Morning, everyone. I hope you can hear us well. We had some technical issues this morning on my side, so please apologize this, also the late start. Anyways, welcome to the earning call for Q1 2023. This morning, Winfried Buss will guide you through the numbers for this quarter. We have just distributed the press release yesterday, you have all received these. Now, Winfried will go into the numbers in more detail. As you know, always, you can also download or watch the recording, which we will upload on the LION website quite after the call. We also will have an interactive Q&A session directly after Winfried's presentation.
As we did this last time, just please raise your hand, and then I will unmute you, and then you can ask your question. Now, Winfried, please share with us more detail about the numbers of Q1.
Yes, good morning, ladies and gentlemen. I hope you can hear me well. Today, we are in the earnings call for the first quarter of 2023. We will present the numbers which have been distributed yesterday night. We'll also give a short update on the LION Smart Production and the LIGHT Battery. Let's then move into the results of Q1. Just a couple of points before we explain the numbers because, like we did in the March call, we have now two legal entities which we consolidate and report against the numbers from last year. This is why you seem a little bit more in details than in the past.
In the Q1 comparison is made between the consolidated LION group numbers and the reference number is the LION Smart GmbH from last year. A little bit on what is going on and how are the companies linked. Just to recap that effective the first of January this year, all sales of the so-called integration business, which is everything around the i3 battery packs, is handed over to the LION Smart Production GmbH, which means at the end the LION Smart GmbH, so the legal entity in the Munich area, will become a so-called sales and R&D centers, both for the LION Smart Production as well as for the new products like LIGHT Battery, for example.
Subsequently, as a matter of that, the LION Smart Production will report sales and profit because they do the product sales on an integration business, while the LION Smart will report mainly cost on the service. We have established some kind of intercompany cross-charge, which is established to balance two companies. In Q1 2023, like we announced in the last call, the sales is executed from LION Smart inventory only. As of this quarter, sales is expected to become a mix of inventory and own production. When you see the numbers, you see also the intercompany cross charges are reflected on a quarterly basis. We don't make a full-year true-up.
We just put the cost in each of the quarters. Having said that, we can go to the numbers here. You see in the first column, you see the LS GmbH. The LS is the LION Smart GmbH. The LSP GmbH is the LION Smart Production GmbH. The consolidated consolidation is the numbers we have from both companies. The reference is made to the LS GmbH, which is the LION Smart, as this was the only company reported last quarter. When we see sales is at EUR 8.1 million compared to EUR 13 million in the previous period, that means we're doing a little bit lower revenue, which we expected. This is not surprising.
Whoever reads my comments in the last presentation, said that, in the first half, we're going to ramp up production, because customers still have inventory and will, as time goes forward, then start ordering packs from LION Smart Production. Despite the lower revenue, the gross margin has improved. It has improved in percentage range, as well as in absolute numbers. That's good. You see that even with the lower revenue, we are making absolutely more gross margin compared to last quarter.
However, on the flip side, we have to absorb a lot of startup cost in Q1 for ramping up the production, which then results in a relatively small loss for the period. If we go to the numbers in more detail, again, you see the four pillars here, the LION Smart GmbH, the LION Smart Production, and the consolidation, versus the Q1 numbers. This is the numbers from last year reflecting the LION Smart numbers. Like I said, sales is at EUR 8.1 million consolidated. This is due to the fact that our customers still use stock from their own production. Sorry, from their own inventory.
We expect to grow sales the next quarter as customer are expected to call more products from LION Smart due to, let's say, having less stock in their, in their, in their own operations. You see intercompany sales is about EUR 1.5 million. This is for service providers between LION Smart to LION Smart Production. We talked on gross profit and same goes in material rates. Material rate improved from 90% in first quarter last year to 80% in this quarter. Subsequently, gross profit is up from EUR 1.2 million in last quarter compared to EUR 1.6 million in this quarter.
When we follow the P&L, we see the gross profit of EUR 1.5 million, EUR 1.6 million and EUR 1.2 million on the top line. We have here the people cost. People cost are up compared to the first quarter last year. This is mainly due to the fact that we now have a full-blown team in Hildburghausen for the LION Smart Production, as well as we are have more people in the headcount in R&D and sales in LION Smart.
