Q1 2024 Nikola Corp Earnings Call

Good morning, welcome to Nicola Corporation's first quarter 2024 earnings and business update call. Currently all participants are in a listen only mode. We will begin today's call with a short video presentation, followed by managements prepared remarks, a brief question and answer session.

Unknown Executive: Good morning. Welcome to Nikola Corporation's first quarter 2024 earnings and business update. Currently, all participants are in a listen-only mode. We will begin today's call with a short video presentation. [inaudible] Kauffman.

Operator: This question and answer session will follow the prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded. Thank you. Thank you.

Jim will follow the prepared remarks, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce Sally Chin head of Investor Relations. Please go ahead. Thank.

Tsoi Chin: It is now my pleasure. Tsoi Chin, Head of Investor Relations. Thank you, operator. And good morning, everyone.

Sally Chin: Thank you operator, and good morning, everyone welcome to Nicola corporations first quarter, 'twenty 'twenty four earnings and business update call.

Tsoi Chin: Welcome to Nikola Corporation's first quarter 2024 earnings and business update call. Joining me today are Steve Girsky, President and CEO, and Tom O'Kray, Chief Financial Officer. A press release detailing our financial and business results was distributed earlier this morning. This release can be found in the Investor Relations section of our website, along with presentation slides accompanying today's call. Today's discussion includes references to non-GAAP measures. The presentation includes adjusted EBITDA, earnings per share, adjusted free cash flow, and other non-GAAP measures.

Sally Chin: Joining me today are Steve Gursky, President and CEO, and Tom Oak Gray Chief Financial Officer.

Sally Chin: A press release detailing our financial and business results was distributed earlier. This morning. This release can be found on the Investor Relations section of our website along with the presentation slides accompany todays call.

Tsoi Chin: These measures are reconciled to the most comparable U.S. GAAP measures and can be found at the end of the Q1 earnings press release we issued today. Today's discussion also includes forward-looking statements about our future results, expectations, and plans. Actual results may differ materially from those stated, and some factors that could cause actual results to differ are also explained at the end of today's earnings press release on page 2 of our earnings call deck and in our filings with the SEC. Forward-looking statements speak only as of the date on which they are made.

Speaker Change: Today's discussion includes references to non-GAAP measures. The presentation includes adjusted EBITDA earnings per share adjusted free cash flow and other non-GAAP measures.

Speaker Change: These measures are reconciled to the most comparable U S. GAAP measures and can be found at the end of the Q1 earnings press release, we issued today.

Sally Chin: Today's discussion also includes forward looking statements about our future results expectations and plans actual results may differ materially from those stated and some factors that could cause actual results to differ are also explained at the end of today's earnings press release on page two of our <unk>.

Sally Chin: Earnings call deck and in our filings with the SEC forward looking statements speak only as of the date on which they are made you are cautioned not to put undue reliance on forward looking statements.

Tsoi Chin: You are cautioned not to put undue reliance on forward-looking statements. After the video presentation, Steve and Tom will provide their prepared remarks, followed by analyst Q&A. Then we will conclude with questions from our stockholders. Please begin the video presentation. Nikola's mission is to pioneer solutions for a zero-emission world, and we want to assist companies that are investing in sustainable solutions and decarbonizing the trucking industry. It's the most comfortable ride I've ever had in any truck that I've been in.

Sally Chin: After the video presentation, Steve and Tom will provide their prepared remarks, followed by analyst Q&A. Then we will conclude with questions from our stockholders. Please begin the video presentation. Thank you.

Sally Chin: Nicholas mission is to pioneer solutions for zero emission world and.

Sally Chin: And we want to assist companies.

Sally Chin: Investing in sustainable solutions and Decarbonising the trucking industry.

Sally Chin: The most comfortable right I've ever had thought that opinion, that's really nice we're building more hydrogen fuel cell trucks every day our facility in Coolidge, Arizona. It drives very smooth very quiet some extremely good turning radius.

Unknown Speaker: It's really nice. We're building more hydrogen fuel cell trucks every day at our facility in Coolidge, Arizona. It drives very smoothly, very quiet, and has an extremely good turning radius.

Sally Chin: He impressed with the technology.

Sally Chin: Integrated this is incredible.

Sally Chin: Yes.

Sally Chin: Okay.

Sally Chin: Yeah.

Sally Chin: This class a fuel cell gives us enough range to meet our customers' needs and still meet their sustainability goals.

Sally Chin: As the product, we're going to go with for the foreseeable future.

Unknown Speaker: I'm very impressed with the technology that's been integrated. This is incredible. This Class 8 fuel cell gives us enough range to meet our customers' needs and still meet their sustainability goals. This is the product we're going to go with for the foreseeable future. Today, we're celebrating the grand opening of our very first modular fueler site. Today, it starts with a ripple, and with your support, this ripple becomes a wave, and the wave becomes a tidal wave as we all pursue our common goal of cleaning up long-haul transportation. If we are successful, it will bring a better future for our kids. Thanks, Zoe. And good morning, everyone.

Sally Chin: Today, we're celebrating the grand opening of our very first modular chiller sites today, it starts where the rebels and with your support this ripple becomes a wave and the way it becomes a tidal wave as we all pursue our common goal of cleaning up long haul transportation.

Sally Chin: If we are successful it will bring a better future for our kids.

Sally Chin: [music].

Stephen J. Girsky: Welcome to our first quarter 2024 earnings and business update call. We're thrilled to be joined for the first time by Tom O'Kray, our new Chief Financial Officer. Tom brings four decades of public company experience to Nikola, from GM to Amazon to Eaton. He's approached our business with a fresh perspective. With this outlook and his keen sense of financial discipline, we look forward to the impact he'll make on Nikola in the quarters to come. Before handing it over to Tom, I'd like to talk about what's going on with Nikola today. We continue to move forward rapidly and execute on our plan. Please keep that in mind.

Speaker Change: Thanks, Joey and good morning, everyone welcome to our first quarter 2024 earnings and business update call.

Sally Chin: We're thrilled to be joined for the first time by Tom <unk>, Our new Chief Financial Officer.

Sally Chin: Tom brings four decades of public company experience to Nicola from G M to Amazon to Eaton, He's approached our business with a fresh perspective with this outlook and his keen sense of financial discipline, we look forward to the impact I'll make on Nicola in the quarters to come.

Speaker Change: Before handing it over to Tom I'd like to talk about what's going on with Nikola today.

Speaker Change: We continue to move forward rapidly and execute on our plans and please keep that in mind, we are in the execution phase not the planning or Conceptive face.

Stephen J. Girsky: We are in the execution phase, not the planning or concepting phase. Last quarter, I talked about getting on the field with the first deliveries of our hydrogen fuel cell electric truck. Today, we are executing plays.

Speaker Change: Last quarter I talked about getting on the field with the first deliveries of our hydrogen fuel cell electric trucks.

Speaker Change: Today, we are executing plays competing and cultivating more green shoots as we expand upon current markets and enter new ones.

Stephen J. Girsky: We are planting and cultivating more green shoots as we expand upon current markets and enter new ones. At Nikola, we emphasize that this is not a science project. We have real trucks on North American roads. And as you've seen, we're growing. At the end of Q1, we announced that we had wholesaled 40 hydrogen fuel cell electric trucks, all designated for Enfleet. This exceeded the high end of the guidance range.

Speaker Change: At Nicola we emphasize that this is not a science project, we have real trucks on North American roads.

Speaker Change: And as you've seen we're growing.

Speaker Change: At the end of Q1, we announced that we had wholesale 40 hydrogen fuel cell electric trucks, all designated for N fleets.

Speaker Change: This exceeded the high end of the guidance range that.

Stephen J. Girsky: That makes 75 wholesale fuel cell trucks in the first two quarters of serial production. We're seeing green shoots with repeat and new fleets, some in new markets such as New York. While our initial focus has been California and Canada, we can expand our reach to meet the demands of end fleet users virtually anywhere in the U.S. We've spoken about the chicken and egg challenge for years. We expanded HILA's North American reach this quarter with the grand opening of our Ontario, California, modular refueling station. And, with our partners at ITD in Canada, we announced the first commercial modular refueling station in Edmonton, Alberta. Iowa's hydrogen highway plan remains on track for 2024.

Speaker Change: That makes 75 wholesale fuel cell trucks in the first two quarters of zero production.

Speaker Change: We're seeing green shoots with repeat and new fleets.

Speaker Change: Some in new markets, such as New York.

Speaker Change: While our initial focus has been California, and Canada, we can expand our reach to meet the demands of end fleet users virtually anywhere in the U S.

Speaker Change: We've spoken about the chicken and egg challenge for eight years.

Speaker Change: We've expanded Hilus North American reached in the quarter with the Grand opening of our Ontario, California modular refueling station.

Speaker Change: And with our partners at ITD in Canada, We announced the first commercial modular refueling station in Edmonton, Alberta.

Speaker Change: <unk> hydrogen highway plan remains on track for 2024 and.

Stephen J. Girsky: In fact, we recently opened another modular refueling station near the port of Long Beach, California, to support primarily dry cargo fleets in this high-density area. We continue to be encouraged by opportunities for constructive green policy. We are pioneers for a zero-emissions world to decarbonize the trucking industry. But we cannot do this alone.

Speaker Change: In fact, we recently opened another modular refueling station near the Port of Long Beach, California to support primarily drayage fleets and this high density area.

Speaker Change: We continue to be encouraged by opportunities in constructive green policies.

Speaker Change: We are pioneers for a zero emissions world to Decarbonize the trucking industry.

Speaker Change: We cannot do this alone.

Stephen J. Girsky: We need both private and public partners. The tailwinds we see from the Inflation Reduction Act of 2022, EPA's Clean Ports Program, and state-specific policies at CARB, to name a few, support our mission. We promised that the first delivery of our improved battery electric truck, which we refer to as the BEV 2.0, would be completed by the end of Q1.

Speaker Change: We need both private and public partners.

Speaker Change: The tailwind we see from the inflation reduction act of 2022, EPA clean ports program and state specific policies of carb to name a few support our mission.

Speaker Change: We've spoken many times that the one truck to powertrain strategy.

Speaker Change: We promised that the first delivery, our bar or improve battery electric truck, which we referred to as the Bev to point a whole would be completed by the end of Q1, we delivered on this commitment.

Stephen J. Girsky: We delivered on this commitment. Now let's get to the business. Again, we exceeded Q1 expectations and wholesaled 40 hydrogen fuel cell electric trucks, all designated for N-Fleet use. Repeat Fleet Customer, IMC, the largest marine drayage company in the U.S. with more than 2,000 trucks in their fleet and operations coast-to-coast, ordered 10 fuel cell electric vehicles from our dealer network in Q1. This was after their initial order of 10 in Q4, and they've announced that they're taking 30 more for a total of 50.

Speaker Change: Now, let's get to the business update.

Speaker Change: Again, we exceeded Q1 expectations and wholesale 40 hydrogen fuel cell electric trucks, all designated for end fleet users.

Speaker Change: Repeat fleet customer IMC, the largest marine Drayage company in the U S with more than 2000 trucks in their fleet and operations coast to coast Order 10 fuel cell electric vehicles from our dealer network in Q1.

Speaker Change: This was after their initial order of 10 in Q4, and they've announced that they're taking 30 more for a total of 50.

Stephen J. Girsky: IMC has expressed strong interest in growing with us as we continue to build out modular hydrogen refueling stations near critical ports such as Long Beach and along busy freight corridors where they operate. Fleets such as AJR demonstrate our focus on fulfilling prior commitments and aligning ourselves with their business needs. AJR, with a total fleet of more than 500 trucks, is a leading carrier for the United States Postal Service and a major dreyage operator in the ports of Los Angeles and Long Beach.

Speaker Change: IMC has expressed strong interest in growing with us as we continue to build out modular hydrogen refueling stations near critical ports, such as long Beach, and along busy freight corridor, where they operate fleets such as a jr. Demonstrate our focus to fulfill prior commitments and align ourselves with their business needs.

