Good morning, and welcome to Nikola Corporation's Investor Update Call. At this time, all participants are in a listen-only mode. We begin today's call with management's prepared remarks. A brief question and answer session will follow the formal prepared remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Nikola's Director of Investor Relations, Henry Kwon. Thank you, Henry. You may begin. Thank you, operator. Good morning, everyone. Thank you for joining us on this call this morning on such a short notice. This is Henry Kwon, Director of Investor Relations at Nikola. With me this morning are Mark Russell, Chief Executive Officer, and Kim Brady, Chief Financial Officer, to answer questions about Romeo Power acquisition announcement that was released shortly after 5 A.M. Pacific Time this morning. The release can be found on the investor relations section of the company's website, along with the presentation that was also posted this morning. Today's discussions may include forward-looking statements about our expectations from this acquisition. Actual results may differ materially from those stated, and factors that could cause actual results to differ are also explained at the beginning of our presentation and at the end of our press release. Forward-looking statements speak only as of the date on which they are made, and readers are cautioned not to put undue reliance on forward-looking statements. Please also be advised that as we are still preparing to release our Q2 earnings announcement later this week, we will not be able to discuss any topics relating to our Q2 earnings in this call. We will also not discuss the results of our proxy vote in this call, which will be discussed separately in tomorrow at our annual call. We would like to ask that you limit your questions to the Romeo Power acquisition this morning. Thank you, and I will turn this over to Mark Russell. Thanks, Henry. Thanks for jumping on with us. We know you're really busy on Monday mornings. We appreciate you carving out some time to go over this with us. The first slide is just the overview that this reflects the same information that's in the press release. Let's go to the next slide. The next slide is an overview of the strategic rationale of the acquisition. This is about vertical integration. We'll go into that in more detail. We believe it will result in significant cost savings. Kim will detail that for you in just a few minutes. This gives us a domestic battery pack manufacturing capability. It doesn't change our dual sourcing commitment. We're still going to be using Romeo Power for batteries going forward. Sorry about the slides. All right. On the next slide, this is just a glance at Romeo Power. They have over 300 employees, number of patents and intellectual property. A lot of experience in battery engineering. Their facility in Cypress, California, which is brand new with brand-new equipment, will become our battery center of excellence following the closing. Go ahead. We have been collaborating with Nikola for some time, for a number of years in terms of designing our pack and helping them get up to speed in manufacturing the modules that are in the pack along with the thermal systems and the software. We believe that once we are on the same team, we're going to be able to combine our resources and improve the throughput and the consistency. We have significant improvements we're already looking at with our engineering team, and we're gonna shift their focus from what has been research and development to high-volume manufacturing. We've earmarked the right amount of capital for investment in training and in automation. We think that there's opportunities there for quality, efficiency, and on-time delivery, and increasing their level of automation and quality control. Again, we are going to still be using Proterra. We're committed to having a dual-source strategy here. All right, I'll turn it over to Kim, and he can dive into the numbers if you want. Thanks, Mark. It is exciting to see Romeo joining the Nikola family. The chart here shown is for illustrative purposes only, and the bar sizes do not represent the actual ratio. In June 2022, Romeo delivered approximately 252 packs to build 28 trucks while relocating its manufacturing facility from Vernon, California to Cypress, California. We plan to significantly increase Romeo's capacity to meet our trade path truck build requirements in second half of 2022 and 2023. This will be accomplished by one, single product focus, two, an increase in the level of automation, three, a more efficient production process, and four, additional manufacturing lines. As we mentioned, we will provide $20 million liquidity support to Romeo so that it can continue its operations without disruption through transaction close. This $20 million support will take the form of a temporary price increase from our original supply agreement for each pack delivered. We see this arrangement as a controlled funding mechanism designed to incentivize pack delivery during this period. After the transaction close, this temporary price increase will cease and Nikola will begin implementing its cost reduction plans. We plan to reduce our non-cell pack costs by 30%-40% from the original supply agreement price. The estimated cost savings for non-cell related battery packs could be as high as $350 million by 2026. On slide nine, where we want to explain how we plan to achieve our cost savings. Approximately 70% of savings will come from the pack enclosure, which we will switch from machine to casting. Additional savings have been identified for thermal fasteners, plastic components, metal and harnesses as we localize parts in Mexico and combine purchasing power. We also expect incremental savings from increased yield, process efficiency and lower labor content. In summary, this acquisition will allow us to bring battery pack engineering and production in-house to improve manufacturing, secure consistent battery pack supply and reduce cost. The transaction terms are as follows. Acquire Romeo for $144 million in equity value or $0.74 per share in stock, which represents a 34% premium to Romeo's July 29th closing share price. Each share of Romeo stock will receive 0.1186 of a share of Nikola common