Um, operating, uh, expense, uh, following that is also higher this quarter compared to last year, um, because, uh, like, uh, we said, uh, we have a, a full plant here, um, which is, uh, is still at the startup cost, and, uh, um, we have to finance that. So at the end, uh, consolidated, uh, EBIT, uh, is, uh, a negative, uh, roughly one half a million compared to, uh, um, zero point, uh, one million in, in, uh, last year. So from, from EBIT, uh, we have, um, uh, a lower financial result, which is due to, to higher interest costs. Uh, remember, we have a lot of credits in, in the company, which, uh, we have to pay, uh, interest.
ort a consolidated EBT of - EUR 0.7 million, with clearly saying we have a positive EBT of EUR 0.8 million in the LION Smart Production. Due to the carry-forward loss from last year, we have only to pay minor tax payments. Finally, overall earnings after tax in Q1 is - EUR 0.7 million compared to - EUR 0.1 million in the previous quarter. When we jump on the balance sheet, overall assets are nearly unchanged at EUR 23.6 million end of this quarter
Fixed assets are up by roughly EUR 2 million due to the fact that we're still having assets under construction and factory setup at LION Smart Production. Current assets on the flip side are down from EUR 13.7 million to EUR 11.2 million as we sell the stock going forward. Equity is down from EUR 6 million end of the first- end of 2022 to EUR 4.4 million in this quarter, mainly due to the change in the accumulated loss of EUR 3.9 million versus EUR 4.3 million. Liabilities and accruals remain nearly unchanged. Despite the negative EBIT, the overall cash flow from operations is positive, slightly positive by EUR 100,000 this quarter.
Cash flow from investments is slightly lower and cash flow from financing is zero in this quarter as no financing has been done. Again, some key messages for the first quarter. Point number one, the company prepares for growth. The production site in Hildburghausen, and I come to this in the next slide, is now ready for shipment. Q1 sales was coming from LION Smart stock. Deliveries in Q2 will be a mixture of inventory and own production. Let me give you an update on the LION Smart Production. Here is the update on Hildburghausen. The product re-qualification is in the meantime finished, as we announced in the last call. We will market our battery under the brand LION Smart SE09.
SE09 is a brand name which is quite well known from the previous production. We will stick to that. In the meantime, we have produced first battery packs which are sitting in our inventory and waiting for a shipment. Shipment will be made next week to the first customer. We see here the team made an outstanding job in Hildburghausen with a lot of personal engagement and passion to bring this product and the production to life. You see here the team made us a small celebration for one of the batteries where they signed off on this battery from their own production. Let me give you a small update on the LIGHT Battery.
This project basically is going as announced last meeting. We have entered the assembly of phase II for the LIGHT Battery, which is scheduled for May. The delivery of the modules to customers still is scheduled for June, the customer testing is starting as previous announced in the Q3 2023. Last point, the financial audit report for fiscal year 2022 is under review by external auditors. Final version is expected to be released in May, as the previous times, we will do a separate announcement once the test start is provided. We are a little bit, let's say, slower than last year, where we had it prior to the call.
This is due to the fact that this year we have the first time two companies, including a consolidation, which simply takes a little bit more time. Like we said, we will announce that quite shortly in May. With this, I'm at the end of my presentation. Frank, I'd like to hand back for you for the Q&A session.
Thank you very much, Winfried, for this very comprehensive presentation and the explanations about the numbers. I think everyone will also appreciate the re-qualification that happened. Well done, team. That was really good. Now we will open the Q&A session. If there are any questions from our attendees, please raise your hand and then I will unmute you. There's the first one from Christian. I'm just checking. Yeah. Okay, now you are unmuted. Please ask your question.
Hi. Good morning. Yes, thank you. First question would be on the second quarter. You said earlier that second quarter will be a mix of some inventory that you're selling and own production from Hildburghausen. Do you have some kind of a mix in mind that you can give us? Like, I don't know, 30% different inventory and the remaining is coming from production. I would assume from Q3 onwards, you will have sold all the packs that you still have on inventory, and then it can be fully from their own production, correct?
Yeah. Thank you for the question. Let me comment on that. We have and that's why I said it's a mixture of own production and stock. We have different variants from the SE09, depending on the application in the market. We have different stock levels for these individual part numbers. Subsequently, we have now reached the point where the first part number is going to production. Others will still be coming from stock. Depending on the customer call-offs over the next period, we expect that we will sell then the last packs in Q3 from stock.
Okay. A second question. At the beginning of the year, you had a press release where you reported some orders. I think it was EUR 45 million. Can you give us an update on what happened from the demand side since then?
Well, we're working with the customers, on follow-up orders and stuff like that. However, just to reconfirm that, we still stick to the guidance given in the range of EUR 70 million-EUR 80 million for this year, which we see as an achievable number.
Okay. Just to confirm, you mentioned May eighth as being the day where you start shipping packs. That means from now on, you are fully operational and you can now start scaling the production.
Yeah. It's the week commencing the eighth, but it depends on the customer when they come and pick it up. In this week, we will have the first shipment.