Speaker Change: A J R with a total fleet of more than 500 trucks is a leading carrier for the United States Postal service and a major drayage operator in the ports of Los Angeles and long Beach.

Stephen J. Girsky: They announced a 50-unit purchase order for Nikola fuel cell trucks in May of 2023. We delivered the first 15 fuel cell trucks of this order to our dealer network in Q1, and we are working to continue our relationship with them as fueling solutions come online in freight corridors critical to their operation. New fuel cell electric vehicle fleet users such as Green Transportation Group or GTG help Nikola enter new markets in the Northeast. GTG is a large, full-service, 100% emissions-free freight and logistics provider in the New York tri-state area.

Speaker Change: They announced a 50 unit purchase order for nuclear fuel cell trucks in may of 2023.

Speaker Change: We delivered the first 15 fuel cell trucks of disorder to our dealer network in Q1, and we are working to continue our relationship with them is fueling solutions come online and freight corridor is critical to their operations.

Speaker Change: New fuel cell electric vehicle fleet users, such as Green Transportation group or G. T. G help Nicola enter new markets in the northeast G. T. G. As a large full service hundred percent emissions free freight and logistics provider in the New York Tri State area.

Stephen J. Girsky: We delivered 10 fuel cell trucks to our dealer network designated for GTG. Notably, GTG will locally source hydrogen from an authorized fueling provider independent from Nikola. Non-California or Canada customers, such as GTG, demonstrate that the sale of fuel cell electric vehicles can be decoupled from high-cost hydrogen, which enables us to penetrate new markets with less capital. As Tom will explain later in the call, expanding geographical focus, especially with large volume accounts, including national accounts, is an important priority of ours going forward.

Speaker Change: We delivered 10 fuel cell trucks to our dealer network designated for GTT.

Speaker Change: Notably G T G will locally source hydrogen from an authorized fueling provider independent from Nicola.

Speaker Change: Non California, or Canada customers, such as G. T. G demonstrate that the sale of fuel cell electric vehicles can be decoupled from hilus sourced hydrogen, which enable us to penetrate new markets with less capital as Tom will explain later in the call expanding geographical focus, especially with large volume accounts.

Speaker Change: Including National accounts is an important priority of ours going forward.

Stephen J. Girsky: Enabling our fleet users to access hydrogen independently is a growth factor in this strategy. Programmed to date, Nikola fuel cell electric vehicles have accumulated over 830,000 miles with an average fuel economy exceeding our target of 7.2 miles per kilogram.

Speaker Change: Enabling our fleet users to access hydrogen independently as a growth factor in this strategy.

Speaker Change: Program to date Nikola fuel cell electric vehicles have accumulated over 830000 miles with an average fuel economy exceeding our target of 7.2 miles per kilogram.

Stephen J. Girsky: We're doing what it takes to delight prospective and existing customers with the best possible experience. Moving to chart seven, we maintained our dominant market share of HVIP vouchers for class eight fuel cell electric vehicles and in the quarter with 362 of 367, or 99% of the vouchers that were requested in 2023 through March of 2024. We remained under soft cap or view at carb for much of Q1 after reaching a ceiling on Unredeemed Vouchers.

Speaker Change: We're doing what it takes to delight prospective and existing customers with the best possible experience.

Speaker Change: Moving to chart seven we maintained our dominant market share of H VIP vouchers for class eight fuel cell electric vehicles and in the quarter with 362 of 367 or 99% of the vouchers that were requested in 2023 through March of 2024.

Speaker Change: We remained under soft cap review at card for much of Q1, after reaching a ceiling on unredeemed vouchers.

Stephen J. Girsky: For context, in response to the strong demand for our zero-emission trucks, we have been requesting higher soft caps at CARB throughout 2023. Our most recent soft cap request for 500 unredeemed vouchers was granted in early April.

Speaker Change: For context in response to the strong demand of our zero emission trucks, we have been requesting higher soft caps at carb throughout 2023.

Speaker Change: Our most recent soft cap request for 500 Unredeemed vouchers was granted in early April.

Stephen J. Girsky: On the battery electric vehicle side, we ended Q1 with 85 unredeemed vouchers, or 30% market share during the same period. Being a pioneer is not easy, and again, we cannot do it alone. We share an aligned mission with CARB to help California achieve its air quality and emissions reduction goals. HVIP is only one program, and we continue to be encouraged by opportunities in other constructive green policies, to in particular help us fund our business.

Speaker Change: On the battery electric vehicle side, we ended Q1 with 85 on redeemed vouchers or 30% market share during the same period.

Speaker Change: Being a pioneer is not easy and again, we cannot do it alone we share an aligned mission, what carb to help California achieve its air quality and emissions reduction goals.

Speaker Change: H VIP is only one program and we continue to be encouraged by opportunities in other constructive green policies.

Speaker Change: Two in particular help us fund our business.

Stephen J. Girsky: CARB's heavy duty omnibus regulation allows us to monetize the NOx and particulate matter or PM credits we generate from selling zero emission trucks on a model year basis. Other OEMs or engine manufacturers that sell products above emission standards in California must purchase credits to enable sales of combustion engines.

Speaker Change: Carbs heavy duty omnibus regulation allows us to monetize the Nox and particulate matter R. P. M credits, we generate from selling zero emission trucks on a model year basis.

Speaker Change: Other Oems are engine manufacturers that sell products above emission standards in California must purchase credits to enable sales of combustion engines.

Stephen J. Girsky: We are pleased to confirm that Nikola has executed its first sale agreement for credits generated from model year 22, and revenue from this transaction will be recognized in Q2 2024. We expect future revenue from the sale of CARB credits to grow over time and be meaningful. California Advanced Clean Truck ACT Credits is another program that supports Nikola's mission to decarbonize trucking. Again, we generate credits for selling zero-emission trucks in California on a model-year basis.

Speaker Change: We are pleased to confirm that Nico has executed its first sale agreement for credits generated for model year 'twenty, two and revenue from this transaction will be recognized in Q2 2024.

Speaker Change: We expect future revenue from the sale of carb credits to grow over time and be meaningful.

Speaker Change: California advanced clean truck Acte credits is another program that supports Niklas mission to Decarbonize trucking.

Speaker Change: Again, we generate credits for selling zero emission trucks in California on a model year basis.

Stephen J. Girsky: OEMs that sell combustion trucks in California generate deficits that must be offset by purchase credit. We have an opportunity to be a market maker in this space and are actively negotiating with counterparties to monetize credit. In addition, the EPA's Clean Ports Program provides $3 billion to fund zero-emission port equipment and infrastructure, as well as climate and air quality planning at U.S. ports.

Speaker Change: <unk> that sell combustion trucks in California generate deficits that must be offset by purchase credits, we have an opportunity to be a market maker in this space and are actively negotiating with counterparties to monetize credits.

Speaker Change: In addition, the EPA clean ports program provides $3 billion to fund zero emission port equipment and infrastructure as well as climate and air quality planning at U S ports.

Stephen J. Girsky: Nikola has engaged with several private and public entities at strategic ports across the U.S. to apply together for funding to help ports decarbonize and transition to zero emissions. Our HILA team is executing its hydrogen highway plan, and we remain on track. Previously, we had committed to nine additional high-level refueling stations in California by year-end 2024. Now we are expecting to provide nine hydrogen fueling solutions by mid-year 2024 and 14 by year-end 2024.

Speaker Change: Nico has engaged with several private and public entities at strategic ports across the U S to apply together for funding to help ports decarbonize and transition to zero emissions.

Speaker Change: Our highly team is executing its hydrogen highway plan and we remain on track previously we had committed to nine additional high level refueling stations in California by year end 2024.

Speaker Change: Now we are expecting to provide nine hydrogen fueling solutions by mid year 2024, and 14 by year end 2024.

Stephen J. Girsky: These solutions include modular fuelers and partner stations in California, Canada, and at our home station at our Coolidge, Arizona manufacturing facility. We want to emphasize that building the hydrogen ecosystem requires industry-wide collaboration for the benefit of all. We need partners, and they come in different forms and stages of infrastructure development. The shared mission is to build an open ecosystem accessible to all. As mentioned during Q1, we launched HILA's first modular fueling station in Ontario, California.

Speaker Change: These solutions include modular fuels and partner stations in California, Canada, and our home station at our Coolidge, Arizona manufacturing facility.

Speaker Change: We want to emphasize that building the hydrogen ecosystem requires industry wide collaboration for the benefit of ball, we need partners and they come in different forms and stages of infrastructure development.

Speaker Change: The shared mission is to build an open ecosystem accessible to all as mentioned during Q1, we launched Hilus first modular fueling station in Ontario, California.

Stephen J. Girsky: This station is live with 24-7 operations to support fleets. We have also recently opened a refueling station near the port of Long Beach. Lastly, we announced Alberta's first commercial hydrogen refueling station along Highway 2, a vital freight corridor connecting Edmonton to Calgary. This station supports our close collaboration with the Alberta Motor Transport Association and our Canadian dealer, ITD Industries. Finally, we completed the first delivery of the remediated BEV in Q1.

Speaker Change: This station is live with 24 seven operations to support fleets.

Speaker Change: We also recently opened a refueling station near the Port of long Beach. This is a critical site for us to support the heavy drayage operations out of the port for fleets like IMC.

Speaker Change: Lastly, we announced Albertas first commercial hydrogen refueling station along highway two a vital freight corridor connecting Edmonton to Calgary.

Speaker Change: This station supports our close collaboration with the Alberta Motor Transport Association, and our Canadian dealer ITD industries.

Speaker Change: Finally, we completed the first delivery of the Remediated Bev in Q1, we continue to prioritize returning depths to customers and dealers and now expect to complete remediation of these units by year end 2024.

Stephen J. Girsky: We continue to prioritize returning BEVs to customers and dealers and now expect to complete remediation of these units by year-end 2024. Our ability to sell our on hand inventory, however, will be dependent upon future battery supply. We now expect to opportunistically sell on hand inventory for revenue in 2025. We've also taken this opportunity to future-proof the BEV 2.0, as it now shares significant software commonality with the battery and operating systems of the fuel cell electric vehicle, allowing customers to receive next generation upgrades seamlessly over the year as they are deployed.

Speaker Change: Our ability to sell Nico has on hand inventory, however will be dependent upon future battery supply.

Speaker Change: We now expect to Opportunistically sell on hand inventory for revenue in 2025.

Speaker Change: We've also taken this opportunity to future proof the Bev to point out as it now share significant software commonality with the battery and operating systems of the fuel cell electric vehicle, allowing customers to receive next generation upgrades seamlessly over the year as they are deployed.

Stephen J. Girsky: We've kept our fleet users front and center as we've engineered over-the-air enhancements, including dynamic data gathering for predictive diagnostics. Lohscheller, Anastasiya Pasterick, Gregory Lewis, We've also deployed new advanced driver assistance systems, features to effectively manage powertrain demand in aggressive route conditions, such as mountainous driving. Again, Growing Nikola is about being nimble, learning as we go, and adapting to meet the demands of our customers. Now, I'm passing it to Tom to cover the financial results. Welcome, Tom.

Speaker Change: We've kept our fleet use is front and center as we've engineered over the air enhancements, including dynamic data gathering for predictive diagnostics improved truck performance and field issue identification. We've also deployed new advanced driver assistance systems features to effectively manage powertrain demand and aggressive route.

Speaker Change: <unk> such as mountainous driving.

Speaker Change: Again growing Nicola is about being nimble learning as we go and adapting to meet the demands of our customers.

Speaker Change: Passing it to Tom to cover the financial results welcome Tom.

Tom: Thanks, Steve.

Tom O'Kray: Thanks, Steve. I've learned a great deal in the two months I've been at Nikola. The energy and unflinching spirit I see here are inspiration.

Tom: I've learned a great deal in the two months I've been at Nicola.

Tom: The energy and unflinching spirit I see here is inspirational.

