LION ELECTRIC ANNOUNCES FOURTH QUARTER AND FISCAL 2023 RESULTS
- Revenue for Q4 2023 was $60.4 million, up from $46.8 million in Q4 2022.
- Delivery of 188 vehicles in Q4 2023, an increase from 174 in Q4 2022.
- Net loss of $56.5 million in Q4 2023, compared to $4.6 million in Q4 2022.
- FY 2023 revenue was $253.5 million, up from $139.9 million in FY 2022.
- Delivery of 852 vehicles in FY 2023, an increase from 519 in FY 2022.
- Gross loss of $9.1 million in Q4 2023, compared to $4.8 million in Q4 2022.
- Adjusted gross profit of $0.8 million in Q4 2023, compared to adjusted gross loss of $4.8 million in Q4 2022.
- Impairment of intangible assets and property of $36.0 million related to delayed production decisions.
- The company experienced challenges with delays in processing and granting subsidies impacting deliveries.
- The decision to lay off approximately 100 employees aimed at rationalizing costs amidst challenges.
- Negative gross loss of $9.1 million in Q4 2023.
- Net loss of $56.5 million in Q4 2023, a significant increase from the previous year.
- Adjusted EBITDA of negative $6.3 million in Q4 2023.
- Impairment of intangible assets and property amounting to $36.0 million.
- Write-down of inventory of $9.8 million related to delayed production decisions.
Insights
An in-depth examination of The Lion Electric Company's Q4 and FY 2023 financial results reveals several key points of interest for stakeholders. The reported revenue growth is a positive sign, indicating an uptick in demand for the company's electric vehicles. However, this is overshadowed by a significant net loss, expanded from the previous year and a gross loss in both Q4 and the full year. The losses are primarily attributed to a write-down of inventory and impairment of assets due to the indefinite delay in the commercial production of two minibus models.
From a financial perspective, the write-downs and impairments are concerning as they indicate a potential overestimation of the value of the company's assets and inventory, which can affect investor confidence. Additionally, the layoffs mentioned may be seen as a cost-cutting measure, but they also raise questions about the company's ability to meet future production targets and order book commitments. Despite the increased revenue, the company's ability to manage costs and navigate the subsidy environment will be critical for its path to profitability.
Investors should also be aware of the impact of non-IFRS measures such as adjusted EBITDA and adjusted gross profit, which can offer a different perspective on the company's performance by excluding certain expenses. However, reliance on these measures should be balanced with an understanding of their limitations and the context of the standard IFRS metrics.
Examining the operational side, the expansion of the company's vehicle deliveries and the growth of its order book are promising signs of market penetration and brand strength, particularly in the medium and heavy-duty urban vehicle segment. The increase in the number of vehicles on the road and miles driven suggests a growing customer base and potentially increasing brand loyalty and market acceptance.
However, the reliance on governmental subsidies and incentives as mentioned in the report is a double-edged sword. While it can drive sales and adoption, it also introduces a layer of unpredictability and dependence on policy changes. This could lead to significant volatility in the company's performance, as evidenced by the delays in processing and granting of subsidies impacting the company's sales efforts and scheduled deliveries.
The electric vehicle industry is highly competitive and sensitive to policy changes, which can affect consumer purchasing decisions and investment in infrastructure such as charging stations. Investors should consider these external factors when evaluating the company's future prospects.
The broader economic implications of Lion Electric's financial results reflect the challenges facing the electric vehicle (EV) industry. The inflationary environment and global supply chain challenges mentioned are not unique to Lion Electric but are systemic issues affecting production costs and margins across the sector. The company's increased cost of sales, despite higher revenues, illustrates the pressure that rising raw material and commodity costs are exerting on EV manufacturers.
Furthermore, the company's strategic decision to delay the production of certain models reflects a potential realignment of resources towards more profitable or in-demand products, a common response to shifts in market dynamics. However, this also suggests that Lion Electric is facing difficulty in predicting market demand or managing its product development pipeline, which could have long-term strategic implications.
Investors should consider the macroeconomic environment and its impact on Lion Electric's cost structure and operational efficiency. Inflationary pressures and supply chain disruptions are likely to persist in the short term and the company's ability to adapt and control costs will be crucial for its financial health.
Q4 2023 FINANCIAL HIGHLIGHTS
- Revenue of
$60.4 million $13.7 million $46.8 million - Delivery of 188 vehicles, an increase of 14 vehicles, as compared to the 174 delivered in Q4 2022.