Okay. Sounds good. Thank you. That's it from my side.
Okay. Thank you very much.
Thank you very much for your questions. Are there any other questions? Please raise your hand, and then I will unmute you. Ian, you have a question.
Yes, Frank.
please speak. You ask the question.
I just wanna make very clear, 'cause we had a number, in the majority of inquiries from investors, Frank, as you know, over the last month to 6 weeks has been on re-qualification. The one thing I want to make sure is everybody understands where we are. I'm gonna ask Winfried a question. Winfried, we are now fully qualified. Our packs, we can produce the packs, the line is working, and so we can now ship these packs to customers, and they are fully qualified. We are now, in every sense of the word, ready to go shipping our packs to customers. Is that a good summary?
Well, Ian, the question is very straightforward, and I can answer that with yes.
Good. Thank you. I just wanna for the record, just in case anybody does ask, I don't think we could make it more clear. I'm gonna be as you know, Alessio and I will be with you next week in Hildburghausen.
Correct.
We're looking forward to it. We are overjoyed with this. you know, this has been a hell of a journey. It is not easy, but I think it's an outstanding achievement, and I'll just put that on the record. Thanks, Frank. That's it from me.
Thank you so much, Ian. We have received another question, a written question, and this is whether you, Winfried, could give us a short update on the order intakes. I think that you have that answered already because it's very similar to Christian's question, I would say.
Correct
... if you would like to add anything, happy, and if the person who asked the question, if this is still a valid and open question, please let us know. Christian, you have still raised your hand, so I'm not sure whether this is a new question or whether this is, still, you know, from your first question. I just put you on unmute. Now you've confirmed that you don't have another question, right? Okay.
No, my raising hand did not go away by itself.
No problem at all. You see we are still here and see your signs. I will unmute you again. There is another written question, I think. Let me check this. No. No written statement. Maximilian, you have a question. You raised your hand, so you should be unmuted, but I see that you don't have installed your mic.
No. No. Do you hear me?
Okay. Yeah, I can hear. We can hear you.
Yeah. It's not a question, a statement from my side. I think you should get to know this. My first contact with your company was in 2015 or 2016. I was a young journalist at Der Aktionär. My colleague told me that company is interesting. Then I forgot you for some years. This called wallstreet:online. There is a year stock picker challenge. Then I've written this on January the first and then get to know the company and have read all your material on the homepage and also can congratulate some really impressive story. It also impressed me that this story happened in the south of Thuringia.
I will be there this day later with Let me have a meeting with an ex-fund manager. I am doing wikifolio and, to get your stock inside my wikifolio, it is necessary that you have the trading, that I have the trading opportunity via Lang & Schwarz. I'm fully convinced of your story, and I hope you doing well the next month. Is there anything you can get to investors? What you can say to them? The question is what you are planning in the, in the investor relations area? What conferences, which coverages are in, or in, or are planned for the future? This is my question.
Sorry for the long statement.
Thank you very much, Maximilian. In terms of investor relations activities, we are in contact continuously with journalists, of course. We want to raise the awareness about, you know, LION and the progress we make. Journalists are interested in, maybe we'll also see some reports. I know that I have also spoken about this last time, I said there will be a report potentially shortly. Of course, you know, press is independent in Germany and other countries for good reasons. Journalists, of course, decide when they want to write something. We are still in contact with journalists and hope that they will cover LION in future.
In terms of conferences, yes, absolutely, we are also planning our attendance at some, you know, investor conferences and financial conferences. If something on the agenda, we will also let you know.
Perfect. Unfortunately, you are not in the next week, in the middle of May in Frankfurt at Equity Forum, called viewers conference. My advice is, and I will report you on this topic, you should have an interview or an article on the website, boersengefluester.de. It's my advice. I will help you with this. I will make a hint, but this could be very interesting for you.
Okay. Thank you so much. I will come back to this. Now I want to also give the others the opportunity to ask question, Maximilian, if that is okay for you. Thank you very much.
Yes, absolutely. Thank you.
for your encouragement. Thank you so much. We have also received. Yeah.
Frank, can I just make... First of all, Maximilian, thank you very much. Very good but accurate comments. I think one important thing, just to see how we see it, you know, we wanted to do this in the right way. When you build a factory and get it re-qualified, it is better to tell the story once all the pieces are together, rather than as the pieces are coming together. We have told the story. We have done a lot of investor relations. To go out and be louder, if you like, we wanna make sure all the pieces are there. I think today's announcement by Winfried is really important. You know, I think we got 10 comments from people saying...