Tom O'Kray: We're pioneers at Nikola and bringing the world closer to our zero emissions vision. Remaining committed to our mission and consistently following through on what we say we're going to do will make our vision a reality. Moving to chart 12, the profitability flywheel. As we have highlighted, we are excited about being in serial production and delivering 40 fuel cell trucks in the quarter and 75 trucks in the last two quarters. There is a market for our trucks, and we've begun to demonstrate that. That said, profitability will not be where we want it to be until we can build scale. Simply put, it is not practical to optimize our cost structure without a meaningful level of volume.

Tom: We're pioneers at Nicola and bringing the world closer to our zero emissions vision.

Tom: Remaining committed to our mission and consistently following through on what we say we're going to do we will make our vision a reality.

Tom: Moving to chart 12, the profitability flywheel as.

Tom: As we have highlighted we are excited about being in serial production.

Tom: And delivering 40 fuel cell trucks in the quarter and 75 trucks in the last two quarters.

Tom: There is a market for our trucks and we've begun to demonstrate that.

Tom: That said profitability will not be where we want it to be until we can build scale simply put it is not practical to optimize our cost structure without a meaningful level of volume.

Tom O'Kray: So, what are we doing differently to build the volume? There are a few things I would like to highlight. First, we are putting a greater focus on selling to national accounts, which we define as fleets greater than 1,000 trucks. Second,

Tom: So what are we doing differently to build the volume.

Speaker Change: There are a few things I would like to highlight.

Speaker Change: First we are putting a greater focus on selling to national accounts.

Speaker Change: Which we define as fleets greater than 1000 trucks.

Tom O'Kray: We are being more forgiving on the economics of the initial deal to build confidence with our end fleet users. We are confident that once Enfleet users drive our trucks, they will be delighted and want more. Finally, we are expanding our geographical focus beyond California and Canada. In short, we will leverage partnerships to build volume across North America. With meaningful volume, we will be able to provide our supplier partners with a consistent order. The Order Book will enable suppliers to optimize their cost structure by enabling economies of scale to reduce our bill of materials.

Speaker Change: We are being more forgiving on the economics of the initial deal to build confidence with our end fleet users. We are confident once and fleet users drive our trucks, they will be delighted and want more.

Speaker Change: Finally, we are expanding our geographical focus beyond California, and Canada in short, we will leverage partnerships to build volume across North America.

Speaker Change: With meaningful volume, we will be able to provide our supplier partners with a consistent order book the order book will enable suppliers to optimize their cost structure by enabling economies of scale to reduce our bill of material.

Tom O'Kray: In addition, we will utilize the scale to optimize our costs, reducing our operating expenses and optimizing our manufacturing costs. The flywheel described above will not only lead to profitability but also put Nikola in the driver's seat of the hydrogen economy, attracting partners who believe in this mission and want to get a head start. Chart 13 contains our financial highlights. As noted previously, absent meaningful volume, profitability will be below our expectation. For the quarter, we had a gross loss of $57.6 million.

Speaker Change: In addition, we will utilize our scale to optimize our cost reducing our operating expenses and optimizing our manufacturing costs.

Speaker Change: The flywheel described above will not only lead to profitability, but also put nicola in the driver's seat of the hydrogen economy, attracting partners, who believe in this mission and want to get a head start.

Speaker Change: Chart 13 contains our financial highlights as noted previously absent meaningful volume profitability will be below our expectations.

Speaker Change: For the quarter, we had a gross loss of $57 $6 million.

Tom O'Kray: That said, we're making progress. With respect to the top line, we exceeded the high end of our volume guidance by delivering 40 fuel cell trucks with revenue of approximately $15 million, also above the high end of guidance, after adjusting for BEV returns associated with dealer cancellation. Further, the average sales price of the 40 fuel cell trucks improved sequentially by $30,000 per unit to $381,000.

Speaker Change: That said, we're making progress with respect to the top line, we exceeded the high end of our volume guidance by delivering 40 fuel cell trucks with revenue of approximately $15 million also above the high end of guidance after adjusting for Bev returns associated.

Speaker Change: With dealer cancellations further the average sales price of the 40 fuel cell trucks improved sequentially by $30000 per unit to $381000.

Tom O'Kray: On the operating side, R&D and SG&A on an adjusted basis, we're favorable to guide. With respect to cash, our unrestricted cash declined $119 million sequentially.

Speaker Change: On the operating side R&D and SG&A on an adjusted basis were favorable to guidance with respect to cash or unrestricted cash declined $119 million sequentially, our cash burn improved sequentially versus the fourth quarter and 2020.

Tom O'Kray: Our cash burn improved sequentially versus the fourth quarter of 2023. We have a lot of work to do, but we are making progress. Moving on to chart 14. For fiscal year 2024, our fuel cell wholesale delivery guidance remains unchanged at 300 to 350 trucks, with Q2 being between 50 and 60 Wholesale delivery.

Speaker Change: Three.

Tom O'Kray: We have a lot of work to do but we're making progress.

Speaker Change: Moving on to chart 14 for fiscal year 2020 for our fuel cell wholesale delivery guidance remains unchanged at 300 to 350 trucks with Q2 being between <unk>.

Speaker Change: <unk> 50, and 60 wholesale deliveries.

Tom O'Kray: For the reasons highlighted earlier, with respect to the Bevs, we will look to sell our on-hand inventory opportunistically in 2025. Profitability is related to the execution of the flywheel discussed earlier in the call. As such, we will be focused on gaining momentum. Finally, we have demonstrated an ability to raise capital, and as we continue to execute our plan, it will only increase as the flywheel gains momentum. Back to Steve for his closing remarks. Thanks, Tom. We're glad you're here.

Speaker Change: For the reasons highlighted earlier with respect to the Bev.

Speaker Change: We will look to sell our on hand inventory opportunistically in 2025.

Speaker Change: Profitability is related to execution of the flywheel discussed earlier in the call as such we will be focused on gaining momentum.

Speaker Change: Finally, we have demonstrated an ability to raise capital and as we continue to execute our plan. It will only increase as the flywheel gains momentum.

Speaker Change: Back to Steve for closing remarks.

Stephen J. Girsky: Thanks, Tom we're glad you're here.

Stephen J. Girsky: To close on a personal note, I have invested more than four years in Nikola and have been through the ups and downs of the company. I believe in our leadership team, our board, and what the team has created. As a leader, I am financially invested in the company, and I have never sold one share of Nikola's stock outside of paying tax obligations. Period. I am focused on removing unnecessary distractions, growing our business, and progressing on the path to profitability. As Nikola moves forward, we will keep hitting milestones. On April 29th, our 100th production fuel cell electric vehicle drove off our Coolidge line.

Stephen J. Girsky: To close on a personal note I have invested more than four years, and Nicola and had been through the ups and downs of the company I believe in our leadership team our board and what the team has created as a leader I am financially invested in the company and I have never sold one share of Niklas stock outside of paying tax obligations.

Stephen J. Girsky: Good.

Stephen J. Girsky: I am focused on removing unnecessary distractions growing our business and progressing on the path to profitability.

Stephen J. Girsky: As Niccolo moves forward, we will keep hitting on milestones on April 29th our 100th production fuel cell electric vehicles drove off our Coolidge line.

Stephen J. Girsky: This is truly a testament to our Arizona teams in Phoenix, Coolidge, and supplier partners around the world. This is just the beginning. I remain inspired by the people at Nikola, the faith of our stockholders, and the mission that we all share, to decarbonize trucking and pioneer solutions for a zero emissions world. These words are what our team lives by, and we thank you for being part of it.

Stephen J. Girsky: This is truly a testament to our Arizona teams in Phoenix Coolidge and supplier partners around the World. This is just the beginning.

Stephen J. Girsky: I remain inspired by the people at Nikola the faith of our stockholders and the mission that we all share to Decarbonize trucking and pioneer solutions for zero emissions World.

Stephen J. Girsky: These words are water team lives by and we thank you for being part of it.

Operator: This concludes our prepared remarks. Operator, please open the line for analyst questions. Thank you. If you would like to ask a question, please press star 1 on your telephone. The confirmation tone will indicate your line is in the question queue. Prestar, too, if you would like to, for participation. Kauffman.

Speaker Change: This concludes our prepared remarks, operator, please open the line for analyst questions.

Speaker Change: Thank you.

Speaker Change: We'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Information tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing your star keys.

Operator: Thank you. Thank you. Our first question is from Scott Group with Wolf Research. Scott, please check and see if your line is working. I can't hear you, Scott.

Stephen J. Girsky: Our first question is from Scott Group with Wolfe Research. Please proceed.

Operator: Scott Please check and see if your line is muted.

Scott Group: Okay, We will move here you Scott.

Scott Group: We'll move on to the next question. Our next question is from Mike Zaremski with D. A Davidson. Please proceed.

Operator: We'll move on. Our next question is from D.A. Yes, good morning, and thanks for taking my question.

Michael Shlisky: Yes, good morning, and thanks for taking my question.

Unknown Analyst: Tom, maybe we could get a little more clarity about some of the comments that you made. If I took it correctly, or if I understood what you were trying to say, it sounded like, perhaps the pricing of future FCEVs for the rest of the year or so might not be as high as initially planned. Are you intending to cut prices to get customers to trial them, to get a few in there? And you also kind of said comments basically saying that it almost implied that you... Don't see much need to cut costs going forward either.

Michael Shlisky: Tom maybe we could get a little more clarity about some of the comments that you made.

If I took it correctly if I understood. What you were trying to say it sounds like.

Michael Shlisky: Perhaps the pricing in the future.

Unknown Analyst: <unk> for the rest of the next year or so might not be as high as initially planned are you intending to cut prices to get customer trial get together a few in there and you also kind of said comments basically saying that.

Unknown Analyst: It almost implies that you.

Michael Shlisky: Don't see much need to cut costs going forward, either it's going to take the volume to meet those costs that you currently have which are a bit lower than they have in the past.

Unknown Analyst: It's going to take volume to make those costs that you currently have, which are a bit lower than they were in the past, but it's going to take more volumes to make the current cost structure work. So can you make a comment on whether you're going to cut prices when you do have any plans to reduce costs going forward? Yeah, let me, let me, let me start with the second part of the question. First, we definitely need to optimize our cost structure. No question about it.

Michael Shlisky: It's going to take.

Unknown Analyst: More volumes to meet the current cost structure works. So can you maybe just comment on whether you're going to cut price.

Speaker Change: You do have any plans to reduce costs going forward.

Tom O'Kray: What we were trying to get at, though, with the flywheel and my two months of crawling around the numbers, is that we need to have meaningful volume to be able to go to our supplier partners and work with them to optimize our bomb. And that comes down to a credible order book, something that they can plan their operations on and optimize their operations. And that's where we touched on the three focus points in terms of national accounts, geography, as well as, What was the third one? Shultz asked. National Accounts, National Accounts, Geography, and that was it.

Speaker Change: Yes, let me let me let me start with the second part of the question first.

Tom O'Kray: We definitely need to optimize our cost structure no question about it what we're trying to get at though with the flywheel and my two months been here crawling around the numbers as we need to have meaningful volume to be able to go to our.

Shultz: Flyer partners.

Tom O'Kray: And work with them to optimize our bonds and that comes down to Accretable order book something that they can plan their operations on and optimize their operations and that's where we touched on the three focus points in terms of national accounts.

Shultz: Geography as well as.

Tom O'Kray: <unk>.

Shultz: What was the third one.

Shultz: National accounts National accounts geography.

Tom O'Kray: <unk>.

Nancy: That was it Nancy.

Tom O'Kray: End. Yeah, and also the economics coming back, I'm sorry, coming back to your first point. So the three points are national accounts, being forgiven on the initial deal, and geography. So being forgiven on the initial deal, what does that mean?

Tom O'Kray: Yes.

Tom O'Kray: And also the economics coming back on sorry, coming back to your first point, so the three points our national accounts.

Tom O'Kray: Being forgiven on the initial deal and geography, so being forgiven on the initial deal what does that mean does that mean, a price cut no. It doesn't mean a price cut in fact, you see that our prices and increasing sequentially versus the prior quarter. What it does mean, though is we.

