Microvast (US:MVST)2022-08-12 01:04Financial Data and Key Metrics Changes - Revenue grew by 93% to USD 64.4 million in Q2 2022, up from USD 33.4 million in Q2 2021, marking the sixth consecutive quarter of substantial revenue growth [24][25] - Year-to-date revenue reached USD 101.1 million, a 109.2% increase from USD 48.3 million in the prior six-month period [25] - Gross profit improved to USD 4.8 million in Q2 2022 from a gross loss of USD 6.8 million in the prior period, representing a 171.5% improvement [25] - Adjusted gross profit was USD 6.7 million in Q2 2022, compared to an adjusted gross loss of USD 6.8 million in Q2 2021, resulting in an adjusted gross margin of 10.4% [25][30] Business Line Data and Key Metrics Changes - The order intake for Q2 was USD 47.8 million, with significant contributions from various customers, including an order from JBM Group for over USD 11 million [21] - The company ended Q2 with a strong backlog of USD 105.3 million, driven by healthy order intake [11] Market Data and Key Metrics Changes - The Asia Pacific region (excluding China) saw revenue growth of 231% in Q2 2022 compared to Q2 2021, with India being a major growth driver [31][32] - The China business posted a 57% growth during the quarter, while Europe experienced a 15% growth rate [32] Company Strategy and Development Direction - The company is focusing on expanding its manufacturing capacities and expects order volume to increase as new capacities come online in Huzhou [15][37] - A new subsidiary, Microvast Energy, Inc., has been established to focus on energy storage solutions, which are seen as a significant growth opportunity [40] - The company is reaffirming its guidance of 35% to 45% revenue growth compared to 2021 and is optimistic about increasing forecasted contracted revenue [39] Management's Comments on Operating Environment and Future Outlook - Management highlighted challenges related to elevated raw material prices due to supply chain disruptions and inflation, with expectations for these prices to remain high through 2022 and possibly into 2023 [13][14] - The company is actively monitoring raw material trends and implementing strategies to mitigate impacts, including optimizing supply contracts and increasing selling prices [14] Other Important Information - The company closed the quarter with approximately USD 396.9 million in cash, cash equivalents, and restricted cash, with expectations to end the year with at least USD 250 million in cash [35][36] - Capital expenditures for the second half of the year are estimated to be between USD 180 million to USD 220 million, primarily for capacity expansion projects [35] Q&A Session Summary Question: Customer involvement in sourcing raw materials - Management confirmed that they are working with customers to find joint solutions for acquiring raw materials to enhance bargaining power [47] Question: New customer qualifications - Management indicated that there are at least 10 customers in alignment that are expected to generate revenue within the next 3 to 6 months [48] Question: Raw material cost mechanisms - Management stated that price adjustments can only be made per existing contracts, and provisions for price increases are included in some multiyear contracts [53][54] Question: Hydrogen vs. battery-powered vehicles - Management explained that hydrogen technology is emerging, and while it may involve smaller batteries, they have tested their battery solutions successfully in hydrogen trucks [56][57]