romeo power spac investor presentation

Download PDF . It is not intended to form the basis of any investment decision or any other decisions with respect of th e Business Combination. You can sign up for additional alert options at any time. There's been plenty of reporting over the recent couple of years on the EV +. Romeo Power is has a solution that targets three of the common obstacles to EV battery adoption. Most of these factors are outside RMGs and Romeos control and are difficult to predict. 2021 Romeo Power, Inc. All Rights Reserved. Romeo Power is an industry leading energy technology company focused on designing and manufacturing lithium-ion battery modules and packs for commercial electric vehicles. With the highest energy dense modules on the market, Romeo Power is on a mission to power the worlds transition to electrification and has a bold vision to create a world where energy poverty no longer exists. It's led by president and CEO Lionel E. Selwood, Jr. Selwood only recently took on the CEO role but has been serving. 2 Important Notice This presentation (the "presentation") is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of RMG Acquisition Corp. ("RMG") or Romeo Systems, Inc. ("Romeo") or any of their respective 2024E Rev. You can sign up for additional alert options at any time. Entrepreneurial spirit with experience in corporate development, institutional relations and industry-led initiatives. Romeo is a battery power company that designs and makes lithium-ion battery modules and packs for commercial electric vehicles. Romeo Power, Inc. ("Romeo Power" or the "Company") (NYSE: RMO), an energy technology leader delivering advanced electrification solutions for complex commercial vehicle applications, today announced its financial results for the third quarter ending September 30, 2021. We do not intend our use or display of other companies tr ademarks or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Stockholders, Romeo Stockholders Tender Reminder: Process & Instructions for How Romeo Power - Events & Presentations Events & Presentations Romeo Stockholders: Click HERE for the Latest Information About the Tender Offer for the Nikola Transaction Upcoming Events Featured Presentation Archived Events & Presentations According to Romeo Power, its solution will deliver a battery with a 25% energy density advantage. 6/15/22. 2 Assuming $234mm cash held in trust by RMG, $150mm PIPE proceeds and no redemptions RMG Team & Romeo Director Nominees Phil Kassin President and COO Lionel Selwood, Jr Chief Executive Officer Michael Patterson Founder and Chief Sales Officer, 6 Highly Experienced RMG Management Team Founder and CEO of Riverside Management Group Former CEO of Horsehead Industries Co - Founder of Mohegan Energy Founding Investor & Board Member of Allied Resource Corp. Chairman Jim Carpenter Former Partner, Founder & Co - Head of Power Investment Business at Carlyle (NASDAQ:CG) Former Managing Director of Goldman Sachs (NYSE:GS) Co - Founder & Head of Power Investment Business, Founder & Head of Commodities Principal Investment Business at Goldman Sachs (NYSE:GS) Former Chairman & CEO of Cogentrix Energy CEO and Director Bob Mancini Former Senior Managing Director of Evercore (NYSE:EVR) Former Head of M&A & Financing at Access Industries Former Board Member and Chairman of the Finance & Investment Committee at LyondellBasell (NYSE:LYB) Senior investment banking roles at Morgan Stanley, Goldman Sachs, Merrill Lynch and AIG President, COO and Director Phil Kassin RMGs Due Diligence Conducted on Romeo RMG Acquisition Corp. (RMG) is NYSE listed SPAC which completed its $230mm IPO on February 12, 2019 RMG Management Team has significant public company board experience (NYSE, NASDAQ, and TSX) Sponsored by Riverside Management Group, a leading merchant bank with ~25 years of experience in M&A advisory and principal investing Anchor investors include: RMG Acquisition Corp. Overview G eneral corporate, employment matters and benefits, legal, litigation and potential claims, intellectual property, environmental