Good day, and thank you for standing by. Welcome to the REE Automotive Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation there will be the question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to first speaker today, Keren Shemesh, Chief Marketing Officer. Please go ahead.

During the course of this call, management will make, express and implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other US Federal Securities Laws. These forward statements include, but are not limited to those statements regarding growing demand for REE’s products and technology, the potential size and increase of REE’s orderbook, that REE’s philosophy will pave the way for it to generate software-based revenues. It's planned to deliver the first production trucks to its North American customers and the timing thereof. Its target of reaching BoM, bill-of-materials breakeven in the second half of next year as it ramps up production and improves operational efficiencies, and that it's successfully experienced with autonomous programs and full redundancy by-wire architecture positions it in a leading position at this transformational time for autonomy. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements during the course of this call are subject to other risks and uncertainties, including those discussed in the risk factor section and elsewhere in the REE’s annual report or Form 20-F for the year ended December 31st 2023 filed with the Securities and Exchange Commission and elsewhere in subsequent filing with the Securities and Exchange Commission. Today's call is hosted by Daniel Barel, REE’s Co-Founder and CEO. We will be joined by Josh Tech, our Chief Operational Officer; Tali Miller, our Chief Business Officer, and Hai Aviv, our new Chief Financial Officer. I will now turn the call over to Daniel Barel.

Welcome, everyone, and thank you for joining us today. We are pleased to report Q3 2024 is yet another strong quarter across the board with accelerating demand for REE product line and technology from fleets and OEMs, along with the start of production of our flagship P7 truck. This milestone is supported by our strategic production partner, Motherson, and is backed by improved liquidity and strong confidence from top tier commercial banks. Having more than doubled our reservation value from $60 million to almost $140 million in one quarter, while improving our liquidity by 47%, is a testament to our continued devotion to delivering strong results in a fiscally disciplined manner. Before we dive in, I would like to share what we are seeing in the market and how it affects REE. We are seeing more and more fleets solving critical charging challenges as they shift towards reserving significant production capacity for mature and scalable EV solutions that they believe have significant technological advantages, capable of addressing their operational needs, while offering an attractive total cost of ownership. Our successful demo program enabled by fleets to experience firsthand the benefits of our P7 lineup and X by-wire technology. Now with our collaboration with Motherson underway, we believe those fleets feel more confident in our ability to support the future-growing demand. Amidst fierce competition between legacy auto manufacturers and new Chinese OEMs, we're seeing more legacy OEMs looking to expedite their transition to software-defined vehicles, SDV architectures. Collaborating with software-defined vehicle technology pioneers allow these automakers to protect and regain market share by offering customers more technologically advanced vehicles with better total cost of ownership and performance, while being able to offer lucrative software services. REE’s philosophy of complete, not compete allows legacy OEMs to access our leading SDV technology, while…

Thanks, Daniel. On behalf of the entire REE team, I'm happy to share the production of our P7 trucks has commenced. We remain on track to deliver the first highly anticipated P7 trucks to our North American customers in the first half of 2025. Our cross-functional team comprising of REE, Motherson and Roush is working hand-in-hand to implement the infrastructure necessary to support our production ramp. Meanwhile, we continue manufacturing our proprietary and revolutionary REEcorner at our Coventry Integration Center in the United Kingdom. Our work with Motherson over the past few months has been smooth, seamless, and is progressing well. We are taking our rational, responsible approach to scaling our manufacturing and focusing on long-term success. Confident in our approach and the market's demand, we are managing growth in a smart and measured approach. Motherson has started supporting our production supply chain management and plan to produce key commodities within their core manufacturing competencies, such as fluid transfer hoses, wire harnesses and plastics. We expect that this will grow as we continue to optimize the supply chain over the upcoming months to increase material margins. We are also working with Motherson on improving supplier payment terms, which should help us improve our working capital commitments. All of this improves our capacity to deliver on time and quality, meeting customer needs. Our production team is working closely with sales and marketing to secure production slots for our eager customers. As we prepare to begin to deliver trucks to customers in the first half of next year, we continue to train our dealers and prepare our support and maintenance capabilities in North America. We're also training fleets to be able to do their own maintenance. Last but not least, we are expanding the number of public charging locations available to P7 customers across North America in addition to on-depot charging solutions that are available to all our customers. Now, I'll turn the call over to Tali.

