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Romeo Power Announces Third Quarter 2021 Financial Results

11/15/2021

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 third quarter ending September 30, 2021.

Recent Business Highlights

  1. Achieved year end commitment to have approximately 1 gigawatt hour of installed capacity at Romeo Power’s Vernon facility.
  2. Secured a new facility in Cypress, CA enabling expansion of production and test lab capacity, positioning the Company to meet expected increase in market demand and continued technology development.
  3. Announced a collaboration to integrate Dynexus Technology’s state-of-the-art battery performance and sensor technology to further enhance Romeo Power’s industry-leading and comprehensive approach to managing battery cell safety, performance, and overall life cycle value.
  4. Improved parts availability for both battery cells and components to support production volume scale-up.
  5. Continued to strengthen our organization in key functions and added manufacturing headcount to support production growth and capabilities.

Third Quarter Financial Update

  1. Generated revenues of $5.8 million, a 753% increase over the prior year as the Company launched product shipments to the Company’s largest customer.
  2. Cash, cash equivalents and investments as of September 30, 2021, were $181 million, reflecting continued strong liquidity.

Management Commentary

“Romeo Power made meaningful progress during the third quarter laying additional foundation to support its growth. We strengthened manufacturing capabilities to support a key commercial launch and to prepare for the continued revenue growth we expect as market demand for our industry-leading technology increases,” said Susan Brennan, President and Chief Executive Officer. “We focused the incredible energy of our entire organization to further improve processes, expertise and infrastructure required to continue establishing Romeo Power as a commercial scale provider of cutting-edge technology and products. We also entered into a collaborative relationship with Dynexus Technology, which will further enhance many facets of our business including production efficiency through cell quality management, battery monitoring and life cycle management. We believe that this collaboration will be another step to further extending the value of Romeo Power’s technology and products for our customers and end users.”

“In addition, our new, state-of-the-art facility in Cypress, CA will not only be the home for our expanded and efficient mass production lines, but it will also provide the capability to run pilot scale development for new customers and products while simultaneously producing at commercial scale for more mature programs. We will double our lab space, which is critical to providing the range of technical resources necessary to support production, validate customer programs and develop new products. We believe that we are taking the steps required to further reinforce our position in an exciting and growing market for commercial electric vehicles.”

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, November 15, 2021. Participating on the call will be Susan Brennan, President and Chief Executive 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 Romeo Power’s expected collaboration with Dynexus Technology, the expansion of production and test lab capacity at Romeo Power’s new facility in Cypress, CA, Romeo Power’s expectations regarding its future financial performance, the demand for safe, effective, affordable and sustainable EV products, Romeo Power’s ability to produce and deliver such products on a commercial scale, and Romeo Power’s expectations that its customers will adhere to contracted purchase commitments on the currently expected timeframe 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 ability to increase the scale and capacity of its manufacturing processes; 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; Romeo Power’s potential need for and ability to secure additional capital; 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, a gain from extinguishment of a Paycheck Protection Program (“PPP”) loan, investment loss, net and derivative expense. 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 income (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. To keep up with everything Romeo Power, please follow the company on social media @romeopowerinc or visit 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 September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

Product revenues

$

2,740

 

$

51

 

$

3,818

 

$

2,097

Service revenues

3,019

 

624

 

3,921

 

2,229

Total revenues

5,759

 

675

 

7,739

 

4,326

Cost of revenues:

 

 

 

 

 

 

 

Product cost

7,904

 

716

 

17,884

 

5,182

Service cost

2,565

 

1,080

 

3,357

 

2,669

Total cost of revenues

10,469

 

1,796

 

21,241

 

7,851

Gross loss

(4,710)

 

 

(1,121)

 

 

(13,502)

 

 

(3,525)

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

4,732

 

1,817

 

10,295

 

5,213

Selling, general and administrative

17,607

 

4,945

 

54,393

 

10,303

Total operating expenses

22,339

 

6,762

 

64,688

 

15,516

Operating loss

(27,049)

 

 

