Fisker Inc. (NYSE:FSR) Q3 2023 Earnings Call Transcript

We have multiple initiatives underway that will continue to improve our delivery efficiency. For example, we now have multiple sites ready that are ready to do go pickups and home delivery and will be ready by the end of the year. We’re already thinking ahead to 2024 and accelerating the acquisition of Fisker real estate as we conducted a survey where more of our customers want to pick up their vehicle from a Fisker facility as opposed to home delivery, which is also faster. We are in the process of opening up a dozen new locations in North America, which will increase our throughput and provide more options for consumers. I recently visited our contactless pickup location in Long Island in New York. And it is a very central location, very exciting location and we have more and more locations that are coming up.

In parallel, we have added now three more delivery partners. We’ve introduced customer pickups, and also something called Fisker Direct, with dedicated Fisker employees, they drive vehicles to customers if the distances are under 60 miles, and give a personal tour of the vehicle. We have had employees from all different various parts of the organization participate in this initiative. And this has been a delight for several of our customers who enjoy listening to how the UI was developed or how the car was designed or how the propulsion works. This strategy increases our geographic reach and delivery volume capacity. Streamlining data integration to provide more accurate real time information flow will also help us more efficiently planned and scheduled deliveries.

We are in the process of integrating the ETAs and delivery schedules, so we will be able to provide customers with more accurate home deliveries as we move forward, which I know has been an annoyance to several customers in the recent times. Fast forward to October, we delivered over 1,200 vehicles in October alone, more than the entire third quarter and November months to date deliveries point to further growth versus October, illustrating the ongoing efficiency improvements in our delivery ramp. As Henrik mentioned earlier, to date, we have delivered over 3,000 vehicles, and we have 100 more on the way to customers. The ramp and production and deliveries is coming at an opportune time where we are benefiting from several costs tailwinds. For example, our predominantly Euro denominated supplier contracts are benefiting from ForEx exchange rates that are close to their lowest levels in nearly two decades.

Raw material and battery prices have also continued to ease favorably impacting input costs. Before moving on, I want to comment a bit on few larger macroeconomic issues that are playing. Interest rates are near 20-year highs, and they are of course impacting consumer spending. And we have seen a direct response from several OEMs who are pushing out their EV production timelines. This reduced industry supply is to a certain extent possible for Fisker as it gives us more runway to develop our amazing portfolio of vehicles and allow us to continue to stand out as a high quality option for consumers who are making EV purchasing decisions to stay and for us to gain a larger market share. In addition, our commitment to sustainability and the EV transition is unwavering.

Turning to supply chain, we continue to make progress with multiple suppliers successfully ramping and maintaining high-quality. However, during this ramp phase, we still do expect to experience the occasion bottleneck confused suppliers that may have challenges meeting our high volume targets in a very short period of time. Supply chain task force is engaged and deployed in the field working to support our suppliers to achieve our mutual objectives. To give you an example, winter tires, most countries where we sell in Europe have laws making driving on winter tires obligatory from the month of November to the month of March. We experienced a shortage of winter tires that is now getting resolved. Absent successful resolution, this could slow us down in the winter months in Europe.

By adjusting our near-term production plan, we provide our suppliers additional opportunity to focus on ramping, while maintaining quality while at the same time, we redouble our efforts on our delivery ramp. In the U.S., as I mentioned earlier, we’re adding physical real estate to meet the surprising high demand for in-person facility vehicle pickup as opposed to home delivery. Just a few examples of how we continue to stay nimble and adjust incoming feedback and changing business needs or market conditions. Now turning to our Q3 results, balance sheet and outlook for the remainder of 2023. Our third quarter revenue totaled $71.8 million, driven primarily by initial Ocean vehicle sales. During the quarter, we delivered 1,097 vehicles. Our third quarter cost of goods sold totaled $83.9 million, which included $18.2 million of noncash inventory adjustment impact associated with initial production ramp.