Thanks Josh. As Daniel mentioned, demand continues to grow from fleets and OEMs. The number of reservations for our P7 trucks increased by 230% quarter-over-quarter, reaching $137 million, representing more than 900 P7 EVs that would be delivered over several years from 30 different customers across North America. We are proud of our diverse customer base and multiple vehicle configurations and use cases. There is tremendous excitement from our customers. As our demo program has performed across the United States, we have received feedback praising the versatility, maneuverability and design of our trucks. The P7 is built to be flexible, catering the diverse needs of multiple markets. We have seen interest from applications ranging from last-mile delivery, [middle-mile] (ph) delivery, to luxury RVs and shuttle buses. Our X by-wire technology is state-of-the-art, and when combined with the modularity of the REEcorner’s and the adaptability of our software, we clearly have a winning formula for commercial EVs and beyond. Additionally, our service network is one of North America's largest for pure commercial EVs, set to provide comprehensive support from start to finish across 80 sales and service points. Our fleet customers are thrilled that we have kicked off production and we are beginning to allocate the first units of 2025. We are receiving large production reservations from fleets as the P7 program matures and REE’s philosophy to complete, not compete, is driving this surge of interest. Those following the industry closely have seen nearly every major OEM make significant investment in software-defined technology, which is a REE core strength. We are in active discussions with several global vehicle manufacturers who are interested in integrating REE's software-defined vehicle technology into their product lines. Conversations with these automakers are progressing faster than previously anticipated. We believe this is partially due to the macroeconomic conditions affecting the automotive industry globally and the realization that software-defined vehicles are the solution to protect market share. As reported by Morgan Stanley, software-defined vehicles are expected to increase for 90% of auto production by 2029, up from just 3% in 2021. This worldwide shift towards software-defined vehicles will offer new revenue opportunities for REE as automakers increasingly rely on the technological innovations and proprietary technologies that we offer. And with that, I'd like to introduce our new CFO, Hai.

Thank you, Tali. And hello, everyone. I'm thrilled to be back at REE, especially at this pivotal moment in the company's growth. It's impressive to see how this management team has navigated through business cycles and achieved key milestones. Since I've been with REE before, my learning curve here is rapid and I look forward to addressing all questions from our investors and analysts today. As Josh mentioned, we are working closely with Motherson and Roush to optimize our costs as we increase production to meet high demand. The numbers at this point are encouraging and we hope to share more information in the future. Importantly, REE has a strong balance sheet and the liquidity required to execute our business plan. We are financing our production needs through credit facilities as we currently secured up to $33 million credit facilities from two top tier banks to support our working capital needs. As demand grows, we will be looking to expand those lines in order to support our growing demand. Our liquidity totaled $88.8 million at the end of Q3, reflecting a 47% increase Q-over-Q. This includes $45.35 million in gross proceeds from the registered direct offering led by REE's long-term automotive focus investor M&G, with Motherson contributing $15 million. The liquidity balance also includes a $15 million credit facility. Subsequently at the end of the third quarter, we signed a term sheet for an additional $18 million non-dilutive credit facility through PO financing. This financing will allow REE to take on larger reservations and lead to expansion while remaining flexible and freeing up working capital. We believe that the $33 million total in commercial bank credit facilities demonstrates bank confidence in REE's business model, commercial demand and ability to deliver. Now let's review the P&L numbers. In Q3, GAAP net loss was $38.5 million, compared to $10.8 million in Q2 2024 and $24.1 million in Q3 2023. The GAAP net loss Q-over-Q increase was driven mainly by non-cash remeasurement of warrants and derivatives, following an increase in REE’s share price, as well as by an R&D tax credit from the UK government, recognized in the previous quarter. When excluding warrants and derivatives non-cash remeasurement and the UK R&D tax credit, our GAAP net loss actually narrowed by $2.4 million Q-over-Q. Non-GAAP net loss in Q3 was $16.8 million compared to $12.4 million in Q2 2024. The Q-over-Q increase was impacted by $5.7 million R&D tax credit from the UK government recognized in the previous quarter. Excluding the R&D tax credit, the non-GAAP net loss decreased by $1.3 million compared to Q2 2024. Reconciliation of GAAP to non-GAAP measures have been provided in the financial statement tables, including in our earning press release. Our free cash flow burn continued to narrow with a 15% decrease year-over-year, related to continued operational efficiencies and substantial completion of the R&D phase of P7 program. I'll now turn it back over to Daniel for his closing comments before going to Q&A.

