mörnig call

Äänitiedosto

Leijona_Q321_call.mp4



Tallenne

00:00:04

Good morning everyone.

00:00:06

A very warm welcome to lyonsi mobility investor call.

00:00:11

It's the last call investor call of the year.

00:00:15

We are still.

00:00:16

Awaiting Alessio to join but I think he will do in a minute.

00:00:21

We had a uh shortly.

00:00:24

Preparation called this morning and he was attending there so he is he is in today and he will join.

00:00:32

I think in a couple of minutes.

00:00:35

Uhm, for those who.

00:00:37

Don't know me?

00:00:37

My name is Frank Chinook.

00:00:39

I'm supporting line mobility in its investor relations with some of you.

00:00:44

I had already some contacts via email and also via phone.

00:00:50

And I will present to you the panelists for this morning.

00:00:57

So as I said, unless you're is joining in a minute, he's chairman of the Board of directors of Liney Mobility.

00:01:05

We have as a panelist as well.

00:01:07

Ian Mukherjee, who is in the board of directors of 90 mobility.

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And for the first time.

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His infant pulse is relatively new to the company he is on the list for today's call as well.

00:01:22

He's general, miniature line, smart GM.

00:01:24

H and I said I'm, I'm supporting investor relations.

00:01:30

I have double check now that the call is recorded.

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Last time we had some difficulties.

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So the first part was missing unfortunately, but this time I have double checked it.

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It is the recording is ongoing.

00:01:46

The agenda for today is Emergy will give you some clear enemy remarks about the business.

00:01:53

Then Ringford bus will take over and to give you some insights into the business of Line Smart GmbH and we comment on the numbers we have released yesterday.

00:02:05

And finally, unless you will.

00:02:08

Give me some closing remarks at the end.

00:02:11

So even if you would like to take over and we would much appreciate that.

00:02:17

Great, can you hear me OK, Frank?

00:02:21

Yes, you are loud and clear.

00:02:23

Brilliant hi everyone.

00:02:25

Welcome to the December results call as well or as a discussion of our results.

00:02:31

The most important thing we'll do today is to introduce Winfred boss, our new MD of the GmbH.

00:02:40

I hope many of you have had the chance to review Winfred's bio which we posted on our website.

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And I hope.

00:02:47

You'll all agree it's pretty impressive, and it's precisely the skill sets we need for the next stage of our journey.

00:02:54

Winfred has many decades of experience in the auto industry, he's a competent and accomplished manager at a senior level, with an extraordinary list of connections in the industry, both in Germany and internationally.

00:03:12

Some importantly, he has a great deal of experience in building and operating manufacturing plants, which are the skills will read as we take over manufacturing battery packs from BMW.

00:03:26

I know investors have been impatient for a final.

00:03:29

Councilman, but frankly this has taken longer than we originally thought.

00:03:34

Given the complexity of the operation nailing down all the suppliers with contracts and getting the price right with BMW, we are pretty confident we'll get this done very soon.

00:03:47

And when we do, we will set up.

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Accord with investors to run them through as many details as we can.

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And of course, Winfred will discuss this shortly when he speak.

00:03:59

Thanks, this is a huge deal for us.

00:04:01

When complete we will be a manufacturer of high quality battery packs.

00:04:06

Will be a partner for BMW.

00:04:09

It also means we start our manufacturing journey and we'll be able to build credibility here, so eventually we could manufacture our own light battery packs for clients.

00:04:20

If that demand comes.

00:04:21

Through this business, this industry, as I think we all agree, will only continue to grow over the next two decades.

00:04:31

Furthermore, I remain ready to help with financing the next part of our journey.

00:04:36

We have many funding sources available as we move into manufacturing.

00:04:41

Unless you are our chairman and I will be working this at a working on this over the next year and I have to tell you well, I remain very excited about our prospects going forward.

00:04:51

And with that.

00:04:52

I'd like to pass over to Winfred.

00:05:00

Yeah, thank you very much, even for the introduction and the related trust in my my person from my side first.

00:05:09

Also, a warm welcome warm hello to all the investors here on the call.

00:05:13

It's the first time I'm here so I'm pretty excited to make the first meeting with you.

00:05:20

As you said, this is the results and earning calls.

00:05:23

So let's get down to.

00:05:23

Numbers and facts.

00:05:26

Uhm, in the course of the presentation I will speak on a couple of things. I will start with the financial situation here today, 2021 and Q3 numbers.

00:05:37

Which we published yesterday.

00:05:40

I basically have five key messages from my side which I want to share with you.

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And finally I would draw some special attention to the three points which are on the interest, probably from the investor side, which is the the life battery, the the production project will BMW.