Tom O'Kray: Does that mean a price cut? No, it doesn't mean a price cut. In fact, you see that our prices are increasing sequentially versus the prior quarter. What it does mean, though, is that we need to land the big national accounts, those that are over 1,000. And to do that, you know, we are not going to be puffing out our chests and really wrestling with the economics at the expense of getting the volume on the road.

Tom O'Kray: We need to land the big National accounts those that are over.

Tom O'Kray: And to do that we are not going to be pumping out our chest and really wrestling with the economics at the expense of getting the volume on the road, we're confident that once we get the trucks in the customers hand.

Tom O'Kray: We're confident that once we get the trucks in customers' hands, they will love the trucks, and we will have a longer-term business with them. So the bottom line is, yes, for sure, we have to cut our costs. The other thing with the national accounts is it will give us more experience with our warranty expense, which is way too high right now. It will give us an opportunity to plan our manufacturing expenses. So the point of the flywheel is that volume is foundational.

Tom O'Kray: They are going to love the trucks, and we're going to have longer term business with them.

Tom O'Kray: Bottom line is yes for sure we have to cut our costs.

Tom O'Kray: The other thing with the national accounts as it will give us more experience for our warranty expense, which is way too high right now it will give us give us an opportunity to plan our manufacturing expense for the point of the flywheel is the volume is foundational and we just wanted to be very open and say we need to be we need.

Stephen J. Girsky: And we just want to be very open and say we need to be flexible with the initial part of the deal. Thanks for the questions. I think just to add to that, just in general, big customers get better price deals than smaller customers. I think it's as simple as that. And if you have bigger customers as more of your volume, the price increases won't occur as fast as if it were all small customers. It's an efficiency issue. How do you get to these small guys that pay more versus the big guys that can bring more volume in and help you lower your material costs?

Stephen J. Girsky: To be flexible with the initial part of the deal.

Speaker Change: Thanks for the questions.

Stephen J. Girsky: I think just to add to that just just in general big customers get better price deals than smaller customers I think it's as simple as that and if you had the bigger customers as more of your.

Stephen J. Girsky: More of your volume the price increases won't occur as fast.

Stephen J. Girsky: As if it was all small customers. It's an efficiency issue is how do you get to the small guys that will pay more versus the big guys that can bring more volume in and help you lower your material cost yes.

Tom O'Kray: Yeah. And just to amplify that one last time, I think in the past, there have been some passing on larger accounts because the profitability wasn't actually where we wanted it to be. And the issue is, if you pass too much, then you're left not with the scale, which is what we need to get this flywheel going.

Stephen J. Girsky: And just to amplify that one last one last time I think in the past there have been some passing on larger accounts because the profitability wasn't actually where we wanted to be and the issue is if you pass too. Much. Then you are left not with the scale, which is what we need to get this flywheel going.

Tom O'Kray: Hopefully, that's clear. Sure. Yes, I appreciate all that color.

Speaker Change: Hopefully that's clear.

Unknown Analyst: I just wanted to ask about some of your comments, Steve, around expanding a little further into New York. Can you give us a sense as to what you believe the current scale and the interest is within New York, and how would the hydrogen build out look within New York? So what's interesting about that deal was, again, this is about experience, right? Getting on the field and learning.

Speaker Change: Sure, Yes, I appreciate all that color.

Speaker Change: I also wanted to ask about some of your comments.

Unknown Analyst: Steve around expanding a little further into New York can you give us a sense as to what you believe the current scale of interest is.

Unknown Analyst: Within New York, and how would the housing build outlook within New York.

Unknown Analyst: So what's interesting about that deal was.

Unknown Analyst: Again this is about experience right getting on the field and learning and one of the things we've learned from our modular fewer is we could put these anywhere and in fact anyone can put them anywhere. So that deal is we sold the trucks.

Stephen J. Girsky: And one of the things we've learned from our modular fueler is that we could put these anywhere. And, in fact, anyone can put them anywhere. So that deal is, we sold the trucks. There's another hydrogen provider nearby that's going to provide the fuel. The customer went to that hydrogen provider and did that. We can go anywhere now, anywhere where it's economically viable for the customer. And New York has, in New York, the Port of New York has some incentives. You're going to see a lot of incentives. You're already seeing it.

Stephen J. Girsky: There is another hydrogen provider nearby that's going to provide the fuel the customer went to that hydrogen provider and bid that we can go anywhere now anywhere where it's economically viable for the customer and New York has.

Stephen J. Girsky: In the New York report in New York has some incentives youre going to see a lot of incentives you're already seeing it. The EPA was mentioned earlier about our clean ports program. So youre going to see a lot of money towards these ports and we can start mobile fuel isn't a lot of these different ports or somebody else can they have the capital and that will sort of move the volume outside of.

Stephen J. Girsky: The EPA was mentioned earlier about a clean ports program. So you're going to see a lot of money go towards these ports. And we can start mobile fuelers at a lot of these different ports, or somebody else can if they have the capital. And that will sort of move the volume outside of California and Canada. Don't To be clear, the incentives in California and Canada are the best in the country right now, but other states have this FOMO going on where they want to get in the game, and they're starting to offer incentives of their own.

Stephen J. Girsky: California, and Canada don't to be clear the incentives in California, and Canada are the best in the country right now, but other states habits.

Stephen J. Girsky: <unk> going on where they want to get in the game and they are starting to offer incentives are their own and the ports is a big fleet is a very logical place for us to start so youll see more of that just to maybe amplify that a little bit more again as a new person coming in I think we were so overly focused with California.

Stephen J. Girsky: And the ports are big; it's a very logical place for us to start. So you'll see more of that. Yeah. And just to maybe amplify that a little bit more, again, as a new person coming in, I think we were so overly focused on California that we were leaving out a big part of the total addressable market. And now, as we're working with partnership and the ability to move fuel elsewhere, we have an opportunity, again, to get this order book larger, which is the foundational part of the flywheel. So we said New York. By the way, we say New York; it could be Newark; it's called a tri-state area.

Stephen J. Girsky: We were we were leaving out a big part of the total addressable market and knowledge, we are working with partnership and the ability to move fuel elsewhere. We have an opportunity again to get this order book larger which is the foundational part of the flywheel.

Speaker Change: Okay, So New York Scott.

Stephen J. Girsky: The way, we said New York that could be Newark, it's call it Tri state area.

Speaker Change: Sure Yeah, they often work in tandem and there's some great infrastructure already connected I'm I'm told.

Speaker Change: Yes, maybe I could ask one.

Stephen J. Girsky: Just kind of one last one about the various housing.

Stephen J. Girsky: Kind of the temporary modulus Hudson, just got around California and elsewhere.

Stephen J. Girsky: Can you give us a sense as to eventually if you've got the scale what would the cost of a more permanent station be and do you intend to have partner is still for serviced at least some of those patients.

Stephen J. Girsky: And kind of the timing of kind of when a just a temporary or kind of modular solution my turn it into a full scale building.

Unknown Analyst: Sure, yeah, they often work in tandem, and there's some great infrastructure already in Connecticut, I'm told. Maybe I can ask just kind of one last question about the various hydrogen, kind of the temporary modular stations you've got around California and elsewhere. Can you give us a sense as to, eventually, if you've got to scale, what would the cost of a more permanent station be? And do you intend to have partners still for at least some of those stations?

Stephen J. Girsky: So.

Speaker Change: I'll start.

Unknown Analyst: And kind of the timing of kind of when just a temporary or kind of modular solution might turn into a full-scale building. So I'll, I'll start. We so each modular fueler can do 20, 30 trucks; you put two of them in, you could do 40 to 60 trucks a day.

Unknown Analyst: So each modular fuel Eric can do 2030 trucks, you put two of them and you could do.

Unknown Analyst: 40% to 60 trucks, a day and then the station like call. It first element in northern California that some others. They can do 100 to 200 trucks. So we want to build this strategy is build density and either make the show the partner or the financier that the economics are viable here and then go in with the <unk>.

Unknown Analyst: Station the station cost.

Unknown Analyst: Farmers Nat depending upon.

Unknown Analyst: Incentives and things like that could be three ex <unk>.

Unknown Analyst: Something something that Anika and it would be more efficient so.

Stephen J. Girsky: And then the station, like call it the first element in Northern California, there are some others, they could do 100 to 200 trucks. So we want to build the strategy of building density and either make the show the partner or the financier that the economics are viable here, and then go in with the whole station, the station costs. Farmer net, depending upon incentives and things like that, could be 3x. [inaudible] So we want to get to the station, but again, to get partners, to convince partners that this is financially viable, we need density, and the modular fuelers are a very cost-efficient way to get us density. Okay, sure, certainly. Thanks for the answers, guys. I appreciate it. I'll pass it along.

Unknown Analyst: So we want to get to the station, but again to get partners to convince partners that this was financially viable we need density and modular fuels are very cost efficient way to get us density.

Stephen J. Girsky: Yeah.

Speaker Change: Okay sure certainly thanks for the answers guys I appreciate it I'll pass it along.

Speaker Change: Thanks, Mike.

Unknown Analyst: Thanks, Mike. Our next question is from Greg Lewis with BTID. Yes, thank you. And good morning.

Stephen J. Girsky: Our next question is from Greg Lewis with <unk>. Please proceed yes. Thank you and good morning, and thanks for taking my question Hey, Steve.

Unknown Analyst: Thanks for my question. Hey, Steve. Um, the first one was about, um, uptake with IMC, obviously, that they've had some vehicles for a little while now. Um, is there any way to kind of see what they utilize, you know, how their utilization or uptime on those vehicles has been trending over the last few months? We can get back to you on that. Not their vehicles in particular.

Unknown Analyst: But the first one was around about uptake with with IMC, obviously that they've had some vehicles for a little while now.

Unknown Analyst: Is there any way to kind of see what that.

Unknown Analyst: How they're those utilization our uptime on those vehicles has been trending over the last few months.

Stephen J. Girsky: We can get back to you in general about what the uptime has been. Great. Let us get back to you on that. Okay. We have that for the fleet in general. I don't want to speak to specific fleets because it's sensitive, but we could, so we'll get back to you with that.

Unknown Analyst: And we can get back to you with not their vehicles in particular, we can get back to you in general what uptime has been great. Let us get back to you on that okay.

Stephen J. Girsky: But we have that for the fleet in general I don't want to speak to specific fleets.

Stephen J. Girsky: Because it's sensitive but we could sell.

Stephen J. Girsky: So you'll get back to you with that okay. Okay, and then and then as I think about the hydrogen the network build out I mean, obviously, we have the location in California.

Unknown Analyst: Okay. And, OK. And then, and then as I think about the hydrogen network build out, I mean, obviously, we have the locations in California and Canada. Is that something where you're able to share kind of the, you know, the hydrogen volumes moving through those fueling stations and kind of that that trend? I don't think we're sharing that information right now on that. It's competitive, but it's mostly internal. I mean, if someone wants to camp outside Ontario, they could see what's going on out there, how many trucks are rolling through, and things like that.

Unknown Analyst: And Canada is that something where you're able to share kind of the.

Unknown Analyst: Our hydrogen volumes moving through those fueling stations in kind of that trend.

Speaker Change: I don't think we're sharing that information.

Unknown Analyst: Right now.

Unknown Analyst: It's competitive it's.

Unknown Analyst: Mostly internal I mean, you could see some once the camp outside Ontario, they could see what's going on out there how many trucks are rolling through and things like that but we're not sharing that in general.

Stephen J. Girsky: But we're not sharing that in general, and Greg. As a first mover, we are partnering with other partners in terms of suppliers. So we're testing and validating the fuelers, and so as we're gathering data, we are a little bit more comfortable sharing what the utilization is. Okay, and then just I'll just ask another question. As I think about the, the, the repurchases of the beds that were announced during the quarter, is there any way to kind of view that in terms of what it was?

Speaker Change: Thank you Okay first mover.

Stephen J. Girsky: With other partners in terms of suppliers that we are testing and validating the pillars and so as we're gathering data.

Stephen J. Girsky: Nothing more comfortable sharing with the.

Speaker Change: Thank you and we'll be there.

Stephen J. Girsky: And then just I'll just ask another then.

Stephen J. Girsky: As I think about.