(7,883)

 

 

(78,190)

 

 

(19,041)

 

Interest expense

(4)

 

 

(265)

 

 

(16)

 

 

(783)

 

Change in fair value of public and private placement warrants

6,134

 

 

124,254

 

 

Gain from extinguishment of PPP loan

3,300

 

 

 

3,300

 

 

Investment gain (loss), net

266

 

 

 

(23)

 

 

Other expense

 

(228)

 

 

 

(1,614)

 

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

(17,353)

 

 

(8,376)

 

 

49,325

 

 

(21,438)

 

Loss in equity method investments

(611)

 

 

(540)

 

 

(1,817)

 

 

(1,272)

Benefit from income taxes

11

 

 

1

 

 

Net (loss) income

(17,953)

 

 

(8,916)

 

 

47,509

 

 

(22,710)

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

Available-for-sale debt investments:

 

 

 

 

 

 

 

Change in net unrealized losses, net of income taxes

(61)

 

 

 

 

(369)

 

 

 

Net losses reclassified to earnings, net of income taxes

161

 

 

 

 

314

 

 

 

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

100

 

 

 

 

(55)

 

 

 

Comprehensive (loss) income

$

(17,853)

 

 

$

(8,916)

 

 

$

47,454

 

 

$

(22,710)

 

 

 

 

 

 

 

 

 

Net (loss) income per share

 

 

 

 

 

 

 

Basic

$

(0.13)

 

 

$

(0.11)

 

 

$

0.36

 

 

$

(0.30)

 

Diluted

$

(0.13)

 

 

$

(0.11)

 

 

$

0.35

 

 

$

(0.30)

 

Weighted average number of shares outstanding

 

 

 

 

 

 

 

Basic

134,017,528

 

 

78,639,037

 

 

131,307,617

 

 

76,900,247

 

Diluted

134,017,528

 

 

78,639,037

 

 

135,342,504

 

 

76,900,247

 

Romeo Power, Inc.

Unaudited Condensed Consolidated Balance Sheets

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

 

 

September 30, 2021

 

December 31, 2020

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

53,278

 

$

292,442

Investments

127,798

 

 

Accounts receivable, net of allowance for expected credit loss of $117 and $238 at September 30, 2021 and December 31, 2020, respectively

2,623

 

841

 

Inventories, net

15,256

 

4,937

 

Insurance receivable

6,000

 

6,000

 

Deferred costs

88

 

 

Prepaid inventories

11,891

 

493

 

Prepaid expenses and other current assets

4,893

 

776

 

Total current assets

221,827

 

305,489

Restricted cash

3,000

 

1,500

 

Property, plant and equipment, net

10,618

 

5,484

 

Equity method investments

37,183

 

35,000

 

Operating lease right-of-use assets

5,287

 

5,469

 

Deferred assets

5,018

 

 

Prepayment - long-term supply agreement

64,703

 

 

Other noncurrent assets

2,807

 

3,100

 

Total assets

$

350,443

 

$

356,042

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities

 

 

 

Accounts payable

$

10,287

 

$

2,900

Accrued expenses

9,595

 

2,844

Contract liabilities

709

 

815

Current maturities of long-term debt

10

 

2,260

Operating lease liabilities, current

855

 

853

Legal settlement payable

6,000

 

6,000

Other current liabilities

1,120

 

384

Total current liabilities

28,576

 

16,056

Long-term debt, net of current portion

32

 

1,082

Public and private placement warrants

3,718

 

138,466

Operating lease liabilities, net of current portion

4,533

 

4,723

Other noncurrent liabilities

 

17

Total liabilities

36,859

 

160,344

Commitments and contingencies

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

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

 

Common stock ($0.0001 par value, 250,000,000 shares authorized, 134,096,818 and 126,911,861 shares
issued and outstanding at September 30, 2021 and December 31, 2020, respectively)

13

 

12

Additional paid-in capital

447,684

 

377,253

Accumulated other comprehensive loss

(55)

 

 

Accumulated deficit

(134,058)

 

(181,567)

 

Total stockholders’ equity

313,584

 

195,698

 

Total liabilities and stockholders’ equity

$

350,443

 

$

356,042

 

Romeo Power, Inc.