Thank you, Hai. It's really great to have you back. We had another very strong quarter during which we achieved major milestones from accelerating demand and improved liquidity to the start of production. We are getting closer to generating meaningful revenue and we see a path towards software-based revenue from OEMs and autonomous driving programs. Before opening it up to Q&A, I want to thank the entire team REE for their devotion and dedication. Together, we have accomplished so much during the past few quarters. Finally, I would like to thank our long-term investors who continue to show their support and belief in what we do, providing the resources that enable us to lead this industry. With 2025 just around the corner, we are excited to start this new chapter in the REE story. We feel highly optimistic heading into the new year. With that, operator, please open the Q&A.

Thank you [Operator Instructions] And now we're going to take our first question, and it comes from the line of Craig Irwin from ROTH Capital Partners. Your line is open. Please ask your question.

Good morning. Thanks for taking my questions. So the biggest surprise this morning is your $137 million in reservations. That's a big jump. So you guys have obviously been working hard and seeing some good results from your demonstrations. I think you said $300 in the press release. Talking to some of your customers this last year, I knew that there were customers out there talking about orders, individual orders as big as 1,000 units. Can you maybe talk about the incremental orders that you booked in the last few months? Approximately how many customers contributed in here? Are they names that we've already talked about? Or are there new names? And are there may be specific dealers that are getting more traction than others at this point as customers are getting to know the capabilities of your technology?

Sure, and of course, good morning and thank you for the question. This is Daniel. So yes, I agree with what you said in part. We see a very big surge in reservations. And I think, one, like you mentioned, it's linked to the fact that now with our announced partnership with Motherson and Roush, as we said earlier, customers are feeling more secured and comfortable placing significant reservations with us. And I think this is one of the things we're seeing now. And it's also important to mention that significant scale up of more than 200% was done in one quarter. So to your question, yes, naturally we're speaking to current customers and prospect customers about additional orders and securing production capacity going forward. Currently, in terms of how the reservation book looks like, we're talking about 30 different customers among which we've shared some of those names that people already know and are in the public domain, leaders in the industry, including very large fleets. And I believe we will continue to see more reservation piling up as we move forward.

That's very good to hear. So then, that's a good segue into my second question, right? So Motherson, can you maybe give us a little bit more color on the work that they've been doing on supply chain optimization and their contribution to your manufacturing plans. Any detail as far as their evaluation of your bill of materials break-even for the second half? How are they contributing here?

I think it's a great question for Josh to answer. Josh?

Yeah, hey guys, how's everyone doing? Yes, yes, so a good question. So, Motherson, so far, it's been a great partnership. We've basically worked through getting a seamless integration between the REE and the Motherson team. Currently, they're supporting our -- they're basically overseeing the supply chain about 50% already, so that's making great headway. Another part where they're coming in is basically in parallel to launch, Motherson will produce the key commodities that are basically in their core competencies. So these are things we mentioned like fluid transfer, harnesses, plastics, those types of things. And then we expect as we grow and as production tooling comes online and we mature the vehicle that those will even increase further into different commodities. The other big one is to work on payment terms. We're working on payment terms especially as we grow the volume that will allow us to basically optimize the working capital model. So many facets there with the relationship of Motherson so far.

Excellent, excellent. Last question, if I may, cash use, your free cash flow below $17 million. You're making strong progress. But the good news is that, you've been very successful in raising capital in the last number of months. How should we think about cash use in 2025 as we look at maybe a tempo that changes throughout the year when you invest for ramping production?

Yes, I think we've seen very strong support from the financial side, both when raising equity and recently with the credit facilities that we've secured. And I think it's a very good testament to the belief and confidence that the financial sector has in our business model, technology in general in us. And I think it's important to recognize it because it's not been a straightforward in the past few years to be able to do things like that, especially for technology companies that are kicking off production. So we're very, very happy with that. Going forward in terms of burn, I think, Hai can give some more detail.

