021 to finishing the roof installation in less
From a greenfield site in July 2021, she finishes their roof installation in less than six months.
Wou: We posted an updated time-lapse video to our social media account in later January .
We posted an updated time lapse video to our social media come in later January .
Wou: was completed. This building will feature approximately 700,000 square feet of manufacturing
Once completed this building, while future approximated 700000 square feet.
Manufacturing space.
Wou: The manufacturing equipment has been ordered and we will be ready to begin serious
The manufacturing equipment has been ordered.
We will be ready to begin serious.
Wou: material production by the first quarter of 2023.
Serial production by the first quarter of 2023.
Wou: completion of this initial phase will bring our total capacity in China up to five gigawatt hours per year. In addition,
Completion of this initial phase <unk> brand, our total capacity in China off two five gigawatt hour per year.
In addition.
We have space for more growth.
As the new facility is large enough to expand our total manufacturing capacity in China to approximated a 12 gigawatt hour per year.
Wou: a new facility is large enough to expand our total manufacturing capacity in China to approximately 12 gigawatt hours per year. We are also making progress
We are also making progress in Clarksville.
Wou: The focus of the project has been renovating and remodeling the internal of the existing building. We expected the delivery and installation requirements in Crossrail to lack our Hudo project by approximately six months. We expect to see a lot of new projects.
The focus of the protocol has been innovating and remodeling the internal of the existing building we.
We expect them to deliver delivery area installation of equipment in.
In Crossville, two lakh hours, who don't project by approximated six months.
We expect to begin.
Wou: serial production in mid-2023 at this site.
Serial production in mid 2023.
At this site.
In Orlando.
We have been actively.
Wou: Activate a recruiting personnel for the research and a development facility.
Activate a recruiting personal.
For the research and development facility.
Wou: We have also begun the detailed planning process to convert the ecosystem space into laboratories suitable for future global R&D projects.
We have also begun the.
Detailed planning.
Process to convert an existing space into laboratories suitable for future global R&D projects.
Our module and pack facility in Berlin.
Wou: Germany is complete and is in production as a project with European OEM began to ramp up. This facility retina received ISO and IATF certification.
Germany is complete.
<unk> is in production at the project, whereas European Oems begin to ramp up this facility retina received ISO and <unk>.
<unk> certifications.
Wou: We distribute a press release along the two new instant battery cells as well as our GIN4 battery pack.
We distributed a press release allows the two new leased on battery cell as well as our June or battery pack last week.
Wou: We are excited about our customers' response to the performance of those cells and expect those solutions to become important revenue drivers in future years.
We are excited about our customers' response to the performance of those cells and expect.
Those solutions.
To become important revenue drivers in future years.
Speaker Change: Before turning the call over to Liang to discuss our financial results, I would like to invite our Chief Revenue Officer, Sasha Kadevon, to discuss those new solutions in more detail.
Before turning the call over to Leon to discuss our financial results.
Would like to invite our chief revenue Officer, Josh asked Kevin to discuss those new solutions in more detail.
Thank you Mr. Hu, it's my pleasure to be here today to discuss this exciting development.
Shasha Keon: Thank you, Mr. Wu. It's my pleasure to be here today to discuss these exciting developments.
Shasha Keon: By introducing the new MPCO 48 MPH and the HPCO 53.5 MPH cells.
By introducing the new MPC or <unk> 48 per hour and the HBC Christy III typhon pay ourselves to our cost of our commercial customers can now select the battery solution based on the operational requirements. We can now provide a high power or high energy battery with what we believe is <unk>.
Shasha Keon: to our commercial customers can now select the battery solution based on their operational requirements. We can now provide a high power or a high energy battery with what we believe is market-leading performance in each category. These new cells are built to offer overall better performance with optimized energy density, cycle life, and total cost of ownership, while reserving the important fast-chiping capability
Market, leading performance in each category. This new cells are built to offer overall better performance with optimized energy density cycle life and total cost of ownership, while reserving the important cost pricing capability.
Shasha Keon: Both cells are available in the same dimension and can be integrated into the new standard MicroVus Gen 4 battery packs.
Most felt are available at the same dimension and can be integrated into the new standard Microsoft Gen for battery packs the new.
<unk> have the same black box design at our old generation battery packs. This high level of comparability of the new series allow us the Owens to switch batteries.
Shasha Keon: same black box design as our old generation battery packs. This high level of comparability of the new series allow us the OEMs to switch batteries based on the technical requirements without changing the power train design or the or the
On the technical requirements without changing the power kind design flaws, yet or the interfaces.
Shasha Keon: Compared with the Gen 3 battery pack, the new version delivers around 20% more energy and power. The new pack has additional safety features at the model and pack level to improve thermal management and meet the toughest safety requirements.
Compared with the Gen III battery pack, the new version deliver around 20% more energy empower the.
The new back half additional safety features at the module and pack level to improve from a management and meet the toughest safety requirements.
