Romeo Power, Inc. (“Romeo Power” or the “Company”) (NYSE: RMO),
an energy technology leader delivering large-scale electrification
solutions for complex commercial applications, today announced its
preliminary financial results for the fourth quarter and full year
ended December 31, 2020.
Fourth Quarter and Full Year 2020 Business Highlights
- Completed business combination with RMG Acquisition Corp. and
related PIPE financing, providing an additional $346 million in net
proceeds to fund future growth
- Signed a multi-year, $234 million agreement with Lion Electric
to supply battery modules and packs for Lion’s fleet of electric
commercial vehicles
- Generated revenues of $9.0 million for the full-year 2020
- Cash or cash equivalents as of December 31, 2020 of $292.4
million
- Cash paid for capital expenditures for the year ended December
31, 2020 of $1.3 million
Recent Business Updates
- Signed an MOU with Ecellix to create advanced electrification
solutions by combining Ecellix’s ultra-high capacity eCell
technology with Romeo Power’s battery packs, modules and battery
management system
- Announced a strategic alliance with Republic Services to
collaborate on the development of Romeo Power’s battery technology
for use in Republic’s electric garbage trucks
- Launched a commercial fleet electrification program with
Heritage Environmental Services through which Romeo Power expects
to electrify 500 Heritage trucks between 2022 and 2025
- As global demand for raw materials outpaces supply, Romeo Power
is subject to a significant shortfall in cell capacity
industrywide, and now expects its revenue for 2021 to be in the
range of $18-40 million
Management Commentary
“Last year was a pivotal year for Romeo Power, as we completed
our merger with RMG Acquisition Corp. in December, strengthened our
balance sheet with more than $346 million of new capital and became
a public company,” commented Lionel Selwood, Jr., Chief Executive
Officer of Romeo Power. “Our team continued to enhance our leading
edge battery technology to a point of commercialization, evolving
Romeo Power from a late-stage innovator to a commercial enterprise
with significant capital inflows. Our achievements over the past
year have demonstrated that our highly configurable Hermes module
and sophisticated battery pack and battery management systems are
the optimal solution for customers that are highly focused on
safety, shortened charge times, increasing energy density and
range, while maximizing profit per mile, and we are pleased with
the commercial engagements signed to date.
Our public listing has raised Romeo Power’s profile and afforded
us the resources to continue investing in our business as we
methodically establish long-term, multi-year partnerships in the
commercial vehicle sector. A notable win in the fourth quarter was
our multi-year, $234 million production contract with Lion
Electric. Our commercial momentum has continued throughout the
first quarter. In January, we announced a program with Heritage
Environmental Services, through which Romeo Power expects to
electrify 500 battery electric vehicles purchased by Heritage and
its affiliates between 2022 and 2025, and a Strategic Alliance
Agreement with Republic Services to collaborate on the development
of Romeo Power’s battery technology for use in Republic’s electric
garbage trucks. We look forward to evolving these partnerships over
the course of 2021.
Regarding our 2021 outlook, we expect that our near term
production and revenues will be constrained by the shortage in
supply of battery cells. As the electric vehicle industry has
experienced massive acceleration in recent months, the demand for
raw materials and cells has outpaced supply. We expect that this
cell shortage will result in Romeo Power’s full year 2021 revenues
being materially lower than originally projected. While frustrated,
by this delay in bringing our solutions to market, we are working
diligently with our preferred cell supply partners to secure
allocation and continuous cell innovation for the near-intermediate
and longer-term. However, Romeo Power’s long-term demand outlook
remains strong and we do not expect short-term cell constraints to
affect our committed order backlog.
Our dialogue with new prospective customers remains active and
healthy. We remain committed to our current strategy and the work
Romeo Power’s team has done over the last four years to build a
strong foundation, develop leading technology solutions and
commercialize and secure committed orders is beginning to produce
notable results. By delivering superior vehicle range and fast
charge capability, to complement leading safety and
configurability, we believe Romeo Power remains well positioned to
navigate current market headwinds and execute our long-term
strategy.”
2021 Outlook
As global electrification of the powertrain has hit an
inflection point, the industry is experiencing a massive
acceleration in growth and the demand for raw materials is
outpacing supply. Romeo Power is currently subject to these supply
constraints and, as a result of the significant shortfall in
battery cell capacity industrywide, Romeo Power now expects its
revenue for 2021 to be in the range of $18-40 million. The Company
is currently pursuing extensive discussions with several preferred
providers regarding establishing long-term cell supply agreements.
Romeo Power remains focused on procuring cells that have met its
rigorous cell supply validation processes, as this is critical to
ensuring that the Company can deliver a safer and better product
with higher energy density and superior fast charge capability
relative to the competition. Romeo Power’s commercial and strategic
priorities remain unchanged and the current cell shortage is not
expected to affect the Company’s contracted order backlog.