Sure. Thanks for the question. So on a monthly basis, we anticipate an average burn of between $5 million to $6 million in 2025. But that's on the monthly average burn. We anticipated both OpEx and CapEx spend will be higher in the first half as we start production -- plan to start production in the second half of 2022. So we expect higher spend both in OpEx and CapEx in the first half of 2025.

Excellent. Well, congratulations on the progress here. I'll go ahead and hop back in the queue.

Thank you.

Thank you. Now we're going to take our next question. And the question comes from the line of Sameer Joshi from H.C. Wainwright. Your line is open. Please ask your question.

Hey, good morning, good afternoon. Thanks for taking my questions. Congrats on all the progress. So looking forward, maybe a little bit premature, but looking forward once you have delivered in the second half, there's hundreds of vehicles. Is there a service network set up in the U.S. or at least are you talking to partners? We just wanted to see how that part of the business is being looked at and if you need to make your own investments in that effort.

Yes. Hi, good morning. Thank you for this question. This is Tali here. Yes, we've put together already a service network across the U.S. and Canada to support all the service for the vehicle that will be soon in production and on the roads. We currently [Multiple Speakers] maybe just to add a little bit more color, we currently have 80 sales and service points. So that was just to complete my answer.

Yes, okay. So those 80 sales points are also service points and there is -- it is expanding network?

Yes, that is correct. So basically the way we look at it is, what we're seeing now with the surge in reservations, we're seeing fleets and other customers trying to compete on securing priority capacity. As they move forward and look at their electrification plans and want to secure enough capacity. So we're seeing competition over priority slots. And naturally, as we touched maybe earlier, and also this point, segued to that is, the fact that this is happening now is because one, our ability to deliver products at scale and at quality because of our partnership with Motherson and Roush, but not less importantly what you just mentioned, our ability to service them post-sale. So REE’s service network, which is dealer-based, is one of the largest in North America with 80 locations that people can actually -- customers can service their vehicles and they also serve as selling points for dealers to increase the reservations.

I understand, thanks for that. Also a high-level question. There's a new administration coming in in the US and there are talks about tariffs. I know also on the incentives portion, I know most of your customers are probably availing of the state level incentives, but there are some federal incentives that could be in jeopardy. Just wanted to understand how you view your market in the US both from a tariff point of view and from incentives point of view?

Yes, we've been getting that question recently naturally quite a bit. And we think there is going to be minimal impact, if any, because our product offers great TCO for our fleet, right? The total cost of ownership, as well as our leading software-defined vehicle, SDV technology, which is very appealing to fleets and other OEMs and generate significant operational efficiency. So we think that we have a really good, strong product in the market. So that's one. I think to add to that, we're also seeing that tax incentives play less of a role than the overall market demand, especially in commercial vehicles where, incentives are very different than the private vehicle incentives both in size, structures and origin. But I think that -- I don't think I want to speculate any further on legislation that has not yet finalized.

Understood. And then, [Technical Difficulty] prepared remarks and answers as well, but is the supply chain fully secured? Like are these parts that was mentioned the harnesses, the plastics, is the supply chain for that actually secured or is Motherson working on securing them?

We started production, so we're producing trucks. So we past that point that we're now with Motherson we're naturally looking to optimize and improve on all factors, but maybe Josh can add some more color on that.

Yes. Just to add, these are -- again the harnesses and things we already produced trucks. These are things like harnesses [indiscernible] Motherson can also make that more efficient and faster and better, faster, cheaper basically. So on things like that, that they can take right off the bat, they're moving. So those are the simpler parts, 12 volt harnesses, low voltage, those types of things. As we go through the growing the supply chain and ramping, we'll be looking at other optimizations of Motherson for resourcing in terms of metals and stampings and that kind of thing. So that comment was around that, around the things that are the low-hanging fruit that Motherson could take off the bat. They've already taken those over.

Understood. Thanks for clarifying that. And congrats once again on all the progress. Good luck.

Thank you so much.

Thank you. Dear speakers, there are no further questions for today. I would now like to hand the conference over to speaker Daniel Barel for any closing remarks.

Thank you operator and thank you everybody for joining us today. We're really, really excited about this quarter and I'm sure you -- like we said before, you can hear it in our voices that we are very optimistic heading into the new year. So we're looking forward to more updates that we'll be able to give. And thank you again and have a great day.

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.