FREEHOLD, N.J. / Nov 12, 2024 / Business Wire / Cenntro Inc. (NASDAQ: CENN) (“Cenntro” or “the Company”), a pioneering electric commercial vehicle company with advanced, market-validated, and purpose-built vehicles, has reported its financial and operational results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial and Operational Highlights:

• Third quarter 2024 net revenue of $16.7 million increased 190% compared to $5.8 million for the third quarter of 2023.
• United States (“US”) sales volume increased to $10.3 million in the third quarter of 2024 from $0.2 million for the third quarter of 2023.
• Adjusted EBITDA loss for the third quarter of 2024 of $7.5 million compared to a loss of $12.1 million for the third quarter of 2023.
• Sold 662 Electric Commercial Vehicles in the third quarter of 2024.
• Sold 78 Logistar™ 400 Class 4 vehicles in the US market compared to 1 vehicle in the third quarter of 2023.
• Sold 334 Avantier™ vehicles in Europe and South American markets in the third quarter of 2024 compared to 21 vehicles in the third quarter of 2023.
• Sold 230 iChassis kits in the third quarter of 2024 compared to 103 kits in the third quarter of 2023.

Peter Wang, Chief Executive Officer illustrated: “In the third quarter of 2024, we continued our steady growth in the US market, selling and delivering Cenntro products as we positioned the Company for a longer-term profitable future. During the third quarter, we sold a total of 662 vehicles across our portfolio, compared to 298 vehicles in the prior year period. Additionally, we sold 230 units of our iChassis in the third quarter, although these units are not inclusive of the number of vehicles sold because iChassis is not considered a complete vehicle. We expect a significant revenue increase in the US market as we continue to shift our strategy to focus towards North American sales, and introduction of additional new models in the US market.

“For new models during the quarter, we announced our newest Class 4 addition to our Logistar series, the Logistar® 450 (“LS450”) model for sale and distribution in the US and global markets. The new LS450 has received California Air Resources Board Executive Order (“CARB”) Certification and a Certificate of Conformity from the US Environmental Protection Agency (“EPA”). The LS450 is equipped with a 128Kwh battery capacity, offering an improved range compared to its predecessor model, the LS400. We also obtained a CARB Executive Order and a Certificate of Conformity from the EPA for the Logistar® 300 model, a Class 3 delivery truck. We introduced the Deepstar® 864 (“DS864”), a Class 8 drayage truck in October 2024, at our ‘Cenntro Day 2024’ at the Ontario Convention Center in Ontario, California. Lastly, we recently announced that Avantier Motors Corporation, our wholly owned subsidiary, launched two new electric vehicle models tailored for the European market following the strong reception of the Avantier C; the Avantier Ex, a mini electric commercial vehicle, and the Avantier Commuter, an entry-level electric passenger car. Both models join Avantier’s existing product line as the company continues its mission to revolutionize urban mobility through innovative, sustainable electric vehicles.

“At our California-based electric commercial vehicles (“ECVs”) production and distribution assembly facility in Ontario, CA, we are now producing the Metro, LS400, LS450 and LS300, with full-scale production capabilities for these and future models. As of October 2024, the facility has assembled and delivered over 150 vehicles to customers in the North American west coast. With the ramp-up of this facility, we are increasing vehicle delivery efficiency as we continue to expand sales in North America’s west coast market.

“Looking ahead, we are diligently working to diversify our portfolio and develop new vehicle models that align with market demands, and keep pace with new regulations, technologies and features. We are focused on expanding our geographic footprint for production, distribution, and service infrastructure, especially in the US market. Taken together, we believe our strategy is positioning us to become a significant presence in commercial EV sales and production,” concluded Mr. Wang.

Third Quarter 2024 Financial Results

Net Revenue

Net revenues for the three months ended September 30, 2024 were approximately $16.7 million, an increase of 190% from approximately $5.8 million for the three months ended September 30, 2023. The increase was primarily due to an increase in vehicle sales, spare parts sales, and sales of iChassis.

