Earnings Call: Q2 2021

Aug 11, 2021

Ladies and gentlemen, thank you for standing by, and welcome to the Lordstown Motors Second Quarter 2021 Earnings Conference Call. At this time, all participant lines are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference may be recorded. I would now like to hand the conference over to your host today, Carter Driscoll, Head of Capital Markets and Investor Relations. Please go ahead, sir. Thank you, operator. Good afternoon and thank you to all for joining Lordstown Motors' Q2 2021 earnings conference call. To supplement today's discussion, please go to our IR website to view our press release and investor deck. Before we begin, I want to call your attention to our Safe Harbor provision for forward looking statements that is posted on our website and is part of our quarterly update. Safe Harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward looking statements for the reasons that we cite in our Form 10 Q and other SEC filings, including uncertainties posed by the difficulty in predicting future outcomes. Joining us today will be Lordstown Motors' Executive Chairwoman, Angela Strand President, Rich Schmidt and Interim CFO, Becky Roof. Angela will provide a strategic update on the business, followed by Rich, who will give a more detailed update on production, and then Becky will cover the financial results, Followed by Angela, who will provide our outlook and closing remarks. With that, I'd like to turn the call over to Angela Strand. Thank you, Carter, and to everyone for joining us today. Our strengthened leadership team has been in place now for less than 2 months and has thoughtfully broadened our go forward commercial strategy. We have identified 5 critical strategic priorities for Lordstown Motors that put us on our path to profitability. Today, our goal is to tell you as much as we can about these strategic priorities as we believe they will unlock the value of both our physical facilities and our technology. We will also provide you with the latest available information on the commercialization of the Endurance, on our continuing efforts to raise additional capital and on the other initiatives that our leadership team is undertaking. I want to start by highlighting how our key assets are moving us forward. Our deep and experienced team, our tremendously large and highly flexible plant and the breadth of technologies we've developed. First, we have become more convinced than ever about our innovation and the inherent value of our technology. Lordstown's tremendous engineering team with its close partner, Lafe, has expanded our unique hub motor design. Many of you on this call today are familiar with in wheel hub motors, but since more and more people are now only hearing about us, I want to take a moment to explain. Our in wheel drive puts a motor completely inside each wheel and is controlled through integrated software to make them all work together safely, powerfully and efficiently. Rather than replicating a gas engine powertrain with inefficient transfer cases, axles and differentials, we have a motor in each wheel and a centralized mine that controls them, providing unrivaled all wheel drive control with exceptional performance, torque, tow, Turning and TCO. So we at Lordstown take a clean sheet approach to where the power should really come from in an electric vehicle, since we have no legacy mindset or assets tying us to the past. We believe that form should follow function and are relentless about meeting customer needs. We feel it's the way you build a work truck if you're starting from new. We are now redoubling our efforts to explain our hub motor technology to the market and to potential investors. We believe that the more our hub motors are proven out through continued testing, the more investors and customers will appreciate Lordstown's unique technological value 2nd, we are accelerating actions to unlock the full potential of our factory in our campus. Lordstown controls a 6,200,000 square foot manufacturing plant on 650 acres of land in a great location in Ohio's Voltage Valley with access to suppliers, rail and a highly trained workforce. The plant itself was kept formed by its prior owner And this year, we have upgraded the factory such that it is completely vertically integrated with our commissioned battery and soon to be commissioned hub motor lines. As a result, we are now well positioned to produce our Endurance truck. But even more than that, we have seen the multiple opportunities that our manufacturing facilities and our large surrounding campus present to other companies that are seeking ready to go manufacturing capabilities for their Products. This is a significant market. Sirius discussions are now underway with several potential partners and we expect that many more will become attracted to the potential of our factory as word of our decision to unlock its full potential spreads through the marketplace. This is a critical strategic pivot for us, a decision that we believe will lead Significant new revenue opportunities for Lordstown at the same time as production of the Endurance is ramping up in the Endurance portion of the factory. Simply put, because of our factory and our campus, Lordstown is uniquely positioned to accelerate production, both for our partners and for the Endurance. 