Thank you for standing by. This is the conference operator. Welcome to the Microvast First Quarter 2022 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Sarah Alexander, Microvast's General Counsel. Please go ahead.

Thank you, operator and thanks to the audience, for joining us today. Mr. Yang Wu, Chief Executive Officer will begin today's call with some opening remarks; Craig Webster, who was recently appointed as our Chief Financial Officer and Sascha Kelterborn, who was recently promoted to the position of President will host today's call. Leon Zheng, our former Chief Financial Officer who has transitioned into an advisory role with Microvast is also on the line. Ahead of this call, Microvast issued its first quarter 2022 earnings press release, which can be found on the Investor Relations section of our website ir.microvast.com. In addition, we have posted tonight's accompanying slideshow presentation to our website. As a reminder please note that on this call, we will be making forward-looking statements on this call. These statements are based on current expectations and assumptions and reflect our views only as of today. They should not be relied upon as representative about views as of any subsequent date, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information, or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks, and other important factors that could affect our financial results. Please refer to our filings with the SEC, including our annual report on Form 10-K, filed on March 29, 2022. In addition during today's call, we may discuss non-GAAP financial measures, including adjusted gross profit, adjusted net loss and adjusted EBITDA, which we believe are useful as supplemental measures of Microvast's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. These non-GAAP measures have been reconciled to their most comparable GAAP metric in the tables included at the earnings - at the end of our earnings press release. A webcast replay of this call will also be available on the Investor Relations section of our company website. With that, I will turn the call over to Mr. Wu for some opening remarks.

Thank you, Sarah. First, I would like to take a few minutes to address the leadership changes that we announced last month. Leon has been the CFO of Microvast for the last 12 years and he has been an integral part of building this company. We would not be where we are today without his leadership, guidance and a steady hand. I want to personally thank him for his years of loyal service and for his continued service as an advisor and as a Director. Craig has been involved with Microvast for over 10 years. And he knows our business and industry very well. I'm confident that he has a skill set required to take Microvast to the next level. And I look forward to working with him in his new role as the CFO. Sascha joined Microvast in 2016 and has been an integral part of our growth strategy in the Western Hemisphere. He will assume responsibility for the company day-to-day operations in a new role as President. I will continue to serve as the company's Chief Executive Officer. This new leadership structure will enable me to focus on Microvast strategic direction. I'm confident that this team will best position Microvast to execute on the opportunities in front of us. Sascha will touch on our business results and Craig will review the financial performance in more detail in a few moments. However, I would now like to turn the call over to Leon. Thank you all.

Thank you, Mr. Wu. First, it has been an honor to serve Microvast as a Chief Financial Officer. I'm very proud of the buildings we have built. And I'm excited about the company's future. When I joined Microsoft in 2010, the company had very few employees, and no revenue, only this would - electrification which over the last 12 years, we build a strong team and work together to execute that region. I'm blessed to have been a part of this journey. And I'm even more excited about the opportunities that, remains in front of Microvast. Craig has been involved in the Microvast as a member of our Board of Director since 2012. He and I have developed a great working relationship over the last decade. He knows our business and the industry very well. And I'm confident he's the right person to step into the role of Chief Financial Officer and to help the Microvast into his next good phase. I look forward to working closely with him to ensure a smooth transition. I am with as most confidence in Microvast future, I look forward to continuing to serve this company as a Director, working together with Craig, remind you as a wider role. And I will continue to support Microvast as a shareholder for many years to come. Thank you to our shareholder for your covenant support and the patience. And thank you to the Microvast team around the globe. It has been a true pleasure to work with each and every part of you. With that, I will turn the call over to Sascha President of Microvast.

Thank you, Leon. On a personal note, I have very much enjoyed working with you for the last few years and I'm pleased that you have chosen to continue forward with Microvast as a Director, and in an advisory capacity. Your historic knowledge of this business is vast. I'm excited to step into the role of President with renewed focus on executing our international growth strategy. I enjoy new challenges and I'm ready to move the company to the next level. Everyone, please turn to Slide Number 4 of the PowerPoint presentation we have just published. As I cover a few highlights from the first quarter. We posted 145.5% revenue growth during the third quarter delivered USD36.7 million in Q1, 2022. Our first quarter performance exceeded expectations is our team real together to get as much product solutions out of the door before the COVID lockdown situation in China worsened. This is a robust revenue growth despite many macro headwinds. A big part of our growth in the first quarter was Asian Pacific. We have seen our market share in India increasing with our partners, and this was one of the biggest contributors to ex China growth in the first quarter. As an example, we received a USD10.1 million order for various e-bus solutions from Ashok Leyland. In addition, orders from our multiyear European projects were strong across the new battery solutions that we have recently announced. We ended the first quarter with a strong backlog of USD120.8 million as a result of a healthy order intake of USD62 million. We're very excited about the prospect of further increasing to our backlog in the coming quarters. Our forecasted contract revenue remains at a healthy USD2.5 billion. Except backlog, our forecasted contract revenue is comprised entirely of customers located outside of…