- Gross loss of
$9.1 million $4.8 million - Adjusted gross profit1 of
$0.8 million $4.8 million - Net loss of
$56.5 million $4.6 million - Adjusted EBITDA2 of negative
$6.3 million $13.9 million - Additions to property, plant and equipment related to the Joliet Facility and the Lion Campus, amounted to
$13.7 million $25.4 million $39.1 million - Additions to intangible assets, which mainly consist of vehicle and battery development activities, amounted to
$17.8 million $3.5 million $21.3 million - Impairment of intangible assets and property, plant and equipment of
$36.0 million $9.8 million
________________________________ |
1 Adjusted gross profit (loss) is a non-IFRS financial measure. See "Non-IFRS Measures and Other Performance Metrics" section of this press release. |
2 Adjusted EBITDA is a non-IFRS financial measure. See "Non-IFRS Measures and Other Performance Metrics" section of this press release. |
FY 2023 FINANCIAL HIGHLIGHTS
- Delivery of 852 vehicles, an increase of 333 vehicles, as compared to the 519 delivered in fiscal 2022.
- Revenue of
$253.5 million $113.6 million $139.9 million - Gross loss of
$5.5 million $12.9 million - Adjusted gross profit of
$4.3 million $12.9 million - Net loss of
$103.8 million $17.8 million - Adjusted EBITDA of negative
$34.3 million $54.8 million - Additions to property, plant and equipment related to the Joliet Facility and the Lion Campus, amounted to
$72.2 million $75.8 million $148.0 million - Additions to intangible assets, which mainly consist of vehicle and battery development activities, amounted to
$67.2 million $11.9 million $79.1 million - Impairment of intangible assets and property, plant and equipment of
$36.0 million $9.8 million
BUSINESS UPDATES
- More than 1,850 vehicles on the road, with over 22 million miles driven (over 36 million kilometers).
- Vehicle order book3 of 2,076 all-electric medium- and heavy-duty urban vehicles as of February 28, 2024, consisting of 285 trucks and 1,791 buses, representing a combined total order value of approximately
$500 million - LionEnergy order book of 132 charging stations and related services as of February 28, 2024, representing a combined total order value of approximately
$4 million - 12 experience centers in operation in
the United States andCanada . - Initiated commercial production of LionD units which led to the completion of first deliveries to customers in January 2024.
- Successfully completed the final certification for medium duty Lion battery packs, paving the way for initial deliveries of Lion5 trucks.
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3 See "Non-IFRS Measures and Other Performance Metrics" section of this press release. The Company's vehicle and charging stations order book is determined by management based on purchase orders that have been signed, orders that have been formally confirmed by clients or products in respect of which formal joint applications for governmental programs, subsidies or incentives have been made by the applicable clients and the Company. The order book is expressed as a number of units or a total dollar value, which dollar value is determined based on the pricing of each unit included in the order book. The vehicles included in the vehicle order book as of February 28, 2024 provided for a delivery period ranging from a few months to the end of the year ending December 31, 2026, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025. In addition, substantially all of the vehicle orders included in the order book are subject to the granting of governmental subsidies and incentives, including programs in respect of which applications relating to vehicles of Lion have not yet been fully processed to date. The processing times of governmental programs, subsidies and incentives are also subject to important variations. There has been in the past and the Company expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times, and certain delays could be significant. Also, there has been in the past and the Company expects there will continue to be variances in the eligibility criteria of the various programs, subsidies and incentives introduced by governmental authorities, including in their interpretation and application. Such variances or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part. The Company's presentation of the order book should not be construed as a representation by the Company that the vehicles and charging stations included in its order book will translate into actual sales. |
The Company decided to proceed with the temporarily lay off of approximately 100 employees, mostly impacting the nightshift production workforce at its
"2023 has been a year of significant progress, marked by record vehicle deliveries and revenue, which translated into positive adjusted gross margins, and also by several achievements, including the construction and operation of our two new factories and the start of commercial production of our Lion5 electric truck and our LionD electric school bus. However, this past year has not been without its challenges, particularly as it relates to a volatile incentive environment that slowed down the pace of orders and deliveries," commented Marc Bedard, CEO - Founder of Lion. "In 2024, with the growth capex investments now behind us, we will focus on driving growth in orders and deliveries, while diligently controlling costs and keeping a tight control of our liquidity, as we expect the volatile environment to persist for at least the next few months. Despite facing such uncertain environment, we remain committed to leveraging all investments made over the last 15 years, with the ultimate objective to reach profitability." concluded Marc Bedard.