stock, and Romeo stockholders will own 4.5% of the combined company post-closing. Nikola will provide Romeo with interim funding to facilitate continued operation through closing, $15 million in senior secured notes and up to $20 million in temporary pack delivery incentives. Nikola and Romeo's board has approved the transaction. We will launch an exchange offer as soon as we file an S-4 pro forma financial statements with the SEC. We expect to close the transaction by the end of October 2022, subject to a minimum tender of a majority of Romeo's outstanding shares in the exchange offer. To be clear, Nikola has enough headroom to issue shares for the transaction and meet our other obligations under our current authorized shares without needing to use the additional shares being considered at our annual meeting. In terms of cost savings, we expect to reduce non-cell related battery pack costs by 30%-40% by the end of 2023 and achieve annual cost savings of up to $350 million by 2026. This concludes our presentation and now we will field questions from our covering analysts. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star key. One moment while we poll for questions. Our first question comes from the line of Michael Shlisky with D.A. Davidson & Co. You may proceed with your question. Hello, good morning and congratulations. Maybe I could ask, just first if you can confirm, once the deal is complete, will Romeo still be selling batteries to other customers besides Nikola? Or are you gonna be doing, at some point, once all contracts are kind of exhausted, strictly Nikola, you know, going forward? The intention long term, Mike, is for them to be our in-house supplier. They obviously will fulfill any obligations that they've already committed to. Then once those are fulfilled, they will become just our own supplier. We don't intend to get in the merchant battery business. Okay, great. I also wanted to ask just a little about some of Romeo's cash numbers. Do you happen to have any feel for what their cash burn is gonna be over the next, call it 18 months, and whether they have any major CapEx to do? Will that be additive or will you be able to maybe combine some of those costs at some point? Mike, Romeo's current burn is anywhere from $15 million-$20 million a month. After the closing, we plan to completely integrate Romeo into Nikola. There will not be a separate reporting entity. We anticipate retaining manufacturing as well as engineering employees. With respect to various functions, we plan to integrate them into Nikola. We are having planning sessions and discussions, but it's too premature to have complete visibility with respect to CapEx needs. However, we did mention that we are looking to expand lines. Currently, they have three lines and they're having CapEx outlay with respect to line four and line five, and we are working with them to bring those lines up as quickly as possible. Okay. Let me just throw one more out there for you guys. I guess I'd be curious when you think about your, about non-sell costs going down 30%-40%. That's a pretty big number. Could you maybe share with us just some of the, you know, larger buckets as to how that's gonna happen? Is there a big piece of that just not having a markup? Beyond that, are there any other interesting large costs that will be taken out in this combined company here? Mike, as we mentioned, when we think about modules and packs, one of the biggest cost element is pack enclosure. Currently, we are machining that, and so it's a significant cost. We believe when we transition to casting, that will likely reduce costs by 70%-80%. We already have had discussions with potential casting partners, and we have had cost discussions, what that could be, and that's going to be a big component. In addition to that, Mike, as you know, right now, focus is to serve various customers, as Mark talked about. Ultimately, our focus will be to supply Nikola. That means we will have focused manufacturing as well as greater automation, improved processes. We anticipate, in addition to supply chain cost savings that we have already identified, such as pack enclosure as well as localization of thermal parts, we anticipate savings from manufacturing efficiency. Great. Well, guys, I appreciate the answers. I'll pass it along. Thank you. Thanks, Mike. Our next question comes from the line of Chris McNally with Evercore. You may proceed with your question. Thanks so much, team. Just a couple of follow-ups. I think you said the capacity that was referenced, I think it's on slide seven, is not to scale. Can we just get a sense for, even if it's public comments from Romeo Power, what was their sort of target capacity, just so we can have an idea over the next couple of years, what you could bring internally on the pack side in terms of trucks? Mike, we wanna be careful here because we have not provided guidance with respect to second half 2022 or for 2023. Having said that, as you're aware, right now, Romeo, about 50% of capacity is allocated to Nikola and 50% is allocated to other customers. We believe as part of this announcement and transition, our focus towards other customers will diminish and we expect to enhance our focus as well as capacity towards manufacturing Nikola packs. Having said that, on slide seven, we've illustrated that in June 2022, they have delivered enough packs to build approximately 28 trucks. Remember and recall that Romeo at that time was relocating their manufacturing facility from Vernon to Cypress. This was a difficult time as they were transitioning their equipment and their manufacturing lines, and they were still able to deliver 28, enough packs to build 28 trucks. We have, as Mark mentioned, we've had over 10 engineers on site for some time now, and we understand Romeo's challenges with respect to manufacturing lines, and we have detailed process improvements and manufacturing efficiency improvements that we have already identified that we will be working closely with Romeo over the next three months, as well as being able to implement those initiatives, especially once we have the transaction closed. Okay. Kim, that's super helpful. Maybe if we could then move to the $350 million synergy number. Is there a way to at least give us