Hello and welcome to the VinFast Q4 and Full Year 2023 Earnings Call. All participants will be in a listen-only mode. After the speakers presentation, there will be question-and-answer session. Instructions will be given at that time. As a reminder, this call is being recorded. I would like to hand the call over to Brook Taylor, Vice President for Government Relations and Strategic Partnership. Please go ahead.

Thank you, operator, and good morning or afternoon to everyone. My name is Brook Taylor, I'm the Vice President of Government Relations and Strategic Partnerships at VinFast. Thank you for joining us for our 2023 fourth quarter and full year earnings call. We will reference the slide presentation today which is accessible on our website. Joining me on the call today are Madame Thuy and Ahn Nguyen, our recently appointed CFO. Both have prepared remarks summarizing the fourth-quarter and full-year 2023 results as well as our expectations for 2024. Then we'll take your questions. Before I turn it over to Madame Thuy, let me remind you that some of the statements on this call include forward-looking statements under Federal Securities Law. These include without limitation, statements regarding the future financial performance of the company, delivery volumes, financial and operating outlook and guidance, macroeconomic and industry trends, company initiatives and other future events. These statements are based on the predictions and expectations as of today and actual events or results may differ due to a number of risks and uncertainties. We refer you to the cautionary language and risk factors in our most recent filings with the SEC. In addition, management will make reference to non-GAAP financial measures during this call. A discussion of why we use non-GAAP financial measures and information regarding reconciliation of our GAAP versus non-GAAP results is available in our earnings press release issued earlier this morning, as well as in our Investor Day. And with that, I would like to turn it over to Madame Thuy.

Thanks, Brook. Good morning, everyone, and thank you for joining us today. After what could only be categorized as a year of firsts for VinFast, we ended 2023 with a strong public debut at both expansion marked by a diverse product mix and strategic channel growth that reinforce our position as a formidable competitor. Our lean operation capital-light channel model and agile execution will lead to margin resiliency by our sleek and modern product design, advanced technology, competitive and created offering to the unique battery leasing model and best-in-class warranty, enabling us to continue on a market share. I wanted to talk about the key achievement in Q4 and in 2023. In the fourth quarter, we deliver on our commitment to make our EVs more accessible to our customers globally. We delivered a record number of 13,513 EVs globally in the fourth quarter, up 35% quarter-on-quarter. And our total EV deliveries for the full year were 34,855 which represents, an increase of 374% from 2022. Our e-scooter business also experienced significant growth rising 21% year-over-year for a total of 72,468 units in 2023. In terms of product launches, we proudly introduced four new SUV models in Vietnam across a number of segments, including our flagship VF 9, VF 5, VF 6 and the VF 7. In particular, we are pleased that the VF 6, which launched in our domestic market last October recorded initial sales far above our expectations. We will gradually bring all these SUV models to our overseas market this year. I would like to spend some time on the market update. First, North America and mostly US. 2023 was a strong year for us and we were pleased with our progress in the US and Canadian markets. The US remains one of our strategic markets and we…

Thank you, Madame Thuy and my pleasure to speak to everyone on the call today. First of all I'd like to take the opportunity to share my excitement taking this new role as CFO of VinFast. I will do my best to contribute to the success of the company, especially, through focused activities to improve profitability, strengthen our balance sheet and hit the gross target. VinFast is in a unique position to capture the tremendous growth opportunities as a global pure EV payer. I'm incredibly proud of the efforts and commitment of our executive team and I'm pleased to say that this hard work has already led to tangible improvements. For financial results, we recorded revenue of USD437 million in Q4 representing an increase of 26% from the first quarter of 2023 and an increase of 133% year-over-year. And for the full year 2023, our revenue reached approximately USD1.2 billion marking a significant 91% growth compared to the previous year. Growth was driven by sales volumes and new products. An average of EV selling price is also 36% higher than last year. In addition, [indiscernible] was recorded USD552 million. And we are proud to have realized a significant improvement in gross margin on full year basis from negative 83% in Q4 last year to negative 40% this quarter and from negative 82% in 2022 to negative 46% in 2023 driven by lower [indiscernible] of materials and production costs. Regarding operating loss we recorded an improvement quarter over quarter 18% decrease and year-over-year 106% decrease in R&D and SG&A spending as a percentage of revenue thanks to a jump in sales volume and stable operating expenses. Turning now to CapEx. We spent around USD218 million during Q4 in line with our previous guidance. This was driven by our investments in the launch of VF 6 and VF 7, the North Carolina fund and development of charging stations and distribution network. As a conclusion, I want to share again that we have started to see a lot of improvements across the board in Q4 and fiscal year 2022. I'm very excited about the coming quarter as we expect the continuation of positive change and the result of our continuous focus on growing top-line and optimizing costs. With that, I will turn it over to Madame Thuy for closing remarks.