Stephen J. Girsky: The repurchases.

Stephen J. Girsky: The beds.

Stephen J. Girsky: That were announced during the quarter is there any way to kind of kind of view that in terms of was that is that just transitory I E. We had to buy these back from the dealers, but we expect those to be deployed or were there. Some other type so is there.

Stephen J. Girsky: Is that just transitory, i.e., we had to buy these back from the dealers, but we expect those to be deployed? Or were there some other types of, you know, is there, competition that, you know, drove that?

Stephen J. Girsky: Is there other competition that.

Unknown Analyst: Just kind of curious about your views on that and if there's a potential for that to reverse, you know, maybe over the next 12 to 18 months. Yeah, I'll take I'll take that, Greg. Anytime you're building out a dealer network to sell a new technology product, you're going to have pruning and optimization of that network, and it was nothing more than that, as it relates to this specific dealer. And, and we repurchase the, you know, the 15 vehicles.

Stephen J. Girsky: That drove that just kind of curious on your views around that and if there is a potential for that to reverse maybe over the next 12 to 18 months.

Speaker Change: Yes, I'll take I'll take that Greg and anytime Youre building out a dealer network to sell a new technology product youre going to have pruning and an optimization of that network.

Unknown Analyst: It was nothing more than that as it relates to the specific dealer and and.

Speaker Change: And we repurchased.

Speaker Change: The 15 vehicles, we also use that as an opportunity to build the reserve based on experience for.

Unknown Analyst: We also use that as an opportunity to build a reserve based on experience for, you know, future returns. But, you know, we intend to, you know, resell those 15 vehicles, and they'll go back into the network. Unfortunately, it muddies up the top line, which, you know, I tried to try to explain. I mean, we actually beat our top line guidance of 15 million for the fuel cell trucks. We were at 381,000 average sales price versus 351 in the prior quarter. So really a good news story making traction, but we got muddied up with the bad return. Absolutely not.

Unknown Analyst: For future returns, but we intend to.

Unknown Analyst: We sell those 15 vehicles.

Unknown Analyst: It will go back out into into the network. Unfortunately, muddies up the the topline which.

Unknown Analyst: Tried to tried to explain I mean, we we actually beat our topline guidance.

Unknown Analyst: $15 million for the fuel cell trucks, we were at 381000 average sales price versus $3 51 in the prior quarter. So really a good news story, making traction, but we it was muddied up with the with the best returns.

Tom O'Kray: Thanks for taking my question. Thank you, guys. Our next question is from Willie Dong. Hi, thanks so much for taking the questions.

Speaker Change: No absolutely thanks for taking my questions.

Yan Dong: Thank you Greg.

Yan Dong: Our next question is from will <unk> with Deutsche Bank. Please proceed.

Unknown Analyst: So, I understand the importance of scale to profitability, as you mentioned in your prepared remarks, but I'm just wondering how we should maybe think about gross margins for this year. And I think, you know, you have this ability to, you know, wholesale 300 to 350 for the year. So, how should we think about this year's gross margin, you know, versus, I mean, the previous we provided, you know, negative 80 to negative 100 for the year. Is that still the right ballpark, or how should we think about that? Yeah, thanks for the question.

Yan Dong: Alright, thanks, so much for taking my questions.

Speaker Change: I understand.

Unknown Analyst: The scale to profitability.

Unknown Analyst: You mentioned in your prepared remarks, but I was wondering how we should maybe think about.

Unknown Analyst: Gross margins for <unk>.

Unknown Analyst: Thank you have visibility to wholesaling the Huntington.

Unknown Analyst: The award.

Speaker Change: Should we think about it.

Unknown Analyst: This year's gross margin.

Speaker Change: I think the premium <unk>.

Unknown Analyst: Yeah.

Unknown Analyst: For the year is that still the right ballpark warehouses.

Unknown Analyst: Yes.

Tom O'Kray: I mean, we intentionally stayed silent on the fiscal year guidance because, you know, trying to work with our supplier partners without the scale to get them to optimize costs, as well as other costs of revenues like warranty experience. It's just really hard to pinpoint what that number is going to be because there's just too many moving parts. So come back to how you can measure us by looking for the sustainable order book.

Speaker Change: Yes. Thanks for the question I mean, we intentionally stayed silent on the on the fiscal year guidance, because trying to train and work with our supplier partners without the scale to get them to optimize costs as well as other cost of revenues like warranty experience.

Tom O'Kray: It's just really hard to pinpoint what that number is going to be because they're.

Tom O'Kray: There's just too many theres just too many moving parts so coming back to how you. How you can measure US is looking for that sustainable order book now talking about what I think it looks like going forward and certainly at some point, we will come out with more detail, but I see 2025 builds.

Tom O'Kray: Now talking about what I think it looks like going forward, and certainly, at some point, we'll come out with more detail, but I see 2025 building significantly more scale than the 300 to 350 units that we're guiding in 2024. And then I see 2026, with even more volume after that. And so at that point in time, then you can really start to see positive, positive cash generation, positive gross margin, but hopefully, it's understandable to go to our supplier partners with a new technology with such small volumes and ask them to lower their costs. That's just not practical.

Tom O'Kray: <unk> significantly more scale than the 300 to 350 units that were guiding in 2024, and then 2026, even more volume.

Tom O'Kray: After that and so at that point in time, then you can really start to see.

Tom O'Kray: Positive positive cash generation positive gross margin, but hopefully it's understandable too.

Tom O'Kray: Go to our supplier partners with a new technology with such small volumes and ask them to lower their cost that's just not practical.

Unknown Analyst: Got it. That's very helpful. Thank you. And then maybe a question on the best side, you know, understand that you're Lohscheller, Anastasiya Pasterick, Gregory Lewis, Dillon Cumming, William Peterson, Gregory Lewis, Dillon Sandhu, Carey Mendes, Nikola Lohscheller, Anastasiya Pasterick, Gregory Lewis, Dillon Sandhu, Battery supply is still tight, Winnie. We're doing what we can. We basically want to support both launches, basically. And we deal with that internally.

Speaker Change: Got it that's very helpful. Thank you.

Unknown Analyst: And then maybe a question on the debt side and I understand that yeah.

Unknown Analyst: Repurchasing.

Unknown Analyst: And the units right now, but you also indicated that we're bidding.

Unknown Analyst: Because our on hand inventory.

Unknown Analyst: <unk> will be dependent on future battery supply so.

Unknown Analyst: What are they can elaborate on what that means.

Unknown Analyst: Particularly.

Unknown Analyst: Battery supply.

Unknown Analyst: Okay.

Unknown Analyst: Yes.

Unknown Analyst: Battery supply is still tight.

Unknown Analyst: <unk>.

Unknown Analyst: Where it is.

Unknown Analyst: Doing what we can we want to support we want to support both launches basically and we deal with that internally.

Stephen J. Girsky: So we try and get as many fuel cell trucks out there as we can. But we also have, put it this way, we're going to be battling that all year, which is why we pushed this out until next year when we could put our own trucks back in the market. If things change, they change. And we'll update you as they change. And we'll see where they go.

Stephen J. Girsky: So we try and get as much fuel cell trucks out there as we can but we also have.

Stephen J. Girsky: We're going to be or put it this way, we're going to be battling that all year, which is why.

Stephen J. Girsky: We pushed this out into next year, when we can put our own trucks back in the market if things change.

Stephen J. Girsky: They change and we'll update you as they change and we'll see where they go but.

Stephen J. Girsky: It's really a supply constraint issue on batteries right now.

Tom O'Kray: But it's really a supply constraint issue on batteries right now. And, Winnie, that really speaks to the difficulty in giving, you know, firm guidance on specific metrics going forward. Because one of the things we really want to do with this call is reset it to really make sure that when we say something, we're going to do it.

Stephen J. Girsky: And in winning that really that really speaks to the difficulty in giving firm guidance on specific metrics going forward because one of the things we really want to deal with this call is is reset it to really make sure that when we say something we're going to do it but hopefully you can appreciate all of the.

Tom O'Kray: But hopefully, you can appreciate all the moving parts, you know, starting up a new dealer network with new technology, getting suppliers on board and ramping up, managing a recall, you know, trying to get the allocation between BEV and fuel cell, working with the government entities to make sure we've got efficient disbursement of voucher money and are in line appropriately for other government funding. There's just a lot of moving parts right now, which makes it very challenging to call the ball and pinpoint some of the future guidance items. Yeah, It's a real Rubik's Cube is what we're trying to solve here, right?

Tom O'Kray: The moving parts, starting up a new desk dealer network with a new technology.

Tom O'Kray: Getting suppliers onboard and ramping up managing a recall.

Tom O'Kray: To get the the allocation between Bev and fuels, so working with the government entities to make sure we got efficient disbursement voucher money.

Tom O'Kray: Our in line appropriately for other government funding, there's just a lot of moving parts right now, which makes it very challenging to call the ball and pinpoint some of the future guidance items.

Tom O'Kray: And it's a real Rubik's cube as what we're trying to solve here right and at the one hand, we are trying to get these beds back on the other hand, we're building an ecosystem around hydrogen we had more trucks in the quarter, we add new customers. We had repeat customers. We add new regions. This ecosystem is developing and as it develops we get more interest in the flywheel.

Stephen J. Girsky: And on the one hand, we're trying to get these BEVs back. On the other hand, we're building an ecosystem around hydrogen. We had more trucks in the quarter. We had new customers. We had repeat customers. We had new regions. This ecosystem is developing, and as it develops, we get more interest. And the flywheel that Tom talked about earlier keeps moving, and it starts to move faster.

Stephen J. Girsky: Tom talked about earlier is.

Stephen J. Girsky: Keeps moving and it starts to move faster, but one thing Thats clear has not changed as we are we are so committed to the zero emissions.

Stephen J. Girsky: But one thing that's clear has not changed is that we are so committed to the zero emission mission and firmly believe that the hydrogen vehicle is key for long-haul trucking. I mean, we can't be serious as a nation to say that we want to have zero emissions and not do something about long-haul trucking. And we're the first out there. We're pioneers here. There are a lot of moving parts, but we're going to build that order book, get the flywheel going, and then watch people jump on it. That would be helpful. Thank you very much. Our next question is from Jeff Kauffman with Vertical Research Partners. Thank you very much. Hey, and congratulations and welcome to town as well.

Jeffrey Asher Kauffman: Mission and firmly believe that the hydrogen vehicle is key for long haul trucking I mean, we can't be serious as a as a nation to say that we wanted to have zero emissions and not do something with long haul trucking and were first out there.

Jeffrey Asher Kauffman: We're pioneers here Theres a lot of moving parts, but we're going to build that order book get the flywheel going and then watch people jump on.

Jeffrey Asher Kauffman: That's very helpful. Thank you very much.

Stephen J. Girsky: Our next question is from Jeff Kauffman with vertical research partners. Please proceed.

Jeffrey Asher Kauffman: Thank you Chad.

Jeffrey Asher Kauffman: Hey, congratulations and welcome to call them as well.

Unknown Analyst: Hey, Jeff. A fair amount of my questions have been answered. So I just want to hone in on what I would consider to be kind of transitory Items. So things like we had to go back and repurchase trucks, or we had to write down $20 million of inventory, and things like that. If I look at the first quarter, and I sum up all those, you know, kind of unusual.

Jeffrey Asher Kauffman: Hey, Jess Thank you.

Unknown Analyst: A fair amount of my questions have been answered so I just want to hone in on what I would consider to be kind of transitory items. So things like we had to go back and repurchase trucks or we had the write down $20 billion of inventory and things like that.

Unknown Analyst: If I look at the first quarter and I sum up all of those.

Unknown Analyst: Kind of unusual costs.

Unknown Analyst: How much of that is? [inaudible] Yeah, that's a great question. And there are a lot of unique things.

Unknown Analyst: Much of that as you make the first quarter how much of this is going to drag on the second and so what I mean is sold.

Speaker Change: 40 trucks at $380000 should have been 15 million in revenue you reported 7% because you had to repurchase them back and then there were some other costs that I'm, assuming we're buried in cost of goods sold regarding inventory and things like that can you help me understand what was more unique to first quarter versus things that are going to continue forward.