Annual Report
Romeo Power also announced today that due to uncertainty
regarding the accounting treatment for its public and private
warrants it will not file its Annual Report on Form 10-K tomorrow,
and will file a Form 12b-25 with the Securities and Exchange
Commission. As a result, the numbers presented here are currently
preliminary and unaudited.
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, March 30, 2021.
Participating on the call will be Lionel Selwood, Jr., President
and Chief Executive Officer, and Lauren Webb, Chief Financial
Officer, 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 expectations
regarding its future financial performance, revenues and capital
expenditures, the Company’s expectations with respect to backlog
and demand for its products, the magnitude and timing of future
contracts, and the availability and pricing of battery cells, 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 losses on the
extinguishment of debt, stock-based compensation, settlement of
certain legal matters, and forgiveness of a portion of stockholder
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
large-scale electrification solutions for complex commercial
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
Unaudited Consolidated
Statement of Operations
(Dollar amount in thousands,
except share and per share data)
Three Months Ended December 31, Years Ended
December 31,
2020
2019
2020
2019
REVENUES: Product revenues
$
813
$
1,750
$
2,910
$
4,847
Service revenues
2,720
614
2,922
1,665
Related party service revenues
1,115
767
3,142
1,976
Total revenues
4,648
3,131
8,974
8,488
COST OF REVENUES: Product cost
4,815
3,924
9,997
12,703
Service cost
4,418
2,009
5,337
2,877
Related party service cost
881
629
2,631
1,657
Total cost of revenues
10,114
6,562
17,965
17,237
GROSS LOSS
(5,466
)
(3,431
)
(8,991
)
(8,749
)
OPERATING EXPENSES: Research and development
2,782
1,545
7,995
11,242
Selling, general, and administrative
7,035
2,685
17,338
13,890
Legal settlement expense
-
4,586
-
4,586
Total operating expenses
9,817
8,816
25,333
29,718
Operating loss
(15,283
)
(12,247
)
(34,324
)
(38,467
)
INTEREST EXPENSE
(328
)
(106
)
(1,111
)
(10,954
)
INTEREST INCOME
-
3
-
269
LOSS ON EXTINGUISHMENT OF DEBT
-
-
-
(9,181
)
OTHER EXPENSE
(2,254
)
-
(3,868
)
-
Net Loss before Income Taxes and Loss on Equity Method Investments
(17,865
)
(12,350
)
(39,303
)
(58,333
)
Loss on Equity Method Investments
(1,208
)
(851
)
(2,480
)
(1,520
)
Income Tax Expense
(2
)
-
(2
)
(1
)
Net loss
$
(19,075
)
$
(13,201
)
$
(41,785
)
$
(59,854
)
NET LOSS PER COMMON SHARE Basic
$
(0.24
)
$
(0.18
)
$
(0.54
)
$
(1.02
)
Diluted
$
(0.24
)
$
(0.18
)
$
(0.54
)
$
(1.02
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic
80,263,702
74,745,896
77,741,339
58,793,480
Diluted
80,263,702
74,745,896
77,741,339
58,793,480
Romeo Power
Unaudited Consolidated Balance
Sheets
(Dollar amount in thousands)
As of December 31,
2020
2019
ASSETS CURRENT ASSETS Cash and cash equivalents
$
292,442
$
429
Accounts receivable—net of allowance for expected credit loss
(2020—$238; 2019—$238)
841
307
Inventories—net
4,937
6,670
Insurance receivable
6,000
6,000
Prepaid expenses
1,269
1,616
Total current assets
305,489
15,022
RESTRICTED CASH
1,500
1,500
PROPERTY, PLANT AND EQUIPMENT—Net
5,484
6,573
EQUITY METHOD INVESTMENTS
35,000
2,480
OPERATING RIGHT-OF-USE LEASE ASSETS
5,469
5,707
OTHER NONCURRENT ASSETS
3,100
1,296
Total Assets
356,042
32,578
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) CURRENT
LIABILITIES Accounts payable
2,900
5,811
Accrued expenses
2,844
1,197
Contract liabilities
815
289
Current maturities of long-term debt
2,260
5,000
Current maturities of long-term debt to related parties
-
100
Operating lease liabilities—current
853
851
Legal settlement payable
6,000
6,000
Other current liabilities
383
315
Total current liabilities
16,055
19,563
COMMITMENTS AND CONTINGENCIES LONG-TERM DEBT—Net of current
portion
1,082
5,225
OPERATING LEASE LIABILITIES—Noncurrent
4,723
4,949
OTHER NONCURRENT LIABILITIES
17
268
Total liabilities
21,877
30,005
STOCKHOLDERS’ EQUITY (DEFICIT): Common stock ($0.0001 par
value, 250,000,000 shares authorized, 126,911,861 shares issued and
outstanding at December 31, 2020 and 250,000,000 shares authorized,
74,449,847 shares issued and outstanding at December 31, 2019)
12
7
Preferred stock ($0.0001 par value, 10,000,000 shares authorized,
