Cenntro Inc. Q4 FY2021 earnings call

• Became a publicly traded company on Nasdaq Capital Market in late 2021, divested Naked's clothing business and had over $250 million cash on hand.
• Achieved 29.8% growth in vehicle sales volume in 2021 despite supply chain challenges.
• Acquired 65% equity interest in Tropos Motors Europe (TME), which has a distribution network in Europe.
• Selected Jacksonville, Florida for a new U.S. manufacturing facility (100,000 sq. ft., capable of assembling up to 10,000 vehicles annually).
• Planning to expand production capability in Chongqing, China, and develop distributor/service provider network.

In 2021, Cenntro's net revenue was $8.6 million, an increase of 57.1% from 2020. Vehicle sales accounted for 85% of the revenue, other service income made up 13%, and the remainder was from spare part sales. Geographically, 51% of revenue came from Europe, 40% from the United States, with the rest from Asia and other regions. Cost of goods sold rose to $7.1 million in 2021, up 44.7% from 2020. Gross profit was $1.5 million, up 163.7% from the previous year, and gross margin increased 710 basis points to 17.5%.

• 2022 is expected to be challenging due to supply chain shortages, global economy, COVID, and Russia-Ukraine conflict, with logistics and material costs likely to increase.
• Confident in maintaining solid growth to capture demand for electric commercial vehicles.
• Adequate cash to navigate challenging environment and focus on production expansion and product development.

• Supply chain issues, including chip and battery shortages, affecting production and delivery.
• COVID lockdowns in China impacting supply chain and shipping.
• Russia-Ukraine conflict potentially increasing logistics and material costs.

Q: Could you extrapolate 2022 production volume considering China COVID shutdowns, Ukraine situation, and supply chain issues, and how Jacksonville coming online will affect it?

A: Production in December 2021 was 628 vehicles. Current supply chain issues with chips, batteries, and shipping are challenging, but the company is taking steps like ordering three months' battery inventory and co-producing, with Jacksonville facility to pack batteries in the U.S. but precise numbers hard to project due to evolving situation.

Q: What are the implications of the auditor change?

A: Marcum was appointed as SEC auditor post-merger with Naked Brand Group. For Australian compliance, Wis Australia is handling IFRS audit.

Q: Describe current sales pipeline, selling environment, and who you're selling to?

A: Demand for electric commercial vehicles is strong in Europe and U.S. Targeting mid-tier and small businesses, focusing on local distributor and after-market support. Demand is strong, but issue is delivering products on time with quality and after-market support.

Q: How will Shanghai lockdowns affect 2022 gross margins?

A: Shanghai lockdowns could impact factories, shipping, and sales realization. The company has ordered three months' key components, but continued or deteriorated lockdowns could hurt gross margins and revenue due to shipping issues.

Q: How is capital allocated, priorities for capital, and geographic split outlook?

A: Priorities include securing supplies and funding inventory, and continuing CapEx/R&D for new products. Europe is expected to remain a major market, likely at least 50% of revenue, but specific guidance is difficult due to supply chain and geopolitical uncertainties.