Shasha Keon: The Gen 4 battery packs will be certified to meet global cross-regional batteries.
The Genco battery packs will be certified to meet global Cross regional battery centers. In addition, the lightweight and long life pack design combined with a new battery cells present, an attractive value proposition in terms of total cost of ownership to our customers, our new serious of battery cells and pet cover the common.
Shasha Keon: In addition, the lightweight and long-life pack design combined with the new battery cells present an attractive value proposition in terms of total cost of ownership to our customers.
Shasha Keon: our new series of battery cells and pack cover the common and future demands of commercial vehicles.
And future demands of commercial vehicle Oems. In addition, we have a brief new product with you on our social media piece yesterday.
Shasha Keon: In addition, we shared a brief new product video on our social media piece yesterday.
neonvang: With having said that, I would like to turn the call to my colleague, Leon Zheng, our CFO , to discuss our financial performance.
Having said that I would like to turn the call to my colleague Liang Zhang our CFO to discuss our financial performance.
Thank you Stephane could be given you everywhere.
neonvang: Thank you, Shacha. Good evening, everyone. I will spend a few minutes to discuss the results of our operations in 2021. Despite many industrialized and global issues, we successfully grew revenue in every quarter during 2021, compared to the same period in 2020.
A few minutes to discuss the results of our operations in 2021.
Spire, many industrial why are global.
We successfully grew revenue in every quarter during 2000 tonnes of what.
Compared to the same period in 2000.
So the two Amanda troubling cow call make it so.
neonvang: The achievement calculated in 39% of revenue groups to 66.8 million in Q4 2021 compared to 48.1 million in Q4 2020.
39% of revenue growth to six to six 8 million in Q4 2000 tonnes of what compare the 248 upon the web immediate in Q4 2020.
Oh revenue 41%.
neonvang: 107.5 million in 2020 to 152 million in 2021.
For 107, five <unk> in 2020 to 152 immediate 2000 tonnes of what.
neonvang: We posted gross profit 1.2 million in Q4 2020 Y compared to gross profit 8.7 million in the same period.
We posted a gross profit $1 2 million in Q4, 2000 and trying to compare.
Compared to gross profit eight 7 million in the same period.
Yes.
neonvang: or tributable to include service-accommodate expense, or cruise-on-warranty expense, inventory impairments.
The attributable to increased share based compensation expense.
The accrued warranty expense inventory impairment.
Yeah.
The price increase.
Well.
neonvang: loss was 0.7 million compared to the gross profit of 17.1 million in 2020. The change was largely due to the increase in product warranty expense of 49.5 million.
Gross loss was.
On the $7 million compared to the gross profit of 17, Paul when needed in 2020.
The change was largely due to the increase in product warranty expense of 49 five <unk>.
Mhm of approximately 17 needed.
neonvang: of approximately 17 million, which were related to the impact
Which what religion.
Does that imply a quarter.
In addition.
Cost of.
Hum.
neonvang: And in 2020, in 2020.
Bidding in 2000 and tell you what.
Yeah.
neonvang: I screw you the one expense and the inventory impairment related to legacy products as well as share business conditions. We would have both profit 28.1 million in 2021. This translates to a good margin of 18.5 percent for the full year of 2000.
I just.
One of the expense and the inventory impairment related to legacy products as well as share based compensation.
All of the hydro.
Gross profit 28 upon the web meeting.
2000 tonnes of what this says to me.
Gross margin of 18, 5% for the full year of 2000.
neonvang: expensive or 52.2 million compared to
<unk> expenses were 50 50 partners.
Two immediate.
I will then take what compared.
neonvang: in the prior period for the full year.
For the six.
In the prior year period.
For the full year.
neonvang: operating expenses were 157.4 minutes compared to 42 minutes in 2020.
Operating expenses were 157 point of what my competitor tool for them.
$2 million in 2000.
neonvang: increase operating expenses when non-caths start this competition.
You increased operating expertise, while noncash stock based compensation.
Okay.
neonvang: for the quarter and 78.6 million for the full year of 2021.
For the quarter and the.
78 upon six immediate for the full year of 2010 gigawatt.
neonvang: In addition, the company increased HIDICAR to support his planned group's initiative and also incurred additional expenses related to operating as a public company.
In addition, the company increased headcount to support his planned accruals initiative and also incurred additional expenses.
He tied to operating as a public company.
neonvang: in the world, and that was 260,000 years ago.
Yes.
What.
It was 206.
Compare that to net loss of 33 6 million in the prior year period.
neonvang: compared to that loss of 33.6 million in the five year period.
But the thing.
Okay.
Okay.
Yeah.
As we discussed above.
neonvang: As Mr. Wu mentioned, we had a backlog of 114.5 minutes at the end of the year 2021.
Mr. Hu mentioned, we had a backlog of 114.5 minutes at the end.
For year 2021.
neonvang: was up more than double year over year as well as sequentially.