00:05:58

And I will speak on on a funding company.

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With with headcounts.

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Come it will take.

00:06:06

The first point of that, the year to date, including a Q3 results you see, we announced a significant increase in revenue to close to 90 million, the 1st 3/4.

00:06:19

Year to date.

00:06:20

That represents A50 more than 50% increase compared to the the numbers from last.

00:06:27

Last year, the same time we had to announce an EBIT of minus 1.4 million, which is mainly due to significant one time cost.

00:06:36

750,000 and also a headcount increase and resulting costs.

00:06:43

Of bringing this headcount in so I will give you some a breakdown of the details below.

00:06:52

Uhm, there's another point which I would like to comment later on.

00:06:57

Is that the material cost.

00:06:58

So let's get started with the.

00:07:02

Introduction of the the walk to the EBIT, so as we previously announced, we have special effects of 751K euro.

00:07:15

That's basically going down to four items, so point number one is the this Tier 1 project.

00:07:21

Which we have.

00:07:22

To do spend additional money.

00:07:25

And to get this finished, that's basically not unusually in that stage of development.

00:07:31

However, we have to learn from it and cooperate in our product development.

00:07:36

The integration business. We had 181 K higher effort for integration work. That does mean that's the the cost for helping the customers integrating the the product into their vehicles.

00:07:52

From taking over the BMW production, and that's another cost over under 65K for due diligence. That's mainly for for legal and planning items.

00:08:04

I will comment on that later on. Finally, there's another chunk of €96,000 which is more or less to the relocations.

00:08:13

Remember line smart split locations this year and and now we have to.

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That for all our people to host them, and there's additional cost of 96,004 for this additional rental fees cost for move and also.

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We we passed.

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That isacks audit, which also costed a.

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Couple of euros.

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That's, uh, another chunk which is cost for additional people.

00:08:41

So we increased headcount, the total cost of increasing head.

00:08:46

And boost the we contributed to the result by roughly a 560,000. So this number is higher than the total number you see on the headcount.

00:08:57

Your headcount numbers that also includes numbers for getting the people on board.

00:09:02

Remember for special functions we have to employ recruiters.

00:09:06

To get the right people with the right skills so that comes on.

00:09:10

Top of that.

00:09:12

Finally, we have another point of €133,000 which are higher costs for accounting. Basically that comes down to the qualification of revenue last year with QQ. And also we have asked the senior at.

00:09:32

That from the industry to give us an expert statement to prove our approach from the principle.

00:09:41

Finally, that's higher depreciation, which also is mainly due to the relocation, will have a lot of online one time write offs according to that.

00:09:51

There's another point, I.

00:09:52

Want to comment on on that as probably the one or the other have seen and the the cost of material remains high.

00:10:02

Right?

00:10:02

Uhm, some uh, or just to make sure that the the to.

00:10:08

To explain that the contribution margin for having all three packs as positive, however, investing in the other product lines BMS and light battery has also increased our material cost as we have to build a prototype and other things like that.

00:10:28

Uhm, I would like to move on giving let's say 55 key messages right now. And the first is, despite the global semiconductor and supply chain shortages, Lion Smart is expected to make the revenue numbers according to the forecast point number one.

00:10:46

The point #2 integrated business has driven growth in 2021 and will continue to grow in 2022.

00:10:54

Helping the company to exceed the 50 million threshold in 2022.

00:11:01

Point #3 the issue of qualification for revenue is not expected to continue in 2021 and 2022.

00:11:11

As of 2023, line smart expect to be the manufacturer anyway.

00:11:17

So remember we we have asked a a senior expert from the finance community to give us his opinion on that.

00:11:25

Point #4 Lions Mart has intensified negotiations with BMW when other stakeholders to build on battery packs in 2023. It's fair to say negotiations are quite close.

00:11:39

Point #5 Lions Mart has performed the TISAK certification process.

00:11:47

In the next point, I want to talk a little bit on taking over the production from BMW.

00:11:53

Basically, Ian already outlined it briefly.

00:11:59

We had to.

00:12:00

Focus on solving the three major challenges a year right now, which is first the commercial, legal and contractual work with BMW.

00:12:11

That's a huge thing with which has a lot of different sub contracts and stuff like that.

00:12:17

So it's fair to say we have to work this with legal on a due diligence pace.

00:12:24

Point #2 is we need to get the suppliers on board. Remember when we take over this business? It's crucial for us to have the suppliers getting the buy in to to supply their products, making us helping to build their quality products. Still, we have one critical supplier to be solved.

00:12:42

The third, also very important is we have to find a location for production.

00:12:47

That means we have to need to have a plant of building the infrastructure to host all the the machines and the equipment.

