Lion Electric Investor Presentation Deck
Appendix C - Non-IFRS Measures and Other Performance Metrics
Order Book Methodology
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General Principle: The company's vehicle and charging stations order book, expressed as a number of units or the amount of sales expected to be recognized in the future (at the applicable time of delivery) in respect of such number of units, is
determined by management based on purchase orders that have been signed, orders that have been formally confirmed by clients or products in respect of which formal joint applications for governmental subsidies or economic incentives have been
made by the applicable clients and the company. The vehicles included in the vehicle order book as of May 3, 2022 provided for a delivery period ranging from a few months to the end of the year ending December 31, 2025. Substantially all deliveries
are subject to the granting of subsidies and incentives with processing times that are subject to important variations, and there has been in the past and the company expects there will continue to be variances between the expected delivery periods of
orders and the actual delivery times, and certain delays could be significant. Such variances or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part. The company's presentation of the
order book should not be construed as a representation by the company that the vehicles and charging stations included in its order book will translate into actual sales.
Delivery Periods: The company's order book refers to products that have not yet been delivered but which are reasonably expected by management to be delivered within a time period that can be reasonably estimated and includes, in the case of
charging stations, services that have not been completed but which are reasonably expected by management to be completed in connection with the delivery of the product.
Purchase orders and applications generally provide for a time period during which the client expects delivery of the vehicles. Such period can vary from a specific date, a number or range of months after the issuance of the order or application, or a
calendar year. The vehicles included in the vehicle order book as of May 3, 2022 provided for a delivery period, subject to the satisfaction of the conditions set forth in each order (which, in substantially all cases as further discussed herein, relate to the
approval of governmental subsidies and grants), ranging from a few months to the end of the year ending December 31, 2025. Delivery periods are disclosed from time to time by the company when available in respect of material orders. Delivery
periods should not be construed as a representation or a guarantee by the company that the actual delivery time will take place as scheduled. Given the nature of the business and the products of the company, the implied lead time for the production
and delivery of a vehicle (which may be impacted, among other things, by supply chain challenges or changes in specifications), the nature of certain customers of the company (in many cases, fleet owners operating capital intensive operations which
require financing and ongoing scheduling flexibility), and the fact that, as further described herein, substantially all deliveries are subject to the granting of subsidies and incentives with processing times that are subject to important variations, there has
been in the past and the company expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times, and certain delays could be significant. Such variances or delays could result in the loss of a
subsidy or incentive and/or in the cancellation of certain orders, in whole or in part. See "Ongoing Evaluation; Risk Factors" below.
Pricing: When the company's order book is expressed as an amount of sales, such amount has been determined by management based on the current specifications or requirements of the applicable order, assumes no changes to such specifications
or requirements and, in cases where the pricing of a product or service may vary in the future, represents management's reasonable estimate of the prospective pricing as of the time such estimate is reported. A small number of vehicles included in the
order book have a pricing that remains subject to confirmation based on specifications and other options to be agreed upon in the future between the applicable client and the company. For purposes of the determination of the order book and the value
allocated to such orders, management has estimated the pricing based on its current price lists and certain other assumptions relating to specifications and requirements deemed reasonable in the circumstances.
Performance Metric: The order book is intended as a supplemental measure of performance that is neither required by, nor presented in accordance with, IFRS, and is neither disclosed in nor derived from the financial statements of the company. The
company believes that the disclosure of its order book provides an additional tool for investors to use in evaluating the company's performance, market penetration for its products, and the cadence of capital expenditures and tooling. The company's
computation of its order book may not be comparable to other similarly entitled measures computed by other companies, because all companies may not calculate their order book, order backlog, or order intake in the same fashion. In addition, as
explained above, the company's presentation of the order book is calculated based on the orders and the applications made as of the time that the information is presented, and it is not based on the company's assessment of future events and should
not be construed as a representation by the company that the vehicles and charging stations included in its order book will translate into actual sales.
Ongoing Evaluation; Risk Factors
A portion of the vehicles or charging stations included in the company's order book may be cancellable in certain circumstances (whether by reason of a delivery delay, unavailability of a subsidy or incentive or otherwise) within a certain period.
Management reviews the composition of the order book every time it is reported in order to determine whether any orders should be removed from the order book. For purposes of such exercise, management identifies orders that have been or are
reasonably likely to be cancelled and examines, among other things, whether conditions attaching to the order are reasonably likely to result in a cancellation of the order in future periods as well as any other available information deemed relevant,
including ongoing dialogue with clients. Such exercise may result from time to time in orders that have previously been included in the order book being removed even if they have not been formally canceled by the client.
The company cannot guarantee that its order book will be realized in full, in a timely manner, or at all, or that, even if realized, revenues generated will result in profits or cash generation as expected, and any shortfall may be significant. The
company's conversion of its order into actual sales is dependent on various factors, including those described below and in section 23.0 entitled "Risk Factors" of the company's Annual MD&A, and in Item 3.D entitled "Risk Factors" of the Annual
Report. For instance, a customer may default on an order, may become subject to bankruptcy or insolvency or cease its business operations. In addition, substantially all of the orders included in the order book are subject to conditions relating to
the granting of governmental subsidies and incentives or the timing of deliveries and, in a limited number of cases, the availability of certain specifications and options or the renewal of certain routes by governmental or school authorities. As a
result, the company's ability to convert its order book into actual sales is highly dependent on the granting and timing of governmental subsidies and incentives, most notably subsidies and incentives under the Quebec government's 2030 Plan for a
Green Economy, under the Federal's Infrastructure Canada's Zero-Emission Transit Fund ("ZETF"), and under California's Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). The termination, modification, delay or
suspension of any such governmental subsidies and incentives could result in delayed deliveries or the cancellation of all or any portion of such orders, which, in turn, could have a material and adverse effect on the company's business, results of
operations or financial condition.
The company's conversion of its order book into actual sales is also dependent on its ability to economically and timely manufacture its vehicles, at scale. The company delivered 196 vehicles during the year ended December 31, 2021. As of May 3,
2022, the company's vehicle order book stood at 2,422 vehicles. The execution of the company's growth strategy and the conversion of its order book will therefore require significant ramp-up in its production. While the company's Saint-Jerome
facility currently has an annual production capacity of 2,500 vehicles at full scale and it is in the process of establishing its operations at the Joliet Facility and the Lion Campus, the company has limited experience to date in high volume
manufacturing of its vehicles. In addition, as of May 3, 2022, approximately 270 units included in the order book, representing a combined total order value of approximately $115 million, related to products which had been developed and were
being sold, but that were not in commercial production. Any failure by the company to successfully develop and scale its manufacturing processes within projected costs and timelines could have a material adverse effect on its business, results of
operations or financial condition.
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