no shares issued and outstanding at December 31, 2020 and 1,000,000
shares authorized, no shares issued and outstanding at December 21,
2019)
-
-
Notes receivable from stockholders
-
(9,175
)
Additional paid-in capital
545,764
181,567
Accumulated deficit
(211,611
)
(169,826
)
Total stockholders’ equity (deficit)
334,165
2,573
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
$
356,042
$
32,578
-
-
Romeo Power
Unaudited Consolidated
Statement of Cash Flows
(Dollar amount in thousands)
Years Ended December 31,
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)
$
(41,785
)
$
(59,854
)
Adjustments to reconcile net loss to net cash used for operating
activities: Depreciation and amortization
1,988
1,871
Stock-based compensation
3,567
1,566
Inventory provision
3,105
1,743
Loss on extinguishment of debt
-
9,181
Interest expense attributable to amortization of debt discount
-
5,585
Loss on equity method investment
2,480
1,520
Non-cash lease expense—operating leases
238
213
Non-cash lease expense—finance leases
283
(15
)
Loss on extinguishment of stockholder note receivable
3,868
-
Changes in assets and liabilities: Accounts receivable
(534
)
(249
)
Inventories
(1,372
)
(2,570
)
Prepaid expenses
(1,685
)
(1,428
)
Accounts payable
(2,556
)
(2,130
)
Interest accrued on notes payable
468
455
Accrued expenses
1,739
(1,768
)
Contract liabilities
526
(898
)
Operating lease liabilities
(224
)
(180
)
Other—net
15
(6
)
Net cash used for operating activities
(29,879
)
(46,964
)
INVESTING ACTIVITIES: Capital expenditures
(1,325
)
(1,099
)
Equity method investment
(35,000
)
-
Other—net
-
(72
)
Net cash used for investing activities
(36,325
)
(1,171
)
FINANCING ACTIVITIES: Issuance of convertible notes
1,924
5,450
Issuance of term notes
6,475
19,000
Proceeds from PPP loan
3,300
-
Proceeds from stockholder note receivable
5,307
-
Repayment of term notes
(11,575
)
(25,624
)
Issuance of line of credit
-
32,000
Repayment of line of credit
-
(32,000
)
Redemption of common stock
-
(8,136
)
Issuance of common stock, net of issuance costs
5,027
56,639
Recapitalization transaction, net of transaction costs (See Note 3)
345,831
-
Exercise of stock options
110
41
Exercise of stock warrants
2,102
2,565
Payment for financed capital expenditures
-
(187
)
Principal portion of finance lease liabilities
(284
)
(31
)
Rescission of common stock
-
(1,164
)
Net cash provided by financing activities
$
358,217
$
48,553
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
$
292,013
$
418
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH —Beginning of period
1,929
1,511
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period
$
293,942
$
1,929
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH TO THE CONSOLIDATED BALANCE SHEETS: Cash and cash equivalents
$
292,442
$
429
Restricted cash
1,500
1,500
Total cash, cash equivalents, and restricted cash
$
293,942
$
1,929
SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest
$
595
$
4,486
Cash paid for income taxes
$
2
$
1
Romeo Power
Supplemental Disclosures of
Non-Cash Investing and Financing Activities
(Dollar amount in thousands)
Years Ended December 31,
2020
2019
Purchases of property, plant and equipment in accounts payable at
year end
$
583
$
1,030
Conversion of promissory notes and accrued interest to common stock
$
7,709
$
31,846
Allocation of debt proceeds to beneficial conversion feature
$
-
$
329
Allocation of debt proceeds to stock warrants
$
-
$
2,047
Exercise of warrants in exchange for note receivable
$
-
$
9,123
Investment in Joint Venture
$
-
$
4,000
Reverse recapitalization effect on additional paid-in capital
$
(145
)
$
-
Issuance of common stock
$
-
$
4,000
Transaction costs included in accounts payable and accrued expenses
$
172
$
-
Reconciliation of Net Loss to
Adjusted EBITDA
(Dollar amount in thousands)
Three Months Ended December 31, Years Ended
December 31,
2020
2019
2020
2019
Net loss
(19,075
)
(13,201
)
(41,785
)
(59,854
)
Interest expense
328
106
1,111
10,954
Interest income
-
(3
)
-
(269
)
Income tax expense
2
-
2
1
Depreciation and amortization expense
-
484
1,988
1,871
EBITDA
$
(18,745
)
$
(12,614
)
$
(38,684
)
$
(47,297
)
Loss on debt extinguishment
-
-
-
9,181
Stock-based compensation
-
617
3,567
1,566
Settlement for certain legal matters
-
4,586
-
4,586
Forgiveness of portion of stockholder notes receivable
2,254
-
3,868
-
Adjusted EBITDA
$
(16,491
)
$
(7,411
)
$
(31,249
)
$
(31,964
)
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