Press release

Romeo Power Announces Second Quarter 2021 Financial Results

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Sponsored by Businesswire

Romeo Power, Inc. (“Romeo Power” or the “Company”) (NYSE: RMO), an energy technology leader delivering advanced electrification solutions for complex commercial vehicle applications, today announced its financial results for the second quarter ending June 30, 2021.

Recent Business Highlights

  • Entered into a long-term supply agreement for lithium-ion battery cells with a Tier 1 battery cell and materials manufacturer.
  • Progressed negotiations to validate supply and secure long-term cell supply commitments with additional potential partners, including for future US sourcing.
  • Surpassed 750,000 miles of Romeo Power modules and battery packs being tested on the road.
  • Advanced evaluation of key suppliers’ capability to achieve run-rate volume and economics.
  • Implemented key leadership changes to substantially strengthen the management team and increase public company management experience, including:

    • Named Susan Brennan as President and Chief Executive Officer, a veteran of high volume and complex manufacturing and technology businesses in the automotive and energy solutions industries,
    • Added Kerry Shiba as Chief Financial Officer and Treasurer, a highly experienced financial leader in public companies going through rapid growth and change,
    • Appointed Lauren Webb to become the Chief Strategy and Commercial Officer, a newly created position, to leverage her deep knowledge of the industry and company to drive growth acceleration,
    • Appointed Matthew Sant as General Counsel and Secretary, a seasoned legal executive having significant experience in large public companies,
    • Made other key additions including the positions of Chief Accounting Officer, Vice President of Manufacturing, Vice President of Cell Engineering and Vice President of Global Supply Chain.

Second Quarter Financial Update

  • Generated revenues of $926,000 for the second quarter of 2021
  • Cash, cash equivalents and investments as of June 30, 2021 of $267.7 million

Management Commentary

“Romeo Power is building a foundation to shape the future of EV technology. As we look ahead, we have significantly bolstered our position for cell supply while continuing to increase value with our customers. Alongside our strengthened leadership team, I am looking forward to driving and executing on our shared commitment to expanding access to green energy solutions. I am honored to lead the company as it enters its next stage of development,” said Susan Brennan, President and Chief Executive Officer.

“We are already accomplishing great work by strategically pursuing key relationships and capabilities. Our pioneering technology and battery solutions have been a dominant force in driving cost effective electrification of heavy-duty fleets. Now, we are entering a pivotal moment as more customers demand safe, effective, affordable and sustainable EV solutions for a wide-range of transportation use-cases. Romeo Power has the institutional knowledge, skills, strength and passion to capitalize on this opportunity. We believe that the company is poised for great success and growth in the months and years ahead.”

Conference call information

Romeo Power will host a conference call at 2:00 p.m. U.S. Pacific Time (5:00 p.m. U.S. Eastern Time) today, August 16, 2021. Participating on the call will be Susan Brennan, President and Chief Executive Officer, Lauren Webb, Chief Strategy and Commercial Officer, and Kerry Shiba, Chief Financial Officer and Treasurer of Romeo Power. To access the conference call, parties should visit the events section of the Investor Relations website at https://investors.romeopower.com/. A recording of the webcast will also be available following the conference call.

Forward Looking Statements

Certain statements in this press release may constitute “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements, including, without limitation, express or implied statements concerning the Company’s ability to secure and maintain agreements with cell suppliers and OEMs, the Company’s ability to validate key suppliers, the Company’s expectations regarding its future financial performance, the demand for safe, effective, affordable and sustainable EV products, and the Company’s ability to produce and deliver such products are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Romeo Power’s management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: Romeo Power’s ability to execute on its plans to develop and market new products and the timing of these development programs; Romeo Power’s estimates of the size of the markets for its products; the rate and degree of market acceptance of Romeo Power’s products; the success of other competing technologies that may become available; Romeo Power’s ability to identify and integrate acquisitions; the performance of Romeo Power’s products and customers; potential litigation involving Romeo Power; demand for battery cells and supply shortages; the potential effects of COVID-19; and general economic and market conditions impacting demand for Romeo Power’s products. You should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s filings with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from those implied by our forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Romeo Power undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Note Regarding Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, including EBITDA and Adjusted EBITDA. “EBITDA” is defined as earnings before interest income and expense, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” has been calculated using EBITDA adjusted for stock-based compensation, change in the fair value of warrants, investment loss, net and forgiveness of portion of shareholder notes receivable. The Company believes that both EBITDA and Adjusted EBITDA provide additional information for investors to use in (1) evaluating our ongoing operating results and trends and (2) comparing our financial performance with those of comparable companies, which may disclose similar non-GAAP financial measures to investors. These non-GAAP measures provide investors with incremental information for the evaluation of our performance after isolation of certain items deemed unrelated to our core business operations. EBITDA and Adjusted EBITDA are presented as supplemental measures to our GAAP measures of performance. When evaluating EBITDA and Adjusted EBITDA, you should be aware that we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Furthermore, our computation of Adjusted EBITDA may not be directly comparable to similarly titled measures computed by other companies, as the nature of the adjustments that other companies may include or exclude when calculating Adjusted EBITDA may differ from the adjustments reflected in our measure. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation, nor should these measures be viewed as a substitute for the most directly comparable GAAP measure, which is net loss. As appropriate, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP are included in this press release.