What's up with more than double year over year as well as the consortium.
neonvang: This gives us confidence going into 2022.
This gave it to us contemplate going into 2022.
Moving to the balance sheet.
neonvang: We ended the fiscal year of 2021 with approximately 536.1 million cash equivalent and restricted cash.
And to the fiscal year of 2001 with approximately 536 point of web <unk> in cash cash equivalents and.
The restricted cash.
neonvang: And we are continuing to use capital to expand our manufacturer capacity.
And we are continuing to use capital to expand our manufacturing capacity.
Capital expenditure totaled 87 9 million in 2000, and total one compared to 18 6 million in 2020, the increase was largely to do with fiber.
neonvang: Capital expenditure totaled at 87.9 million in 2021, compared to 18.6 million in 2020. The increase was largely due by the manufacturing capacity expansion. We expect the spending to further increase.
On your furniture capacity expansion.
We expect the spending to further.
Found in 'twenty two.
And <unk>.
neonvang: our capital expenditure will be between $300 to $360 million for the upcoming fiscal year.
Our capital expenditure expenditure.
<unk> will be between 300 $350 million.
Commenting physically.
With that.
neonvang: With that, I would like to reach out to Mr. Wu to discuss our business outlook. Thank you very much.
Mr Ward to discuss our business.
Hello.
Thank you everyone.
The last several years had before challenges mineral which were unprecedented.
neonvang: Our team pushed forward and we are continuing to build a strong foundation for future growth.
Our team pushed forward and we are continuing to build a strong foundation for future growth.
neonvang: We believe our business can sustain a strong growth rate going forward. Our preliminary guidance for the upcoming year is 30 to 45 percent growth compared to 2021.
We believe our business can sustain a strong growth rate going forward, our preliminary guidance for the upcoming year.
Is 30% to 45% growth compared to 2021.
neonvang: We are optimistic about our opportunity in 2022. However, developments over the last several weeks have added a significant impact on the future of the United States.
We are okay mystic about our opportunity in 2022 however.
Developments over the last several weeks.
Have added.
Level of uncertainty.
I am pleased to note.
neonvang: that we do expect a strong start to the 2022 physical year.
Data, we do expect a strong start to the 2022 physical year.
We anticipate that our revenue for the first quarter will be between 32 million to $34 million.
neonvang: We anticipate that our revenue for the first quarter will be between 32 million to 34 million.
neonvang: This representing 115 to 128 percent growth over 14.9 million for the prior quarter.
This representing 115% to 128% growth over $14 9 million for the prior quarter.
Thank you all for your time today.
Speaker Change: Thank you all for your time today. Before I turn this call over to Sarah, let's pray for...
Before I turn this call over to Sara <unk>.
Let's pray for peace.
Sarah Alexander: Everyone deserves to have a beautiful and peaceful life.
Everyone deserves to have a beautiful and peaceful life.
Thank you Mr. Lou I'd like I'd now like to turn the call back to the operator to moderate the question and answer session.
Sarah Alexander: Thank you, Mr. Wu. I'd now like to turn the call back to the operator to moderate the question and answer session.
Yeah.
Thank you.
We will now begin the question and answer session.
Sarah Alexander: in the question queue, you may press star then one on your telephone keypad.
To join the question queue you May Press Star then one on your telephone keypad.
You will hear a time acknowledging your request.
Sarah Alexander: If you're on speakerphone, please pick up your handset before pressing any key.
If you're on Speakerphone, please pick up your handset before pressing any key.
Sarah Alexander: to withdraw your question, please press star, then two.
To withdraw your question. Please press Star then two.
Speaker Change: your first question comes from Adam Jonas from Morgan Stanley . Please go ahead.
Your first question comes from Adam join US join US from Morgan Stanley . Please go ahead.
Adam Jonas: Hey everybody. Good evening and thanks for doing the call. Mr. Wu, thanks for those really very kind.
Hey, everybody.
Good evening.
And thanks for doing the call Mr. Woo, thanks for those really very kind.
Adam Jonas: and thoughtful comments and the prayer at the end. That's, I wish more people did that. Thank you. Just a couple of questions. First, on the capital strategy.
And thoughtful comments on the prayer at the end I wish more people did that thank you.
Just a couple of questions first on the capital strategy.
Adam Jonas: And I think just your capex alone will spend, of course, well over half your cash balance. So I think if you add some reasonable amount of cash operating expense over the year that
I think just your Capex alone will spend of course, well over half of your cash balance so.
I think if you add some reasonable amount of cash operating expense over the year that.
Adam Jonas: If I were to grow it, let's say in line with your growth of revenue just for discussion, you're going to consume maybe two-thirds or more of the cash. So tell us what's your capital strategy in terms of debt or equity or government loans or grants and your minimum cash balance, please.
If I were to grow at let's say in line with your growth of revenue just for just for discussion.
