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Microvast Reports 2023 Financial Results

  • Revenue increased 49.9% year over year to $306.6 million in FY 2023
  • Record quarterly revenue of $104.6 million, up 61.4% year over year in Q4 2023
  • Gross margin increased from 4.4% to 18.7%, a 14.3 percentage point improvement year over year, with Q4 2023 gross margin of 22.0% compared to 3.4% in Q4 2022

STAFFORD, Texas, April 01, 2024 (GLOBE NEWSWIRE) -- Microvast Holdings, Inc. (NASDAQ:MVST) (“Microvast” or the “Company”), a technology innovator that designs, develops and manufactures lithium-ion battery solutions, announced today its consolidated financial results for the fourth quarter and full fiscal year ended December 31, 2023 (“Q4 2023” and “FY 2023,” respectively).

“We achieved record revenue in the fourth quarter of 2023 bringing our full year revenue growth to 49.9% and we delivered these revenues at a gross margin close to our targeted level. The revenue growth achieved in EMEA is really encouraging and we would expect this to continue into 2024, with the possibility of this region also hitting breakeven this year.” said Yang Wu, Microvast’s Founder, Chairman, and Chief Executive Officer. “In APAC, with the Huzhou Phase 3.1 expansion now in full operation since Q3 of last year, we anticipate another year of steady revenue growth from mature operations that are now self funding and profitable. To get the U.S. to the same mature and steady state requires us to secure financing to complete Clarksville Phase 1A. This remains a key initiative that we hope to bring to a successful close as early as possible.”

“The combination of growing revenues, gross margin improvement of 14.3 percentage points, and keeping our adjusted operating costs increase to 11% allowed us to achieve a meaningful reduction in our adjusted net loss this year.” said Craig Webster, Microvast’s Chief Financial Officer. “Maintaining the strong revenue growth and gross margin profiles generated by our APAC and EMEA operations will be a key focus for us in 2024, whilst also providing the foundations to improve our overall liquidity position and make further headway in reducing our operating losses.”

Full Year 2023 Highlights

  • Record revenue of $306.6 million, compared to $204.5 million in 2022, an increase of 49.9%
  • Gross margin increased to 18.7% from 4.4% in 2022; Non-GAAP adjusted gross margin increased to 20.7%, up from 8.2% in 2022
  • Operating expenses of $165.9 million, compared to $170.7 million in 2022; Adjusted operating expenses of $107.1 million, compared to $96.5 million in 2022
  • Net loss of $106.4 million, compared to net loss of $158.2 million in 2022; Non-GAAP adjusted net loss of $41.6 million, compared to non-GAAP adjusted net loss of $77.3 million in 2022
  • Net loss per share of $0.34 compared to net loss per share of $0.52 in 2022; Non-GAAP adjusted net loss per share of $0.13, compared to non-GAAP adjusted net loss per share of $0.25 in 2022
  • Adjusted EBITDA of negative $19.6 million, compared to adjusted EBITDA of negative $56.7 million in 2022
  • Capital expenditures of $186.8 million, compared to $150.9 million in 2022, and were driven by investments in manufacturing capacity expansions in Huzhou, China and Clarksville, Tennessee
  • Cash, cash equivalents, restricted cash and short-term investment of $93.8 million as of December 31, 2023, compared to $327.7 million as of December 31, 2022; decrease largely due to significant capital expenditure towards PP&E in the U.S. and Huzhou, China.

Fourth Quarter 2023 Highlights

  • Record quarterly revenue of $104.6 million, compared to $64.8 million in the fourth quarter of 2022, an increase of 61.4%
  • Gross margin increased to 22.0% from 3.4% in Q4 2022; Non-GAAP adjusted gross margin increased to 23.5%, up from 6.4% in Q4 2022
  • Operating expenses of $46.0 million, compared to $37.3 million in Q4 2022; Adjusted operating expenses of $34.3 million, compared to $21.4 million in Q4 2022
  • Net loss of $24.6 million, compared to net loss of $33.7 million in Q4 2022; Non-GAAP adjusted net loss of $11.4 million, compared to non-GAAP adjusted net loss of $15.9 million in Q4 2022
  • Net loss per share of $0.08 compared to net loss per share of $0.11 in Q4 2022; Non-GAAP adjusted net loss per share of $0.04, compared to non-GAAP adjusted net loss per share of $0.05 in Q4 2022
  • Adjusted EBITDA of negative $2.6 million, compared to adjusted EBITDA of negative $11.8 million in Q4 2022