3rd, we have gained an even deeper understanding of the broader potential marketplace and are more convinced than ever about our ability to penetrate important opportunities in this space. We believe that Lordstown's Endurance can address both the commercial and direct to consumer segments in the electric pickup truck marketplace. Initially, The commercial fleet segment is one where we have every reason to believe Lordstown's and Durance can succeed in a big way. The opportunity is substantial and it is just a subset of the overall $90,000,000,000 potential market for electric light duty pickup trucks. And while there are already competitors, including big brands, the EV pickup market is so underserved that there is plenty of room for all. With our particular focus initially on the commercial fleet market, as well as strategically targeting delivery trucks, Military vehicle programs and technology licensing of our batteries, hub motors and skateboard platform, We believe Lordstown has a wide and clear road forward into a lucrative and expanding EV marketplace. 4th, our strengthened leadership team is determined to build the Endurance the right way. As everyone knows, The last months have been difficult for vehicle manufacturers generally. Shortages of semiconductors and vehicle parts of all kinds have created enormous production challenges for even the most established traditional OEMs. And we at Lordstown are not immune from these acute Our team is adapting and will continue to adapt to these short term challenges and to making the best decisions for our stakeholders. 1st and foremost is production readiness. We will be prudently ramping production to ensure a quality product and to accommodate supplier realities in the near term. We are on track to begin limited production at the end of September and complete vehicle validation and regulatory approvals in December to January. This will be followed by deployments with Selected early customers in Q1 in advance of commercial deliveries in early Q2 with the ramps between the second half of next year. This responsible commercial plan is important for three reasons. 1, to ensure that we provide our fleet customers with Time necessary to experience and then build out the required charging infrastructure for larger deployments. 2, to manage our supply chain challenges prudently, particularly as shortages and COVID impacts persist through the next few quarters. And 3, to further fortify our capital position to fully support our commercial launch. Finally, our 5th strategic priority. Our experienced leadership team has embarked upon a comprehensive effort to raise the new capital that will be necessary to ensure Lordstown's ultimate success. We have already announced an The agreement was the first of what we believe will be several steps to ensure that the company has the financing it needs to succeed to profitability. We are now exploring a variety of other financing options, including non dilutive private strategic investments and debt. We look forward to updating all of you as we reach agreements regarding these new financing I will now turn the call over to Rich. Thank you, Angela, and good afternoon to everyone on the call. I am Rich Schmidt, President of Lower Sound Motors, and I'm happy to provide an update on production, engineering and quality. First, in terms of management changes, I want to reiterate the strong team we have always had in place in production and in engineering. 2nd, The Endurance betas. We have completed our beta builds and we are using the betas for our crash, durability and other validation tests. We have passed multiple crash tests and are achieving the standard requirements to meet FBMSS and plan for a 5 star crash rating for our vehicle. As someone who has over 30 years' experience building cars and trucks have many different plans and for many different OEMs around the world, I say that to be this far advanced in crash tests In the first pass using the beta vehicle is unique and a testimony to the team's innovative use of CAE and design innovation speed and our vehicle technologies. 3rd, we continue to refine the components for cost and quality and production validation and preproduction vehicles. We are launching a mix of soft and hard tools to protect these improvements. Once complete, we will lock in with hard tools, which are production equipment needed to build trucks in mass scale cost efficiently. We will use preproduction Vehicles for NHTSA, crash testing and validation, wants the final steps before we go to commercial production. Recall that PBVs We'll have production process with battery and hub motors built in house as well as paint, sub assembly and frames all completed here in our plant. We are retooling the plant to be flexible, to ensure build multiple vehicle platforms, vehicle platforms inexpensively from trucks to cars. We have made substantial progress on this since last May when we last spoke. The stamping, body and paint shop reconditionings are all complete. General assembly is also on track for September production readiness, and we have installed a new