Youre going to Youre going to consume maybe two thirds or more of the cash so tell us what's your capital strategy in terms of debt or equity or government loans or grants and your minimum cash balance. Please.
Adam Jonas: that you would expect you to run the business, what you would not want to go below.
That you would expect you to run the business what you would what you would not want to go below.
Thank you.
Adam Jonas: Do you want to answer this question?
Yeah, if you want you want to.
That's a good question.
Sure.
Speaker Change: Sure, definitely. Thanks for the question.
Okay quite a bit.
No.
Speaker Change: As we are, you know, there are many headwinds and so many other things that we are facing, we, we will not, we could not give you very detailed quantitative figures, but from our side, you know, we end up with 2001, more than 536, so,
Okay.
About menu hydro wind and so many of us and that we are facing.
We will not we cannot give you detailed quantitative figures.
Yes.
Our site.
End of <unk>.
Yes.
What that is.
536.
So.
So.
Because I.
Sachin is older.
600.
Okay.
I, though.
And wished.
Speaker Change: we should have a minimal cash balance around 200 million or above. Okay.
Sure the hail and minimal cash balance around the 200 million.
Okay.
We need to be.
Speaker Change: Okay. I'm having great difficulty hearing you, I'm so sorry, but your connection is not great. I heard you said a minimum cash balance of $200 million, I just want to confirm that. And I didn't know if you had any strategy or even at a high level how you would approach
Okay.
We're having great difficulty hearing you I am I'm, so sorry, but your connection is not great. I heard you said a minimum cash balance of $200 million I just wanted to confirm that and I didn't know if you had any strategy or.
Yes, even at a high level, how you would approach.
Speaker Change: bringing in more capital before you need it. You know, it's always better to bring in capital when you have a growth opportunity before you reach a minimum cash balance.
Uh huh.
Bringing in more capital before you need it.
It's always better to bring in capital when you have a growth opportunity before before you reach a minimum cash balance.
Speaker Change: So I'm curious how you prioritize the various sources, please.
So I'm curious how you prioritize the various sources please.
Sure sure I'm sorry.
Speaker Change: Sure. Sure. Sorry. I just want to thank you for what I said. I couldn't hear it.
Just wondering you know what I said.
I Couldnt hear it I apologize.
How are you.
Speaker Change: Hello. Yeah, your phone, you know, the interrupting, you know, the almost every sentence and it's not continue speaking.
Hello, Yes.
Don.
Interrupted.
Almost every sentence.
And it's not yet speaking.
My apologies can you hear me now.
Speaker Change: Yeah, we'll try it again and then otherwise we'll ask different questions and we can follow up.
Yeah, well, we'll try it again and then otherwise we'll ask a different question and we can follow up.
Speaker Change: But we can hear you. Why don't you try again, please?
But we can hear you.
Aren't you try again please.
Uh huh.
Speaker Change: Yeah, I think so. So let's continue. Thank you.
Yes, I think so so let's let's let's continue.
Thank you okay.
Speaker Change: Okay, sorry, sorry, but then, you know, better communication, it's just, you know, I would like to repeat what I said. So, thank you.
Okay, sorry, I thought they did not buy the car.
Litigation.
Our license would be Peter what I said, so thank you ladies not our culture.
Based on all that.
Speaker Change: Based on our current estimate, we do believe by end of this year, we have we should have a minimal cash balance is 200 million or more. So regarding our.
We estimate we still would be a deal by the end of the year. We hire it we should have had minimal cash balance is 200 million or more.
So I mean, Scott in our.
Speaker Change: capital funding plan going forward.
Type of total funding plan going forward.
Speaker Change: What do we do basically, we expect to read the certain, we get a certain amount of bank finance from local bank in China at the same time, we also.
What do we do basically we expect will lead to certain we get this.
Certainly amount of bank of Atlanta.
So from a local bank.
In China at the same time, we're also.
Speaker Change: actively negotiate with the U.S. financial utility to get the additional loans by before the end of this year. So if we are able to get additional finance, so our cash balance will be even larger than the minimum amount we currently projected.
I could go and negotiate with.
You ask Vanessa EQT to get to that.
<unk> loans.
Before the end of this year, so equal we are able to get decent though by Matt.
So our case of balance it will be even larger than that minimum amount, we cant project it.
Speaker Change: Thank you, Leon. And just one more follow-up for me if that's okay. The CAPEX guidance of 300 to $350 million for fiscal year 22, is this CAPEX ready to be spent right now? Meaning, is that expenditure based on any
Thank you Leon.
Then just one more follow up from me if that's okay.
The capex guidance of $300 million to $350 million for fiscal year 'twenty two.
Is this.
Capex ready to be spent right now meaning is that expenditure based on any.
Speaker Change: further final investment decision, environmental approvals, or is it contingent upon any financing commitment, including some of the loans that you're pursuing that have yet to be finalized?
Further.
Final investment decision environmental approvals or is it contingent upon any.
Financing commitment, including some of the loans that you've that.