Please refer to the tables at the end of this press release for reconciliations of gross profit to non-GAAP adjusted gross profit, net loss to non-GAAP adjusted net loss, non-GAAP EBITDA to non-GAAP adjusted EBITDA.

Q1 2024 Outlook

  • For Q1 2024, the Company is targeting a revenue growth of 40% to 60% year over year and revenue guidance of $65 million to $75 million
  • Continued regional efficiencies and utilization increases, providing a Company gross margin target of 20% to 25%
  • Targeting financing solutions to complete Clarksville Phase 1A and bringing in long term domestic customer contracts
  • New customer wins in APAC and EMEA that expand our presence in differentiated commercial vehicle markets as OEM product lines and segments continue to electrify

Webcast Information

Company management will host a conference call and webcast on April 1, 2024, at 4:00 p.m. Central Time, to discuss the Company's financial results. The live webcast and accompanying slide presentation will be accessible from the Events & Presentations section of Microvast’s investor relations website (https://ir.microvast.com/events-presentations/events). A replay will be available following the conclusion of the event.

About Microvast

Microvast is a global leader in providing battery technologies for electric vehicles and energy storage solutions. With a legacy of over 17 years, Microvast has consistently delivered cutting-edge battery systems that empower a cleaner and more sustainable future. The company's innovative approach and dedication to excellence have positioned it as a trusted partner for customers around the world. Microvast was founded in 2006 and is headquartered in Stafford, Texas.

For more information, please visit www.microvast.com or follow us on LinkedIn or Twitter (@microvast).

Contact:

Investor Relations
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Cautionary Statement Regarding Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “plan,” “project,” “predict,” “outlook” “should,” “will,” “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These forward-looking statements include, but are not limited to, statements regarding our industry and market sizes, and future opportunities for us. Such forward-looking statements are based upon the current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.

Many factors could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements, including, among others: (1) our ability to remain a going concern; (2) risk that we may not be able to execute our growth strategies or achieve profitability; (3) risk that we will be unable to raise additional capital to execute our business plan or pay our debts as they come due, which may not be available on acceptable terms or at all; (4) restrictions in our existing and any future credit facilities; (5) risks of operations in China; (6) the effects of mechanics liens filed by contractors that we do not have sufficient funds to pay; (7) the effects of existing and future litigation; (8) changes in general economic conditions, including increases in interest rates and associated Federal Reserve policies, a potential economic recession, and the impact of inflation on our business; (9) changes in the highly competitive market in which we compete, including with respect to our competitive landscape, technology evolution or regulatory changes; (10) changes in availability and price of raw materials; (11) labor relations, including the ability to attract, hire and retain key employees and contract personnel; (12) heightened awareness of environmental issues and concern about global warming and climate change; (13) risk that we are unable to secure or protect our intellectual property; (14) risk that our customers or third-party suppliers are unable to meet their obligations fully or in a timely manner; (15) risk that our customers will adjust, cancel or suspend their orders for our products; (16) risk of product liability or regulatory lawsuits or proceedings relating to our products or services; (17) the effectiveness of our information technology and operational technology systems and practices to detect and defend against evolving cyberattacks; (18) changing laws regarding cybersecurity and data privacy, and any cybersecurity threat or event; (19) the effects and associated cost of compliance with existing and future laws and governmental regulations, such as the Inflation Reduction Act; (20) economic, financial and other impacts such as a pandemic, including global supply chain disruptions; and (21) the impacts of geopolitical events, including the ongoing conflicts between Russia and Ukraine and between Israel and Hamas. Microvast’s annual, quarterly and other filings with the U.S. Securities and Exchange Commission identify, address and discuss these and other factors in the sections entitled “Risk Factors.”