chassis marriage line. With the flexibility considered upfront in our retooling, our current footprint utilizes about 30% of the plant's 6,200,000 square foot. So we have ample room for potential partners to build vehicles, for us to build vehicles for others and for additional LMC vehicle platforms as well as other opportunities such as selling batteries, hub motors and our complete skateboards to other companies. Shifting focus to propulsion. We started installing the 1st electric home motor line on-site and it is currently undergoing site commissioning in advance of limited production builds. The 1st battery pack module and pack assembly line are now fully commissioned. Finally, we continue to develop and refine our hub motors. We want to develop multiple motor sizes and different platforms and use cases, And broadness involves increased torque, towing capacity and energy efficiencies. Improvements to the motors were developed in house In conjunction with our partners, Alafi. We believe the performance improvements should open up our opportunities set within the commercial space. Our innovative technologies are leverageable in many different ways for Lordstown, including the power, our unique truck skateboard and to expand our use of our revolutionary hub motor across many vehicle applications. Because of our technology, we have no doubt that we will be at the center of the discussion as fleet customers and consumers look at electric Pickup differently. And with that, I will hand over to Becky to take you through the financial results. Thank you. Thank you, Rich. Good afternoon, and I also want to thank everyone for joining today's call. I am Becky Roof, Interim Chief Financial Officer, and I will review our 2nd quarter 2021 results and mention other items as well. But before I do that, let me note some of the actions I am taking to both bolster our team and address our auditors' concerns. First, we are adding several experienced financial personnel in accounting, treasury and controller functions. 2nd, we are implementing additional financial software tools to enhance our reporting and control processes that will also support our SOX compliance testing that will be taking place over the balance of the year. Our financials are presented in accordance with GAAP. In the Q2 of 2021, we recorded a net operating loss of $108,200,000 versus $125,200,000 in Q1. Our expenses consisted of $33,800,000 in SG and A versus $14,400,000 in Q1 or an increase of 19 point $4,000,000 Our R and D expenses were $76,500,000 compared to $91,800,000 in Q1 or a decrease of $15,300,000 Included in the Q2 amounts is $3,900,000 of stock compensation The quarter over quarter increase in SG and A expenses is principally driven by higher legal, consulting and payroll expenses. Our legal expenses were $9,000,000 higher in Q2 than in Q1, largely due to the special committee and SEC investigations. Consulting fees were $6,200,000 higher, largely due for the same reasons and vehicle development expenses. We believe that much of the increase in legal and consulting expenses is nonrecurring in Sure. For Q2, we believe that as much as $13,000,000 is nonrecurring. Payroll The quarter over quarter decrease in R and D expenses was driven principally by lower prototype components expense of $28,900,000 related to the completion of purchases for our betas and a decline in purchases of preproduction vehicle components as many of those purchases were made in prior quarters. We also experienced lower supplier services fees in the amount of 1,400,000 These reductions were offset by higher total payroll costs of $7,300,000 for increased headcount as we ramp up our manufacturing teams and also by increased operating expenses, including utilities, building maintenance and supplies and shipping, totaling $4,800,000 We anticipate that quarter over quarter R and D expense should continue to trend downwards over time as our external service activities in vehicle development are concluded. Turning to the balance sheet. We ended the Q2 of 2021 with a total cash position of $367,000,000 We have total assets of $687,000,000 largely consisting of our cash position plus $286,000,000 in PP and E and construction in progress. On the liabilities and equity side, We have $88,000,000 in total liabilities, mainly accounts payable and accrued expenses and $599,000,000 in shareholders' Equity. From a cash flow perspective, we used $98,800,000 in cash from operations, Used $121,300,000 in investing activities from purchases of capital assets and generated $500,000 from financing Our combined cash used in operations and investments was $220,100,000 We ended the quarter with approximately 177,000,000 shares outstanding. If all outstanding warrants were converted today, We would have approximately 180,000,000 diluted shares outstanding, not counting employee stock options. As Angela mentioned, we are pleased to have recently announced an equity line of credit with a notional amount of $400,000,000 This gives us the flexibility to raise capital quickly and at our discretion. We recognize there is dilution from utilizing this instrument, and we want to balance our future capital needs using less dilutive instruments. We are in