That you are pursuing that have yet to be finalized.
Speaker Change: Let me answer the question. I would like to have our chief operating officer to answer the second part regarding the KPEX progress. I think the short answer to your question is you know the KPEX balance we currently projecting without considering we get an additional balance from the financial inclusion either in the US and in China. So the short answer is you know the money with the KPEX
Let me answer the question I would like to hire Shea, our chief operating officer to answer the second part of the Italian Capex progress I think that the short answer to your question.
No.
The cash balance.
We currently project came with other currency that we get a rotation of balancing for.
Hum.
NASA <unk> either in the U S into China. So the short answer is when you do the.
The money with the Capex.
Speaker Change: be spent in 2022 will come from the equity we reached the last year.
To be spent in 2022 will come from the equity rates of the last year.
Okay.
Speaker Change: Yeah, so Adam, Shane Smith. Hey, Shane. Thanks. Hi. How you doing? Hey, as you know, we're not looking at environmental conditions in terms of putting the money to work. We've outsold what we have capacity for. So of course, we've got to put that capacity in place. We basically have contracts.
Yeah. So Adam this is Shane Smith.
Thanks Hal.
Are you doing.
As you know, we're not looking at environmental conditions in terms of putting the money to work we outsold what we have capacity for so of course, we've got to put that capacity in place. We basically have contracts in place for $400 million and what Youre seeing is just the payment schedule for.
Speaker Change: in place for $400 million, and what you're seeing is just the payment schedule for either the construction milestones or equipment milestones that we expect, and so some of that money that we've already
Either the construction milestones or equipment.
Millstones that we expect and so some of that money that we've already.
Speaker Change: uh put to work just kind of rolls into 2023 and that's why you're seeing uh only the 300 and a little over 300 million that we're paying out this year but uh again the contracts are already in place both on construction and equipment to get what we need to be
Put to work just kind of rolls into 2023, and Thats why youre seeing.
Only the 300 and a little over $300 million that we're paying out this year, but again the contracts are already in place both on construction and equipment to get where we need to be to execute the plans that the customers are closely watching back to your other question. I mean, we are spending a fair amount of capex, because we have assets in place.
Speaker Change: to execute the plans that the customers are closely watching. Back to your other question. I mean, we are spending a fair amount of CapEx, but we have assets in place.
<unk>.
Speaker Change: that it's fairly easy to get financing for. And so we are, we've been fairly on the low debt side, if you will.
It's fairly easy to get financing for and so we are we have been fairly on the low debt side. If you will.
Speaker Change: uh probably too low for a company our size for the contracts we have in place and for the capital we're spending so we're now putting that work
Probably too low for a company our size for the contracts we have in place for the capital we're spending so we're now putting that work.
Speaker Change: Uh, putting that money to work in a different way through the assets and and Leon's well on his way of, uh, actually, she's already inked, uh, some of those, uh, funding options. And so, I think we have a little, we have more room in that area before we would look at the equity market, if you will, I think the equity market's more of a, hey, we keep winning business, uh, is where you'll hear that story. And so far, so good. Uh,
Putting that money to work in a different way through the assets.
<unk> is well on its way up.
She is already inked.
Some of those funding options.
We have a little we have more room in that area before we would look at the equity market. If you will I think the equity markets more of a hey, we keep winning business.
You will hear that story and so far so good.
Speaker Change: That's a likely story, maybe, in the next ATM months. But the market's going to receive that message.
That's a likely story maybe in the next 18 months, but the market is going to receive that message well.
Speaker Change: Understood. I really appreciate that chain and can I just squeeze in one more for for Professor Mattis, please on the supply chain if that's okay. Dr. Mattis, I hope you're well. Good to hear your voice.
Understood I really appreciate that chain and can I just squeeze in one more for professor matters. Please on the supply chain. If that's okay. Dr. Matt already.
Hi, hope you're well good to hear your voice.
Speaker Change: Um, Dr. Mattis, Dr. Mattis, so tell, tell me, um, tell us what, um, could you elaborate a bit more on, you know, supply chain?
We have Dr. <unk>, Dr. Madis, so tell.
Tell me tell us what.
Could you elaborate a bit more on the supply chain.
Mattis: prices. And I understand you can do LFP and Nickel Rich, which gives you flexibility because your technology is material agnostic, if you will, which is great. But you mentioned long term supply contract.
<unk>.
I understand you can do LSP and nickel rich.
Which gives you flexibility because your technology is.
Material agnostic, if you will which is great.
So, but you mentioned long term supply contracts.
Mattis: I'd be curious any capital commitments that you've need to make to make that secure. And I'd love your thoughts on how we should think about pass through, particularly of lithium, which you cannot avoid, which is up about 5x, prices 5x in China, if I understand lithium carbonate. So a little more detail that would be really helpful. And that's my last question. I do appreciate the opportunity. Thank you.
I'd be curious any any capital commitments that you need to make to make that secure.