Actual results, performance or achievements may differ materially, and potentially adversely, from any forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as forward-looking statements are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. All information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date hereof except as may be required under applicable securities laws. Forecasts and estimates regarding our industry and end markets are based on sources we believe to be reliable, however, there can be no assurance these forecasts and estimates will prove accurate in whole or in part.

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, Microvast has disclosed in this earnings release non-GAAP financial measures, including non-GAAP adjusted gross profit (loss), non-GAAP adjusted EBITDA and non-GAAP adjusted net loss, which are non-GAAP financial measures as defined under the rules of the SEC. These are intended as supplemental measures of our financial performance that are not required by, or presented in accordance with U.S. generally accepted accounting principles (“GAAP”).

Reconciliations to the most comparable GAAP measures, gross profit (loss) and net income (loss), are contained in tabular form in the unaudited financial statements below. Non-GAAP adjusted gross profit (loss) is GAAP gross profit (loss) as adjusted for non-cash stock-based compensation expense included in cost of revenues. Non-GAAP adjusted net loss is GAAP net loss as adjusted for non-cash stock-based compensation expense and change in valuation of warrant liabilities. Non-GAAP adjusted net loss per common share is GAAP net loss per common share as adjusted for non-cash stock-based compensation expense and change in valuation of warrant liabilities per common share. Non-GAAP adjusted EBITDA is defined as net loss excluding depreciation and amortization, non-cash settled share-based compensation expense, interest expense, interest income, changes in fair value of our warrant liability and income tax expense or benefit.

We use non-GAAP adjusted gross profit (loss), non-GAAP adjusted EBITDA and non-GAAP adjusted net loss for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We consider them to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that these non-GAAP financial measures, when taken together with their most directly comparable GAAP measures, gross profit (loss) and net income (loss), provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results.

We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors.

Non-GAAP financial measures have limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for, financial information prepared in accordance with GAAP. For example, our calculation of non-GAAP adjusted EBITDA may differ from similarly titled non-GAAP measures, if any, reported by our peer companies, or our peer companies may use other measures to calculate their financial performance, and therefore our use of non-GAAP adjusted EBITDA may not be directly comparable to similarly titled measures of other companies. The principal limitation of non-GAAP adjusted EBITDA is that it excludes significant expenses and income that are required by GAAP to be recorded in our financial statements. In addition, it is subject to inherent limitations as it reflects the exercise of judgments by management about which expense and income are excluded or included in determining this non-GAAP financial measure. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. In addition, such financial information is unaudited and does not conform to SEC Regulation S-X and, as a result, such information may be presented differently in our future filings with the SEC. For example, with respect to the warrant liability resulting from the merger, we now exclude changes in fair value from net loss in our non-GAAP adjusted EBITDA and non-GAAP adjusted net loss calculation, which had not been done in prior periods.

 

 
MICROVAST HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 December 31,
2022
 December 31,
2023
Assets   
Current assets:   
Cash and cash equivalents$231,420  $44,541 
Restricted cash, current 70,732   37,477 
Short-term investments 25,070   5,634 
Accounts receivable (net of allowance for credit losses of $4,407 and $4,571 as of December 31, 2022 and 2023, respectively) 119,304   138,717 
Notes receivable 2,196   23,736 
Inventories, net 84,252   149,749 
Prepaid expenses and other current assets 12,093   25,752 
Total Current Assets 545,067   425,606 
Restricted cash, non-current 465   6,171 
Property, plant and equipment, net 335,140   620,667 
Land use rights, net 12,639   11,984 
Acquired intangible assets, net 1,636   3,136 
Operating lease right-of-use assets 16,368   19,507 
Other non-current assets 73,642   9,661 
Total Assets$984,957  $1,096,732 
    