health and safety, contract review, r eal estate and joint venture capital structure due diligence performed by Latham & Watkins Technical due diligence performed by Roland Berger Accounting and Tax due diligence performed by Grant Thornton Business due diligence completed by RMG RMG led extensive multi - month long industry - wide commercial, business, technological, financial and legal due diligence effort, engaging leading experts and advisors RMG Acquisition Corp. Overview, 7 $310mm Contracted Revenue and up to $2.4Bn Under Advanced Negotiation World - Class Battery Team with Technical Expertise and Deep Industry Experience 7 GWh State - of - the - Art West - Coast Production Facility with Optimized Manufacturing Capabilities Designed for High Growth Attractive and Large Industry Agnostic End Market Opportunity with Initial Focus on $225Bn Commercial Vehicles TAM in North America and Europe Established Customer Reputation for Safety and Reliability Driven by First Principles Research & Development Accelerated and De - risked Commercialization through Strategic Partnerships with Global Leaders in Vehicle Component Technology and Battery Recycling Order Book with Customers Representing ~ 68 % Market Share of the Class 8 Truck Market in North America and Landmark Agreement to Supply Leading Class 8 New Entrant Romeo Power Investment Highlights Across all battery technology categories, Romeo is a clear industry leader Through Romeos differentiated offerings and superior technology, we believe that Romeo is well - positioned to capture an industry - leading share of the estimated $665Bn global CV TAM 1 2 3 4 5 7 6, 8 Todays Agenda Transaction Overview Romeo Power Overview Leading Provider of Battery Packs and Battery Management Systems Validated Technology & Products 2 1, Romeo Power Overview Leading Provider of Battery Packs and Battery Management Systems Section 1. TENDER REMINDER FAQ for Romeo Cell Science Not being bound to any one cell supplier enables Romeo to deliver the BEST cell per application 5. Projections are inherently uncer tai n due to a number of factors outside of RMGs or Romeos control. Through its suite of advanced hardware, combined with its innovative battery management system, Romeo Power delivers the safety, performance and reliability its customers need to succeed. Lion's current development pipeline . . Neither RMGs nor Romeos independent auditors have studied, reviewed, compi led or performed any procedures with respect to the projections for the purpose of their inclusion in this presentation, and accordingly, neither of them expressed an opinion or provided any other form of assurance with respect ther eto for the purpose of this presentation. Information on acquisition, funding, investors, and executives for Romeo Power. 312-445-2870 On December 29, 2020, Romeo Power announced the completion of its business combination with a special purpose acquisition company (SPAC) and that starting on December 30, 2020, Rower. 2 Important Notice This presentation (the presentation) is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other financial instruments of RMG Acquisition Corp. (RMG) or Romeo Systems, Inc. (Romeo) or any of their respective affiliates. The transaction values the company at $1. In the commercial v ehicle segment, gravimetric density is the primary KPI Larger space in CVs allow for flexibility in fitting battery packs in the vehicle, rendering volumetric density less important Certain restrictions still apply, depending on the pack position (e.g., height restriction) Emerging pack providers represent a significant improvement over current mainstream EVs on the market Romeo is leading in energy density relative to direct competitors current products and in a similar range with 2021E generation Commentary Romeo energy density data based on identified product improvements for current and NextGen packs 170 210 180 190 220 185 240 250 260 150 290 300 310 0 120 145 130 150 155 125 160 200 165 140 170 230 175 0 180 140 115 160 200 190 195 135 280 270 Audi e - tron Tesla Model S P85 BMW i3 Hyundai