SELECT EXPLANATIONS ON RESULTS OF OPERATIONS FOR THE FOURTH QUARTER AND FISCAL YEAR ENDED DECEMBER 31, 2023
Revenue
For the three months ended December 31, 2023, revenue amounted to
For the year ended December 31, 2023, revenue amounted to
Cost of Sales
For the three months ended December 31, 2023, cost of sales amounted to
For the year ended December 31, 2023, cost of sales amounted to
Gross Loss
For the three months ended December 31, 2023, gross loss increased by
For the year ended December 31, 2023, gross loss improved by
Administrative Expenses
For the three months ended December 31, 2023, administrative expenses increased by
For the year ended December 31, 2023, administrative expenses increased by
Selling Expenses
For the three months ended December 31, 2023, selling expenses decreased by
For the year ended December 31, 2023, selling expenses decreased by
Restructuring Costs
Restructuring costs of
Impairment of Intangible Assets and Property, Plant and Equipment
Impairment of intangible assets and property, plant and equipment of
Finance Costs (Income)
For the three months ended December 31, 2023, finance costs increased by
For the year ended December 31, 2023, finance costs increased by
Foreign Exchange Loss (Gain)
Foreign exchange gains (loss) for both periods relate primarily to the revaluation of net monetary assets denominated in foreign currencies to the functional currencies of the related Lion entities. For the three months ended December 31, 2023, foreign exchange gain was
Foreign exchange loss (gain) relates primarily to the revaluation of net monetary assets denominated in foreign currencies to the functional currencies of the related Lion entities. For the year ended December 31, 2023, foreign exchange gain was
Change in Fair Value of Conversion Options on Convertible Debt Instruments
For the three months ended December 31, 2023, change in fair value of conversion options on convertible debt instruments was a gain of
For the year ended December 31, 2023, change in fair value of conversion options on convertible debt instruments was a gain of
Change in Fair Value of Share Warrant Obligations
Change in fair value of share warrant obligations moved from a gain of
Change in fair value of share warrant obligations moved from a gain of
Net Earnings (Loss)
The net loss for the three months ended December 31, 2023 as compared to the net loss for the corresponding prior period is higher as it includes the impacts of the inventory write-down and the impairment charge related to the delay of start of commercial production of the LionA and LionM minibuses, and it reflects higher administrative and selling expenses and finance costs, and lower gains related to non-cash decrease in the fair value of share warrant obligations, as compared to the comparative period in the prior year.
The net loss of
CONFERENCE CALL
A conference call and webcast will be held on February 29, 2024, at 8:30 a.m. (Eastern Time) to discuss the results. To participate in the conference call, please dial (404) 975-4839 or (833) 470-1428 (toll free) using the Access Code 863541. An investor presentation and a live webcast of the conference call will also be available at www.thelionelectric.com under the "Events and Presentations" page of the "Investors" section. An archive of the event will be available for a period of time shortly after the conference call.
FINANCIAL REPORT
This release should be read together with the annual audited consolidated financial statements of the Company and the related notes for the years ended December 31, 2023 and 2022, and the related management discussion and analysis ("MD&A") for the three and twelve months ended December 31, 2023, which will be filed by the Company with applicable Canadian securities regulatory authorities and with the
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31, 2023 and December 31, 2022
(in US dollars)
Dec 31, 2023 | Dec 31, 2022 | ||
$ | $ | ||
ASSETS | |||
Current | |||
