LithiumBank Resources

XL Fleet Announces Second Quarter 2022 Financial Results

09 August 2022

XL Fleet Corp. (NYSE: XL) (“XL Fleet” or the “Company”), a leading provider of fleet electrification solutions and energy efficiency, today announced second quarter 2022 financial results.

Second Quarter 2022 and Recent Highlights

  • Generated revenue for second quarter of 2022 of $3.0 million, compared to $3.7 million in the prior year
  • Realized gross profit for the second quarter of 2022 of $0.6 million versus gross profit of $1.0 million in the prior year
  • Exited second quarter of 2022 with cash and cash equivalents of approximately $322.4 million
  • Appointed Donald P. Klein as CFO of XL Fleet; seasoned executive with 25+ years of public company experience
  • Unveiled pre-series Curbtender Quantum refuse truck at WasteExpo 2022; the Company’s first all-electric vehicle
  • Advancing process to identify transformational M&A focused on large and growing need for decarbonization

Management Commentary & Outlook

“Our progress towards identifying transformational M&A accelerated during the quarter,” said Eric Tech, CEO of XL Fleet. “We remain firmly committed to utilizing our significant financial resources and platform to identify opportunities that deliver value and position our company to contribute to the wide, growing and cross-industry need for decarbonization. We have narrowed our focus, and remain keen on identifying opportunities that achieve our three core requirements – a business that is making an impact on decarbonization, a leader in a mature and growing market segment, and a company that is generating positive EBITDA. We are more confident than ever in our ability to identify an opportunity that checks these boxes and accomplishes the long-term strategic objectives we set forth earlier this year.”

“During the quarter, we unveiled and made exciting progress on our Curbtender refuse truck, our first all-electric vehicle, which remains on target for first deliveries by the end of this year,” continued Mr. Tech. “We continue to constantly evaluate new opportunities for growth, while assessing the right and most efficient uses of our resources and capital to benefit our business and its value over the long-term.”

Consolidated Financial Results

Revenue totaled $3.0 million in the second quarter of 2022 compared to $4.8 million in the first quarter of 2022 and $3.7 million in the second quarter of 2021.

Gross profit was $0.6 million for the second quarter of 2022, compared to a gross loss of $0.4 million in the first quarter of 2022 and gross profit of $1.0 million in the second quarter of 2021. Gross margins for the second quarter of 2022 were 19%, compared to gross margins for the first quarter of 2022 of negative 9%.

Selling, general & administrative expenses for the second quarter of 2022 totaled $12.8 million, compared to $11.7 million in the first quarter of 2022 and $10.8 million in the second quarter of 2021. SG&A expenses for the second quarter of 2022 include approximately $2.5 million in legal fees related to previously disclosed class action complaints and Securities and Exchange Commission investigation.

Adjusted EBITDA totaled ($11.7) million for the second quarter of 2022, compared to ($10.8) million for the first quarter of 2022 and ($11.4) million in the second quarter of 2021.

Net loss was $12.7 million for the second quarter of 2022, compared to net loss of $16.1 million in the first quarter of 2022 and net loss of $10.5 million in the second quarter of 2021. Net loss for the second quarter of 2022 includes a non-cash gain from the change in fair value of warrant liability of $1.8 million, compared to a non-cash gain of $2.7 million in the first quarter of 2022. Adjusted net loss was $11.7 million for the second quarter of 2022, compared to adjusted net loss of $11.4 million in the first quarter of 2022 and adjusted net loss of $11.8 million in the second quarter of 2021. A reconciliation of net loss to adjusted net loss and adjusted EBITDA is set out in the tables below.

Segment Financial Results

Drivetrain: Revenues totaled $0.9 million for the second quarter of 2022, compared with $0.6 million in the first quarter of 2022 and $1.3 million in the second quarter of 2021. Segment loss was $3.4 million dollars, compared with a segment loss of $5.9 million in the first quarter of 2022 and a segment loss of $4.0 million in the second quarter of 2021. Segment loss for the second quarter of 2022 included a non-cash inventory obsolescence charge of $0.2 million and $0.2 million of restructuring charges.