Gross Profit

Gross Profit for the three months ended September 30, 2024 was approximately $4.0 million, an increase of approximately $3.3 million from approximately $0.7 million of gross profit for the three months ended September 30, 2023. For the three months ended September 30, 2024 and 2023, our overall gross margin was approximately 24.2% and 12.4%, respectively. Our gross margin of vehicle sales for the three months ended September 30, 2024 and 2023 was 23.5% and 15.7%, respectively. The increase of our overall gross profit was mainly caused by an increase in the gross profit of our vehicle sales and spare-part sales of approximately $6.8 million and $0.5 million, respectively, offset by the increase in the inventory write-down of approximately $4.0 million.

Operating Expenses

Total operating expenses were approximately $14.4 million in the third quarter of 2024, compared to $13.3 million in the third quarter of 2023.

Selling and marketing expenses for the three months ended September 30, 2024, were approximately $5.0 million, an increase of approximately $2.4 million or approximately 91.4% from approximately $2.6 million for the three months ended September 30, 2023. The increase in selling and marketing expenses was primarily attributed to the increase in marketing expenses and marketing related professional fee of approximately $2.3 million and $0.3 million, respectively, offset by a decrease in freight of approximately $0.2 million.

General and administrative expenses for the three months ended September 30, 2024 were approximately $7.9 million, a decrease of approximately $1.1 million or approximately 12.5% from approximately $9.1 million for the three months ended September 30, 2023. The decrease in general and administrative expenses in 2024 was primarily attributed to a decrease in share-based compensation, legal and professional fee and salary, lease ROU amortization and social insurance of $1.1 million, $0.6 million, $0.1 million and $0.2 million, respectively, offset by the increase in leasehold improvement depreciation, rental expense and others of approximately $0.3 million, $0.2 million and $0.4 million, respectively, the increase in others was mainly caused by the increase in fees related to garage liability insurance.

Research and development expenses for the three months ended September 30, 2024 were approximately $1.5 million, a decrease of approximately $0.2 million or approximately 9.7% from approximately $1.6 million for the three months ended September 30, 2023. The decrease in research and development expenses in 2024 was primarily attributed to the decrease in design and development expenditures, share-based compensations and others of approximately $0.06 million, $0.09 million and $0.06 million, respectively.

Net Loss

Net loss was approximately $9.0 million in the third quarter of 2024, compared with net loss of $16.1 million in the third quarter of 2023.

Adjusted EBITDA

Adjusted EBITDA was approximately ($7.5) million in the third quarter of 2024, compared with Adjusted EBITDA of ($12.1) million in the third quarter of 2023.

Nine Months 2024 Financial Results

Net Revenue

Net revenues for the nine months ended September 30, 2024 were approximately $28.4 million, an increase of approximately $15.0 million or 111.2% from approximately $13.5 million for the nine months ended September 30, 2023. The increase was primarily due to an increase in vehicle sales, spare parts sales, and sales of iChassis.

Gross Profit

Gross Profit for the nine months ended September 30, 2024 was approximately $5.3 million, an increase of approximately $3.2 million from approximately $2.1 million of gross loss for the nine months ended September 30, 2023. For the nine months ended September 30, 2024 and 2023, our overall gross margin was approximately 18.6% and 15.3%, respectively. Our gross margin of vehicle sales for the nine months ended September 30, 2024 and 2023 was 19.2% and 16.3%, respectively. The increase of our overall gross profit was mainly caused by an increase in the gross profit of our vehicle sales and spare-part sales of approximately $8.5 million and $0.4 million, respectively, offset by the increase in the inventory write-down of approximately $5.7 million.

Operating Expenses

Total operating expenses were approximately $33.9 million for the nine months ended September 30, 2024, compared with $38.3 million in the nine months ended September 30, 2023.