Thank you, Sascha. Before I take you through our Q1 financial performance, I would just like to personally thank Leon for all this years of hard work and devotion to Microvast. I am fortunate to inherit from him a great finance team that has global reach and capabilities. Additionally, Leon leaves me with a very strong balance sheet and an orderly and clean capital structure. As you know, we have exciting plans for our capital deployment over the next couple of years and beyond. And I'm excited by the opportunities that lay ahead for the company. Now, let me turn to our financials and I'll spend the next few minutes discussing our Q1, 2022 financial results. Please turn to Slide 10. And I will summarize the main line items from our Q1 P&L. First off revenue, I am pleased to report strong revenue growth in the first quarter, which grew 145.5% to $36.7 million from $14.9 million in Q1, 2021. As Sascha mentioned, this performance exceeded our expectations. And I will take you through the geographic breakdown in a later slide. We posted gross profit of $13,000 in Q1, 2022 compared to gross loss of $1.2 million in the prior period. After adjusting for non-cash settled share-based compensation expense, adjusted gross profit was $1.9 million in Q1, 2022 compared to adjusted gross loss of $1.2 million in Q1, 2021. This translates into an adjusted gross margin of 5.2% in Q1, 2022 compared to negative 8.3% in Q1 2021 a 13.5 percentage point improvement. Operating expenses were $43.4 million in Q1, 2022 compared to $11.5 million in the prior year period. The largest contributor to the increased operating expenses was share-based compensation expense, which totaled $26.2 million in the quarter. of this SBC expense $14.3 million is non-cash, and the balance…

Thanks, Craig. Lastly, please turn to Slide 15. First an update on the construction progress related to our ongoing manufacturing capacity expansions. Our manufacturing facility in Huzhou is located in a nearby neighboring province to Shanghai and thus far has not been directly impacted by the COVID lockdowns in China. I'm pleased to report that the ongoing construction related to this project remains on schedule, and is on track to continue production by the first quarter of 2023. We expect production to begin ramped up in Q4, 2022. We posted an updated time lapse to our social media accounts last week, which shows that the facility has reached 90% completion on the exterior side. This is an impressive feat against the backdrop of a difficult environment in China during the last few months. In addition, our ability to produce battery solutions was not immediately impacted from the lockdown and we have been able to continue production from our existing raw material inventory in Huzhou. However, logistics have created many challenges in getting products out of the door in Q2 both on the ground as well as by sea. In addition, as - April progress into May, it has also become increasingly challenging in a timely replenishment, production and raw materials due to supply chain disruptions impacting our vendor as well as our T network. We expect the challenges will be temporary in nature and as of right now we believe we can make up the softest experience during the first half of Q2 once logistics normalize. We have finished goods in our warehouse that are ready to be shipped as soon as transportation can be arranged. We will continue to monitor the situation closely. We expect Clarksville to begin zero production in Q3, 2023. Clarksville is well on its way…

Thank you, Sascha. I would now like to ask the operator to open up the line for question-and-answers.

Thank you. [Operator Instructions] Our first question is from Adam Jonas with Morgan Stanley. Please go ahead.

Hi, everybody thanks for the call. Thanks for the details. I got your full your CapEx outlook, but could you also provide any magnitude or cadence of OpEx as well particularly what would consume cash any visibility you could provide there would be - very helpful? Thank you.

Sure, Adam Craig here, not a problem, I think it will come as a surprise to you that we'll run some cash outflow this year. I think, you know, our best estimates for that is that cash outflow from operations would be in the region of about $50 million. Q1 was slightly higher than we'd anticipated because we took the decision to buy a lot more raw materials. You saw that from the inventory going up. And now notes receivable that is an indicator for you that it will be like that for the rest of you. That was a tactical management decision to go into the market earlier on raw materials.

Okay, I appreciate that. And, obviously, given the cash projections and the cost of the expansion in Huzhou and Clarksville with your cash position I imagine you'd be getting down to what you would define as minimum cash levels within a couple of quarters. I didn't know if you wanted to - obviously you're exploring lots of different options? And there's all sorts of exciting opportunities to get low cost financing from grants and the DOE and others, but for another time, perhaps. But can you remind us, what - you would say would be your comfortable range of minimum cash to run the business before - you bring in some new outside funds?

Yes, I think - it's very similar to what Leon mentioned. Last time that, we're looking to always have minimum cash around $150 million, $200 million just so you know, what we're doing with the balance sheet Adam is this right. So, we've got cash, and then we're converting that cash into productive assets, fixed assets, right. Once we do that our fixed asset basis goes up. It's unlevered and our fixed assets are backed by cash flows, because we've already got the technology. But as we do that, we've then got the flexibility to add debt financing. And that's a lot easier for banks to do because - you've done what you promised to do. You build the building, you put the equipment in there, they see the customers come. And they're not just looking at a LTV on a building. They're looking at like, what's the cash flows associated with it, and that's the nice position that we're in.

Makes a lot of sense, I look forward to meeting you and thanks for the details.

Yes I look forward. You come to Houston anytime. We'll see you in New York next time as well.

You got it. Thanks.

Thanks.

Thanks Adam.

As there are no further questions, I'll turn the conference back over to Sascha Kelterborn for any closing remarks.

Thank you all for joining today, and we wish you a great and a pleasant evening. Thanks a lot.

This concludes today's conference calls you may disconnect your lines. Thank you for participating and have a pleasant day.