XL Grid: Revenues totaled $2.2 million for the second quarter of 2022, compared with $4.2 million in the first quarter of 2022. The sequential decrease in revenue for the second quarter of 2022 was primarily driven by significant utility program changes and project approval delays, material availability, and longer sales cycle times attributed to larger project mix. Segment loss was $1.5 million dollars, compared with a segment loss of $1.4 million in the first quarter of 2022.

Balance Sheet and Capital

Cash and cash equivalents as of June 30, 2022 totaled $322.4 million compared to $333.5 million as of March 31, 2022. Total debt outstanding as of June 30, 2022 was approximately $0.03 million. XL Fleet had 142 million shares of Common Stock outstanding as of June 30, 2022. Cash used in operations for the second quarter of 2022 totaled $11.2 million.

Second Quarter 2022 and Recent Operational & Business Updates

  • In May 2022, XL Fleet announced the unveiling of its pre-series Curbtender Quantum refuse truck at WasteExpo 2022. The vehicle is being jointly developed in collaboration with Curbtender, Inc. and represents the company’s first all-electric refuse vehicle.
  • In April 2022, XL Fleet announced that it appointed Donald P. Klein as Chief Financial Officer of XL Fleet. Mr. Klein is an accomplished senior executive with over 25 years of public company finance & accounting experience. Mr. Klein has strong industry experience and a track-record of execution in complex operating environments.

Conference Call Information

The XL Fleet management team will host a conference call to discuss its second quarter 2022 financial results today at 5:00 p.m. Eastern Time. The call can be accessed live over the telephone by dialing (877) 510-3772, or for international callers, (412) 902-0125 and referencing XL Fleet. Alternatively, the call can be accessed via a live webcast accessible on the Events & Presentations page in the Investor Relations section of The Company’s website at www.xlfleet.com. A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the replay is 10169416. The replay will be available until August 23, 2022. An archive of the webcast will be available for a period of time shortly after the call on the Investor Relations section of The Company’s website at www.xlfleet.com.

About XL Fleet

XL Fleet is a leading provider of energy efficiency and vehicle electrification solutions for commercial and municipal fleets in North America, with more than 170 million miles driven by customers such as The Coca-Cola Company, Verizon, Yale University and the City of Boston. XL Fleet’s hybrid electric drive systems can significantly increase fuel economy and reduce carbon dioxide emissions, decreasing operating costs and meeting sustainability goals while enhancing fleet operations. For additional information, please visit www.xlfleet.com.

Forward Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of management and are not predictions of actual performance. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including but not limited to; the effects of pending and future legislation; the highly competitive nature of the Company’s business and the commercial vehicle electrification market; litigation, complaints, product liability claims and/or adverse publicity; cost increases or shortages in the components or chassis necessary to support the Company’s products and services; the introduction of new technologies; the impact of the COVID-19 pandemic on the Company’s business, results of operations, financial condition, regulatory compliance and customer experience; the potential loss of certain significant customers; privacy and data protection laws, privacy or data breaches, or the loss of data; general economic, financial, legal, political and business conditions and changes in domestic and foreign markets; the inability to convert its sales opportunity pipeline into binding orders; risks related to the rollout of the Company’s business and the timing of expected business milestones, including the ongoing global microchip shortage and limited availability of chassis from vehicle OEMs and our reliance on our suppliers; the effects of competition on the Company’s future business; the availability of capital; supply chain issues including the lack of available components and/or inflationated component prices, including with respect to batteries, solar panels, and other critical components, and the other risks discussed under the heading “Risk Factors” in the Company’s current report on Form 10-K filed on March 1, 2022, and other documents that the Company files with the SEC in the future. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and the Company specifically disclaims any obligation to update these forward-looking statements.

Use of Non-GAAP Financial Information

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), XL Fleet Corp. reports certain non-GAAP financial information which have been reconciled to the nearest GAAP measures in the tables within this press release. This prospective financial information was not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or U.S. GAAP with respect to forward looking financial information. We believe that these non-GAAP measures, viewed in addition to and not in lieu of our reported GAAP results, provides useful information to investors by providing a more focused measure of operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies.