Cash | 29,892,966 | 88,266,985 | |
Accounts receivable | 75,641,780 | 62,971,542 | |
Inventories | 249,606,756 | 167,191,935 | |
Prepaid expenses and other current assets | 1,553,276 | 5,067,513 | |
Current assets | 356,694,778 | 323,497,975 | |
Non-current | |||
Other non-current assets | 6,994,815 | 1,073,226 | |
Property, plant and equipment | 198,536,683 | 160,756,328 | |
Right-of-use assets | 89,663,139 | 60,508,354 | |
Intangible assets | 175,703,257 | 151,364,023 | |
Contract asset | 13,528,646 | 13,211,006 | |
Non-current assets | 484,426,540 | 386,912,937 | |
Total assets | 841,121,318 | 710,410,912 | |
LIABILITIES | |||
Current | |||
Trade and other payables | 92,424,961 | 75,222,042 | |
Deferred revenue and other deferred liabilities | 18,267,139 | 634,971 | |
Current portion of long-term debt and other debts | 27,056,476 | 24,713 | |
Current portion of lease liabilities | 7,984,563 | 5,210,183 | |
Current liabilities | 145,733,139 | 81,091,909 | |
Non-current | |||
Long-term debt and other debts | 197,885,889 | 110,648,635 | |
Lease liabilities | 83,972,023 | 58,310,032 | |
Share warrant obligations | 29,582,203 | 23,243,563 | |
Conversion options on convertible debt instruments | 25,034,073 | — | |
Non-current liabilities | 336,474,188 | 192,202,230 | |
Total liabilities | 482,207,327 | 273,294,139 | |
SHAREHOLDERS' EQUITY | |||
Share capital | 489,362,920 | 475,950,194 | |
Contributed surplus | 139,569,185 | 134,365,664 | |
Deficit | (255,746,097) | (151,979,960) | |
Cumulative translation adjustment | (14,272,017) | (21,219,125) | |
Total shareholders' equity | 358,913,991 | 437,116,773 | |
Total shareholders' equity and liabilities | 841,121,318 | 710,410,912 |
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE EARNINGS (LOSS)
For the years ended December 31, 2023 and 2022
(in US dollars)
(Unaudited) | (Audited) | ||||||
Three months ended | Year ended | ||||||
Dec 31, | Dec 31, | Dec 31, | Dec 31, | ||||
$ | $ | $ | $ | ||||
Revenue | 60,428,739 | 46,768,660 | 253,495,601 | 139,914,470 | |||
Cost of sales | 69,479,799 | 51,533,378 | 259,020,001 | 152,861,775 | |||
Gross loss | (9,051,060) | (4,764,718) | (5,524,400) | (12,947,305) | |||
Administrative expenses | 13,011,219 | 9,996,995 | 51,479,445 | 44,843,042 | |||
Selling expenses | 3,146,991 | 5,643,130 | 19,650,125 | 22,973,972 | |||
Restructuring costs | 1,426,487 | — | 1,426,487 | — | |||
Impairment of intangible assets and | 35,998,123 | — | 35,998,123 | — | |||
Operating loss | (62,633,880) | (20,404,843) | (114,078,580) | (80,764,319) | |||
Finance costs | 6,742,686 | (891,329) | 17,892,444 | 955,422 | |||
Foreign exchange (gain) loss | (2,155,426) | 558,551 | (2,259,539) | 1,972,679 | |||
Change in fair value of conversion options | (1,626,304) | — | (4,982,236) | — | |||
Change in fair value of share warrant | (9,052,303) | (15,434,253) | (20,963,112) | (101,468,186) | |||
Net income (loss) | (56,542,533) | (4,637,812) | (103,766,137) | 17,775,766 | |||
Other comprehensive income (loss) | |||||||
Item that will be subsequently | |||||||
Foreign currency translation | 5,785,916 | 3,522,926 | 6,947,108 | (18,309,729) | |||
Comprehensive earnings (loss) for the | (50,756,617) | (1,114,886) | (96,819,029) | (533,963) | |||
Earnings (loss) per share | |||||||
Basic earnings (loss) per share | (0.25) | (0.02) | (0.46) | 0.09 | |||
Diluted earnings (loss) per share | (0.25) | (0.02) | (0.46) | 0.09 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2023 and 2022
(in US Dollars)
(Unaudited) | (Audited) | ||||||
Three months ended | Year ended | ||||||
Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2023 | Dec 31, 2022 | ||||
$ | $ | $ | $ | ||||
OPERATING ACTIVITIES | |||||||
Net earnings (loss) | (56,542,533) | (4,637,812) | (103,766,137) | 17,775,766 | |||
Non-cash items: | |||||||
Depreciation and amortization | 8,359,468 | 3,723,559 | 26,074,572 | 11,492,473 | |||
Impairment of inventory | 12,022,984 | 478,889 | 12,022,984 | 478,889 | |||