Thank you, Lan Anh. To summarize, we will complete the full EV line-up in 2024 for global markets including the right-hand-drive versions for relevant markets. For North America, we plan to ship the VF 9 to the US and the VF 8 to the EU and remaining model to follow as well as for other markets, which would help drive ourselves significantly especially towards the latter half of the year. We are excited about new markets and traction so far and how the dealership model will help accelerated go to market and boost sales. We expect to reach approximately 400,000 sales globally by the end of 2024 including 130 in North America. Improved cost and quality remain a major focus for us, which is directly managed by our new CEO. We currently have the capacity to manufacture up to 300,000 EVs annually and expect to deliver 400,000 EVs globally in 2024. I believe our team is well aligned to drive operational improvements in 2024, while delivering share gain across our product segment. With the new leadership team announced earlier this year, we believe the company is strongly positioned in 2024, as it enters the next phase of its development and accelerate its global expansion. We thank you for your continued support. And with that I turn it over to the operator to open the line up for questions.

Thank you. [Operator Instructions] Our first question comes from Andres Sheppard with Cantor Fitzgerald. Your line is open.

Hi, good evening, everyone or good morning. Congratulations on the quarter and all of the recent developments. And thank you so much for taking our questions. Maybe the first question is I am wondering if it's possible to get some direction on the delivery target that you put out. I'm wondering should we expect perhaps maybe a bigger concentration in the second half of the year? Just trying to get a sense of what may be seasonality or how that guidance will look like throughout the year. Thank you.

You can hear m right?

Yes.

Okay, thank you. Thank you for the question. Still the – we think that most of the sales will come in in the second half of the year. We have several markets with the right-hand drive vehicles that in fact we have been going through the amortization [ph] procedure and we start delivering at the end of Q2 in Q3. And also a few other markets that we need to start or expect to sell. So we expect that a lot of the volume will come in the second half of the year.

Got it. That's very helpful. Thanks for that, Thuy. And maybe as a quick follow-up. How should we be thinking about growth margins throughout this year and into next year? What does the path to maybe breakeven gross margins maybe looks like at a high level? Thank you.

Thank you. At the high-level, we plan to get to very close to positive gross margin by the end of the year and definitely in 2025 and continue and the gross margin continue improving of the year.

Got it. That's very helpful. Thank you again and congratulations on the quarter. I'll pass it on. Thank you.

Thanks Andres.

Thank you. Our next question comes from Brian Dobson with Chardan Capital. Your line is open.

Hi, good evening. Thanks very much for taking my question. So that was a positive update you gave on the 75 US dealers going through the contracting process. I believe your goal is 130 dealership locations for this year in North America. Does that goal include multiple location dealerships? And if so, how many dealers would you need to sign to get to that 130 locations in North America?

Hi, Brian. So the 75 dealership groups that we're talking to have multiple – some of them have multiple locations. So far we have been working with the multiple independent dealer groups and each of -- some of them will have more than one dealership locations. And we prioritize the dealers that have locations that are available right away. So we believe that we should be able to get to 130 points of sales in North America by the end of the year.