a reference point for how many trucks that's based on? I imagine that $350 million synergy number is some form of, you know, saving 30% on pack cost, whatever that number is, $6,000 per truck times a certain number of trucks gets you a large portion of the synergies. Obviously, there's some redundancy in personnel, but any idea how that number was or any reference to how that number was derived? Just so we can have a frame of reference to do our own math on it. Hey, Chris, you're spot on. That's simply taking a number of trucks that we intend to deliver by 2026 and cost savings per pack. As you know, it takes about nine packs per truck, and we estimate that we have a path how we can reduce our pack manufacturing cost by about 30%. It's simply taking, you know, pack price and ultimately per truck and then number of trucks. We have not provided guidance, obviously, with respect to 2026, and this is simply internal projection and we're Okay. estimating what that could be. Great question, okay. Yeah, no, Kim. I'll leave it there. I'll definitely take this offline, but just, you know, quick McNally math. You have $20,000 rough pack cost per truck. 30% reduction, $6,000. To get to a number above $300 million, it would have to be about 50,000 trucks. We'll see if any part of my math is off, but we can follow up offline. Chris, I think your math is significantly off, but we can- We'll help you. Yeah, we'll help. Okay. Thank you. Thanks, guys. Our next question comes from the line of Jeff Kauffman with Vertical Research Partners. You may proceed with your question. Absolutely. Good morning, everybody, and congratulations. Well, Kim, I've never been accused of being good at math, so I'm not even gonna go that direction. I was just kinda curious, kinda looking beyond the short term of this. I mean, clearly it puts a little pressure on cash flow near term, but I think big opportunity long term. What will this allow you to do that you couldn't have otherwise done with an in-house battery supply? That's a great question because the ultimate motivation here is strategic and long term. Long term, it's important that we are in control of our battery destiny and that we have our own capability for engineering and manufacturing in-house. You know, we'll stay dual source or have alternatives and options on supply, of course always, for such a strategic component. This will give us our own battery team and our own facility, our own center of excellence to focus on things going forward. Because batteries are constantly changing and improving. We think we have a world-class battery that's in this tray that's being mass-produced now. It's based on the Romeo module and the Romeo thermal system and the Romeo battery management system software. We get the people who are responsible for that on our team. You know, we go from our current headcount to almost 400 more, and they're all passionate about batteries and focused on battery technology. They have a brand-new facility with brand-new equipment. That puts us in a good position for the battle going forward, to make sure that we always have world-class battery technology in our products. As you know, the current 2170-based module that we're using, someday in the future that will innovate on cylindrical batteries, that will move to a larger format cell that will be more efficient, that will change the architecture of what we do, and we'll take that opportunity to improve it any other way we can. Then, of course, we're evaluating other technologies for the long term as well, including pouch and prismatic systems. This puts us in a position of having control of our destiny on the battery front, and that's really the important strategic rationale here. Jeff, just the second part of your question with respect to cash flow. We wanna be clear, what we have stated is that we are providing a $35 million liquidity support during this period until the closing occurs. $25 million, $20 million in temporary price increase for packs. What that means is that you should expect in Q3 as well as Q4, our cost of goods sold will increase substantially to reflect this temporary price increase. This is purely a method to fund liquidity to Romeo and also to incentivize them to deliver packs on time. That's important for us. That's why it's structured that way, as well as $15 million in senior secured note. What that means is that, yes, there is a cash flow impact for the next three months. After we close, we've stated that there will not be a separate Romeo entity. We will completely integrate Romeo into Nikola. What that means is that there will be no separate functions after the closing, support functions. We plan to integrate them with Nikola support functions, and it will be manufacturing as well as engineering. You know, what that means is that when it comes to manufacturing, we plan to be significantly more efficient. We suspect some customers will no longer be interested, for Romeo to provide packs going forward. We will work with them. As Mark alluded, we are not looking to be in merchant battery pack business. We believe that there will be greater efficiency, greater focus, greater rationalization, and cost savings. Please understand, ultimately, while we are moving forward with this transaction because of strategic reasons that Mark talked about, we plan to achieve cost savings that we have identified. That was very helpful. Thank you very much. Our next question comes from the line of Bill Peterson with JP Morgan. You may proceed with your question. Yeah. Hi. Good morning, and thanks for taking the questions. Maybe following up on some synergies. How long before you can achieve this sort of 30% cost reduction? I guess if you walk us through the timeline of, you have immediate sort of headcount synergies and things like that. Like, how long does it take before we get those, I guess, type of cost savings? We believe by the end of 2023 that we'll be able to achieve full savings of 30%-40% with respect to pack price. Bill, when it comes to headcount synergy, as you know, that can only happen after we close the transaction. With respect to potential pack price savings. We plan to move forward immediately with respect to transitioning to casting from machining. That's going to be important