00:12:55

We potentially may receive.

00:12:58

So we're working intensively on that, and Laggin said, once we hopefully close this shortly, we will move into a producer of battery packs, and that subsequently we'll bring lines March to the next level from the company perspective.

00:13:16

In in the next point, I want to turn briefly on the status of light battery.

00:13:21

Uhm, light battery continues to require additional startup in vain.

00:13:27

On the one hand side is this Tier 1 project to be finalized on the other it's our internal project needs to be going forward that results in a substantial increase of material and subsequently reduction on gross profit.

00:13:42

We still have technical challenges to overcome and we need to improve the technical maturity of the product.

00:13:49

The end customer of the tier one did not progress with the project as expected, so right now our battery project was this.

00:13:57

Tier one is on hold.

00:13:59

However, it's fair to say we have a new life battery prototype project under quotation with the advanced engineering of an OEM.

00:14:11

It's the nature of a quotation process that we may or may not win.

00:14:17

The point is, if we win, we know in Q1 and we'll start in Q1 next year.

00:14:23

We also have to gather additional market feedback.

00:14:26

For light batteries soon.

00:14:32

In the Third Point, I want to talk a little bit about the headcount.

00:14:37

As you've seen, line Smart has invested in acquiring additional human resources with special focus on mainly engineering and sales.

00:14:47

This resulting in higher costs for personal expenses.

00:14:51

Plus the hiring expenses I explained earlier.

00:14:54

So basically we're improving on two things, technical skills.

00:14:57

We're improving technical expertise for light battery and integrated business.

00:15:02

And we're investing in sales people.

00:15:05

So we increase sales activities with two focused.

00:15:09

One is broaden the customer base for integrated battery, reduce dependency on dominant customers.

00:15:16

Second is identify the discussion with customers on light battery.

00:15:23

With that I'm done with my part of the presentation and I'd like to thank you very much for your patience.

00:15:34

Thank you very much, Lynn Fricket.

00:15:36

It was very interesting what you have outlined this morning I guess.

00:15:40

And unless you'll.

00:15:42

Please could you continue with your closing remarks this morning?

00:15:46

Thank you so much.

00:15:55

Unless you have to unmute.

00:16:06

Can you hear me OK?

00:16:08

Can you hear me OK?

00:16:08

Yes, now now we can hear you unless you.

00:16:11

So sorry sorry for delay.

00:16:13

Uh, so good morning to everybody.

00:16:16

Thank you Frank.

00:16:18

Thank you winfred.

00:16:19

Thank you Ian for the proper introduction.

00:16:22

I would like just to have the some small statement in some color because we already had a detailed explanation.

00:16:31

Or where we come from and where we're going so in.

00:16:36

In order to.

00:16:36

Say I would stick my view mainly on 2 topics, but we're part of the dialogue over the last years because I would say that steady sales growth over the last three asset.

00:16:51

And the the fact that we are working and considering and expecting that we're gonna have no qualification, it's going to be a huge step considering the time being.

00:17:02

Another point that I would say that says in 2022 as I mentioned at my Winfred are gonna be expected to be not enough fifty million and from my side is a huge achievement compared to the last two years. So looking back we can but we.

00:17:22

Also have to consider it's not an excuse, but it's just an assumption and a consideration, but we had to navigate.

00:17:29

We discovered 19 emergency.

00:17:32

It is a great result from my personal point of view and I think that is also the confirmation that we are going in the right direction.

00:17:41

This evolution in terms of states putting more, I think, better set the momentum for us to become into entering the manufacturing.

00:17:50

Arena is gonna be a transformation aisle.

00:17:54

A milestone in our story.

00:17:58

And, uh, at this scope, I say that the appointment of Wilfred Boss as the new MD of Lions marked goes in that direction, especially where we are going to where, where we expect to go.

00:18:13

And considering he's strong worldwide track track order in building production.

00:18:19

Facilities and launching mass production.

00:18:22

We, as the board members, but there is also speak as the shareholders that we cannot rely on his long term management experience that we guide the entire group in a new phase.

00:18:34

And having the right pilot to navigate it, to try and to lead this shift to becoming a manufacturer is very, very important for my experience.

00:18:45

Also, reading the the question we had so far, I would like to add just a small comment regarding the.

00:18:55

B&W transaction.

00:18:58

But we expect to complete very soon as we further just stated and mainly I would like to confirm Sheryl this as a chairman, but the delay are due to the due diligence of supply agreements.

00:19:12

But we have to really take care as we produce expected furthermore.

00:19:18

I say that coming from M&AI say that denomina, sometimes the the the timing of the negotiations.