Somebody said, "If you're not re-qualified, you're not real." I think that was stood out in my mind, Frank, as a comment. In that case, we are now qualified, therefore we are real. I think, Maximilian, in our journey, it is now a much more appropriate time to move forward a bit more aggressively to tell the story where our story will be more dependent on sales orders, and then of course our quarterly results. I think we're in a much better position today to do this than we were a month ago, or God forbid, six months ago. Thanks for the comment and we will be rolling out attendance at capital market events because I agree with you. I think we've got now an incredible story to tell. Thanks, Frank.
Yeah. Thank you very much, Ian. I couldn't agree more to what you have said. Thanks for the clarification. We have received another question in writing. The question is, Winfried, what is about the possible production number of units LION can now do a day? It is about the capacity and the production capacities.
Yeah. I think we previously announced that we have close to 2 GWh production capacity per year, which is equivalent to something around 50,000 packs a year. That's the production capacity, so you can divide that by the 200 working days-220 working days, and then you'll get the daily capacity.
Okay. Just to be sure, it is 50,000, so 50,000 packs, right?
Exactly.
Yeah. Thank you. We have received another question. What is about those SE09 battery customers from BMW? Are there any negotiations going on with these new customers?
Not sure, Frank, if I understood that correct. Our customer base is broadened, and it contains a historical customer as well as new customers.
Yeah. I understand the question that way is that, of course, BMW had also customers for its battery packs, and now you're LION taking over the production. Is there any chance to get those BMW customers, you know, on LION side? That's my interpretation of the written question. If that's not right-
Yeah.
The person.
No, no.
Yeah.
That's correct. We have, like I said, we have historic customers and we have new customers.
Right. Once we have something to announce in terms of, you know, new customers and new orders, we of course will announce this, right?
Correct.
Good. Thank you, Winfried. I think that answers the question. If not, the person who has asked the question can clarify. We received a couple of another written questions. Another one is, could you give us a flavor about actual or backlog and how personal costs and percentage of sales will evolve during the ramp-up phase?
Can you please repeat the question, Frank?
Sure. Could you give us a flavor about actual order backlog and how personal costs, personal staff costs, and percentage of sales will evolve during the ramp-up phase?
Let me try to answer the question. Currently, we're not in a backlog situation, so we deliver according to customer call-offs. That's point number one. Point number two is we have for the ramp up the people on board we need. We will see when we go forward with the production capacity increase, how many more people we need, but I can't give you out of my head here a concrete number.
Frank, can I make one comment? I think I might understand. It's quite obvious. You know, we have a relatively fixed number of personnel people. We will increase that as orders increase, as in running more shifts. Obviously there's enormous scalability in the business. As we get more and more orders, we don't have to hire in a linear fashion more people because if people have seen the video of the plant, it is highly automated. Maybe a good question if I can ask Winfried. Winfried, how many people do we need to run one full shift per day at the plant? That probably might help because we've got a sense of what production can be on a day. I think the number, Winfried, you gave was something like 50,000...
How many packs a year? I think if we could just go over that, because it wasn't clear to me. How many packs a year can we?
50,000 packs. 50,000 packs per year.
we would divide that roughly by, I don't know, 252.
252.
which is the number of working days a year. Winfried, maybe, that's an interesting question. How many people would be, one shift?
If we run a full shift, we probably need in the range of 20-25 people per shift, having a full-blown logistics and running both module and pack lines. I think the point probably I just was thinking what is the question behind the question, and probably, like you said, there are scale effects because we will not linear scale up people with a ramp of our production because we don't need that amount of people, not on a linear scale. Having said that, there is scale effect and you can see on the numbers on the LION Smart Production, which we announced for Q1, roughly the ratio, you can calculate it.
I'm I can switch back and forth unfortunately here, so I would have done the math quite quickly. This is the level of the rate production versus sales if you divide the salaries versus the revenue. With increased utilization of the plant, management expect that this number is going to decrease in percentage.
Thank you, Winfried. That brings me to another question also about the 50,000 packs per year, which is the capacity of the plant. Is that the 50,000, can that happen in a two-shift production series, or do we need a three shift for this?
No, this is a three-shift production.
Okay. Thank you. I think this answers the question. If not, please tell us. There are no other questions in written questions, and there are no hands raised. I think we are almost done, which is good. We are in time. It was a very interactive session, so thank you for this, everyone who participated in this call. As I said, thank you very much, Winfried, for your explanations and the good outlook. As I said, the recording will be uploaded, I think today. We also want to announce the successful requalification to all the people that are not participating in the call, which will also happen today. This is it from my side. If you have any questions afterwards, please send it to me either frank.schoenrock@lionemobility.com or ir@lionemobility.com.
Thank you everyone, and have a lovely day and a perfect weekend. Thank you and goodbye.