discussions with multiple parties in exploring access We are continuing our discussions with the Department of Energy Loan Program Office regarding our obtaining an ATVM or Advanced Technologies Vehicle Manufacturing Loan. Angela mentioned unlocking our value. We have a large and strategically located campus, the plant of the past making vehicles of the future. We are reporting a book value for our land, buildings, machinery and equipment and vehicles in an amount of $45,500,000 We have invested an additional 240,100,000 in construction and progress assets as we continue our plant readiness preparation. We believe that when coupled with 1,000,000,000 of dollars that the former owner invested before Lordstown Motors acquired the facility that the fair market value far exceeds what we are reporting on a GAAP basis. We are in the process of engaging third party appraisers to opine on this valuation. Finally, and in connection with the delivery and placement into commercial service of our 0 emission vehicles, or ZEVs, Under various federal and state rules and standards, we will earn tradable credits that can be sold to other OEMs. We intend to take advantage of these regulatory frameworks by registering and selling these credits. In addition, we have entered into an emissions credit agreement with GM pursuant to which and subject to the terms of which During the first three annual production model years wherein we produced vehicles at least 10 months out of the production model year, GM will have the option to purchase such emission credits at a purchase price equal to 75% of the fair market value of such credits. Please see our 10 ksA for a detailed description of additional terms related to these ZEV credits. Thank you. And I'll now turn the call back over to Angela, who will provide our outlook and closing remarks and guidance. Thank you, Becky. As we made everyone aware during Lordstown Week, we are committed to our values of teamwork, technology and transparency. Now on to guidance. As we have already indicated, our expenses have exceeded prior management's expectations for the reasons laid out earlier and the pace of our commercial production ramp will depend on multiple factors. We are updating the outlook for full year 2021 that was provided last quarter. First, we have chosen to build a limited number of early production vehicles in the Q4 for validation and regulatory clearance, as well as gaining real world experience with customer pilots and demonstrations. This prudence will allow us to mitigate supply chain ramp up, risk and expense and achieve more favorable cost of goods targets prior to moving into commercial production and launch in Q2. 2nd, for full year guidance, we expect between $375,000,000 $400,000,000 in capital expenditures, up from $250,000,000 to $275,000,000 largely due to prepayments for hard tool purchases. On the operating front, we now forecast $95,000,000 to $105,000,000 in SG and A, up from 55 $60,000,000 of which $8,000,000 is stock compensation expense $310,000,000 to $320,000,000 in R and D, up from $280,000,000 to $290,000,000 of which $12,000,000 is stock compensation expense. 3rd, for our liquidity position, we expect our cash at the end of the 3rd quarter to be in a range of 2.25 $275,000,000 before giving effect to any financing. As noted above, the equity line gives us flexibility to access capital and will do so as needed, while we also continue to explore other financing and strategic options. We remain in discussions for multiple strategic and financing opportunities. In addition, we also remain in due diligence for an application for an ATBM loan. And we continue to seek and pursue opportunities for other tax credits and grants across multiple jurisdictions. We want to thank all of our talented employees for their hard work and dedication across our offices in Lordstown, Ohio Farmington Hills, Michigan and Irvine, California. We are proud to be part of the voltage valley renaissance in Ohio, creating good jobs that help address climate change and sustainability issues. In summary, our mission to bring to market the first Full sized all electric pickup truck is reinforced by our 5 strategic priorities stated previously: Our technology, our plant, our commercialization plan, our production capabilities and importantly our team. We see numerous paths to unlock the value of our business with additional vehicle platforms, contract manufacturing opportunities and multiple and diverse revenue streams. Lordstown is a company with heart that is building a real truck with real people and a real plan, and our future is very bright. Thank you for your time, and we very much look forward Talking with you again in November. Operator, we will now take questions. Thank you. Our first question comes from the line of John Murphy with Bank of America. Your line is now open. Good afternoon, everyone. This is Aileen Smith on for John. First Question on the increase to the CapEx outlook for this year. When we compare it to the outlook that was provided a few months ago, is it fair to interpret the 1Q outlook as Perhaps encompassing a more conservative budget as the team was focused on maintaining appropriate liquidity levels. And therefore, this