Great. Thanks very much. And just to revisit my colleague's earlier question, when you're thinking about that 100,000 vehicle target for this year, what would the geographic mix on those sales look like?

So right now the mix is -- the focus will still be mainly supported by our home market in Vietnam. So about half of the number would be from -- come from Vietnam and then the rest would be split between North America, Europe and Middle East and closer to home Asia market.

Thanks very much. And just a final question from me. What could we expect from average selling price for 2024?

So the mix that we have right now is kind of -- I mean it really depends on market by market because the product mix in different markets are quite different. If you talk about Asia then, we see bigger numbers -- especially Vietnam included you see more VF 5 for example. But when you go to Europe or US, you see a bigger number in VF 8, VF 6, VF 7. So quite balanced mix across all different products, if you look at it globally.

Excellent. Thanks, Madame Thuy and congratulations on a good quarter.

Thank you.

There are no further questions on the phones. Please proceed with any web questions.

Thank you, operator. We will now turn to questions from the web. First question we have is can you please provide some more detail on the gross margin loss of 40%? What are the reasons for this? And what is the path to profitability?

Okay. Let me take that question. Actually, if there's -- in Q4 versus Q2, if you take out the one-off adjustments for the NRV the net realizable value basically then you see an upward trend in profit margin from 37% in Q3 to a 27% roughly in Q4. So the profit margin is getting better. But because of the one-off adjustment for the inventory at the end of the year we have gross margin of 40%. Maybe let me -- I think I see some of the questions here. So maybe can I -- or Brooke you want to read the questions or you want me to just read the question and answer?

Madame Thuy, if you have the question there go ahead.

So the next question also from [indiscernible]. How many cars were sold to GSM in the Vietnam market in Q4 2023 and in full year 2023? We had this number in Form 6-K. Basically, about -- in 2023, the first year of GSM in Vietnam, we sold about 70%, over 70% of the EVs to GSM and some to the customers that bought Green Homes home. So there's a whole section on related party sales. Similarly for e-scooter, we sold about 45% of the e-scooter to GSM for the e-scooter taxi as well as to some the Green Homes customers. The next question also from to Thuc Thanh. Can you please share the CapEx and R&D investment guidance in 2024 and 2025? Our estimate right now is in 2022, 2024 we're running at around $1 billion to $1.5 billion million in CapEx. Some of that is mandatory; some of that can be pushed to later. But roughly that's the number that we have right now. The development -- the next question is on development timeline for the U.S. factory. We're still keeping the current timeline for U.S. factory so by the end of 2025. The next question is how much grant the Vingroup Chairman expects to disperse in 2024. Right now we can -- we still have about close to $700 million, I think $680 million in grant from Chairman and Vingroup. So we expect to receive such grant in early half of this year.

Madame Thuy, I have a question here if you would like to take this next one.

Oh, Okay. Yes, I can't see all the questions kind of going up and down, but go ahead.

So the next question is can you please provide some additional detail on the strategy for India and Indonesia?

So India and Indonesia are the two important new markets for us this year. They are closer to us. The vehicles sold in this market are closer to the vehicles that have been tested and delivered in Vietnam market. So we -- India with 1.5 billion people the most populous country, with the very supportive government policy and the whole drive towards green transportation, we believe that we should be able to take some market share in the market. Indonesia is part of ASEAN. Vietnam is part of ASEAN as well. So, one of our neighboring markets. We started launching in Indonesian market last Thursday and the results so far been very positive. The support that we received from the market, from the government policy to private sector to customers have been very positive. With 280 million people, Indonesia is the third most populous country in the world. And we also believe that we are uniquely positioned to take some market share as the country, as the EV adoption in Indonesia continue increasing. I think just a last thing, as we already announced, we're going to open the factory in both India and Indonesia in order to take advantage of the tax incentive given by the government. Next one?

Thank you. Our next question comes from Greg Lewis with BTIG. Your line is open. Greg Lewis with BTIG, your line is open. If you're telephone's muted please unmute. Please proceed with any further questions.