Unaudited Condensed Consolidated Statement of Cash Flows

(Dollar amounts in thousands)

 

 

Nine Months Ended September 30,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net income (loss)

$

47,509

 

$

(22,710)

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

 

 

 

Depreciation and amortization

1,833

 

1,404

Amortization of investment premium paid

1,486

 

Stock-based compensation

14,933

 

784

Inventory provision

1,617

 

Change in fair value of public and private placement warrants

(124,254)

 

Gain from extinguishment of PPP loan

(3,300)

 

Loss in equity method investments

1,817

 

1,272

Non-cash lease expense - operating leases

182

 

176

Non-cash lease expense - finance leases

212

 

211

Derivative expense

 

1,614

Other

303

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(1,782)

 

(689)

Inventories

(11,936)

 

(1,902)

Prepaid and other current assets

(14,930)

 

(218)

Prepayment - long-term supply agreement

(64,703)

 

Accounts payable

7,014

 

2,734

Accrued expenses

5,415

 

2,163

Interest accrued on notes payable

 

741

Deferred costs

(88)

 

Contract liabilities

(106)

 

458

Operating lease liabilities

(188)

 

(165)

Other, net

189

 

1

Net cash used in operating activities

(138,777)

 

(14,126)

Cash flows from investing activities:

 

 

 

Purchase of investments

(308,970)

 

Proceeds from maturities of investments

120,030

 

Proceeds from sales of investments

59,296

 

Equity method investment

(4,000)

 

Capital expenditures

(4,998)

 

(561)

Net cash used in investing activities

(138,642)

 

(561)

Cash flows from financing activities:

 

 

 

Issuance of convertible notes

 

1,924

 

Issuance of term notes

 

4,450

Proceeds from PPP loan

 

3,300

 

Issuance of common stock

 

5,027

 

Exercise of stock options

18,481

 

15

 

Exercise of stock warrants

21,580

 

 

Warrant redemption payments

(72)

 

Principal portion of finance lease liabilities

(234)

 

(212)

Net cash provided by financing activities

39,755

 

14,504

Net change in cash, cash equivalents and restricted cash

(237,664)

 

(183)

Cash, cash equivalents and restricted cash, beginning of period

293,942

 

1,929

Cash, cash equivalents and restricted cash, end of period

$

56,278

 

$

1,746

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

 

 

 

Cash and cash equivalents

$

53,278

 

$

246

Restricted cash

3,000

 

1,500

Total cash, cash equivalents and restricted cash

$

56,278

 

$

1,746

 

Romeo Power, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

(Dollar amounts in thousands)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

2021

 

2020

Net (loss) income

$

(17,953)

 

 

$

(8,916)

 

 

$

47,509

 

 

$

(22,710)

 

Interest expense

4

 

 

265

 

 

16

 

 

783

 

Benefit from income taxes

(11)

 

 

 

 

(1)

 

 

 

Depreciation and amortization

834

 

 

454

 

 

1,833

 

 

1,404

 

EBITDA

$

(17,126)

 

 

$

(8,197)

 

 

$

49,357

 

 

$

(20,523)

 

Stock-based compensation

4,315

 

 

132

 

 

14,933

 

 

784

 

Change in fair value of public and private placement warrants

(6,134)

 

 

 

 

(124,254)

 

 

 

Gain from extinguishment of PPP loan

(3,300)

 

 

 

(3,300)

 

 

Investment (gain) loss, net

(266)

 

 

 

23

 

 

Derivative expense

 

 

228

 

 

 

1,614

Adjusted EBITDA

$

(22,511)

 

 

$

(7,837)

 

 

$

(63,241)

 

 

$

(18,125)

 

 

Romeo Power

For Investors
ir@romeopower.com

For Media
media@romeopower.com

Source: Romeo Power, Inc.

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