new outlook reflects What would have been in your internal expectations now that you've lined up incremental capital with the equity purchase agreement? Or is there something more operational in the CapEx outlook that reflects Significantly higher level of spending than what you assumed a few months ago. Thanks, Aileen. Appreciate the question. Yes, I think you're on the right track In terms of this the ordering of the hard tools and the prepayments were along the lines of the budget before the increased expenses. So we're really back to what the plan was in the Q1. Okay, got it. And then I wanted to dig in a little bit into the Strategy with the strategic partners that you've referenced a couple of times and get a little clarification. Is that more of an effort by Lordstown to get into contract manufacturing Or rather opening up the significant capacity within the facilities for your partners to use as they see fit. And is either offering More or less ideal for Lordstown and how do you think about the economics of working with those partners? Thanks for the question. We are exploring multiple partnership constructs that includes contract manufacturing, that includes licensing in addition to Producing our own vehicles. And so of course, you understand I can't disclose partnerships that are in discussions. But broadly, we're discussing with multiple OEMs who are interested in exploring how they can leverage the assets that we have today. Okay, understood. And then a final one, if I may, in some of the recent management changes and resignations. Can you talk about some of the customer or Partner feedback you've received with the C suite developments. And in terms of the search process for a new CEO and CFO, Do you have a thought process on some of the priorities on candidates that you want to bring into the company, meaning those with more automotive experience or technology experience? Thank you for the question. I'll take the second part first. So we are in an active Recruitment process for our CEO and CFO and that process is proceeding. And there are a diverse range of candidates that we're evaluating and that are evaluating us at the present time. The second as to the customer And stakeholder response to the new expanded leadership team, as you know, we hosted more than 4.50 people during Lordstown Week and that was a very diverse range of investors, policymakers, customers and suppliers And the response has been extremely positive. And we've really been able to accelerate our momentum and specifically now that They understand that we're committed to the long term viability of the company and also really to unlocking the full value, not just for the Endurance, but also for the other assets that we have at our disposal. Okay, great. That's very helpful. Thanks for taking the questions. Appreciate it. Thank you. Thank you. Thank you. Our next question comes from the line of Emmanuel Rosner with Deutsche Bank. Your line is now open. Hi, good afternoon, everybody. How are you doing, Emmanuel? Hi. Doing well, thanks. So it's encouraging to hear about upcoming limited production in the Q4, both for validation and also for Customer pilots, can you talk about, which customers will be piloting some of these early models? And then Any update you're able to provide on shape of demand beyond that when you start Actual productions and deliveries, I don't know if it's in terms of order book, have you started taking some deposits, just Anything that helps us in terms of how to think about it once you start delivering your vehicles? Sure. Thanks for the question. It was nice to meet you by the way at Lordstown Week. In terms of the customers, we And I'm sure you understand, we're not disclosing the specific list of customers, but the Contours, in addition to Holman ARI, who we've already We have a vehicle purchase agreement with, we'll be working with fleet management companies and understanding that they're important because they also serve Their own fleet as well as fleet customers directly and we're hitting all of the major segments telecom, Utility, construction as well as municipal, and we'll be working with across those segments in the Q1 as we move to commercial ramp in the Q2. Perhaps for the second part of the question, I'll ask Carter to comment. Yes. Thanks, Emmanuel. What we've always felt comfortable with is that we build a truck that is The quality product and it meets the specs that our customers demand and at a price point that's attractive, we're never really concerned with demand. We feel very comfortable that There will be demand will most likely outstrip our production capabilities for the 1st couple of years. We're hesitant to put a number around it as you know Because of the way that we have discussed our order book in the past, we'll get a lot more feedback as we give some of those customer Demonstrations and trials and we expect to continue to pursue expanded vehicle purchase agreements as that process evolves. That's fair. So I guess just if you can give us a sense of where you are in that process and have you already Started taking some firm orders or the ones that require deposits or is that something that would be coming later on? Yes. I mean, we're