Kona Kreisel 2020 Kreisel 2021 E Akasol 2020 Akasol 2021 Proterra Battery Pack Microvast BMZ Inc. Romeo 2020E Romeo 2021E ZOE gen 2 Bolt I - PACE ID NEO Tesla Model 3 Leading Pack P roviders Study Conducted by Roland Berger CV Passenger Car, 35 Battery Lifecycle Management Romeos proprietary technology enables the quickest fast charge while maintaining battery capacity Cell chemistry selection and design based on commercial vehicle needs New generation of low cobalt NCA cells with extra long life Uniform thermal management and BMS controls By developing multiple leading edge fast charging protocols, Romeo is able to balance charging needs with battery life Preheating and thermal modulation ensure cells receptive to fast charge Rigorous laboratory experimentation and battery modeling identifies fast charge methods with least damage factors 0 5 10 15 20 25 30 35 40 Romeo Fast Charge 1 Romeo Fast Charge 2 Romeo Fast Charge 5 Romeo Fast Charge 7 Tesla SuperCharge Minutes One Million Mile Battery Life 1 Collection of the Quickest Fast Charge Protocols for Different Applications 1 Tesla Open Source Data Project, 36 0 100 200 300 400 500 0:00 0:03 0:06 0:10 0:13 0:16 0:20 Temperature ( C ) Time (mm:ss) Thermal Event Safety Designing a safe battery system using a collaborative effort across multiple knowledge domains Thermal Event Mitigation In - House Battery Safety Testing and Targeted Safety R&D Selection of safest cells only as result of elaborate testing campaign Reproducible and predictable behavior Cell Selection Robust to vibration and road failures Flame ablation and resistant material Mechanical Design Venting strategy and methodology Crash mitigation strategy Pack Design Rational fusing hierarchy down to the single cell Multiple disconnects and pyro devices Electrical Design Romeos Solution at Work Allows for continuous destructive testing and failure analysis, providing quick and precise feedback for the safest product designs In - house testing capabilities include: Cell, module, pack and destructive testing (fire and mechanical ) Materials and components stability / dielectric withstand at high voltage Testing and validation of venting strategies Abuse testing covers most stringent safety standards Safety group director with 10+ years of battery safety experience Battery Experiencing Incident Thermal Incident Not Propagating to Neighbor Batteries Protected B atteries E xperiencing Thermal Runaway Thermal incident propagates from cell to cell Competitor Packs Module and pack design prevents propagation of incident Romeo Power E xperiencing Thermal Runaway, 37 Designed for Cell & Material Recovery at End of Life Romeo keeps sustainability at the forefront Battery Recycling will be a Key Focus for Many Competitors Recycling rates for li - ion batteries in the U.S. and Europe are less than 5% today Large - scale, global adoption of li - ion batteries will require cost - effective recycling processes Ease of battery recovery cannot be at expense of safety and durability Reducing recycling cost through ease of access to aged battery cells: Reduced work hours for pack / module disassembly Reduced tooling required for disassembly Romeos batteries are designed with recycling ease in mind: Layered design approach for ease of disassembly drives more cost effective recycling Low content of adhesives and putties that would make separation processes complex and expensive Layered design allows for simple peel style disassembly Designed for Cell & Material Recovery at End of Life Battery Life Cycle Recycling Packs can be processed to extract valuable rare - earth materials Raw - material extraction and R eprocessing Romeo Pack Manufacturing Reuse Packs can be repurposed for a second - life application in energy - storage services that is suitable to their reduced performance capabilities Second - life Application in Stationary S torage New Battery Pack Electric Vehicle Battery Refurbishing Junkyard Used Battery Pack Source: Chemical & Engineering News, 38 Machine Learning to Optimize Battery Life and Warranty Coverage Romeos machine