Earnings (loss) Before Interest, Income Taxes, Depreciation, and Amortization (“EBITDA”): We define EBITDA as our consolidated net income (loss) and adding interest expense, income taxes, and depreciation and amortization. We believe EBITDA provides meaningful information to the performance of our business and therefore we use it to supplement our GAAP reporting. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results.

Adjusted EBITDA and Adjusted Net Income (Loss): We believe that adjusted EBITDA and Adjusted Net Income (loss), which excludes certain identified items that we do not consider to be part of our ongoing business, improves the comparability of year to year results, and is representative of our underlying performance. Management uses this information to assess and measure the performance of our operating segments. We have chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the below reconciliations, and to provide an additional measure of performance.

XL Fleet Corp.

Unaudited Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2022 and June 30, 2021

       
 

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands, except per share and share amounts)

2022

 

2021

 

2022

 

2021

Revenues

 

3,010

 

 

 

3,694

 

 

 

7,773

 

 

 

4,369

 

Cost of revenues

 

2,445

 

 

 

2,732

 

 

 

7,641

 

 

 

4,123

 

Gross loss

 

565

 

 

 

962

 

 

 

132

 

 

 

246

 

Operating expenses:              
Research and development

 

2,404

 

 

 

2,809

 

 

 

5,393

 

 

 

4,221

 

Selling, general, and administrative expenses

 

12,801

 

 

 

10,822

 

 

 

24,459

 

 

 

18,780

 

Impairment of goodwill

 

-

 

 

 

-

 

 

 

8,606

 

 

 

-

 

Loss from operations

 

(14,640

)

 

 

(12,669

)

 

 

(38,326

)

 

 

(22,755

)

Other (income) expense:              
Interest expense, net

 

7

 

 

 

10

 

 

 

19

 

 

 

21

 

Gain on extinguishment of debt

 

-

 

 

 

-

 

 

 

(4,527

)

 

 

-

 

Gain on asset disposal

 

(7

)

 

 

21

 

 

 

(16

)

 

 

21

 

Change in fair value of obligation to issue shares of common stock

 

(137

)

 

 

514

 

 

 

(498

)

 

 

514

 

Change in fair value of warrant liability

 

(1,783

)

 

 

(2,726

)

 

 

(4,500

)

 

 

(74,731

)

Other Income

 

(22

)

 

 

(19

)

 

 

(29

)

 

 

(25

)

Net (Loss) Income

$

(12,698

)

 

$

(10,469

)

 

$

(28,775

)

 

$

51,445

 

Net (loss) income per share, basic

$

(0.09

)

 

$

(0.08

)

 

$

(0.20

)

 

$

0.37

 

Net loss per share, diluted

$

(0.09

)

 

$

(0.08

)

 

$

(0.20

)

 

$

(0.17

)

Weighted-average shares outstanding, basic

 

142,247,590

 

 

 

139,237,805

 

 

 

141,760,478

 

 

 

137,416,593

 

Weighted-average shares outstanding, diluted

 

142,247,590

 

 

 

139,237,805

 

 

 

141,760,478

 

 

 

137,598,535

 

               

XL Fleet Corp.

Segment Results

For the Three and Six Months Ended June 30, 2022 and June 30, 2021

   

 

 

 

 

 

   

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands)  

2022

2021

 

2022

2021

As Reported            
DriveTrain            
Revenues  

$

808

 

$

1,282

 

 

$

1,406

 

$

1,957

 

Loss from Operation  

 

(3,404

)

 

(3,950

)

 

 

(9,310

)

 

(7,511

)

XL Grid            
Revenues  

$

2,202

 

$

2,412

 

 

$

6,367

 

$

4,221

 

Loss from Operation  

 

(1,453

)

 

(438

)

 

 

(2,894

)

 

(489

)

Corporate            
Revenues  

$

-

 