still in terms of the timeframe. We're very cautious. We don't have a product, right? So we've always said until we have a product available, We can't meet rev recognition terms. So there are vehicle purchase agreements we continue to pursue do include Some form of deposits, either of them are different. So these are all each unique. But as we get closer to these demonstrations, we will Become a lot more forthcoming description of what those purchase agreements look like, but they generally follow the form of what we've talked about in the past. Understood. And then second question, I guess, in the last quarterly update, I think part of the Update revolve around the supply chain constraints and the ability to sort of get access to some of the parts That you needed, which prompted in turn some in sourcing of some of those parts. Can you just update us So what you're seeing in terms of supply chain, have you essentially been in the process of insourcing all that you needed? Are there any additional constraints coming up? Or I think looking actually pretty stable going into your early production. I'll have Rich answer that. Thank you for your question, Emmanuel. Basically, there's not really any difference in the difference in the supply chain from last quarter to this quarter. We are in sourcing some of the major components that Or some of the potential risks last time, as we discussed last time, we have brought the frame in house. Part of that is to give us flexibility on multiple platforms, which allows us to build the technology of our skateboard, which With the flexibility of building the frame, the hub motor and the battery, it gives us multiple platforms and we can really build off of that platform The multiple vehicle platforms other than just the endurance truck if we need to. Understood. Thank you very much. Thanks, Emmanuel. Thank you. Our next question comes from the line of Joseph Beck with RBC Capital Markets. Your line is now open. Thank you. Good afternoon, everyone. So You just guided second half OpEx, a little bit under $200,000,000 Even if we just split that, So $100,000,000 we look at your cash balance that takes you down to call it $265,000,000 So to get to your 3rd quarter liquidity target, It makes it seem like there's a really big decline in the CapEx next quarter. Can you help us with the cadence Of OpEx and CapEx, so we can calibrate here? Sure. I'll ask Becky to answer that question. Thank you, Angela, and thank you, Joseph, for asking the question. So we made very significant CapEx expenditures In Q2, when compared to Q1, it was 121.3% in Q2 And $54,300,000 in Q1. So the biggest change in our CapEx Outlook for the balance of the year is the prepayments on hard tooling that we'll make either late Q3, Q4, And those were not contemplated when we provided guidance earlier this year. With regards to liquidity, Yes. At the end of Q3, cash forecasting is always as much of an art as it is a science. And we have levers to pull when we make large cash outlays like the one I just That I just described, we have flexibility in when we make those prepayments for our hard tooling. So we'll make these kinds of decisions when we see how market conditions are and what kind of strategic and financial Discussions how those are progressing. We do have the equity line of credit that we just put in place, and we have not yet utilized that line. Okay. Maybe that's a good segue into the follow-up. So last quarter, you said you're going to you thought you're going to end the year $50,000,000 to $75,000,000 Now you raised spending, but you do have the Elok. What are you targeting for end of year? Or maybe put differently, like how much do you plan To draw on the ELOC for the year. So thanks for the follow-up. As I just said, We put the ELF in place to create a lot of flexibility for ourselves. And so as our other strategic and financial discussions progress, and as Angela mentioned, we're in discussions with multiple parties on both fronts. As we see how those come together, coupled with the availability under the ELF line, We'll make the decision that make the decisions about how we spend our CapEx. Okay. But there's no Cash level end of your cash level you're targeting as of today? No, because Joe, just let me think about just the different levers that Becky was talking about. We've made the commitment to hard tools because it's incredibly important for us to get to vehicle profitability and they have long lead time components as you know. So we're going to make the appropriate strategic partnership decisions and financial decisions to make sure that we have Sufficient cash to execute on our plan, but those are still there's 3 or 4 different moving parts and we will have a better sense over say the next 2 months as where we would be. It's a little premature for us to give you a year end cash figure, but we're very conscious of where we stand today and we have a lot of optionality is what we're trying We will update you appropriately in the coming weeks. Okay. And one more, you mentioned strategic Partners and the optionality there from building vehicles for others or it sounds like maybe even subleasing space. But It's interesting you're calling it strategic