for us. That will require some investment, upfront investment, but we believe that can yield significant improvements. As well as in the interim, we plan to work closely with Romeo to make sure that we can improve operations and manufacturing efficiency and yield. Okay. Thanks for that. I think they said they had, like, around $412 million in backlog, and I think you believe you're a 50% customer. How long before the rest of the backlog is cleared? I think you said just to an earlier question that some of this may roll off if the customers choose not to move forward. Trying to get a feel for how fast the other business goes off so you can obviously focus on your business. That's a great question, Bill. As we evaluated customer contracts, we know that customer contracts have termination by convenience by both parties with simple notice anywhere from 30 to the longest, I believe, is up to 6 months. We plan to work with customers in terms of transition. Okay. If I could sneak one more. When you say, having dual source, I fully get that makes total sense on a risk basis. What would be the ideal sourcing between, you know, Romeo and Proterra or another source if you look at it from a long-term perspective? That will be determined by what's most efficient as we go forward. Obviously having an in-house capacity, you're going to prefer that, all other things being equal because there's no margin in between you. Generally, we are very focused on making sure that we have an alternative, and we're very pleased to be partnered with Proterra and we intend to continue to work with them going forward. They have some unique capabilities themselves and also some geographic coverage that Romeo doesn't have, with, you know, plans to serve in Europe, et cetera. Those things are important to us and Proterra is gonna be an important partner for us going forward. We do intend to keep our options open. Okay. Makes sense. Thank you. Our next question comes from the line of Joseph Spak with RBC Capital Markets. You may proceed with your question. Thanks so much. Just a couple quick ones from me. On that slide seven, I understand, you know, all your caveats there, but the 28 trucks you said or 28 equivalent trucks in June. I just wanna be clear, is that total Romeo or that is Romeo's or your share of Romeo's capacity? Our share of Romeo's capacity. Okay. Meaning they delivered enough battery packs in June for us to build 28 trucks. Okay. That was their monthly rate as of June. Okay. On the $350 million savings, right? I just again, I mean, I think you sort of said this, I just wanna be clear. That is a gross savings that you expect on the pack, right? You talked about, you know, at current at least sort of a. I guess this was maybe sort of with capital expense as well, but you mentioned sort of like a $180 million-$240 million annualized burn. There's gonna be opportunity of course to sort of, as you mentioned, Kim, sort of, you know, work through some of those other synergy savings, but I just wanna make sure that 350 is gross. The net savings is actually gonna be much smaller to start, right, until you start working away at some of those other synergies. Great question. Simple answer would be yes. Essentially, the savings that we're anticipating by 2026 is assuming our projected volume in 2026, and if you take our current pack price before the temporary price increase, we believe we can achieve savings of approximately 30% from that number. You should not assume in terms of as you think about cash flow, taking simply $15 million-$20 million of term burn and extrapolating that for the next 12 months. We have a very detailed plan in terms of once closing happens, how we plan to rationalize that cost structure. As we also suggested, that many of the contracts going forward, we believe we will be able to work with those customers and find a quick transition. We plan to have those discussions. As Mark alluded, our ultimate goal is not to be in merchant battery business. Okay. Last one from me. I believe Romeo has like an 8 GWh agreement with LGES. Is that like, if this acquisition goes through, are you free and clear on sort of that agreement? Or is there sort of some sort of any sort of change of control or anything in that agreement to get supply cells to Nikola? We are having discussions, and I suspect once we will have discussions with LG with respect to Romeo's commitment for those battery cells. As you recall, until recently, Nikola has been working hard to make sure that we have adequate supply for our anticipated demand in 2024 and 2025 and 2026 timeframe. We believe if we are able to achieve our projected volume in those out years, in 2024 and 2025 and 2026, we will need allocation from LG, Nikola allocation we currently have, as well as Romeo's allocation, as well as Proterra's allocation. We are working through all those issues and then we will be able to provide, you know, better updates in the future. That is a good question. Just to be clear, like just if this purchase of Romeo goes through, it's not certain that you take over that existing contract they have? No, we do have contract. No, we will step into the shoes of that contract. Okay. That's an important point here, is we pick up their supply of LG cells as well as our own. You may not know this, but we already separately acquire those cells and we consign them to Romeo. We actually separately get our own cells for our current packs, and then the cells that they are receiving from LG go into packs for other customers. In the long term, that's an important point is they have their own supply agreement with LG and that will be important to us in terms of having security of cell supply for the long term. Okay. That's the part that you would assume if this was consummated? That's correct. Okay. Thanks for that. I appreciate it. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Mark Russell for closing comments. Thanks again for being available on short notice. You're welcome to tune into our annual meeting tomorrow, where we will announce the results of our proxy vote for the authorization of additional shares. Of course, we'll talk to you again with our earnings release on Thursday. Thanks, everybody. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.