Tom O'Kray: You know, I wouldn't, I wouldn't say it's so much the first quarter; I would say it's, again, I mean, to repeat until we build the scale. I mean, one of the things that you didn't, you didn't talk about was warranty. We're working with our supplier partners to, you know, get the experience out there so we can do an appropriate warranty accrual. Right now, our warranty number is, you know, way outsized, and there's no way it's going to be like that going forward. But we just don't have enough miles and enough trucks out there to be able to, you know, reduce it, reduce it credibly. So, that's one thing.

Speaker Change: Yes, that's a great question and there is a lot of unique things.

Tom O'Kray: I wouldn't I wouldn't say, it's so much first quarter I would say.

Tom O'Kray: Again.

Tom O'Kray: To repeat until we build the scale I mean, one of the things that you didn't you didn't talk about was.

Tom O'Kray: Warranty.

Tom O'Kray: We're working with our supplier partners to get the experience out there. So we can do an appropriate warranty accrual right now are our warranty number is.

Tom O'Kray: Way outside and there's no way, it's going to be like that going forward, but we just don't have enough miles and enough trucks out there to be able to reduce it reduce incredibly so so that's one thing.

Tom O'Kray: The, you know, the net realizable value where we write down inventory, that's, that's another thing that isn't going to continue. Obviously, that's a point in time when the returning of the bed vehicles, which, which which which hits is another one. We also had an FFI transaction in there which hit, you know, which hit SG&A, which is in total about 18 million 18.3 million, to be exact. So, you're absolutely right. And thank you for bringing that up.

Tom O'Kray: The net realizable value, where we write down the inventory. That's another thing that is is not going to continue obviously, that's the point in time, the returning the best vehicles, which which which hits is another one we also had in <unk>.

Tom O'Kray: Transaction in there which hit.

Tom O'Kray: Which hit SG&A, which is in total.

Tom O'Kray: About $18 million $18 3 million to be exact so.

Unknown Analyst: There's a lot of stuff out there that, you know, we haven't called out as one-time items, but we don't expect them to continue once we get the flywheel going. Okay, and then, you know, I see that you have increased the fueling station location outlook, but no real increase in volume for this year. So just kind of, I understand this is flywheel related, but help me understand, if we're increasing the number of locations that are available, shouldn't we be seeing a similar increase potentially in units wholesale? Yeah, so I'll, I'll take that. Then, Remember, we're juggling three balls, right?

Speaker Change: Youre, absolutely right and thank you for bringing it up there is a lot of stuff out there.

Unknown Analyst: We haven't called out as onetime items, but.

Speaker Change: We don't expect them to continue once we get the flywheel going.

Speaker Change: Okay and then.

Unknown Analyst: I see that you have increased the fueling station location outlook.

Speaker Change: But no real increase.

Speaker Change: <unk> for this year.

Speaker Change: So just kind of I understand this flywheel related but help me understand if we're increasing the locations that are available should we be seeing a similar increase potentially in units wholesale.

Speaker Change: Yes, so I'll take that.

Stephen J. Girsky: We've got customers, we've got trucks, and we've got fuel. And at any one time, one of those balls is ahead, and one of those balls is behind. Well, fuel has been behind. And we're trying to move fuel from instead of being a quarter or two behind to being a quarter or two ahead. Not too far ahead, because we don't want stranded capital out there, but we need it to be ahead. So we are dropping more fueling locations in place.

Speaker Change: Remember, we're juggling three balls right. We've got customers, we got trucks, and we got fuel and at any one time one of those balls is ahead and one of those balls is behind will fuel has been behind and we're trying to move fuel from instead of being a quarter or two behind that being a quarter or two had not too far ahead because.

Stephen J. Girsky: We don't want stranded capital out there, but we needed to be ahead. So we are dropping fuel more fueling locations in place. This is based on feedback from our sales team and from customers.

Stephen J. Girsky: This is based on feedback from our sales team and from customers. And then you'll see the sales follow-up as we get the trucks, by the way. So we're managing supply constraints, we're managing fuel constraints, and that's limiting our customer growth. And as Tom mentioned earlier, we're doing everything we can to remove these constraints. So that's why we're trying to get ahead. And I mean, just to throw on and amplify a little more going to these big national accounts, you've got to have the fuel in place, or else, you know, that discussion doesn't go as smoothly as you would want. No, that makes sense. Thank you.

Stephen J. Girsky: And then Youll see the sales follow up as as we get trucks by the way. So we're managing supply constraints, we're managing fuel constraints and thats limiting our customer growth and as Tom mentioned earlier, we're doing everything we can to remove these constraints. So that's why we're trying to get ahead.

Stephen J. Girsky: I mean, just to throw on and amplify a little more go into these big National accounts, you have got to have the fuel in play or else.

Stephen J. Girsky: That discussion doesn't go as smoothly as you want to.

Unknown Analyst: And then one last question. As we focus a little more on national accounts, as you mentioned, there are a lot of incentives out there for customers, particularly in California ports, and you've got some FOMOs, so you're seeing better incentives in other states. Is the headline ASP really as big an issue with all these incentives, or would it be for national infleets that the ASP initiates the conversation, and then we'll figure out the incentives down the road? I mean, it's case-by-case.

Speaker Change: No that makes sense. Thank you and then one last question.

Unknown Analyst: So as we focus a little more on national accounts.

Unknown Analyst: As you mentioned there are a lot of incentives out there for customers, particularly in California ports and you've got some fall most of are you seeing better incentives and other states.

Unknown Analyst: Is the.

Unknown Analyst: Is the headline ISP really as big of an issue with all these incentives or would it be for national and fleets.

Unknown Analyst: The ISP initiate the conversation and then we'll figure out the incentives down the road.

Unknown Analyst: You know, some of the national accounts are very committed to ESG and want to have a certain percentage of their fleets be zero emissions. You know, there are other accounts that want to participate in the voucher program, and we're working with the regulatory bodies in California to, you know, make sure we can get those vouchers processed efficiently and quickly so we can get the vouchers back and restored.

Unknown Analyst: I mean, its case, it's case by case.

Unknown Analyst: Some some of the national accounts are very committed to ESG and wanted to have a certain percentage of their their fleets, which are zero emissions.

Unknown Analyst: Other accounts that want to participate in the voucher program and there we're working with the regulatory bodies in California to make sure. We can get those vouchers processed efficiently and quickly. So we can get the <unk>.

Unknown Analyst: Answers back and restored.

Unknown Analyst: Some of them, it's a penny game, where theyre going against price of diesel and then we need to make a decision internally.

Unknown Analyst: What we're going to do for the initial deal and it really varies customer by customer.

Unknown Analyst: And some of them, it's a penny game where, you know, they're going against the price of diesel, and then we need to make a decision internally what we're going to do for the initial deal. And it really varies customer by customer. Yeah. Jeff, this is really about getting on the field, and we've talked about that before in the fourth quarter, and in the first quarter, and that's why these bigger accounts are now coming to us. They want to get on the field.

Speaker Change: Jeff This is really about getting on the field and we've talked about that before.

Unknown Analyst: In the fourth quarter and the first quarter and that's what these bigger accounts are now coming to us they want to get on the field. They have the ability to buy lots of trucks, but let's get on the field with a few.

Stephen J. Girsky: You know, they have the ability to buy lots of trucks, but let's get on the field with a few smaller orders and see how they work and see what use cases work best for this, and that's what you're going to see going forward. Yeah. And we're confident once we get the big national accounts, there will be the, I don't know, what Steve called the fear of missing out with the, you know, not as big national accounts, who see the, you know, the bigger ones doing this and want to get in on the game. And that's all part of the flywheel.

Stephen J. Girsky: Smaller order and see how they work and see at what use cases work best for this and Thats, what youre going to see going forward.

Stephen J. Girsky: And we're confident once we get the big National accounts, there will be the I don't know what Steve called the fear of missing out with the not as big National accounts.

Stephen J. Girsky: Who see the the bigger ones doing this and want to get in on the game and Thats all part of the flywheel and where we're not going to ignore the smaller the smaller accounts, which we've been focusing on.

Stephen J. Girsky: And we're not going to ignore the smaller accounts, which we've been focusing on, you know, to date more. We're going to continue to serve those as well. Okay, so I guess from 10,000 feet, you're becoming much more relevant.

Stephen J. Girsky: To date more we're going to continue to serve those as well.

Stephen J. Girsky: Okay. So I guess from 10000 feet, you are becoming much more relevant the bigger fleet discussions are starting to happen and if there's kind of trimming inventory here are adjusting there.

Tom O'Kray: The bigger fleet discussions are starting to happen, and if there's kind of trimming inventory here, or adjusting there, or trimming, trimming's the wrong word, adjusting price to activate that flywheel, this is just part of the evolution, I guess, is the message. Yes, and I would say it's not just the fleets that are interested in the discussions, it's other players throughout the ecosystem. There are other players who want this ecosystem to work that are interested in this, and those people are calling as well as we are as we validate it. Yeah, we can sit back and pop out our chests and be very tough on ASP and not have any volume.

Tom O'Kray: Or trimming trimming or on word adjusting price to to activate that flywheel. This is just part of the evolution I guess is the message.

Tom O'Kray: Yes, I would say, it's not just the fleets that there is interest and discussions it's other players throughout the ecosystem. There are other players who want this ecosystem to work that are interested in this and those people are calling as well as we as we validated yes we.

Unknown Analyst: And then the suppliers, you know, can't work with us credibly because we can't give them the volume they need. That's a road to nowhere. We need volume. We need to have Nikola trucks running around the road delivering freight. And once that starts to happen in great numbers, then great things will happen. Okay, thank you for your answers and congratulations.

Unknown Analyst: We can sit back and pop out our chats and be very tough on ASP and.

Unknown Analyst: Not have any volume and then the suppliers.

Unknown Analyst: You can't work with incredibly because we can't give them the volume range that that's it.

Unknown Analyst: And nowhere, we need volume, we need to have nicolette trucks running around the road delivering delivering freight and once that starts to happen in great numbers, then great things will happen.

Speaker Change: Okay. Thank you for your answers and congratulations.

Speaker Change: Thank you. Thank you.

Unknown Analyst: Thank you. Our next question is from Jeff Osborne with TD Calendars. Good morning, Steve. A couple of quick ones on my side.

Unknown Analyst: Our next question is from Jeff Osborne with Cowen. Please proceed.

Unknown Analyst: Can you remind me what the CAPEX is for a mobile refueler? Just the five additional that you've got going on here. Kauffman, Dillon Sandhu, Gregory Lewis, Dillon Kauffman, Dillon Kauffman, And that's two to three.

Jeffrey David Osborne: Good morning, Steve good.

Jeffrey David Osborne: Good morning, a couple of quick ones on my side.

Unknown Analyst: Can you remind me what the Capex is for our mobile or fewer.

Unknown Analyst: Five additional that you got going on here.

Unknown Analyst: Yes.

Unknown Analyst: Okay.

Stephen J. Girsky: Yeah, and that's it folks. Okay, so should I think your prior CapEx guidance was 60 to 70, should we bump that up by about 10 million? I just didn't see the updated.

Unknown Analyst: And that's two to three yes in that Zip code.

Stephen J. Girsky: Okay. So should I think your prior Capex guidance was 60 to 70 shall we bumped that up by about $10 million.

Stephen J. Girsky: To update it.

Unknown Analyst: I know some of these are finance, so... I mean, it could be an offset. Some of these, by the way, are what other people are buying, so I don't know what you guys are thinking. Yeah, we left it unchanged at 60 to 70, as you said, Jeff, and, you know, leave it at that for the time being. We are, as Steve said, you know, we're going through the details right now.

Stephen J. Girsky: Got it for the year and I know some of these some of these are financed so yeah I mean it.

Unknown Analyst: Could be an offset some of these by the way our other people who are buying so I don't know what you guys.

Unknown Analyst: Yes.

Unknown Analyst: We left it unchanged at 60 to 70.

