Microvast (MVST) - 2024 Q1 - Quarterly Results

Financial Performance Overview This section summarizes the company's financial performance for 2023, including management insights, key results, and the Q1 2024 outlook Management Commentary Management highlighted record Q4 2023 revenue, driving 49.9% full-year growth, with strategic focus on EMEA, APAC, and Clarksville facility financing - The company achieved record revenue in Q4 2023, leading to 49.9% full-year revenue growth[3] - Strong revenue growth is expected to continue in the EMEA region in 2024, with the possibility of reaching breakeven[3] - The APAC region is operating profitably and is self-funding following the completion of the Huzhou Phase 3.1 expansion[3] - A key priority is securing financing to complete the Clarksville Phase 1A facility in the U.S[3] - The adjusted net loss was significantly reduced, driven by revenue growth, a 14.3 percentage point gross margin improvement, and an 11% increase in adjusted operating costs[3] Full Year 2023 Financial Highlights For full year 2023, Microvast reported a 49.9% revenue increase to $306.6 million, significantly improving gross margin and narrowing net and adjusted EBITDA losses Full Year 2023 Key Financial Metrics (in millions) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue | $306.6M | $204.5M | +49.9% | | Gross Margin | 18.7% | 4.4% | +14.3 p.p. | | Adjusted Gross Margin (Non-GAAP) | 20.7% | 8.2% | +12.5 p.p. | | Net Loss | ($106.4M) | ($158.2M) | +32.7% | | Adjusted Net Loss (Non-GAAP) | ($41.6M) | ($77.3M) | +46.2% | | Net Loss per Share | ($0.34) | ($0.52) | +34.6% | | Adjusted EBITDA (Non-GAAP) | ($19.6M) | ($56.7M) | +65.4% | | Capital Expenditures | $186.8M | $150.9M | +23.8% | - Cash, cash equivalents, restricted cash, and short-term investments decreased to $93.8 million as of December 31, 2023, from $327.7 million a year prior, largely due to capital expenditures for manufacturing expansion in the U.S. and China[6] Fourth Quarter 2023 Financial Highlights Microvast achieved record quarterly revenue of $104.6 million in Q4 2023, marking a 61.4% increase and substantial gross margin improvement Fourth Quarter 2023 Key Financial Metrics (in millions) | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue | $104.6M | $64.8M | +61.4% | | Gross Margin | 22.0% | 3.4% | +18.6 p.p. | | Adjusted Gross Margin (Non-GAAP) | 23.5% | 6.4% | +17.1 p.p. | | Net Loss | ($24.6M) | ($33.7M) | +27.0% | | Adjusted Net Loss (Non-GAAP) | ($11.4M) | ($15.9M) | +28.3% | | Net Loss per Share | ($0.08) | ($0.11) | +27.3% | | Adjusted EBITDA (Non-GAAP) | ($2.6M) | ($11.8M) | +78.0% | Q1 2024 Outlook For Q1 2024, the company projects revenue of $65 million to $75 million and a gross margin of 20% to 25%, alongside strategic financing and customer acquisition goals - Targeting Q1 2024 revenue of $65 million to $75 million, a 40% to 60% year-over-year increase[12] - Company-wide gross margin is targeted to be between 20% and 25% for Q1 2024[12] - Strategic goals include finalizing financing for the Clarksville Phase 1A plant and securing new long-term domestic customer contracts[12] - Focus on new customer wins in APAC and EMEA to expand in differentiated commercial vehicle markets as OEMs electrify their product lines[12] Consolidated Financial Statements This section presents the company's consolidated balance sheets, statements of operations, and cash flows for the reported periods Condensed Consolidated Balance Sheets As of December 31, 2023, Microvast's total assets increased to $1.10 billion, while total liabilities grew to $532.5 million, leading to a slight decrease in total equity Selected Balance Sheet Data (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $44,541 | $231,420 | | Inventories, net | $149,749 | $84,252 | | Property, plant and equipment, net | $620,667 | $335,140 | | Total Assets | $1,096,732 | $984,957 | | Accounts payable | $112,618 | $44,985 | | Total Current Liabilities | $403,410 | $252,409 | | Total Liabilities | $532,542 | $371,980 | | Total Equity | $564,190 | $612,977 | Condensed Consolidated Statements of Operations For full year 2023, revenue grew to $306.6 million with significant gross profit improvement, and the loss from operations narrowed for both the full year and Q4 Full Year