learning provides incremental future revenue opportunities with fleets Romeo applies algorithms for life optimization of electric fleets based on field operation data Ride sharing or truck fleet companies can maximize total fleet battery health (effective total asset life) by leveraging machine learning to help make choices on the following: Vehicles to deploy Routes to take Optimal charging schedule Machine Learning Opportunity for as high as 25% life extension with parameter optimization (Direct impact to TCO) Aging as a Result of Charge Time Optimization How it Works Model population as one virtual battery Provide individual decisions that benefit net total asset and increase profitability of fleet managers, and TCOs Learn aging factors from field behavior based on feedback from battery population health optimization, 39 Key IP Focus Areas: Intellectual Property Overview Romeo has taken a deliberate approach in protecting its IP and trade secrets Battery Structure, Interconnect, Sensing and Balancing Enables high throughput micro - laser welding Protect s Romeos current manufacturing and design methods, allowing a highly configurable approach Blocks competition from adopting errorless micro - laser welding and subsequently, higher throughput rates Romeo is, at its Core, a Knowledge - Based Organization Focused deeply on limiting exposure and pursuing patents to protect Romeos core recipe, in addition to claiming future technology domains Select IP Overview Battery Vapor Chamber Key technology for battery cooling and thermal management Protects proprietary findings which will be core to future battery evolution Semi automated plant with high throughput assembly and micro precision processes such as novel laser welding technologies Patented architecture enabling multi voltage options, and ternary fusing protection for added safety E - Plate Methodology and patent pending designs for achieving most uniform temperature distribution and efficient cooling Thermals Active and passive methods, and materials for achieving single cell and multiple cell fault tolerance, and venting Safety Algorithms for accurate and precise battery states estimation, diagnostics and prognostics BMS Production Recipes, and combinations to achieve adequate thermal management, structural support, and voltage isolation Materials Single or multi - layered current collector enables product variants and quick new product deployment Enables high throughput micro laser welding for speed of manufacturing time Creates additional safety features via ternary fusing Utilizes gas to liquid, and liquid to gas phase change Lightweight with highest possible heat transfer coefficient Enables new regime of power capability, 41 Proposed Transaction O verview Transaction Structure Valuation Capital Structure RMG and Romeo Power have agreed to enter a business combination on October 5, 2020; the transaction is expected to close in Q4 2020 It is anticipated that the post - closing company will be listed on NYSE under the ticker RMO and retain its Romeo Power name Transaction reflects a $900mm pre - money equity valuation for Romeo, representing a highly attractive opportunity to invest in a leader in commercial vehicle electrification Romeo to receive ~$ 340mm cash at closing to fund its attractive growth opportunities $1,334mm post - money Equity Value $993mm Enterprise Value, with no material debt outstanding at closing Represents 1.3x EV / 2023E Revenue, a highly attractive entry multiple relative to peer group The transaction will be funded by a combination of ~$234mm cash held in trust and $150mm in PIPE proceeds All - primary transaction; existing Romeo shareholders, including management and strategic partner BorgWarner (BWA) are rolling virtually 100% of their equity and collectively are expected to own 67% of the pro forma company at closing, 42 $ in millions 2020E 2021E 2022E 2023E 2024E 2025E Income Statement Items Product $ 5 $ 134 $ 399 $ 710 $ 1,043 $ 1,462 Engineering Services $ 2 $ 3 $ 3 $ 11 $ 16 $ 22 BMI Revenue $ 0 $ 0 $ 7 $ 37 $ 88 $ 156 JV Royalty / Service