Unknown Analyst: You said, Jeff and.

Unknown Analyst: Leave it at that for the time being we are as we said we're going through the details right now.

Speaker Change: We could have more to say on that in next quarter's call.

Unknown Analyst: And, you know, we can have more to say on that on next quarter's call. But it shouldn't be, it shouldn't, it shouldn't be a hugely different number. You know, we had 20 for guidance, and we came in at, you know, 16 and a half in this quarter. So it's not going to be a huge difference.

Unknown Analyst: But it shouldnt be it shouldnt it shouldnt be hugely.

Unknown Analyst: Hugely different number.

Unknown Analyst: We had 20 for guidance and we came in.

Unknown Analyst: 2016, and a half in this quarter so.

Unknown Analyst: It's not going to be a huge difference.

Tom O'Kray: And Jeff, as we learned, just for context, as we learned more, some of these big customers may want their own fueler, they may want it on their site, they may want to, so there's a lot of ways to skin this cat. They may want their own hydrogen. They may want our hydrogen in their fuelers. So there's a lot of ways to skin this cat.

Speaker Change: And Jeff as we learn just for context as we learn more some of these big customers may want their own fuel or they may want it on their side. They may want to so there's a lot of ways to skin. This cat.

Tom O'Kray: We want their own hydrogen they may want our hydrogen in their fuel or so there's a lot of ways to skin. This cat.

Stephen J. Girsky: And then just following up on the other Jeff's question, the sort of one-ish time items, just to be crystal clear, do you anticipate BEV repurchases in the second quarter at all, just as we model top line trends, because the guidance only assumes the fuel cell portion, but I'm just curious, are there other dealers beyond the one that you repurchased 15 trucks from that have indicated that either you will or may potentially buy back? We don't We don't have any knowledge of that now, and not to go into an accounting lesson, though.

Speaker Change: Got it and then just following up on the other jeffs question.

Stephen J. Girsky: One ish time items just to be Crystal clear did you anticipate BV repurchases in the second quarter at all this as we model topline trends because the guidance only assumes that fuel cell.

Stephen J. Girsky: Portion, but I'm just curious are there other dealers beyond the one that you've repurchased 15 trucks from that have indicated that either.

Stephen J. Girsky: <unk> may potentially buyback no.

Stephen J. Girsky: I mean, we reserve based on experience. So we have a number reserved, which is greater than we have had returned already. So if there were to be additional returns, we've got additional reserves for that. Got it. Then just two other very quick ones.

Stephen J. Girsky: We don't we don't have any knowledge of that now and not to go into an accounting lesson, though I mean, we reserve based on based on experience.

Stephen J. Girsky: So we have a number of reserve which is greater.

Stephen J. Girsky: Then we have had returned already so if there were to be additional returns.

Stephen J. Girsky: We've got additional reserve for that.

Unknown Analyst: Your prior two predecessors, CFOs, talked about, not using the flywheel term, but a volume to reach gross margin and EBITDA breakeven. As you've studied the numbers for the past two months, Tom, and looked at that flywheel, is there a way you could update us on that with this new initiative as it relates to national accounts and potential changes in price? Yeah, I think it goes back to the, you know, the three characteristics, which I view them as different than the past, much more focused on national accounts.

Stephen J. Girsky: Got it and then just two other very quick ones youre prior to predecessor, CFO as I talked about.

Unknown Analyst: Not using a flywheel term, but our volume to reach gross margin and EBITDA breakeven as you have studied the numbers for the past two months, Tom and looked at that flywheel is there a way you could update us on that with this new initiative as it relates to national accounts and potential changing pricing.

Unknown Analyst: And within those national accounts, you know, being much more forgiving for the initial deal, wanting them to get into the product, delight them, and then having a further discussion after that. And then the third one is, is geography.

Unknown Analyst: Yes.

Unknown Analyst: Think it goes back to the.

Unknown Analyst: The three characteristics, which I view them as different than than the past.

Unknown Analyst: A much more focus on national accounts.

Unknown Analyst: And within those national accounts.

Unknown Analyst: Being much more.

Unknown Analyst: Forgiving for the initial deal wanting them to get in the product delight them and then having a further discussion and after that and then the third one is the geography.

Tom O'Kray: You know, we're still going to be focused on California and Canada, but we're going to expand our geography. So we've got a bigger total addressable market. So, working backwards, total addressable market, a more attractive first deal to get any big customers to get the flywheel going. I think all three of those are different than what has been done in the past.

Tom O'Kray: We're still going to be focused on California, and Canada, but we're going to expand our geography. So we've got a bigger total addressable market. So working backwards. The total addressable market more attractive first via hope of getting these big customers to get the flywheel going I think all three of those.

Tom O'Kray: There are different than it's been done in the past and the way to a way to grade US is to watch the order book.

Unknown Analyst: And, you know, the way to grade us is to watch the order book. So I get the strategy, but just in terms of the numbers, I think in the past, there were like X thousand vehicles to be positive, both the gross margin and EBITDA levels. That's not a number you're willing to update, just to be clear.

Unknown Analyst: So I get the strategy, but just in terms of the numbers that I think in the past there was like X thousands of vehicles to be positive about the gross margin and EBITDA level, that's not a number you're willing to update just to be clear yes.

Tom O'Kray: Yeah, it's not a number two months in that I'm ready to give, because again, you know, to have that discussion with our supplier partners, which are such a big part of our P&L, it wouldn't be prudent to throw out a number right now. So, you know, let's build that order book. Let's have those conversations with the suppliers once we've built that order book, and know better what the warranty experience is going to be, then we can give a more thoughtful number that we can commit to and achieve or beat. Got it.

Tom O'Kray: It's not a number two months in that I'm ready to give because it again.

Tom O'Kray: And have that discussion with our supplier partners, which are such a big part of our P&L.

Tom O'Kray: <unk>.

Tom O'Kray: Wouldn't be prudent to throw out a number right now so let's build that order book, let's have those conversations with the suppliers. Once we've built that order book know better what the warranty experience is going to be then we can give a more thoughtful number that we can commit to it.

Tom O'Kray: And achieve or beat.

Unknown Analyst: The last one I had for you, Steve, is that just at the time of the SPAC, there was a discussion of Anheuser-Busch buying, I think, 800 trucks. Is that a customer that, you know, potentially may resurface, or is that ship sick? So, um, I don't want to Jeff, I don't want to speak to any large customers that we're demoing with a lot of large customers, Biagi, Halls, Hans for Anheuser-Busch. So, this is one of their 40 distributors, right? And Isa Bush, I don't think she owns any trucks, but her distributors do. So, that's the way we're working on that one. Everything is on the table everywhere.

Tom O'Kray: Got it.

Unknown Analyst: For you Steve is just at the time of the spec there was discussion of Anheuser Busch buying I think 800 trucks is that a customer that potentially may resurface or has that ship sailed.

Unknown Analyst: So.

Unknown Analyst: I don't want to jump I don't want to speak to any large customers with that along with a lot of large customers BRG halls cans for Anheuser Busch.

Unknown Analyst: So this is one of their.

Unknown Analyst: One of their 40 distributors right Anheuser Busch I don't think owns any trucks, but the distributors do but so that's the way we're working that one everything is on the table everywhere. So, but we don't we don't have specifics.

Stephen J. Girsky: So, but we don't, we don't have specifics with any one customer. And frankly, even the ones we demo with have signed NDAs, so we don't announce we're demoing; they may announce they're demoing with us, but we don't announce we're demoing. But just for perspective, when we talk about national accounts, we said over 1,000 trucks. There are approximately 250 of those, of those fleets that have over 1,000 trucks, and some of them have many, many more than 1,000. So, it's a meaningful number of customers to go after and delight. Thanks, that's all I have. I appreciate the response.

Stephen J. Girsky: With any one customer and frankly, even the ones we demo with Mega sign NDA. So we don't announce they may announce they are demoing with us, but we don't announce where gambling. So just for perspective, when we talk national accounts, we said over a 1000 trucks. There is approximately 250 of those.

Stephen J. Girsky: Of those fleets that have over 1000 trucks in.

Stephen J. Girsky: And some of them many many more than 1000 so.

Stephen J. Girsky: It's a meaningful number of customers to go after and delight.

Speaker Change: Thanks, that's all I have I appreciate the responses.

Unknown Analyst: Our next question is from Scott Group with Wolf Research. Hey, thanks. Sorry about that earlier. So I just want to understand, last quarter, you gave guidance on units and revenue, and now just units. Is this a permanent sort of change in how you want to start guiding, or is it just? We're changing some strategy a little bit, and we'll get back to the revenue guys. Yeah, I mean, look.

Speaker Change: Thank you our next.

Unknown Analyst: Our next question is from Scott Group with Wolfe Research. Please proceed.

Scott Group: Hey, Thanks, sorry about that earlier.

Unknown Analyst: [laughter].

Unknown Analyst: So I just want to understand you know last quarter, you gave guidance on units and revenue and now just units is this a permanent sort of change in how you want to start guiding or is it just.

Scott Group: Changing some strategy a little bit.

Scott Group: We'll get back to revenue guidance at some point.

Unknown Analyst: Yes.

Unknown Analyst: Well, first of all, thanks. Thanks for the question. I'm glad we could get you back in the queue. You know, no, this is not a permanent shift. You know, this is me coming in and, you know, I've been here two months.

Speaker Change: Well first of all thanks, Thanks for the question and glad we could get you back in the queue.

Unknown Analyst: No. This is not a permanent shift.

Unknown Analyst: This is me coming in and <unk> been here two months and.

Tom O'Kray: And, you know, myself and Steve want to give a number that we can really commit to. But I didn't feel comfortable committing to a number at this point in time until we have, you know, worked through the flywheel, until we have worked through the national accounts, until we have had discussions with our supplier partners. You know, but definitely going forward, you know, what you can see on the horizon is we will have an investor day where we set short-term and long-term targets, and then we will measure ourselves against that quarter after quarter. You know, we're still in the innovation stage here. We're still in the starting stage here.

Tom O'Kray: Myself and speed, we want to give a number that we can really commit to and I didn't feel comfortable committing to a number.

Tom O'Kray: At this point in time until we have.

Tom O'Kray: Work through the flywheel until we have worked through the national accounts until we had discussions with our supplier partners.

Tom O'Kray: <unk>.

Tom O'Kray: Definitely going forward, what you can see on the horizon as we will have an investor day, where we put out short term and long term target and then we will measure ourselves to that quarter after quarter.

Tom O'Kray: We're still in we're still in the innovation stage here, we're still in the starting stage here, we've been producing and selling trucks for two quarters now and we're still working out the kinks with the suppliers I don't want to repeat but we.

Tom O'Kray: We've been producing and selling trucks for two quarters now, and we're still working out the kinks with the suppliers. I don't want to repeat myself, but, you know, we've only had fuel cell production for a little while. But this is not a permanent change to be evasive on guidance.

Tom O'Kray: We've only had fuel cell production for a little while but this is this is not a permanent change to be evasive on guidance. This is just.

Tom O'Kray: This is just, you know, working through it so we can give a number that everybody can count on and we can be held accountable to. Just that makes sense in the near term, any color on just how to think about like price per unit in Q2. Yeah, at this point, it depends, again, on the order book and what's the mix between the bigger fleet customers and, you know, the smaller fleet customers and then the much smaller fleets. All of those will have different prices and a different economic profile. And, you know, again, I could throw out a number, and it would probably be wrong.

Tom O'Kray: We're working through it so we can give a number that everybody can count on and we can be held accountable.

Tom O'Kray: Sure that makes sense and then just in the near term any any color on just how to think about like price per unit in Q2.

Tom O'Kray: Yeah.

Tom O'Kray: You know, please don't take from these comments that we're being irresponsible, though. If you look at Q1, again, 381,000 for the fuel cell ASP versus 351 in Q4. So, you know, we grew that, what is it, 9%?

Tom O'Kray: Yes at this point it depends again on the order book and what's the mix between the bigger fleet customers.

Tom O'Kray: The smaller fleet customers in and then a much smaller fleets.