Impairment of intangible assets and property, plant and | 35,998,123 | — | 35,998,123 | — | |||
Share-based compensation | 408,643 | 2,521,960 | 5,203,521 | 12,362,070 | |||
Accretion expense | 3,388,287 | — | 5,663,365 | — | |||
Accretion and revaluation expense on balance of purchase price | — | — | — | 82,850 | |||
Gain on derecognition of the balance of purchase price payable | — | — | — | (2,130,583) | |||
Non-cash issuance of closing fee shares through 2023 | — | — | 623,336 | — | |||
Change in fair value of share warrant obligations | (9,052,303) | (15,434,253) | (20,963,112) | (101,468,186) | |||
Change in fair value of conversion options on convertible debt | (1,626,304) | — | (4,982,236) | — | |||
Unrealized foreign exchange loss (gain) | (2,783,193) | (10,785) | (4,106,220) | 821,424 | |||
Net change in non-cash working capital items | (10,133,717) | (17,247,824) | (57,974,652) | (58,967,500) | |||
Finance costs attributable to 2023 Debenture financing | (3,829,850) | — | (3,829,850) | — | |||
Cash flows used in operating activities | (23,790,395) | (30,606,266) | (110,036,306) | (119,552,797) | |||
INVESTING ACTIVITIES | |||||||
Acquisition of property, plant and equipment | (10,501,121) | (39,642,755) | (78,291,978) | (129,573,638) | |||
Addition to intangible assets | (18,660,272) | (20,805,023) | (75,173,685) | (78,284,126) | |||
Disposition of property, plant and equipment | — | — | — | 24,413 | |||
Proceeds from | — | — | 20,506,589 | — | |||
Government assistance related to property, plant and equipment and | 2,011,244 | 3,226,696 | 9,452,796 | 3,226,696 | |||
Cash flows used in investing activities | (27,150,149) | (57,221,082) | (123,506,278) | (204,606,655) | |||
FINANCING ACTIVITIES | |||||||
Increase in long-term debt and other debts | 65,587,727 | 62,638,399 | 171,687,491 | 111,576,513 | |||
Repayment of long-term debt and other debts | (21,823,809) | (9,928,509) | (148,305,458) | (10,348,894) | |||
Payment of lease liabilities | (2,085,003) | (1,219,492) | (6,512,231) | (4,977,183) | |||
Proceeds from issuance of shares through "at-the-market" equity program, net of issuance costs | — | 10,164,952 | 8,580,405 | 29,351,308 | |||
Proceeds from the issuance of units through the December 2022 | — | 19,909,398 | 2,907,226 | 19,913,196 | |||
Proceeds from the issuance of units through the December 2022 | — | 27,264,038 | 4,175,836 | 27,264,038 | |||
Proceeds from the 2023 Debentures Financing | 3,829,850 | — | 142,920,845 | — | |||
Proceeds from the issuance of shares through exercise of stock | — | 23,173 | — | 23,173 | |||
Cash flows from financing activities | 45,508,765 | 108,851,959 | 175,454,114 | 172,802,151 | |||
Effect of exchange rate changes on cash held in foreign currency | (344,322) | 628,959 | (285,549) | (2,077,744) | |||
Net decrease in cash | (5,776,101) | 21,653,570 | (58,374,019) | (153,435,045) | |||
Cash, beginning of year | 35,669,067 | 66,613,415 | 88,266,985 | 241,702,030 | |||
Cash, end of period | 29,892,966 | 88,266,985 | 29,892,966 | 88,266,985 | |||
Income taxes paid | — | — | — | — | |||
Interest paid | 3,900,718 | 835,592 | 11,119,136 | 2,386,930 | |||
Interest paid under lease liabilities | 1,301,422 | 819,786 | 4,656,033 | 3,162,932 | |||
NON-IFRS MEASURES AND OTHER PERFORMANCE METRICS
This press release makes reference to Adjusted gross profit (loss), Adjusted gross margin, and Adjusted EBITDA, which are non-IFRS financial measures, as well as other performance metrics, including the Company's order book, which are defined below. These measures are neither required nor recognized measures under IFRS, and, as a result, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. Lion compensates for these limitations by relying primarily on Lion's IFRS results and using Adjusted gross profit (loss), Adjusted gross margin, Adjusted EBITDA, and order book on a supplemental basis. Readers should not rely on any single financial measure to evaluate Lion's business.