Support $ 3 $ 3 $ 3 $ 7 $ 10 $ 11 Total Romeo Revenue $ 11 $ 140 $ 412 $ 765 $ 1,156 $ 1,650 % Growth 39 % 1,193 % 195 % 86 % 51 % 43 % ( - ) Direct Materials $ 6 $ 134 $ 349 $ 543 $ 771 $ 1,041 ( - ) Other COGS $ 8 $ 15 $ 23 $ 38 $ 55 $ 75 Gross Profit ($ 4) ($ 10) $ 40 $ 182 $ 331 $ 534 Gross Profit Margin % nm nm 10 % 24 % 29 % 32 % ( - ) R&D $ 6 $ 19 $ 26 $ 28 $ 35 $ 45 ( - ) Other Operating Expenses $ 12 $ 25 $ 33 $ 64 $ 99 $ 151 EBITDA ($ 22) ($ 54) ($ 19) $ 91 $ 196 $ 338 EBITDA Margin % nm nm nm 12 % 17 % 20 % Income From JV ($ 1) ($ 1) ($ 1) ($ 7) $ 2 $ 7 Key Balance Sheet and Cash Flow Items Net Working Capital ($ 1) ($ 55) ($ 30) ($ 31) ($ 30) ($ 46) % of Revenue (11 %) (39 %) (7 %) (4 %) (3 %) (3 %) Capital Expenditures $ 1 $ 59 $ 50 $ 30 $ 65 $ 41 % of Revenue 5 % 43 % 12 % 4 % 6 % 3 % Romeo Power Projected Financial Overview Commentary Strong pipeline built with commercialization and production ramp commencing in 2021 $412mm Revenue in 2022E and $1.65Bn Revenue in 2025E at a 59% CAGR 32% Gross Margin profile in 2025E as Romeo benefits from scale volume and pack input efficiencies Company commitment to disciplined R&D spend for continued technology leadership EBITDA margins projected to expand to 20% in 2025E as Romeo consolidates its market position and deepens portfolio penetration, including BMI product Capex budget supports best - in - class tooling and standing up manufacturing lines to meet strong customer demand 40% of JV Net Income, 43 Joint Venture Projected Financial Overview $ in millions 2020E 2021E 2022E 2023E 2024E 2025E Income Statement Items Total JV Revenue $ 0 $ 4 $ 9 $ 229 $ 547 $ 708 % Growth nm nm 133 % 2,363 % 139 % 29 % ( - ) JV Royalty $ 0 $ 0 $ 0 $ 4 $ 7 $ 9 ( - ) Other COGS $ 0 $ 4 $ 9 $ 210 $ 478 $ 618 Gross Profit $ 0 $ 0 $ 0 $ 15 $ 62 $ 81 Gross Profit Margin 4 % 5 % 5 % 6 % 11 % 11 % ( - ) JV Service Support Costs $ 3 $ 2 $ 2 $ 2 $ 2 $ 2 ( - ) Operating Expenses $ 0 $ 0 $ 1 $ 21 $ 36 $ 36 EBITDA ($ 3) ($ 3) ($ 3) ($ 9) $ 23 $ 43 EBITDA Margin % nm nm nm nm 4 % 6 % JV Net Income ($ 3) ($ 3) ($ 3) ($ 18) $ 5 $ 17 $708mm JV Revenue in 2025E with a 76% CAGR from 2023E 2025E, and access to global CV opportunity Romeo offers engineering support to the JV at a 15% premium to cost, reflected in Romeo Power Revenue Tiered IP license agreement paying Romeo Power a $7mm flat fee royalty and 0.75% of Revenue over $500mm in 2025E Romeo Power will provide technical engineering personnel and operating assets to the JV Romeo Powers financials will include 40% of JVs net income Commentary, 44 Pro Forma E quity O wnership RMG Shareholders 17 % / 23.0 RMG Sponsor Shares 4% / 5.8 PIPE Investors 11% / 15.0 Existing Romeo Power Shareholders 67 % / 89.7 All Romeo Power convertible debt and equity holders will receive stock in public company (no cash paid to Romeo Power shareholders at closing) Proceeds for transaction will be used to capitalize balance sheet for ~$340mm Romeo will use proceeds to primarily fund: Expansion of production capacity in its state - of - the - art manufacturing facility Working capital to support increasing production demand Substantial research and development activities devoted to developing the next generation of battery systems technology Completion of the transaction is expected to occur during the fourth quarter of 2020 $ in millions $ % Newly Issued RMG Shares $897 70% Estimated Cash Held in Trust 3 $234 18% PIPE Proceeds $150 12 % Total Sources $1,281 100% Equity Consideration to Existing Romeo Power Shareholders $897 70 % Estimated Romeo Net Debt $3 0.3 % Cash to Balance Sheet $341 27 % Payment of Estimated Transaction Fees $40 3 % Total Uses $1,281 100 % Sources and Uses 1,2 Pro Forma Valuation 4 Post Money Ownership 4 $ in millions , except per share data Share Price $ 10.00 Pro Forma Shares Outstanding 133.4 Equity Value $ 1,334 Plus: Debt - Less: Cash to Balance Sheet $ 341 Enterprise Value $ 993 1 Based on Romeo capital structure as of June 30, 2020; $7mm of existing convertibles notes to convert to equity at closing.

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