About Romeo Power, Inc.

Founded in 2016 and headquartered in Los Angeles, California, Romeo Power (NYSE: RMO) is an energy technology leader delivering advanced electrification solutions for complex commercial vehicle applications. The Company’s suite of advanced hardware, combined with its innovative battery management system, delivers the safety, performance, reliability and configurability its customers need to succeed. Romeo Power’s 113,000 square-foot manufacturing facility brings its flexible design and development process in-house to pack the most energy dense modules on the market. To keep up with everything Romeo Power, please follow the Company on social @romeopowerinc or visit https://romeopower.com.

Financial Statements

 

Romeo Power, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(Dollar amounts in thousands, except share and per share data)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

Product revenues

$

466

 

 

$

458

 

 

$

1,078

 

 

$

2,046

 

Service revenues

460

 

 

671

 

 

902

 

 

1,605

 

Total revenues

926

 

 

1,129

 

 

1,980

 

 

3,651

 

Cost of revenues:

 

 

 

 

 

 

 

Product cost

5,542

 

 

1,737

 

 

9,980

 

 

4,466

 

Service cost

403

 

 

686

 

 

792

 

 

1,589

 

Total cost of revenues

5,945

 

 

2,423

 

 

10,772

 

 

6,055

 

Gross loss

(5,019

)

 

(1,294

)

 

(8,792

)

 

(2,404

)

Operating expenses:

 

 

 

 

 

 

 

Research and development

1,792

 

 

1,594

 

 

5,563

 

 

3,396

 

Selling, general and administrative

22,911

 

 

2,451

 

 

40,910

 

 

5,358

 

Total operating expenses

24,703

 

 

4,045

 

 

46,473

 

 

8,754

 

Operating loss:

(29,722

)

 

(5,339

)

 

(55,265

)

 

(11,158

)

Interest expense

(5

)

 

(264

)

 

(12

)

 

(518

)

Change in fair value of public and private placement warrants

1,995

 

 

 

 

118,120

 

 

 

Investment loss, net

(379

)

 

 

 

(289

)

 

 

Other expense

 

 

(1,386

)

 

 

 

(1,386

)

(Loss) income before income taxes and loss in equity method investments

(28,111

)

 

(6,989

)

 

62,554

 

 

(13,062

)

Loss in equity method investments

(563

)

 

(36

)

 

(1,206

)

 

(732

)

Provision for income taxes

 

 

 

 

(10

)

 

 

Net (loss) income

(28,674

)

 

(7,025

)

 

61,338

 

 

(13,794

)

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

Available-for-sale debt investments:

 

 

 

 

 

 

 

Change in net unrealized losses, net of income taxes

34

 

 

 

 

(308

)

 

 

Net losses reclassified to earnings, net of income taxes

115

 

 

 

 

153

 

 

 

Total other comprehensive income (loss), net of income taxes

149

 

 

 

 

(155

)

 

 

Comprehensive (loss) income

$

(28,525

)

 

$

(7,025

)

 

$

61,183

 

 

$

(13,794

)

 

 

 

 

 

 

 

 

Net (loss) income per share

 

 

 

 

 

 

 

Basic

$

(0.22

)

 

$

(0.09

)

 

$

0.47

 

 

$

(0.18

)

Diluted

$

(0.22

)

 

$

(0.09

)

 

$

0.45

 

 

$

(0.18

)

Weighted average number of shares outstanding

 

 

 

 

 

 

 

Basic

131,059,149

 

 

77,396,263

 

 

129,930,204

 

 

76,021,298

 

Diluted

131,059,149

 

 

77,396,263

 

 

135,021,296

 

 

76,021,298

 

 

Romeo Power, Inc.

Unaudited Condensed Consolidated Balance Sheets

(Dollar amounts in thousands, except share and per share date)

 

 

June 30, 2021

 

December 31, 2020

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

44,046

 

 

$

292,442

 

Investments

223,636

 

 

 

Accounts receivable, net of allowance for expected credit loss of $213 and $238 at June 30, 2021 and December 31, 2020, respectively

1,992

 

 

841

 

Inventories, net

7,615

 

 

4,937

 

Insurance receivable

6,000

 

 

6,000

 

Deferred costs

2,217

 

 

 

Prepaid expenses and other current assets

10,158

 

 

1,269

 

Total current assets

295,664

 

 

305,489

 

Restricted cash

1,500

 

 

1,500

 

Property, plant and equipment, net

6,430

 

 

5,484

 

Equity method investments

37,794

 

 

35,000

 

Operating lease right-of-use assets

5,350

 

 

5,469

 

Deferred assets

5,018

 

 

 

Other noncurrent assets

2,716

 

 

3,100

 

Total assets

$

354,472

 

 

$

356,042

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

8,200

 

 

$

2,900

 

Accrued expenses

4,620

 