And I'd Love your yes, I'd love your thoughts on how we should think about pass through particularly.
Particularly of lithium, which you cannot avoid which is up about five X.
Hi.
<unk> in China, I find my understand lithium carbonate so a little more detail there would be really helpful. And that's my last question I do appreciate the opportunity. Thank you.
Speaker Change: Yeah, sure. Yeah, so the supply question would actually better for Mr. Smith, but I would like to talk about my point of view. So, as for the cash of the material pricing in the kind of market, it went up to 2.5 times.
Yeah sure yeah. So the.
So my question would answer any vaginal flora Chihuahua, Mr. Shen Smith, but I would you like to just talk about your my point of view so as of for the cathode material pricing.
You know China markets, even when happy to two five times and nevertheless, the other materials such as the PBS lithium fixing the electrolyte those all ramped up.
Speaker Change: and nevertheless the other materials such as the PVDF, the lithium PF-16 electrolytes, those all ramps up. And as for micrologists, the strategy
And as for micro launch strategy.
Speaker Change: The most expensive components in the lithium and battery is a castle the material and that making our own material not only it increases the capacity increases the safety and also save.
The most expensive component in the lithium ion battery is a castle the material and by making our own material not only increases our capacity increases the safety and also save.
Speaker Change: more than two-digit percentage for micro-vacitude in terms of the cost.
More than two digits percentage for microbiome too in terms of the cost to <unk>.
Speaker Change: and we do have the strategic collaboration conversations already started in the United States, in Europe for the long-term collaboration in terms of the recycling of our product, and also in recycling the scrap material in the cell production line.
We do have the <unk>.
Strategy, Oh collaboration conversations already started in United States Youll route for that long term our collaboration in terms of the recycling of our product and also in recycled material in the cell product. Your line, yes. So those topics are well underway.
Speaker Change: Yeah, so those topics are well on the way. And by this point, was not limited by the supply chain change the interruptions currently have to spread it out in the world. I will pass this call to Mr Smith for more accurate.
And by this acquainted microvascular was not limited by the supply chain change the interruption so current pretty hot.
Oh Wow.
Today's call to recession Smith before more accurate.
So Adam is as Mr. Woo alluded to in his opening comments. It is one of the areas that we're closely watching we're trying to engage how long of a contract to get in because we are doing a little bit of a do you think when winter prices is going to go down or is this a trend we're going to continue to see.
Speaker Change: So, Adam, it is, as Mr. Wu alluded to in his opening comments, it is one of the areas that we're closely watching. We're trying to engage how long of a contract to get in, because we are doing a little bit of, uh, do you think when a, when a price is going to go down? Is this a trend we're going to continue to see right now? I'm, I'm saying it's a, it's a continued trend. They will go through 2022 and into 2023. And, uh, that's the way we're, um,
Right now.
I'm, saying, it's a continued trend that will go through 2022 and into 2023 and that's the way we're.
Speaker Change: Forecasting, that's the way we're engaging in our contracts.
Forecasting that's the way, we're engaging in our contracts and our.
Speaker Change: And so it's something that we closely watch. On the sales side, we are engaging customers to increase prices. And trying to keep that balance is challenging. So I think that that will be a part of our story in terms of margin pressure. Thanks Shane. Thanks everybody.
So it's something that we closely watch on the sales side, we are engaging customers to increase prices and trying to keep that balance is is challenging. So I think that that will be a part of our story in terms of margin pressure.
Thanks, Shane thanks, everybody.
Yes.
Good to hear from Adam.
Thank you.
Speaker Change: Once again, if you have a question, please press star, then 1.
Once again, if you have a question. Please press Star then one.
Speaker Change: Your next question comes from Gabe Doad from Cowan. Cowan, please go ahead.
Your next question comes from Gabe Daoud from Cowen. Please go ahead.
Yeah.
Yeah, Hi, Thanks for taking my questions. My first question is do you guys plan on providing any additional details on the backlog regarding regional or customer dynamics and how much of the backlog will be realized in 2022.
Gabe Dode: Hi, thanks for taking my questions. My first question is, do you guys plan on providing any additional details on the backlog regarding regional or customer dynamics and how much of the backlog will be realized in 2015?
Speaker Change: Do you want to go ahead and take that question? Yes, please. I will go ahead. Thanks for that question. I mean, most of the backlog, which we have right now will be, will be realized in 2022 partly some backlog could be shifted to 2023, but actually, most of it will be realized.
Moshe do you want to go ahead and take that question, yes. Please.
I will go ahead. Thanks for the question I mean, most of that backlog, which we have right now will be will be realized in 2022.
Possibly some backlog could be assistance in 2023, but actually most of it will be realized in 2022. So we could talk about the full cost of contract revenue. This is something which will start end of 2022 and move.
Speaker Change: So if we talk about the forecast of content revenue, this is something which will start end of 2022 and move all the way till 2031 as Orly mentioned. But the increasing factor will start extremely through various, the HEPA project in 23 as well as in 24. Got it. And then the second question I've gotten.