Statement of Operations (in thousands) | Account | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Revenues | $306,617 | $204,495 | | Gross profit | $57,227 | $9,073 | | Loss from operations | ($106,729) | ($159,946) | | Net loss | ($106,412) | ($158,200) | | Net loss per common share | ($0.34) | ($0.52) | Q4 Statement of Operations (in thousands) | Account | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Revenues | $104,575 | $64,797 | | Gross profit | $23,024 | $2,226 | | Loss from operations | ($22,216) | ($34,626) | | Net loss | ($24,591) | ($33,698) | | Net loss per common share | ($0.08) | ($0.11) | Consolidated Statements of Cash Flows For 2023, net cash used in operating activities increased to $75.3 million, with significant cash usage in investing activities, resulting in an $88.2 million year-end cash balance Statement of Cash Flows Summary (in thousands) | Activity | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($75,303) | ($53,928) | | Net cash used in investing activities | ($165,605) | ($175,945) | | Net cash generated from financing activities | $33,041 | $4,967 | | Decrease in cash, cash equivalents and restricted cash | ($214,428) | ($233,492) | | Cash, cash equivalents and restricted cash at end of year | $88,189 | $302,617 | Non-GAAP Financial Measures and Reconciliations This section explains the company's non-GAAP financial measures and provides reconciliations to their most directly comparable GAAP counterparts Explanation of Non-GAAP Measures Microvast utilizes non-GAAP measures like adjusted gross profit, net loss, and EBITDA to provide a clearer view of underlying business trends by excluding certain non-cash items - Non-GAAP measures disclosed include adjusted gross profit, adjusted EBITDA, and adjusted net loss[15] - Adjustments from GAAP to Non-GAAP typically exclude non-cash stock-based compensation and changes in the fair value of warrant liabilities[17] - Management uses these non-GAAP measures to illustrate underlying business trends and for internal performance comparisons, believing they offer greater transparency to investors[18][19] Reconciliation of Gross Profit to Adjusted Gross Profit For full year 2023, adjusted gross profit reached $63.3 million with a 20.7% margin, while Q4 2023 saw $24.6 million in adjusted gross profit at a 23.5% margin FY 2023 Gross Profit Reconciliation (in thousands) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Gross profit (GAAP) | $57,227 | $9,073 | | Non-cash settled share-based compensation | $6,091 | $7,677 | | Adjusted gross profit (non-GAAP) | $63,318 | $16,750 | | Adjusted gross margin (non-GAAP) | 20.7% | 8.2% | Q4 2023 Gross Profit Reconciliation (in thousands) | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Gross profit (GAAP) | $23,024 | $2,226 | | Non-cash settled share-based compensation | $1,532 | $1,932 | | Adjusted gross profit (non-GAAP) | $24,556 | $4,158 | | Adjusted gross margin (non-GAAP) | 23.5% | 6.4% | Reconciliation of Net Loss to Adjusted Net Loss The full-year 2023 GAAP net loss of $106.4 million was adjusted to a non-GAAP adjusted net loss of $41.6 million, improving adjusted net loss per share to $0.13 FY 2023 Net Loss Reconciliation (in thousands) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net loss (GAAP) | ($106,412) | ($158,200) | | Gain on changes in fair value of warrant liability | ($59) | ($979) | | Non-cash settled share-based compensation | $64,920 | $81,906 | | Adjusted Net Loss (non-GAAP) | ($41,551) | ($77,273) | | Adjusted net loss per share (non-GAAP) | ($0.13) | ($0.25) | Reconciliation of Net Loss to EBITDA and Adjusted EBITDA For full year 2023, the GAAP net loss of $106.4 million was reconciled to an adjusted EBITDA loss of $19.6 million, significantly improving from the prior year and Q4 2022 FY 2023 EBITDA Reconciliation (in thousands) | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net loss (GAAP) | ($106,412) | ($158,200) | | EBITDA (non-GAAP) | ($84,455) | ($137,658) | | Adjusted EBITDA (non-GAAP) | ($19,594) | ($56,731) | Q4 2023 EBITDA Reconciliation (in thousands) | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Net loss (GAAP) | ($24,591) | ($33,698) | | EBITDA (non-GAAP) | ($15,826) | ($29,598) | | Adjusted EBITDA (non-GAAP) | ($2,592) | ($11,789) |