Adjusted Gross Profit (Loss) and Adjusted Gross Margin
Adjusted gross profit (loss) is defined as gross profit (loss) before the impact of a non-cash charge to gross profit (loss) resulting from the inventory write-down recorded by the Company in connection with its decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses, as described in section 8.0 of the Company's MD&A for the three and twelve months ended December 31, 2023 entitled "Operational Highlights" and section 13.0 of the Company's MD&A for the three and twelve months ended December 31, 2023 entitled "Results of Operations". Adjusted gross margin is calculated as Adjusted gross profit (loss) divided by revenue. The Company has elected to introduce Adjusted gross profit (loss) and Adjusted gross margin in order to measure its performance at the gross margin level without the impact of this non-cash charge, which can affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. The Company believes that these measures are useful to management and investors as they facilitate period-to-period comparisons of the Company's costs of sales and gross profit, including how efficiently the Company uses labor and materials for manufacturing goods sold to its customers, by excluding the impact of a non-cash charge that is not directly related to its operating performance. However, readers should be aware that when evaluating Adjusted gross profit (loss) and Adjusted gross margin, Lion may incur other charges similar to that excluded when calculating Adjusted gross profit (loss) in the future, and the exclusion of this charge should not be construed as an inference that a charge of a similar nature will not occur in the future. Readers should review the reconciliation of gross profit (loss), the most directly comparable IFRS financial measure, to Adjusted gross profit (loss) and Adjusted gross margin, which is presented by the Company under section 13.0 of the Company's MD&A for the three and twelve months ended December 31, 2023 entitled "Results of Operations - Reconciliation of Adjusted Gross Profit (Loss) and Adjusted Gross Margin."
Adjusted EBITDA
"Adjusted EBITDA" is defined as net earnings (loss) before finance costs, income tax expense or benefit, and depreciation and amortization, adjusted to exclude restructuring costs, share-based compensation, change in fair value of conversion options on convertible debt instruments, change in fair value of share warrant obligations, foreign exchange (gain) loss and transaction and other non-recurring expenses. Adjusted EBITDA also excludes the impact of a non-cash impairment charge relating to intangible assets and property, plant and equipment resulting from the write-down of previously capitalized vehicle development costs and property, plant and equipment as well as the impact of a non-cash charge related to the inventory write-down referred to above, all of which were recorded by the Company in connection with its decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses. Lion uses adjusted EBITDA to facilitate a comparison of the profitability of its business on a consistent basis from period-to-period and to provide a further understanding of factors and trends affecting its business. The Company also believes this measure is useful for investors to assess the Company's profitability, its cost structure and its ability to service debt and to meet other payment obligations. However, readers should be aware that when evaluating Adjusted EBITDA, Lion may incur future expenses similar to those excluded when calculating Adjusted EBITDA. In addition, Lion's presentation of these measures should not be construed as an inference that Lion's future results will be unaffected by unusual or non-recurring items. Readers should review the reconciliation of net earnings (loss), the most directly comparable IFRS financial measure, to Adjusted EBITDA presented by the Company under section 13.0 of the Company's MD&A for the three and twelve months ended December 31, 2023 entitled "Results of Operations - Reconciliation of Adjusted EBITDA."
Order Book
This press release also makes reference to the Company's "order book" with respect to vehicles (trucks and buses) as well as charging stations. The Company's vehicles and charging stations order book is determined by management based on purchase orders that have been signed, orders that have been formally confirmed by clients, or products in respect of which formal joint applications for governmental programs, subsidies or incentives have been made by the applicable clients and the Company. The order book is expressed as a number of units or a total dollar value, which dollar value is determined based on the pricing of each unit included in the order book as further explained under "Pricing" in section 10.0 of the Company's MD&A for the three and twelve months ended December 31, 2023 entitled "Order Book". The vehicles included in the vehicle order book as of February 28, 2024 provided for a delivery period ranging from a few months to the end of the year ending December 31, 2026, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025. In addition, substantially all deliveries are subject to the granting of subsidies and incentives with processing times that are subject to important variations. There has been in the past and the Company expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times, and certain delays could be significant. Also, there has been in the past and the Company expects there will continue to be variances in the eligibility criteria of the various programs, subsidies and incentives introduced by governmental authorities, including in their interpretation and application. Such variances or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part.
The Company's presentation of the order book should not be construed as a representation by the Company that the vehicles and charging stations included in its order book will translate into actual sales. See below for a full description of the methodology used by the Company in connection with the order book and certain important risks and uncertainties relating to such methodology and the presentation of the order book.