All the way till 2031 as already mentioned, but the increasing pack to Woodstock extremely through various.
If a project in in 'twenty, three as well as in 'twenty four.
Got it and then one question I've gotten.
Yes regional.
Yes.
Yeah.
Okay great.
Yes regional.
Go ahead please.
Go ahead, sorry go ahead.
Okay reached now that will be will be dedicated to Europe as well as to the Asia, India in India Asia market, mainly and also to the U S.
Speaker Change: regional it will be it will be dedicated to Europe as well as to the Asian India Asian market mainly and and also to the US.
Okay.
Okay.
Can you provide any additional.
Percentages or whatnot.
Speaker Change: not at that stage, so it's way easier to shift that in 23 and 24 because a lot of projects are just starting. We're building up, as already mentioned, in the call the capacities now for the U.S. market.
Not I.
We're not at that stage.
So it's way easier to shift 2023, and 24, because a lot of project starting we are building up as already mentioned the in the <unk>.
Called the capacity now for the U S market and.
Speaker Change: and so mainly it will be dedicated in the first step to Europe as well as to especially also Asia and in the second step it will direct
And so mainly will be dedicated in the first step two.
You too.
Europe as well as to especially also Asia.
And then second separately directly move over to the U S.
Speaker Change: Got it. Thank you. And the second question I've gotten from several investors was regarding your lawsuit with the formal general counsel. I was wondering if you could give us an update on where that stands and any plans to get this overhang behind.
Got it thank you and the second question I've gotten from several investors with regarding your lawsuit with their formal general Counsel I was wondering if you could give us an update on where that stands and any plans to get this overhang behind you.
Speaker Change: Sure, Gabe. This is Sarah Alexander. A trial has been scheduled and postponed a number of times. It's currently now scheduled for May, but yes, we would like to get that behind us and move forward. It's been outstanding for quite some time.
Sure Gabe this is Sarah Alexander.
<unk>.
Trial had been scheduled and postponed a number of times. It's currently now scheduled for.
For May, but yes, we would we would like to get that behind us and move forward.
And it's been.
Outstanding for quite some time.
Okay.
Perfect. Thank you.
Thank you.
Speaker Change: Thank you. This concludes the question and answer session. I would like to turn the conference back over to Sarah Alexander for any closing.
This concludes the question and answer session I would like to turn the conference back over to Sarah Alexander for any closing remarks.
Sarah Alexander: Thanks, Matt. Before we go, we received some great questions in response to our Ask Microvast campaign. While we don't have time to address every question we received, I would like to take a few minutes to address a few important themes. Thanks to everyone who submitted questions. We appreciate your feedback and keep them coming.
Thanks, Matt.
Before we go we received some great questions and response to our ask micro vast campaign, while we don't have time to address every question. We've received I would like to take a few minutes to address a few important themes. Thanks to everyone who submitted questions. We appreciate your feedback and keep them coming.
Sarah Alexander: The most frequently asked question was a request for an update on the status of our S1 registration statement.
The most frequently asked question was a request for an update on the status of our S. One registration statement.
Sarah Alexander: To provide some additional color on the timeline of events, our business combination with Tusken closed on July 23rd, 2021. Our understanding is that shortly after the completion of our business combination, the SEC chairman made public remarks directing this SEC staff to quote, take a pause for now on approving the registration statements of certain issuers.
To provide some additional color on the timeline of events our business combination with Tuscan closed on July 23, 2021, our understanding is that shortly after the completion of our business combination. The SEC chairman made public remark directing this SEC staff to quote take a pause for now on improving.
The registration statements of certain issuers.
Sarah Alexander: with a significant portion of their operations in China. We filed our initial S1 registration statement in the middle of this pivot in mid-August. Over the course of the next several months, we received correspondence from the SEC following each of our S1 filings and have responded with amended filings to address those comments.
With a significant portion of their operations in China, We filed our initial S. One registration statement in the middle of this pivot in mid August over the course of the next several months we received correspondence from the SEC following each of our S. One filings and have responded with amended filings to address those comments.
Sarah Alexander: Most of the comments have related to clarifying certain aspects of our operations in China, as well as the implication or potential implication of current or future laws on our operation.
Most of the comments I have related to clarifying certain aspects of our operations in China as well as the implication or potential implication of current or future loss on our operations. As an example, we were requested to make additional disclosures following the PCA Ob and the FCC's implementation of the <unk>.
Sarah Alexander: As an example, we were requested to make additional disclosures following the PCAOB and the SEC's implementation of the Holding Foreign Companies Accountable Act in the December 2021, January 2022 timeframe.
<unk> foreign companies accountable Act in December 2021 January 2022 timeframe it.
Sarah Alexander: It's also our understanding that many of the comments we received were issued by the SEC to many other similarly situated companies during the same time period.
