Carbon Revolution plc Wheel Production More Than Tripled in Q4 CY2023 from Previous Year Quarter

Rhea-AI Summary

Carbon Revolution plc (Nasdaq: CREV) announced an 84% increase in wheel production in the second half of CY23, with a record production of just under 13,000 wheels. The company's backlog has more than doubled since October 2022 to US$730 million, with five programs awarded since August 2022. Carbon Revolution remains focused on achieving profitable growth in the future through the continued industrialization of production processes and with greater fixed cost leverage as volumes continue to ramp.

Insights

Market Research Analyst

Carbon Revolution's recent announcement of production increases and a substantial backlog growth reflects a positive trajectory in operational efficiency and market demand. The 84% production jump in the second half of the calendar year, coupled with the tripling of output in the fourth quarter, suggests a robust scaling of the company's Mega-line capacity. This indicates not only improved manufacturing capabilities but also a strong order book, which is critical for revenue forecasts and investor confidence.

The nearly 13,000 wheels produced in the second calendar half and the record 7,100 wheels in the fourth quarter are indicative of the company's ability to meet the increasing demand from electric vehicle (EV) manufacturers and other OEMs. With the automotive industry's pivot to EVs and stricter CAFE standards, Carbon Revolution's lightweight wheel technology positions the company favorably within the supply chain of OEMs seeking to enhance vehicle efficiency and performance.

Investors should note the strategic partnerships with major automakers, including the recently announced German automaker, which could signal long-term growth and stability. The US$730 million backlog is a substantial figure that showcases the company's potential future revenue, assuming successful fulfillment of orders. This backlog, if managed effectively, could lead to increased market share and stronger financial performance.

Financial Analyst

Carbon Revolution's financial outlook appears promising given the reported revenue records and the backlog more than doubling since October 2022. The backlog valuation of US$730 million is a significant indicator of future revenue, assuming the company continues to scale production without compromising quality or incurring excessive costs. The record production figures suggest that the company is effectively leveraging fixed costs, which is crucial for improving margins as production volumes increase.

It's also worth noting the potential for increased profitability through the 'continued industrialization of production processes,' which may lead to cost reductions and efficiency gains. As volumes grow, the company's fixed cost leverage should improve, potentially leading to profitable growth. Investors will be keen to monitor the company's subsequent financial statements for evidence of these trends materializing into net income improvements.

However, investors should also consider the risks associated with rapid expansion, such as the need for capital investment and the possibility of execution challenges. The ability of Carbon Revolution to maintain its production quality and delivery commitments as it scales will be crucial for sustaining investor confidence and capitalizing on its current market opportunities.

Automotive Industry Expert

The automotive sector is undergoing a significant transformation with a shift towards electric vehicles and sustainable technologies. Carbon Revolution's lightweight carbon fiber wheels offer an up to 5% to 10% increase to EV vehicle range, which is a substantial value proposition given the industry's focus on efficiency and performance. The reduction of unsprung mass not only improves vehicle handling but also contributes to overall vehicle efficiency, which is a key selling point for OEMs.

The adoption of Carbon Revolution's wheel technology by six global OEMs, including high-profile names like Ford and Ferrari, underscores the industry's recognition of the performance benefits associated with weight reduction. The company's alignment with CAFE standards and its contribution to OEM compliance further enhance its strategic positioning within the industry.

Carbon Revolution's success in securing contracts with a diverse range of OEMs, including a major German automaker, reflects the broad applicability of its technology across different vehicle segments. This diversification is a positive sign for the company's resilience and adaptability in a competitive and rapidly evolving market.

Company Made Continued Strong Progress Ramping Mega-line Capacity and Throughput

Production Jumps 84% from Prior Half (H1 CY2023)
The December quarter of 2023 Was Highest Wheel Production Quarter in Company History

GEELONG, Australia, Jan. 09, 2024 (GLOBE NEWSWIRE) -- Carbon Revolution plc (Nasdaq: CREV) (the “Company”) a Tier 1 OEM supplier and the leading global manufacturer of lightweight advanced technology carbon fiber wheels, announced today that wheel production, as measured by wheels boxed for shipment, more than tripled in Q4 CY2023 from the year ago period and rose 84% in the second half of CY23 versus the previous half as the Company made strong progress ramping Mega-line capacity and throughput.