Selling and marketing expenses for the nine months ended September 30, 2024 were approximately $7.7 million, an increase of approximately $0.4 million or approximately 5.7% from approximately $7.2 million for the nine months ended September 30, 2023. The increase in selling and marketing expenses in 2024 was primarily attributed to the increase in marketing expenses and marketing related professional fee of approximately $1.7 million and $0.7 million, respectively, offset by the decrease in salary expense, freight and share-based compensations of approximately $1.0 million, $0.6 million and $0.4 million, respectively.

General and administrative expenses for the nine months ended September 30, 2024 were approximately $21.9 million, a decrease of approximately $3.8 million or approximately 14.7% from approximately $25.7 million for the nine months ended September 30, 2023. The decrease in general and administrative expenses in 2024 was primarily attributed to a decrease in legal and professional fees, office expenses and share-based compensations of approximately $2.1 million, $1.7 million and $1.5 million, respectively, offset by the increase in salary and social insurance expense, lease ROU amortization, amortization, leasehold improvement depreciation and others of approximately $0.7 million, $0.3 million, $0.2 million, $0.3 million and $0.1 million, respectively.

Research and development expenses for the nine months ended September 30, 2024 were approximately $4.3 million, a decrease of approximately $1.1 million or approximately 19.7% from approximately $5.3 million for the nine months ended September 30, 2023. The decrease in research and development expenses in 2024 was primarily attributed to the decrease in design and testing material expenditures of approximately $1.3 million, offset by the increase in salary expense of approximately $0.4 million.

Net Loss

Net loss was approximately $27.4 million in the nine months ended September 30, 2024, compared with net loss of $41.3 million in the nine months ended September 30, 2023.

Balance Sheet

Cash and cash equivalents were approximately $21.8 million as of September 30, 2024, compared with $29.4 million as of December 31, 2023.

Adjusted EBITDA

Adjusted EBITDA was approximately ($23.1) million in the nine months ended September 30, 2024, compared with Adjusted EBITDA of $(33.9) million in the nine months ended September 30, 2023.

We define Adjusted EBITDA as net income (or net loss) before net interest expense, income tax expense, depreciation and amortization as further adjusted to exclude the impact of stock-based compensation expense and other non-recurring expenses including expenses related to TME Acquisition, expenses related to one-off payment inherited from the original Naked Brand Group, impairment of goodwill, convertible bond issuance fee, loss on redemption of convertible promissory notes, loss on exercise of warrants, and change in fair value of convertible promissory notes and derivative liability. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.

Represents a non-GAAP financial measure.

About Cenntro

Cenntro (NASDAQ: CENN) is a leading maker and provider of electric commercial vehicles (“ECVs”). Cenntro's purpose-built ECVs are designed to serve a variety of commercial applications inclusive of its line of class 1 to class 8 trucks. Cenntro is building a globalized supply-chain, as well as the manufacturing, distribution, and service capabilities for its innovative and reliable products. Cenntro continues to evolve its products capabilities through advanced battery, powertrain, and smart driving technologies. For more information, please visit Cenntro's website at: www.cenntroauto.com.

Forward-Looking Statements

This communication contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts. Such statements may be, but need not be, identified by words such as "may," "believe," "anticipate," "could," "should," "intend," "plan," "will," "aim(s)," "can," "would," "expect(s)," "estimate(s)," "project(s)," "forecast(s)," "positioned," "approximately," "potential," "goal," "strategy," "outlook" and similar expressions. Examples of forward-looking statements include, among other things, statements regarding assembly and distribution capabilities, decentralized production, and fully digitalized autonomous driving solutions. All such forward-looking statements are based on management's current beliefs, expectations and assumptions, and are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed or implied in this communication. For additional risks and uncertainties that could impact Cenntro’s forward-looking statements, please see disclosures contained in Cenntro's public filings with the SEC, including the "Risk Factors" in Cenntro's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2024 and which may be viewed at www.sec.gov.