It is also our understanding that many of the comments we received.
By the SEC to many other similarly situated companies during the same time period.
Sarah Alexander: In addition, we've been informed by the SEC staff that due to the significant increase in the number of recent transactions, the SEC's internal review process and turnaround time is slower than issuers may have experienced in previous years.
In addition, we have been informed by the SEC staff that due to the significant increase in the number of recent transactions. The FCC's internal review process and turnaround time is slower than issuers may have experienced in previous years.
Finally.
Sarah Alexander: The current delay between our last S1A filed in January 28, 2022 is because the financial statements included in that filing were current as of September 30, 2021.
The current delay between our last S. One as filed in January 2028, 2022 is because of the financial statements included in that filing were current as of September 30th 2021, those financial statements became stale in mid February and the document is required to be updated with December 30 <unk>.
Sarah Alexander: Those financial statements became stale in mid-February, and the document is required to be updated with December 31, 2021, results.
<unk> 2002 2021 results.
Sarah Alexander: Our annual report on Form 10K was filed earlier today, so we will now turn our focus to the S1, get the financials and disclosures as of 1231 updated quickly, and get the next amendment on file as soon as possible. We recognize that this process has taken longer than is typical, and we fully understand our shareholders' frustration.
Our annual report on Form 10-K was filed earlier today. So we will now turn our focus to the S. One get the financials and disclosures as of 12 31 updated quickly and get the next minute amendment on file as soon as possible. We recognize that this process has taken longer than is typical and we fully understand our share.
Holders frustration for moving the process forward as swiftly as possible and we appreciate your patience and understanding as we bring this process toward a conclusion.
Sarah Alexander: We're moving the process forward as swiftly as possible, and we appreciate your patience and understanding as we bring this process toward a conclusion.
Yeah.
Sarah Alexander: In addition, we've had several people ask for clarity about the Holding Foreign Companies Accountable Act and its potential impact on microvast, so I can provide you with a little bit of additional background information.
In addition, we've had several people ask for clarity about the holding foreign companies accountable Act and its potential impact on microvascular.
So I can provide you with a little bit of additional background information on.
Sarah Alexander: on the law, on the regulation which originally became law in December of 2020.
On the unregulated.
Nation, which originally became law in December of 2020.
Sarah Alexander: Among other things, the statute requires the SEC to identify public companies that have retained a registered public accounting firm to issue an audit report where the firm has a branch or office that is located in a foreign jurisdiction and the PCAOB has determined that it is unable to inspect the books of such accounting firm.
Among other things the statute requires the SEC to identify public companies that have retained our registered public accounting firm tuition to issue an audit report where the firm has a branch or office that is located in a foreign jurisdiction and the PCA Ob has determined that it is unable to inspect.
The books of such accounting firm.
Sarah Alexander: On December 16th, 2021, the PCAOB published a list of the accounting firms in mainland China and Hong Kong that it determined it is unable to inspect. That list does include microvast auditor, a mainland China office of Deloitte, as well as the mainland China and Hong Kong offices of other major accounting firms also located in the region.
On December 16th 2021, the PCA Ob published a list of the accounting firms in mainland China, and Hong Kong that it determined it is unable to inspect that list does include Microsoft's auditor, our mainland China office of Deloitte as well as the mainland China and Hong Kong offices.
Other major accounting firms also located in the region.
Sarah Alexander: On January 10, 2022, new SEC rules became effective which amended the disclosure requirements in annual reports for issuers that the SEC identifies as having an audit report issued by one of the above mentioned accounting firms.
On January 10, 2022, new SEC rules became effective which amended the disclosure requirements in annual report for issuers that etsy that the SEC identified as having an audit report issued by one of the above mentioned accounting firms.
Sarah Alexander: The SEC refers to these issuers as commission-identified issuers pursuant to the HFCAA. If an issuer is a commission-identified issuer for three consecutive years, the SEC shall prohibit the securities of the issuer from being traded on a securities exchange.
The SEC refers to these issuers as commission identified issuers pursuant to the HFC AA. If an issuer is it commission identified issuer for three consecutive years. The SEC shall prohibit the securities of the issuer from being traded on a securities exchange.
Speaker Change: MicroVAS does anticipate that it will be designated as a commission identified issuer following the filing of its 10k earlier today. But we've also begun discussions with our auditors to determine a path forward and a timeline for compliance as we expand and diversify our global operations.
Nobody does anticipate that it will be designated as a commission identified issuer following the filing of its 10-K earlier today.
We have also begun discussions with our auditors to determine a path forward and a timeline for compliance as we expand and diversify our global operations.
Speaker Change: So those are all of the questions that we have time for today. Thanks everyone for joining and this concludes today's call.
So those are all of the questions that we have time for today. Thanks, everyone for joining and this concludes today's call.
Yeah.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating have a wonderful day.
Speaker Change: Today's conference call you may disconnect your lines. Thank you for participating. Have a wonderful day