$

-

 

 

 

-

 

 

-

 

Loss from Operation  

 

(9,782

)

 

(8,282

)

 

 

(26,122

)

 

(14,754

)

             
As Adjusted (1)            
DriveTrain            
Revenues  

$

808

 

$

1,282

 

 

$

1,406

 

$

1,957

 

Loss from Operation  

 

(3,211

)

 

(3,950

)

 

 

(7,599

)

 

(7,511

)

XL Grid            
Revenues  

$

2,202

 

$

2,412

 

 

$

6,367

 

$

4,221

 

Loss from Operation  

 

(1,453

)

 

(438

)

 

 

(2,894

)

 

(489

)

Corporate            
Revenues  

$

-

 

$

-

 

 

$

-

 

$

-

 

Loss from Operation  

 

(7,081

)

 

(7,357

)

 

 

(12,616

)

 

(13,829

)

             

(1) As adjusted adjusts for the following one-time charges: Severance charges (including benefits) included in Corporate, Inventory charge for obsolete inventory included in DriveTrain, Goodwill impairment charge included in Corporate, Legal charges related to SEC investigation and shareholder lawsuits included in Corporate, Accreted contingent compensation obligation to sellers of World Energy included in Corporate, Accelerated amortization of right-of-use asset included in Corporate, Non-recurring World Energy acquisition expenses included in Corporate.

 

XL Fleet Corp.

Reconciliation of Non-GAAP Financial Measures

For the Three and Six Months Ended June 30, 2022 and June 30, 2021

             
   

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands)  

2022

2021

 

2022

2021

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA            
Net (Loss) Income  

$

(12,698

)

$

(10,469

)

 

$

(28,775

)

$

51,445

 

Interest Expense, net  

 

7

 

 

10

 

 

 

19

 

 

21

 

Impairment of Goodwill  

 

-

 

 

-

 

 

 

8,606

 

 

-

 

Depreciation and Amortization  

 

648

 

 

382

 

 

 

1,204

 

 

601

 

EBITDA  

 

(12,043

)

 

(10,077

)

 

 

(18,946

)

 

52,067

 

Gain on extinguishment of debt  

 

-

 

 

-

 

 

 

(4,527

)

 

-

 

Restructuring charges (1)  

 

418

 

 

-

 

 

 

2,898

 

 
Severance charges related to former President and Chief Financial Officer (2)  

 

-

 

 

-

 

 

 

705

 

 

-

 

Legal charges related to SEC investigation and shareholder lawsuits  

 

2,536

 

 

-

 

 

 

3,112

 

 
Accreted contingent compensation obligation to sellers of World Energy  

 

(60

)

 

427

 

 

 

(104

)

 

427

 

Change in fair value of obligation to issue shares of common stock  

 

(137

)

 

514

 

 

 

(498

)

 

514

 

Change in fair value warrant liabilities  

 

(1,783

)

 

(2,726

)

 

 

(4,500

)

 

(74,731

)

Non-recurring World Energy acquisition expenses  

 

-

 

 

498

 

 

 

-

 

 

498

 

Adjusted EBITDA  

$

(11,069

)

$

(11,364

)

 

$

(21,860

)

$

(21,225

)

             
   

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands)  

2022

2021

 

2022

2021

Reconciliation of Net (Loss) Income to Adjusted Net Loss            
Net (Loss) Income  

$

(12,698

)

$

(10,469

)

 

$

(28,775

)

$

51,445

 

Gain on extinguishment of debt  

 

-

 

 

-

 

 

 

(4,527

)

 

-

 

Impairment of goodwill  

 

-

 

 

-

 

 

 

8,606

 

 

-

 

Restructuring charges (1)  

 

418

 

 

-

 

 

 

2,898

 

 

-

 

Severance charges related to former President and Chief Financial Officer (2)  

 

-

 

 

-

 

 

 

705

 

 

-

 

Legal charges related to SEC investigation and shareholder lawsuits  

 

2,536

 

 

-

 

 

 

3,112

 

 