00:19:29

Are can be delayed in order to avoid important risk and for these things, I think that sometimes there is a misleading between the timing and the rhythm between the M&A and the capital market was.

00:19:45

So as I said, it's better to be detailed oriented and to focus in order to avoid the risk for additional costs, especially for the long term and only related to the transaction.

00:19:58

But in any.

00:19:59

Case my message is better.

00:20:01

We believe that when we're gonna have our own product, it will also be easier for us to grow sales.

00:20:09

I mean to implement and additionally grow shades.

00:20:12

And for tomorrow.

00:20:13

We're gonna be also more attractive for new clients.

00:20:17

And permit activities.

00:20:19

On the market so we can have.

00:20:21

We have we still having a new new conversation bar.

00:20:27

Uh, regarding new conversation.

00:20:30

I want to endorse and confirm what Ian and Wilfred settles on the light battery.

00:20:36

Everybody that had data with me knows that they strongly believed on the like battery on his concept in in Spanish, 'cause I think, but it will it continue.

00:20:47

To grow to show first of.

00:20:49

All great promise and interest from other parties and we also say that his advanced concept of the inertial cooling one.

00:21:00

Is it gonna come?

00:21:02

Uh, attracts even now interested and new requests from our other other parties and are very, very promising.

00:21:13

So I feel better like battery I I say, I don't think I continue to say that it's gonna.

00:21:20

Have an interesting future like that.

00:21:23

Finally, I mean as a chairman, I want to confirm to shareholders that I continue to watch over the governance of the business and I will continue to make sure that we operate on the other side.

00:21:36

The highest standards.

00:21:39

Working with win friend and the.

00:21:40

Rest of the board.

00:21:42

And personally.

00:21:43

I want to thank everybody for, uh, for supporting us in in this journey, and in any case, uh, I would like to thank everybody and wish Merry Christmas and.

00:22:00

Happy New Year as well.

00:22:02

Thank you.

00:22:07

Yes, thank you very much allessio for your closing remarks and Ian, do you want to continue?

00:22:14

Yeah I got a couple of questions delivered, but first of all I just want to make sure that you know, we emphasize a couple of things I know having had messages from a number of investors that many people, including me, were upset about the qualification.

00:22:34

And that we received last year. I'll be very clear. Our expectation is that we will get no qualification for 21 and 22.

00:22:44

As Winfred said, in 23 it won't be relevant 'cause we hopefully will be manufacturing ourselves. So I just want to be very clear with that of course.

00:22:55

Uh, you know, some investors may prefer to wait till I think March April when the full year ordered to 21 comes out and we'll see no qualification. So I just want to get that out.

00:23:06

There, the second thing is a couple of investors messaged me just now saying is there a full presentation?

00:23:14

I would say no.

00:23:15

We we obviously sent the results out with some bullet points yesterday.

00:23:22

But I would.

00:23:22

Say two things that we will come back to you.

00:23:26

Obviously with a fuller presentation.

00:23:31

When we have signed and the deal is done with BMW, that would be really appropriate and we'll come back with a a longer presentation to talk through that address questions.

00:23:43

And at that time I think it might be more appropriate for Winfred to to give some more.

00:23:50

Strategy comments as well.

00:23:52

You know people were asking for that after the second week that Winfred joined.

00:23:59

I don't think that's fair.

00:24:00

I think he needs a a little bit of a run of time.

00:24:04

I'd say two or three months.

00:24:05

Before you can come back to us and say this is good.

00:24:08

This is bad.

00:24:09

Let's do more of this.

00:24:10

Having said all that, uhm, you know.

00:24:14

I think Winfred is going to be extremely busy finding a factory space.

00:24:18

I know he's been out there looking already and identifying potential sites.

00:24:24

Some investors have been very shrewd.

00:24:26

And seeing that we have been putting job ads in place in various parts of Germany, looking for site managers and some factory workers.

00:24:34

So we have been very busy on all this stuff with the view that when we sign we've lined up a whole bunch of things that we can move forward with.

00:24:43

Very quickly and our plan would be to come with a bigger presentation on that, perhaps in in later in January, so hopefully frank that answers some of the questions that that just came in a couple came in on my WhatsApp.

00:25:04

Yes, it does.

00:25:05

Thank you very much Ian.

00:25:08

I think we we are finished with the call.

00:25:13

As I said they will be recording shortly.

00:25:16

Also available on the website and maybe give us today to download it from the system here and to upload it on our website, but I think definitely on Monday it will be available maybe also.

00:25:29

Today from my end, I wish you a wonderful festive, a wonderful Christmas season. I had a great break and I wish all of us a successful year 2022. Thank you and goodbye.