To fulfill the growing demand from Carbon Revolution’s OEM customers, capacity and throughput of the Company’s manufacturing facility grew steadily quarter on quarter during calendar 2023. This was enabled by the completion of the first phase of Mega-line commissioning. The Company achieved record production in the 2nd calendar half of just under 13,000 wheels. Production in the 4^th calendar quarter was also a record at 7,100 wheels.

Production for the first two quarters of the fiscal year ending June 30, 2024 (the last two quarters of CY2023) was almost equivalent to the total production achieved for all of fiscal year 2023.

“We have been ramping up production to meet our growing pipeline of orders as our backlog has more than doubled¹ since October 2022 to US$730 million,”² said Jake Dingle, CEO of Carbon Revolution. “This is due primarily to new program awards, including substantial electric vehicle programs and the recently announced award by a premium brand of a major German automaker.”

As previously announced, Carbon Revolution delivered record revenue in the fiscal first quarter (Q3 CY2023) and expects to deliver a new record quarterly revenue for the fiscal second quarter ending December 31, 2023.

The Company has been awarded five programs since August 2022 taking the total number of programs awarded to 18³ with six global OEMs, including Ford Motor Company, General Motors Company, Renault, Ferrari N.V., Jaguar Land Rover and the major German automaker program announced on December 4 as demand grows among global automakers for its disruptive weight-reduction and efficiency technology.

The Company remains focused on achieving profitable growth in the future which it believes will be achieved through the continued industrialization of production processes and with greater fixed cost leverage as volumes continue to ramp.

Carbon Revolution wheels weigh up to 50% less than comparable aluminum wheels, and can provide an up to 5% to 10% increase to EV vehicle range.⁴ Carbon Revolution’s wheels significantly reduce unsprung mass, which greatly improves efficiency while also helping leading global automakers to comply with the Corporate Average Fuel Economy (CAFE) targets set by the National Highway Traffic Safety Administration (NHTSA).

As the global automotive industry shifts to electric power and other sustainable alternatives to fossil-fuel-based engines, Carbon Revolution is well positioned to capture OEM demand for weight-saving efficiency technologies.

About Carbon Revolution plc
Carbon Revolution plc is the parent of Carbon Revolution Limited, an Australian technology company, which has successfully innovated, commercialized and industrialized the advanced manufacture of carbon fiber wheels for the global automotive industry. The Company has progressed from single prototypes to designing and manufacturing lightweight wheels for cars and SUVs in the high performance, premium and luxury segments, for the world’s most prestigious automotive brands. Carbon Revolution is creating a significant and sustainable advanced technology business that supplies its lightweight wheel technology to automotive manufacturers around the world.

For more information, visit carbonrev.com

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¹ Compared to backlog as of 10/31/2022 and 9/30/2023. Backlog (remaining lifetime gross program projected revenue) is based on awarded programs and excludes programs that are contracted for engineering. Please see Disclaimer, Risk Factors and Projection Methodologies for important details in the accompanying business update presentation here.
² All USD figures converted to USD at 0.7 for convenience and are unaudited.
³ Lifetime awards, of which six are in production, seven are in development and five are in aftersales.
⁴ If associated weight reduction were to be reinvested in battery mass; top end of range assumes further benefits derived from additional aerodynamic, NVH (noise, vibration and harshness), and structural enhancements.

 

FAQ

What is the ticker symbol for Carbon Revolution plc?

The ticker symbol for Carbon Revolution plc is CREV.

What was the increase in wheel production in the second half of CY23?

The wheel production in the second half of CY23 increased by 84% for Carbon Revolution plc.

How much has the company's backlog increased since October 2022?

The company's backlog has more than doubled since October 2022 to US$730 million.

How many programs has Carbon Revolution plc been awarded since August 2022?

Carbon Revolution plc has been awarded five programs since August 2022.

What is Carbon Revolution's focus for achieving profitable growth in the future?

Carbon Revolution remains focused on achieving profitable growth in the future through the continued industrialization of production processes and with greater fixed cost leverage as volumes continue to ramp.