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Exro drives toward growth after closing SEA Electric acquisition

Aims to be profitable, cash flow positive by Q2 2025

Exro's Coil Driver, pictured here, will be used alongside SEA Electric’s SEA-Drive vehicle control unit for electric vehicles. (Courtesy Exro Technologies Inc.)

After concluding its acquisition of SEA Electric Inc. in April, Exro Technologies Inc. (EXRO-T) is searching for a path to profitability in 2025, the Calgary-based power-control electronics company reports in its Q1 results.

Announced in January, the merger between Exro and Torrance, Calif.-based SEA Electric was a bet on increased electrification in transportation. The plan is to combine Exro’s Coil Driver with SEA Electric’s SEA-Drive vehicle control unit for electric vehicle (EV) propulsion systems.

After closing the acquisition that valued SEA Electric at over $400 million, deliveries of SEA-Drive were made to key customers, according to Exro. The company also began exploring the incorporation of Coil Driver into its blue-chip partnerships.

Exro expects to deliver over 250 propulsion systems within the first six months after the acquisition and more than 1,000 systems in the 12 months after closing the deal.

"The progress made since April 5 is a validation to the deal synergies presented in January – revenue, cost savings and complementary technologies," Exro CEO Sue Ozdemir said in a release.

Exro’s road to profitability

Exro’s revenue target in 2024 was set at over $200 million, the company said in a letter to investors earlier this year.

Acquiring SEA Electric "is a good way for us to take control, provide stability in an unstable transition, and be able to take advantage of contracts that are already placed on their side," Ozdemir told Sustainable Biz Canada in an interview.

With the acquisition complete, Exro turns its focus to achieving profitability and positive cash flow by Q2 2025, the company said in a release.

The first step is ramping up deliveries to its blue-chip customers, to over 1,000 propulsion systems per year.

In its Q1 financials, Exro reports operating at a net loss of $12.9 million with revenue at $1.3 million. In Q4 2023, its net loss was almost $19 million, with revenue at $935,410.

Exro is cutting costs, aiming for up to $13.6 million per year in savings during 2024. Since buying out SEA Electric, the company has already found $6.8 million in savings through eliminating redundancies, finding supply chain efficiencies and optimizing business operations, Exro says in the release.

To sustain its business, Exro is in discussions to secure non-dilutive working capital to fund its growth, it adds.

Slowing demand for EVs over the past 12 months is something Exro acknowledges in its management’s discussion & analysis for Q1. The company is still, however, optimistic in the long-term trend toward electrification, saying it is a “matter of when, not if” 20 to 30 per cent of the transportation industry is electrified.

Progress on its technology

Exro says its energy storage system, known as Cell Driver, is progressing through the final testing for global safety science company UL in Q2.

In its management’s discussion & analysis, Exro reports progressing on its e-Axle program with Linamar, toward completing and marketing a medium-duty commercial e-Axle demonstration vehicle.

Coil Driver units have been delivered to several clients, including to HB4, Vicinity Motors and Giaffone.

Integration of Coil Driver inverters into the propulsion systems of its original equipment manufacturer (OEM) partners is being discussed. Exro anticipates pilot programs for Coil Driver with its partners will begin in Q3.

Its program with a passenger vehicle OEM to explore Coil Driver’s ability to reduce rare-earth metal amounts in electric motors is in Phase 2. Deliveries of Coil Driver prototypes that are optimized to the partner’s motor have been or will be made this year.

Other global automotive OEMs are interested in Coil Driver, and Exro is “optimistic” there will be a second OEM innovation program announcement by the end of Q3.

"We remain committed to our vision and innovation in motor and battery control," Ozdemir said.

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