Thank you, operator. While waiting for Greg, we have additional questions from the webcast here. The next question is why are gross margins decreasing as you grow revenue? Are you discounting your vehicles? Or are you experiencing an increase in your production costs?

Let me take that question. I think I provided an answer to that question before. The reality is the gross margins actually decreased. There was a one-off adjustment for inventory at the end of the year. The profit margin actually got better between -- from Q4 from Q3. And the improvement in gross margin was due to improved production costs, improved inform [ph], so basically better cost optimization in Q4 versus Q3.

Thank you, Madame Thuy. The next question what was the total use of cash during the quarter? And could you provide an update on the funding efforts moving forward?

In Q4?

That is correct.

So basically if you looked at VinFast every quarter inform operations -- and this is looking into 2024 as well. Each quarter we roughly burn about -- from operations about $250 million, right? And we spend probably somewhere like $100 million $150 million in R&D in the -- previously per quarter, which is reducing our going forward, because we already pretty much completed the R&D for the vehicles. And then a little bit on CapEx for manufacturing. I think the last quarter it was to just, I think $40 million $50 million, something like that. So if you asked about the Q4.

Thank you. The next question from the webcast. Can we get a sense of your expectation of margin profile trajectory going forward?

We expect that margin will continue improving. So if you look at the trend, it's been trending better quarter-by-quarter. Like I said earlier, we expect that by the end of the year 2024. We're going to get very close to 0% gross profit margin. And then we're heading into positive territory next year.

Thank you, Madame Thuy. The next question from the webcast. How many more charging points have been added to the VinFast network over the quarter?

I think we've added something like 90-something, almost 100,000 charging ports to our network to bring our total charging point globally to about 800,000 charging ports. I think I explained it a little bit in the previous quarters. But in Vietnam -- I mean it's different in different markets and we continue to be that way. In Vietnam, we built out the whole charging network of up 250,000 charging points, because we don't have a public charging network in Vietnam. So we own the charging network in Vietnam in order to go sell. Outside of Vietnam, in developed markets like US and EU, we tap into the existing charging network by integrating our vehicles with the CPOs in the market. So, as we add more CPOs and as our CPOs add more charging, our charging network, continue growing. In some newer markets like India and Indonesia or other markets where charging markets is not developed yet then we might consider building charging network as well together with other partners in those markets. So, it's really market-by-market but our charging market will continue growing.

Thank you, Madame Thuy. Next question from the webcast. How many of the 100,000 projected cars are expected to be sold to GSM?

We still think that as GSM is growing in different markets, in Vietnam alone GSM already in 19 different cities and continue growing. So I think the demand from Vietnam is also -- will still be significant, but not as much as last year. But as GSM grows internationally starting from Laos and other countries like Indonesia, like Philippines based on what they explained to me there will be demand from GSM as well for those markets. But we believe that the total number will be -- or at least a percentage of our total sales for 2024 would be significantly less than 2023.

Thank you. Next question from the webcast. Can you share the expected CapEx for fiscal year 2024, and how the company plans to fund that?

Okay. I give to Lan Anh to answer this question.

Yeah. We anticipate that the CapEx between $1 billion and $1.5 billion this year with $1 billion invested in the US factory over the next two years and the remaining allocated to the facilities in India, Indonesia and Vietnam. We are exploring avenues to support CapEx needs from local and international financing. And we have a strong commitment from Vingroup and our Chairman to support CapEx needs in the long-term growth. Thank you.

Thank you. Next question from the webcast. How would you characterize your BOM and battery costs over the quarters? Were you able to realize the benefits from falling metal and lithium prices?

So like other OEMs, our material costs are being adjusted, I think on quarterly basis supplier by supplier but pretty much the same in the whole industry being adjusted when the commodities or the material are going up and down. So we follow the same practice of the industry.

Thank you. Next question from the webcast. Could you please provide an update on sources of funding moving forward?