Liabilities   
Current liabilities:   
Accounts payable$44,985  $112,618 
Advance from customers 54,207   43,087 
Accrued expenses and other current liabilities 66,720   148,284 
Income tax payables 658   655 
Short-term bank borrowings 17,398   35,392 
Notes payable 68,441   63,374 
Total Current Liabilities 252,409   403,410 
Long-term bank borrowings 28,997   43,761 
Long-term bonds payable 43,888   43,157 
Warrant liability 126   67 
Share-based compensation liability 131   199 
Operating lease liabilities 14,347   17,087 
Other non-current liabilities 32,082   24,861 
Total Liabilities$371,980  $532,542 
    
Total Equity$612,977  $564,190 
Total Liabilities and Equity$984,957  $1,096,732 

 

 
MICROVAST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 Year Ended
December 31,
  2022   2023 
Revenues$204,495  $306,617 
Cost of revenues (195,422)  (249,390)
Gross profit 9,073   57,227 
Operating expenses:   
General and administrative expenses (104,572)  (97,291)
Research and development expenses (43,508)  (45,004)
Selling and marketing expenses (22,611)  (23,614)
Total operating expenses (170,691)  (165,909)
Subsidy income 1,672   1,953 
Loss from operations (159,946)  (106,729)
Other income and expenses:   
Interest income 3,179   3,609 
Interest expense (3,323)  (2,628)
Gain on changes in fair value of warrant liability 979   59 
Other income (expense), net 944   (713)
Loss before provision for income tax (158,167)  (106,402)
Income tax expense (33)  (10)
Net loss$(158,200) $(106,412)
Less: net loss attributable to noncontrolling interests    (76)
Net loss attributable to Microvast Holdings, Inc.'s shareholders (158,200)  (106,336)
Net loss per common share   
Basic and diluted$(0.52) $(0.34)
Weighted average shares used in calculating net loss per share of common stock:   
Basic and diluted 303,279,188   310,909,379 

 

 
MICROVAST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 Three Months Ended
December 31, 
  2022   2023 
Revenues$64,797  $104,575 
Cost of revenues (62,571)  (81,551)
Gross profit 2,226   23,024 
Operating expenses:   
General and administrative expenses (21,551)  (27,944)
Research and development expenses (10,498)  (11,395)
Selling and marketing expenses (5,242)  (6,698)
Total operating expenses (37,291)  (46,037)
Subsidy income 439   797 
Loss from operations (34,626)  (22,216)
Other income and expenses:   
Interest income 1,575   128 
Interest expense (858)  (1,191)
Gain on changes in fair value of warrant liability 58   84 
Other income (expense), net 186   (1,386)
Loss before provision for income tax (33,665)  (24,581)
Income tax expense (33)  (10)
Net loss$(33,698) $(24,591)
Less: Net loss attributable to noncontrolling interest    (55)
Net loss attributable to Microvast Holdings, Inc.'s shareholders$(33,698) $(24,536)
Net loss per common share   
Basic and diluted$(0.11) $(0.08)
Weighted average shares used in calculating net loss per share of common stock   
Basic and diluted 307,604,827   314,966,888 

 

 
MICROVAST HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 Year Ended
December 31,
  2022   2023 
Cash flows from operating activities   
Net loss$(158,200) $(106,412)
Adjustments to reconcile net loss to net cash used in operating activities:   
(Gain)/loss on disposal of property, plant and equipment (14)  1,947 
Depreciation of property, plant and equipment 19,811   22,141 
Amortization of land use rights and intangible assets 554   787 
Noncash lease expenses 2,214   2,764 
Share-based compensation 90,808   64,971 
Changes in fair value of warrant liability (979)  (59)
Allowance of credit losses 1,640   236 
Provision for obsolete inventories 4,789   3,613 
Impairment loss from property, plant and equipment 1,798   504 
Product warranty 14,097   12,688 
Changes in operating assets and liabilities:   
Notes receivable 3,187   (25,338)
Accounts receivable (38,924)  (21,759)
Inventories (43,694)  (74,406)
Prepaid expenses and other current assets 3,628   (14,291)
Amounts due from/to related parties 85    
Operating lease right-of-use assets (19,375)  (5,446)
Other non-current assets (282)  (547)
Notes payable 13,490   (3,507)
Accounts payable 7,146   68,576 
Advance from customers 53,022   (10,949)
Accrued expenses and other liabilities (24,674)  6,602 
Operating lease liabilities 14,999   2,266 
Other non-current liabilities 946   316 
Net cash used in operating activities (53,928)  (75,303)
    