General
| The Company's vehicle and charging stations order book is determined by management based on
The vehicles included in the vehicle order book as of February 28, 2024 provided for a delivery
The Company's presentation of the order book should not be construed as a representation by the
|
Delivery
| The Company's order book refers to products that have not yet been delivered but which are
Purchase orders and applications relating to vehicles of Lion generally provide for a time period
|
Pricing:
| When the Company's order book is expressed as an amount of sales, such amount has been
|
Performance
| The order book is intended as a supplemental measure of performance that is neither required by,
The Company's computation of its order book is subject to the specific methodology described
|
Ongoing | A portion of the vehicles or charging stations included in the Company's order book may be cancellable in certain
The Company cannot guarantee that its order book will be realized in full, in a timely manner, or at all, or that,
Any termination, modification, delay or suspension of any governmental program, subsidies and incentives,
The Company's conversion of its order book into actual sales is also dependent on its ability to economically and
|
RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS) AND ADJUSTED GROSS MARGIN
The following table reconciles gross profit (loss) and gross margin to Adjusted gross profit (loss) and Adjusted gross margin for the three months ended December 2023 and 2022, and the years ended December 31, 2023, 2022 and 2021:
Three months ended | Year ended December 31, | ||||||||
2023 | 2022 | 2023 | 2022 | 2021 | |||||
(in thousands) | (in thousands) | ||||||||
Revenue | |||||||||
Cost of sales | |||||||||
Gross profit (loss) | |||||||||
Inventory write-down related to | $— | $— | $— | ||||||
Adjusted gross profit (loss) | |||||||||
Gross margin | (15.0) % | (10.2) % | (2.2) % | (9.3) % | 0.1 % | ||||
Adjusted gross margin | 1.3 % | (10.2) % | 1.7 % | (9.3) % | 0.1 % | ||||
(1) | During the fourth quarter of fiscal 2023, the Company decided to indefinitely delay the start of commercial production of the LionA all-electric mini school bus, which is designed for school transportation and to accommodate passengers with special needs, with a capacity of up to 24 passengers. Such decision has also delayed the start of commercial production of the LionM model, an all-electric minibus designed to be used for paratransit or as a standard shuttle bus, and which leverages the same platform as the LionA. The decision was made to prioritize the commercial production of its other products (including the Lion8T) and the integration of Lion batteries to its existing vehicles. |
RECONCILIATION OF ADJUSTED EBITDA
The following table reconciles net earnings (loss) to Adjusted EBITDA for the three months ended December 31, 2023 and 2022, and the years ended December 31, 2023, 2022 and 2021:
Three months ended | Year ended December 31, | ||||||||
2023 | 2022 | 2023 | 2022 | 2021 | |||||
(in thousands) | (in thousands) | ||||||||
Revenue | |||||||||
Net earnings (loss) | ( | ( | ( | ( | |||||
Restructuring costs(1) | $— | $— | $— | ||||||
Impairment of intangible assets | $— | $— | $— | ||||||
Inventory write-down related to | $— | $— | $— | ||||||
Finance costs | ( | ||||||||
Depreciation and amortization | |||||||||
Share-based compensation(4) | |||||||||
Change in fair value of conversion | ( | $— | ( | $— | $— | ||||
Change in fair value of share | ( | ( | ( | ( | ( | ||||
Foreign exchange loss (gain)(7) | ( | ( | |||||||
Transaction and other non- | |||||||||
Adjusted EBITDA | ( | ( | ( | ( | ( | ||||
(1) | Represents the restructuring costs (mainly severance costs) recognized in connection with workforce reduction announced on November 27, 2023, as described in note 17 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022. See also "Workforce Reduction" in section 8.0 of this MD&A entitled "Operational Highlights." |
(2) | Represents impairment of previously capitalized vehicle development costs and property, plant and equipment related to the LionA and LionM minibuses for which the Company made the decision to indefinitely delay of the start of commercial production, as announced on November 7, 2023, as described in Notes 6 and 8 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022. |
(3) | Represents the write-down of inventory to net realizable value as a result of the decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses as described in Note 5 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022. |
(4) | Represents non-cash expenses recognized in connection with the issuance of stock options, restricted share units, and deferred share units issued under Lion's omnibus incentive plan as described in Note 16 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022. |
(5) | Represents non-cash change in the fair value of the conversion options on convertible debt instruments as described in Note 13 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022. |
(6) | Represents non-cash change in the fair value of the share warrant obligations as described in Note 14 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022. |
(7) | Represents losses (gains) relating to foreign exchange translation. |
(8) | For the years ended December 31, 2023, and 2022, represents non-recurring professional, legal and consulting fees. |
ABOUT LION ELECTRIC
Lion Electric is an innovative manufacturer of zero-emission vehicles. The company creates, designs and manufactures all-electric class 5 to class 8 commercial urban trucks and all-electric school buses. Lion is a North American leader in electric transportation and designs, builds and assembles many of its vehicles' components, including chassis, battery packs, truck cabins and bus bodies.