So I think -- I've heard a lot of questions about liquidity plan, so let me address our liquidity plan, because that way we don't have to answer the same question multiple times. So right now if you -- I think in the presentation, we showed that our current liquidity is about $1.8 billion, so roughly about $2 billion from the cash, cash on the balance sheet at the end of the year plus the remaining grants from our Chairman in Vingroup, the equity line of credit. So roughly that's what we have. And then we -- after the listing of VinFast, it opened up quite a lot of avenues for funding from both public and private. And we are expecting that after the blackout period, we should be able to raise funds based on the pipeline that we have. Also for the -- you asked about CapEx before. So as Lan Anh already explained, we have planned to fund a portion of the CapEx locally in those markets to pay for our CapEx. So, going forward -- and as you also see that -- we pivoted from the CapEx-heavy direct-to-consumer distribution model to the CapEx-light dealership model. So that would also help with the cost of expansion if not used with the direct-to-consumer model. And then we also have in our pipeline multiple transactions that we think that we'd be able to execute on this year. I think I mentioned earlier in one of the interviews that we plan to add to the free float about 10 -- at least 10% to 20% to the free float. So that plan is still ongoing right now. So I hope that would give some idea about our liquidity plan for 2024 and going forward.

Thank you, Madame Thuy. Next question is from the webcast. Have you shipped more cars to the US yet? How are sales going into the US?

Sales in the US, actually this year, we've seen very positive sign in the US this year. Last year after receiving very critical, but important feedback from the market and we improved on the vehicles and started delivering the vehicles. I think in January, we saw a huge uptick in deliveries. We had only one dealer open in -- maybe it's a complete competition between the direct to consumer and the dealerships. But somehow in January, our sales in our own store in California also increased significantly. And this year -- this month, in February we also increased, we received a lot of orders this month already. Like I mentioned, we had one dealer open in January. And as we add more and more dealers, we expect that in the sales in the US in multiple markets would increase, as well as our customers will be able to have access to our vehicles. Keep in mind also that we have about -- we still have around almost 9,000 thousand orders in the US that we already have received the deposits. A lot of them actually are in different space. They're not in California. They're in different states. So, as we open dealers in multiple states, we should be able to materialize some of the order books that we already had in the past years.

Thank you. Next question from the webcast is from John Murphy of Bank of America. How much capital would be saved in efficiency gains by leveraging dealers specifically in the US?

I think initially -- based on the calculation initially, it's actually -- it looked better initially to actually sell through the dealers instead of paying for CapEx especially in this high interest rate environment in order to follow the direct-to-consumer model. But I think that's only one of the benefits. I mean cost is one of the -- margin is one of the benefits. The important benefits for opening the third-party dealership network, is to be able to access the whole US market. With a direct-to-consumer model, we could access only about half of the states in the US. But with the dealership network, we can leverage existing dealership to be able to have products available in all of states in the US.

Thank you. Next question from the webcast. The expected timing for positive EBITDA and FCF.

Okay. I'll pass it on to Lan Anh.

Yeah. So we expect that that we're going to have the positive EBITDA on 2025, and for cash flow positive in 2027. Thank you.

Thank you very much. Next question coming in from the webcast. Can you please disclose, how much cash was raised under the Yorkville agreement during the quarter?

We raised -- we used that facility gently. So over $30 million is what we draw from the facility in Q4.

Thank you. And that is all the questions, we have from the webcast.

Please proceed with any closing remarks.

Thank you very much for attending the first full-year earnings call for VinFast. Again, thank you very much for your continued support. As you have seen, we have gathered a lot of momentum in the past years, especially in 2023, the year of the firsts, the first time that we listed, the first time that we went international, the first time that we had the full line-up of vehicles. We believe that we've done a lot of things that's never been done in the industry and we have gathered momentum to be ready for this year. We believe that this year's going to be a pivotal year for us and we hope that you will continue supporting us. Thank you very much. Happy New Year. Happy Lunar New Year.

Thank you for your participation. This does conclude the program and you may now disconnect. Everyone, have a great day.