Tom O'Kray: All of those will have a different pricing in a different economic profile and.

Tom O'Kray: Again, I could throw out a number and it would probably be wrong.

Tom O'Kray: Please don't take from these comments that were being irresponsible, though if you look at Q1 again 381000 for the fuel cell ASP versus $3 51 in Q4. So we grew that what is that 99%.

Tom O'Kray: You know, we're still focusing on price. We're still focusing on the economics of the deal. We're just not going to walk away from a great deal with a great customer because, you know, we're being too stingy on price. No, I get that. I just would have thought...

Tom O'Kray: We're still focusing on price, we're still focusing on the economics of the deal which is not going to walk away from a great deal with a great customer because.

Tom O'Kray: We're being too stingy on price.

Tom O'Kray: No.

Speaker Change: I just want to start.

Stephen J. Girsky: Even the big customers, you know, they're tough on price, but they also know they don't want to put us out of business either. They want us to be there, so they're managing on their side as well. I didn't I didn't realize that this, If you get some big order for national, it's going to impact Q2 deliveries and price per unit in Q2 right away. We don't know, it's hard to know when these things come in. As these things come in, when they come in, you know, California HVIP is starting to pay more, so that's going to churn more.

Speaker Change: Sorry go ahead Steve.

Tom O'Kray: Given the big customers, they're tough on price, but they also know they don't want to put us out of business either they want us to be there. So.

Stephen J. Girsky: They're managing on their side as well yes.

Stephen J. Girsky: Okay.

Stephen J. Girsky: I didn't realize that.

Stephen J. Girsky: If you get some big order for National Bank.

Stephen J. Girsky: It's going to impact Q2 deliveries in <unk> and <unk>.

Stephen J. Girsky: Price per unit in Q2 right away.

Stephen J. Girsky: We don't know by heart.

Stephen J. Girsky: Hard to know when these things come in as these things come in when they come in.

Stephen J. Girsky: California Hbf is starting to pay more so that's going to churn more.

Stephen J. Girsky: Again, there are a lot of moving pieces here. The good news is that we're selling more trucks, we're validating the ecosystem, and there's more interest from lots of people. And when you talk about national accounts, are you talking about higher companies, private fleets, do we have? How much of the order book now is with National? I don't, I don't, I don't, as an IMC, they have 2,000 trucks in their fleet all over the country.

Stephen J. Girsky: Again, there is lot of moving pieces here. The good news is we're selling more trucks, we're validating the ecosystem and there's more interest from lots of people.

Stephen J. Girsky: Okay.

Stephen J. Girsky: When you talk about National accounts are you talking.

Stephen J. Girsky: For hire companies private fleets do we have.

Stephen J. Girsky: How much.

Stephen J. Girsky: How much of the order book now is with National.

Stephen J. Girsky: Adam I don't listen IMC is.

Stephen J. Girsky: They have 2000 trucks in their fleet all over the country, sometimes you land in one part of the country and it helps you in another part of the country.

Stephen J. Girsky: Sometimes you land in one part of the country, and it helps you in another part of the country. Hard to know what the order book is, but I don't want to... To be clear, we've done 35 and 40, so the order book is not that big right now.

Stephen J. Girsky: Hard to know what the order book I don't want to.

Stephen J. Girsky: And to be clear I mean, we.

Stephen J. Girsky: We've done 35 and 40, so the order book is not.

Stephen J. Girsky: Right now I mean in terms of order of magnitude we're talking.

Unknown Analyst: In terms of order of magnitude, we're talking hundreds of vehicles a month, not the numbers that we're producing right now. And I'm just thinking about if you looked at the vouchers, I don't think we've ever dissected the voucher customers into 1000 trucks or less. I mean, most of them are in California.

Unknown Analyst: We're talking hundreds of vehicles a month.

Unknown Analyst: The numbers that were producing right now in the quarter and I'm just thinking about if you looked at the vouchers I don't think we've ever dissected the voucher customers buy.

Unknown Analyst: I have 1000 trucks are at less than most of them are in California. So there is a bias towards smaller fleets in there, but there's still some big customers in there.

Unknown Analyst: So there's a bias towards smaller fleets in there, but there are still some big customers in there. And to maybe give just a little bit of confidence in this, and you know, one of the reasons I'm here, I mean... To think about what must be true for this not to happen, you know, you would have to believe that zero emissions isn't going to happen. And you would have to believe that, you know, as a country, we're not going to clean up long-haul trucking.

Unknown Analyst: Okay.

Unknown Analyst: Maybe give just a little bit of confidence in this in one of the one of the reasons.

Unknown Analyst: Im here.

Tom O'Kray: And, you know, after all of the talk and all of the legislation, and everything where we're moving toward, that just doesn't seem to be practical. And, you know, it's going to happen. We just need to, again, you know, to repeat, get the flywheel going and get some of these big accounts back. Thanks for the time, guys. I appreciate it.

Unknown Analyst: To think about what must be true for this not to happen.

Tom O'Kray: You'd have to believe that zero emissions isn't going to happen and then you'd have to believe that.

Tom O'Kray: As a country, we're not going to cleanup long haul trucking and after all of the.

Tom O'Kray: The talk and all of the legislation and everything where we're moving toward that just doesn't seem that just doesn't seem practical.

Tom O'Kray: <unk>.

Tom O'Kray: It's going to happen, we just we just need to again.

Tom O'Kray: Repeat get the flywheel going and get some of these big accounts there.

Tom O'Kray: Thanks for the time guys appreciate it.

Speaker Change: Thank you.

Operator: Thank you. I would now like to turn the call back over to Zoe for the investigation. Thank you, Operator.

Tom O'Kray: I would now like to turn the call back over to Sally for the Investor questions.

Zoe: We received questions from retail investors through the SAFE platform, most of which can be summed up into three topics: The Reverse Split Proposal, Subsequent Potential for Delusion, and finally, Our Path to Growth and Profitability. First question: What is the rationale for the proposed reverse split? Why is it necessary? And why now?

Zoe: Thank you operator, we received questions from retail investors through the same platform most of which can be summed up into three topics.

Zoe: Split proposal subsequent potential for dilution and finally, our path to growth and profitability.

Zoe: First question what is the rationale for the proposed reverse split why isn't necessary and why now.

Speaker Change: I'll take that one the <unk> team has worked hard to reset the operational focus of the company since 2023.

Stephen J. Girsky: The Nikola team has worked hard to reset the operational focus of the company since 2023, and we are proud to have the first two quarters of Fuel Cell Cereal production under our belt. And as Steve mentioned, this is just the beginning. Now it's time to reset our financial foundation so that Nikola has the characteristics of a company that is ready to climb. Therefore, three reasons for the reverse split. First, there's a need to address the potential of delisting.

Stephen J. Girsky: We are proud to have the first two quarters of fuel cell serial production under our belt and as Steve mentioned this is just the beginning.

Stephen J. Girsky: Now it's time to reset our financial foundation, so that Nicola has the characteristics of a company that is ready to climb.

Stephen J. Girsky: Therefore, three reasons for the reverse split.

Stephen J. Girsky: <unk>.

Stephen J. Girsky: There is a need to address the potential of delisting.

Stephen J. Girsky: If Nikola stock trades below $1 for a certain period, we can be delisted from NASDAQ, which has severe consequences for a company like ours, such as limiting our ability to access markets that raise capital and raise funds.

Stephen J. Girsky: If niklas stock trades below a dollar for a certain period, we can be delisted from Nasdaq.

Stephen J. Girsky: Which has severe consequences for a company like ours, such as limiting our ability to access markets that raise and raised capital.

Stephen J. Girsky: The reverse split should allow the stock to trade above a dollar, thereby reducing the risk of delisting. Additionally, it broadens the pool of investors that may be interested in investing in Nikola by attracting new investors who are prohibited from or prefer not to invest in shares that trade at lower prices. Third, the reverse split makes available additional shares needed for future capital raises and potential partnerships. So that we can be a company poised to, Of course, we are mindful of dilution and will only use the additional shares as necessary. In short, we need flexibility and choices, and the reverse split is the best, most efficient option to get us through. Second question.

Stephen J. Girsky: The reverse split should allow the stock to trade above a dollar, thereby reducing the risk of delisting.

Stephen J. Girsky: Second.

Stephen J. Girsky: It broadens the pool of investors that may be interested in investing in nikola by attracting new investors, who are prohibited from or prefer not to invest in shares that trade at lower share prices.

Stephen J. Girsky: Third the reverse split makes available additional shares needed for future capital raises and potential partnerships. So that we can be a company poised to climb.

Stephen J. Girsky: Of course, we are mindful of dilution and we will only use the additional shares as necessary in short, we need flexibility and choices and the reverse split is the best most.

Stephen J. Girsky: <unk> option to get us there.

Stephen J. Girsky: Second question why is the strategy being referred to as a reduction in authorized shares when it effectively increases the potential dilution to current shareholders.

Stephen J. Girsky: Why is the strategy being referred to as a reduction in authorized shares when it effectively increases the potential dilution for current shareholders? It's important for a growing company like Nikola to have access to capital. Therefore, having the flexibility to best position Nikola to raise capital efficiently and effectively is critical; if not for a reverse split, we would have had to request shareholder approval for authorization of additional shares to support. We analyze both options, the reverse split or authorizing more shares, and the impact on shareholders in depth. We concluded that the reverse split provided the most financial flexibility we needed. Huffman.

Stephen J. Girsky: It's important for a growing company like <unk> to have access to capital.

Stephen J. Girsky: Therefore, having the flexibility to best position <unk> to raise capital efficiently and effectively is of critical importance.

Stephen J. Girsky: If not for a reverse split.

Stephen J. Girsky: We would have had to request shareholder approval for authorization of additional shares to support the business.

Stephen J. Girsky: We analyzed both options the reverse split or authorizing more shares.

Stephen J. Girsky: And the impact on shareholders in depth, we concluded that the reverse split provided the most financial flexibility we need it.

Stephen J. Girsky: As discussed in the prior question to achieve our objectives.

Stephen J. Girsky: Thank you for achieving our goals. The final question, what is Nikola's roadmap to profitability? Can you talk about the potential for partnerships and large accounts? Sure, I'll take that one, Steve.

Speaker Change: The final question what is Nicolas roadmap to profitability can you talk about the potential for partnerships and large accounts.

Speaker Change: Sure I'll take that one Steve.

Stephen J. Girsky: It gets at the heart of our message today. We need to build scale. Without scale, profitability will be below our expectations.

Stephen J. Girsky: It gets at the heart of our message today.

Speaker Change: We need to build scale.

Speaker Change: Without scale profitability will be below our expectations simply put it's not practical to optimize our cost structure without a meaningful level of volume.

Tom O'Kray: Simply put, it's not practical to optimize our cost structure without a meaningful level of volume. We're putting a greater focus on national accounts. In order to do this, we will be deal driven and less sensitive to ASP in the short term to build confidence with our end fleet. Finally, while our main focus remains California and Canada, we are expanding our geographical footprint beyond California, thereby increasing the addressable market. Working towards zero emissions and building out the hydrogen ecosystem should benefit all. We look to develop and leverage partnerships wherever we can build volume and hydrogen infrastructure across North America.

Tom O'Kray: We are putting a greater focus on national accounts in.

Tom O'Kray: In order to do this we will be deal driven and less sensitive to asps in the short term to build confidence with our and fleet users.

Tom O'Kray: Finally, while our main focus remains California, and Canada, we are expanding our geographical footprint beyond, California, and Canada, thereby increasing the addressable market.

Tom O'Kray: Working towards zero emissions and building out the hydrogen ecosystem should benefit all.

Tom O'Kray: We look to develop and leverage partnerships wherever we can build volume and hydrogen infrastructure across North America.

Stephen J. Girsky: Thank you, Steve and Tom. We appreciate you all taking the time to join us today. And on behalf of all Nikola employees, we thank you. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Speaker Change: Thank you Stephen Tom We appreciate you all taking the time to join US today and on behalf of all <unk> employees. We thank you.

Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Stephen J. Girsky: Okay.

Stephen J. Girsky: Yeah.