Always actively seeking new and reliable technologies, Lion vehicles have unique features that are specifically adapted to its users and their everyday needs. Lion believes that transitioning to all-electric vehicles will lead to major improvements in our society, environment and overall quality of life. Lion shares are traded on the New York Stock Exchange and the Toronto Stock Exchange under the symbol LEV.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws and within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). Any statements contained in this press release that are not statements of historical fact, including statements about Lion's beliefs and expectations, are forward-looking statements and should be evaluated as such.
Forward-looking statements may be identified by the use of words such as "believe," "may," "will," "continue," "anticipate," "intend," "expect," "should," "would," "could," "plan," "project," "potential," "seem," "seek," "future," "target" or other similar expressions and any other statements that predict or indicate future events or trends or that are not statements of historical matters, although not all forward-looking statements may contain such identifying words. These forward-looking statements include statements regarding the Company's order book and the Company's ability to convert it into actual sales, the expected production capacity of the Company's manufacturing facilities in
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Lion believes that these risks and uncertainties include the following:
- any adverse changes in
U.S. or Canadian general economic, business, market, financial, political or legal conditions, including as a consequence of the ongoing uncertainties relating to inflation and interest rates; - any unavailability, reduction, discriminatory application, delay in processing or elimination of governmental programs, subsidies or incentives due to policy changes, government regulations or decisions or otherwise;
- any inability to ramp-up the production of Lion's products and meet project construction and other project milestones and timelines;
- any inability to meet the expectations of the Company's customers in terms of products, specifications, and services;
- any inability to successfully and economically manufacture and distribute its vehicles at scale;
- any inability to raise additional funds to meet its capital requirements and pursue its growth strategy when and in the amounts needed, if any;
- any inability to execute the Company's growth strategy;
- any escalation, deterioration and adverse effects of current military conflicts, which may affect economic and global financial markets and exacerbate ongoing economic challenges;
- any unfavorable fluctuations and volatility in the availability or price of raw materials included in components used to manufacture the Company's products, including battery cells, modules and packs;
- the reliance on key suppliers and any inability to maintain an uninterrupted supply of raw materials;
- any inability to reduce total cost of ownership of electric vehicles sold by the Company over time;
- the reliance on key management and any inability to attract and/or retain key personnel;
- labor shortages (including as a result of employee departures, turnover, and demands for higher wages) which may force the Company to operate at reduced capacity, to lower its production and delivery rates or lower its growth plans, and could pose additional challenges related to employee compensation;
- any inability to maintain the Company's competitive position;
- any inability to reduce the Company's costs of supply over time;
- any inability to maintain and enhance the Company's reputation and brand;
- any significant product repair and/or replacement due to product warranty claims or product recalls;
- any failure of information technology systems or any cybersecurity and data privacy breaches or incidents;
- any inability to secure adequate insurance coverage or a potential increase in insurance costs;
- natural disasters, epidemic or pandemic outbreaks, boycotts and geo-political events such as civil unrest, acts of terrorism, the current ongoing military conflicts or similar disruptions;
- any event or circumstance, including the materialization of any of the foregoing risks and uncertainties, resulting in the Company's inability to convert its order book into actual sales; and
- the outcome of any legal proceedings in which the Company is or may be involved from time to time.
These and other risks and uncertainties related to the business of Lion are described in greater detail in section 23.0 entitled "Risk Factors" of the Company's MD&A for the three and twelve months ended December 31, 2023. Many of these risks are beyond Lion's management's ability to control or predict. All forward-looking statements attributable to Lion or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained and risk factors identified in the Company's MD&A for three and twelve months ended December 31, 2023 and in other documents filed with the applicable Canadian regulatory securities authorities and the
Because of these risks, uncertainties and assumptions, readers should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under applicable securities laws, Lion undertakes no obligation, and expressly disclaims any duty, to update, revise or review any forward-looking information, whether as a result of new information, future events or otherwise.
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SOURCE The Lion Electric Co.
FAQ
How did Lion Electric's revenue for Q4 2023 compare to Q4 2022?
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