Cash flows from investing activities   
Purchases of property, plant and equipment (150,880)  (186,788)
Proceeds on disposal of property, plant and equipment 5   1,649 
Purchase of short-term investments (25,070)  (5,966)
Proceeds from maturity of short-term investments    25,500 
Net cash used in investing activities (175,945)  (165,605)
    
Cash flows from financing activities   
Proceeds from bank borrowings 58,708   47,852 
Repayment of bonds payable (29,259)  (692)
Repayment of bank borrowings (24,482)  (14,119)
Net cash generated from financing activities 4,967   33,041 
Effect of exchange rate changes (8,586)  (6,561)
Decrease in cash, cash equivalents and restricted cash (233,492)  (214,428)
Cash, cash equivalents and restricted cash at beginning of the year 536,109   302,617 
Cash, cash equivalents and restricted cash at end of the year$302,617  $88,189 

 

 
MICROVAST HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 Year Ended
December 31,
  2022   2023 
Reconciliation to amounts on consolidated balance sheets   
Cash and cash equivalents$231,420  $44,541 
Restricted cash 71,197   43,648 
Total cash, cash equivalents and restricted cash$302,617  $88,189 

 

 
MICROVAST HOLDINGS, INC.
RECONCILIATION OF GROSS PROFIT (LOSS) TO ADJUSTED GROSS PROFIT (LOSS)
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2022   2023   2022   2023 
Revenues$64,797  $104,575  $204,495  $306,617 
Cost of revenues (62,571)  (81,551)  (195,422)  (249,390)
Gross profit (GAAP)$2,226  $23,024  $9,073  $57,227 
Gross margin 3.4%  22.0%  4.4%  18.7%
        
Non-cash settled share-based compensation (included in cost of revenues) 1,932   1,532   7,677   6,091 
Adjusted gross profit (non-GAAP)$4,158  $24,556  $16,750  $63,318 
Adjusted gross margin (non-GAAP) 6.4%  23.5%  8.2%  20.7%

 

 
MICROVAST HOLDINGS, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED NET LOSS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2022   2023   2022   2023 
Net loss (GAAP)$(33,698) $(24,591) $(158,200) $(106,412)
Gain on changes in fair value of warrant liability* (58)  (84)  (979)  (59)
Non-cash settled share-based compensation* 17,867   13,318   81,906   64,920 
Adjusted Net Loss (non-GAAP)$(15,889) $(11,357) $(77,273) $(41,551)


*The tax effect of the adjustments was nil.

 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2022   2023   2022   2023 
Net loss per common share-Basic and diluted (GAAP)$(0.11) $(0.08) $(0.52) $(0.34)
Gain on changes in fair value of warranty liability per common share           
Non-cash settled share-based compensation per common share 0.06   0.04   0.27   0.21 
Adjusted net loss per common share-Basic and diluted (non-GAAP)$(0.05) $(0.04) $(0.25) $(0.13)

 

 
MICROVAST HOLDINGS, INC.
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2022   2023   2022   2023 
Net loss (GAAP)$(33,698) $(24,591) $(158,200) $(106,412)
Interest expense, net (717)  1,063   144   (981)
Income tax expense 33   10   33   10 
Depreciation and amortization 4,784   7,692   20,365   22,928 
EBITDA (non-GAAP)$(29,598) $(15,826) $(137,658) $(84,455)
Gain on changes in fair value of warrant liability (58)  (84)  (979)  (59)
Non-cash settled share-based compensation 17,867   13,318   81,906   64,920 
Adjusted EBITDA (non-GAAP)$(11,789) $(2,592) $(56,731) $(19,594)

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