 

2,844

 

Contract liabilities

3,123

 

 

815

 

Current maturities of long-term debt

3,307

 

 

2,260

 

Operating lease liabilities, current

855

 

 

853

 

Legal settlement payable

6,000

 

 

6,000

 

Other current liabilities

153

 

 

384

 

Total current liabilities

26,258

 

 

16,056

 

Commitments and contingencies

 

 

 

Long-term debt, net of current portion

34

 

 

1,082

 

Public and private placement warrants

9,852

 

 

138,466

 

Operating lease liabilities, net of current portion

4,597

 

 

4,723

 

Other noncurrent liabilities

32

 

 

17

 

Total liabilities

40,773

 

 

160,344

 

 

 

 

 

Stockholders’ equity

 

 

 

Preferred stock ($0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2021 and December 31, 2020)

 

 

 

Common stock ($0.0001 par value, 250,000,000 shares authorized, 132,995,060 and 126,911,861 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively)

13

 

 

12

 

Additional paid-in capital

429,946

 

 

373,129

 

Accumulated other comprehensive loss

(155

)

 

 

Accumulated deficit

(116,105

)

 

(177,443

)

Total stockholders’ equity

313,699

 

 

195,698

 

Total liabilities and stockholders’ equity

$

354,472

 

 

$

356,042

 

 
 

Romeo Power, Inc.

Unaudited Condensed Consolidated Statement of Cash Flows

(Dollar amounts in thousands)

 

 

Six Months Ended June 30,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net income (loss)

$

61,338

 

 

$

(13,794

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

Depreciation and amortization

999

 

 

950

 

Amortization of investment premium paid

990

 

 

 

Stock-based compensation

14,742

 

 

652

 

Inventory provision

1,242

 

 

 

Change in fair value of public and private placement warrants

(118,120

)

 

 

Loss in equity method investments

1,206

 

 

732

 

Non-cash lease expense—operating leases

119

 

 

115

 

Non-cash lease expense—finance leases

142

 

 

140

 

Derivative expense

 

 

1,386

 

Other

20

 

 

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(1,151

)

 

(65

)

Inventories

(3,920

)

 

(1,245

)

Prepaid expenses and other current assets

(8,377

)

 

344

 

Accounts payable

5,369

 

 

535

 

Accrued expenses

1,776

 

 

907

 

Interest accrued on notes payable

 

 

489

 

Deferred costs

(2,217

)

 

 

Contract liabilities

2,308

 

 

629

 

Operating lease liabilities

(124

)

 

(108

)

Other, net

(102

)

 

 

Net cash used in operating activities

(43,760

)

 

(8,333

)

 

 

 

 

Cash flows from investing activities:

 

 

 

Purchase of investments

(304,868

)

 

 

Proceeds from maturities of investments

78,633

 

 

 

Proceeds from sales of investments

1,300

 

 

 

Equity method investment

(4,000

)

 

 

Capital expenditures

(2,113

)

 

(603

)

Net cash used in investing activities

(231,048

)

 

(603

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Issuance of convertible notes

 

 

1,924

 

Issuance of term notes

 

 

3,750

 

Proceeds from PPP loan

 

 

3,300

 

Issuance of common stock

 

 

5,027

 

Exercise of stock options

5,058

 

 

7

 

Exercise of stock warrants

21,580

 

 

 

Warrant redemption payments

(72

)

 

 

Principal portion of finance lease liabilities

(154

)

 

(138

)

Net cash provided by financing activities

26,412

 

 

13,870

 

Net change in cash, cash equivalents and restricted cash

(248,396

)

 

4,934

 

Cash, cash equivalents and restricted cash, beginning of period

293,942

 

 

1,929

 

Cash, cash equivalents and restricted cash, end of period

$

45,546

 

 

$

6,863

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:

 

 

 

Cash and cash equivalents

$

44,046

 

 

$

5,363

 

Restricted cash

1,500

 

 

1,500

 

Total cash, cash equivalents and restricted cash

$

45,546

 

 

$

6,863

 

 
 

Romeo Power, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(Dollar amounts in thousands)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2021

 

2020

 

2021

 

2020

Net (loss) income

$

(28,674

)

 

$

(7,025

)

 

$

61,338

 

 

$

(13,794

)

Interest expense

5

 

 

264

 

 

12

 

 

518

 

Provision for income taxes

 

 

 

 

10

 

 

 

Depreciation and amortization expense

494

 

 

468

 

 

999

 

 

950

 

EBITDA

$

(28,175

)

 

$

(6,293

)

 

$

62,359

 

 

$

(12,326

)

Stock-based compensation

8,189

 

 

375

 

 

14,742

 

 

652

 

Change in fair value of public and private placement warrants

(1,995

)

 

 

 

(118,120

)

 

 

Investment loss, net

379

 

 

 

289

 

 

Forgiveness of portion of stockholder notes receivable

 

 

1,386

 

 

 

1,386

Adjusted EBITDA

$

(21,602

)

 

$

(4,532

)

 

$

(40,730

)

 

$

(10,288

)