partnerships or strategic partners now. I think last quarter and then prior Conversations, it was called strategic investment or strategic capital. So Is that also still an option? Is that off the table or is the financing more likely to come from Financial capital raises as opposed to strategic raises and then the partnership conversations Are really more about how they can potentially utilize your assets. So it's a great question and the answer is it's both. And so when we talk about strategic partnerships, they can also come with investments as well as financial investors. So I think your interpretation is accurate. Thank you very much. I would separate them Joe into 2 buckets, right? There are multiple different financial options and multiple different strategic options And some of those come with financial investments. Okay. Thank you. Certainly. Thank you. Our next question comes from the line of John Lopez with Vertical Group. Your line is now open. Hi, thanks very much. I apologize. I just wanted to come back to portions of the prior topic and just maybe try and ask it this way. It seems like based on the cash guidance, your combined OpEx plus CapEx has to drop To like sub $150,000,000 in Q3, but then increase to above $250,000,000 in Q4. Is that like directionally right? I'll ask Becky to answer that. So I don't think I provided any difference between Q3 and Q4. And Again, reiterating that we have a lot of flexibility around when we make our large disbursements And that's not just CapEx disbursements, but that's also for expenditures that are currently classified as R and D and will stay R until we go into production. So that's how I would answer your question is just the optionality that we very carefully put in place. And think about when the timing of it, John, right? Some of them straddle 3Q, 4Q. So some could bleed 1 to the other. So it's kind of tough to delineate when it could stretch from end of September early October. So it kind of gets we put it in that second half bucket without trying to parse it too finally into the Q3. You have a range of 3rd quarter and there's some Movement there, but we have the optionality to be able to move it. And part of this is also our anticipation of the types of financing we're going to get. I see. Okay, that helps. Sorry, I had 2 other quick ones if I could. Well, hopefully they're quick. Secondly, It sounds like the messaging now is commercial production is shifted to the calendar Q2 of 2022. So could you just if I'm interpreting that incorrectly, please correct me. But then I suppose my question underlying that is a lot of The prior management's focus was on sort of like being early, being first. And to the extent that you push commercial production there, You're now sort of layering on top of a large competitor's timing. So how do we think about that? Does that influence your view of The initial opportunity, the longer term opportunity, maybe just talk to those dynamics for a second, if you could? Of course. It's a great question. Thank you. So The distinction I'll make was you're correct that commercial production and commercial production ramp begins Q2. However, the vehicles that we'll be deploying with a limited number of customers in Q1 are production quality vehicles. And the distinction that I'll make there is we still plan to be first to market, particularly in the commercial fleet space. And what we've heard from fleet customers and fleet management companies is that based on the performance of the vehicle, the configuration, the options, the Performance in the TCO will be really well positioned to establish a leading market share. And as I mentioned in our Prepared remarks, it's a very, very large and underserved market and there's room for multiple players. Got you. Understood. Sorry, my very last one here is, I do want to talk about Hub Motors for a quick second, which you guys seem to be highlighting Maybe a bit more. And I think I heard you guys referencing potentially some licensing opportunities there. And I suppose my question is this, I guess, our understanding is that you're licensing the core technology itself from Elephy, which you've referenced a few times, but then you're also paying Workhorse for some past Development there of one sort or another. So sorry, the question here is, did you send you were going to license something like what exactly is yours to license? Thanks for the question. So you are correct in that we have a licensing partnership with Elafe And we are continuing to work with Elafee as we develop expanded and unique configurations and applications, not only for the hub, But the hub integrated into our skateboard. And so there are multiple levers that we're pulling there as different customers and partners Are interested in different configurations. Okay, understood. Thank you very much for the thoughts. Thanks, John. You're welcome. Thank you. There are no further questions. I would now turn the call over to Angela Strand for closing remarks. Thank you again everyone. On behalf of our team at Lordstown Motors, we appreciate your time, all of your support today and we look forward to speaking with you again in November. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.