-

 

Accreted contingent compensation obligation to sellers of World Energy  

 

(60

)

 

427

 

 

 

(104

)

 

427

 

Change in fair value of obligation to issue shares of common stock  

 

(137

)

 

514

 

 

 

(565

)

 

514

 

Change in fair value warrant liabilities  

 

(1,783

)

 

(2,726

)

 

 

(4,500

)

 

(74,731

)

Non-recurring World Energy acquisition expenses  

 

-

 

 

498

 

 

 

-

 

 

498

 

Adjusted Net Loss  

$

(11,724

)

$

(11,756

)

 

$

(23,150

)

$

(21,847

)

             

(1) Amount for the three months ended June 30, 2022 represents an additional inventory obsolescence charge of $193 and $225 of accelerated amortization of the right of use asset relating to the Company's Quincy, IL facility that it closed as of May 31, 2022. The amount for the six months ended June 30, 2022 consists of (i) severance charges (including benefits) of $840 relating to the termination of 51 employees relating to the restructuring of the business; (ii) an inventory obsolescence charge of $1,711 relating to the Company's decision to discontinue the production and sale of certain vehicle kits; and (iii) $337 of accelerated amortization of the right of use asset relating to the Company's Quincy, IL facility that it plans to close as of May 31, 2022.

 

(2) Amount consists of severance charges incurred with the departure of the former president of $479 in March 2022 and the departure of the former Chief Financial Officer of $226 in January 2022

 

XL Fleet Corp.

Unaudited Condensed Consolidated Balance Sheets

As of June 30, 2022 and December 31, 2021

         
   

June 30,

 

December 31,

(In thousands, except share and per share amounts)  

2022

 

2021

Assets        
Current assets:        
Cash and cash equivalents  

$

322,371

 

 

$

351,676

 

Restricted cash  

 

150

 

 

 

150

 

Accounts receivable  

 

7,051

 

 

 

6,477

 

Inventory, net  

 

14,189

 

 

 

15,262

 

Prepaid expenses and other current assets  

 

1,323

 

 

 

1,040

 

Total current assets  

 

345,084

 

 

 

374,605

 

Property and equipment, net  

 

2,239

 

 

 

3,495

 

Intangible assets, net  

 

1,245

 

 

 

1,863

 

Right-of-use asset  

 

5,124

 

 

 

4,564

 

Goodwill  

 

-

 

 

 

8,606

 

Other assets  

 

114

 

 

 

88

 

Total assets  

$

353,806

 

 

$

393,221

 

Liabilities and stockholders' equity (deficit)        
Current liabilities:        
Current portion of long-term debt, net of debt discount and issuance costs  

$

27

 

 

$

78

 

Accounts payable  

 

2,029

 

 

 

3,799

 

Lease liability, current  

 

774

 

 

 

900

 

Accrued expenses and other current liabilities  

 

9,042

 

 

 

11,856

 

Total current liabilities  

 

11,872

 

 

 

16,633

 

Long-term debt, net of current portion  

 

6

 

 

 

21

 

Deferred revenue  

 

1,142

 

 

 

691

 

Lease liability, non-current  

 

4,670

 

 

 

3,599

 

Warrant liabilities  

 

905

 

 

 

5,405

 

Contingent consideration  

 

95

 

 

 

541

 

New market tax credit obligation  

 

-

 

 

 

4,521

 

Total liabilities  

 

18,690

 

 

 

31,411

 

         
Stockholders' equity        
Common stock, $0.0001 par value; 350,000,000 shares authorized at June 30, 2022 and December 31, 2021; 142,492,833 and 140,540,671 issued and outstanding at June 30, 2022 and December 31, 2021, respectively.  

 

14

 

 

 

14

 

Additional paid-in capital  

 

463,288

 

 

 

461,207

 

Accumulated deficit  

 

(128,186

)

 

 

(99,411

)

Total stockholders' equity  

 

335,116

 

 

 

361,810

 

Total liabilities and stockholders' equity  

$

353,806

 

 

$

393,221

 

 

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