MONTREAL — The Lion Electric Company (LEV.WS) (NYSE: LEV) (TSX: LEV) (“Lion” or the “Company”), a leading manufacturer of all-electric medium and heavy-duty urban vehicles, today announced its financial and operating results for the first quarter of fiscal year 2022, which ended on March 31, 2022. Lion reports its results in US dollars and in accordance with International Financial Reporting Standards (“IFRS”).
Q1 2022 FINANCIAL HIGHLIGHTS
- Delivery of 84 vehicles, an increase of 60 vehicles, as compared to the 24 delivered in the same period last year.
- Revenue of $22.6 million, up $16.4 million as compared to $6.2 million in Q1 2021.
- Gross loss of $0.9 million, as compared to a gross loss of $1.8 million in Q1 2021.
- Net earnings of $2.1 million, as compared to a net loss of $16.1 million in Q1 2021. Net earnings for Q1 2022 include a $21.5 million gain related to non-cash decrease in the fair value of share warrant obligations and a $3.8 million charge related to non-cash share-based compensation, compared to a $5.2 million charge related to non-cash share-based compensation in Q1 2021.
- Adjusted EBITDA1 of negative $11.3 million, as compared to negative $5.9 million in Q1 2021, after mainly adjusting for certain non-cash items such as change in fair value of share warrant obligations and share-based compensation.
- Capital expenditures, which included expenditures related to the Joliet Facility and the Lion Campus, amounted to $34.9 million, up $33.8 million, as compared to $1.1 million in Q1 2021.
- Acquisition of intangible assets, which mainly consist of R&D activities, amounted to $15.0 million, up $8.5 million, as compared to $6.5 million in Q1 2021.
- As of March 31, 2022, Lion had $155.5 million in cash, and access to a committed revolving credit facility in the maximum principal amount of $200 million, as well as available support from the Canadian federal and Quebec governments of up to approximately C$100 million (amounting to approximately C$50 million each) in connection with the Lion Campus.
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1 Adjusted EBITDA is a non-IFRS financial measure. See “Non-IFRS Measures and Other Performance Metrics” section of this press release.
BUSINESS UPDATES
- More than 600 vehicles on the road, with over 10 million miles driven.
- Vehicle order book2 of 2,422 all-electric medium- and heavy-duty urban vehicles as of May 3, 2022, consisting of 286 trucks and 2,136 buses, representing a combined total order value of approximately $600 million based on management’s estimates.
- LionEnergy order book2 of 241 charging stations and related services as of May 3, 2022, representing a combined total order value of approximately $3.0 million.
- 12 Experience Centers in operation in the United States and Canada.
- Tenant improvement work as well as the installation of critical production and other equipment advancing at the new leased 900,000 sq-ft U.S. manufacturing facility in Joliet, Illinois (the “Joliet Facility”). Vehicle production expected to begin in the second half of 2022.
- Construction and development work for the battery manufacturing plant is advancing, including the installation of the prototype module production line at JR Automation’s facilities in Troy, Michigan, the production of the first prototype pack, and the completion of the steel structure for the battery plant building in Mirabel. Production of battery packs and modules is expected to begin in the second half of 2022.
- Several new key partnerships announced with truck upfitters to provide new fully electrified refrigerated, dry freight and aluminum stake body options for the Lion6 zero-emission urban truck. The new partnerships include equipment upfit options from industry leaders Morgan Truck Body, Thermo King, Knapheide and CM Truck Beds.
- Launch of a new lightweight, aerodynamic, 100% electric heavy-duty truck on the Lion6 chassis, together with Transit Truck Bodies that is suited for last-mile urban delivery, that was developed under an upfitter partnership model.
- As of May 3, 2022, Lion had approximately 1,100 employees, of which over 300 were in its Engineering and R&D departments.
“We are pleased with our Q1 performance. Despite the ongoing challenges in the supply chain environment, we continued to experience improvements and achieved a record number of quarterly vehicle deliveries. We also sustained momentum in vehicle manufacturing and we expect that cadence of production, and therefore of deliveries, should gradually improve over the rest of the coming year,” commented Marc Bedard, CEO – Founder of Lion. “As we celebrate our first year as a public company, we continue to build the foundations of our long-term growth and are excited to see that the movement towards electrification of transports continues to gain strong momentum, as demonstrated by unprecedented government funding packages announced in the U.S. and Canada over the past few months,” concluded Marc Bedard.
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2 See “Non-IFRS Measures and Other Performance Metrics” section of this press release.
SELECT EXPLANATIONS ON RESULTS OF OPERATIONS FOR THE FIRST QUARTER OF FISCAL YEAR 2022
Revenue
For the three months ended March 31, 2022, revenue amounted to $22.6 million, an increase of $16.4 million compared to three months ended March 31, 2021. The increase in revenue was primarily due to an increase in vehicle sales volume of 60 units, from 24 units (18 school buses and 6 trucks; 22 vehicles in Canada and 2 vehicles in the U.S.) for the three months ended March 31, 2021, to 84 units (72 school buses and 12 trucks; 80 vehicles in Canada and 4 vehicles in the U.S.) for the three months ended March 31, 2022. Revenues for the three months ended March 31, 2022 were impacted by continuing global supply chain challenges, which required the Company to delay the final assembly of certain vehicles and resulted in increased inventory levels. In addition, the school bus unit mix for the three months ended March 31, 2022, as well as discounted pricing on certain trucks that were sold in the context of new product launches, had a negative impact on average selling prices per unit. Revenues generated from sales of LionEnergy and aftermarket parts during the three months ended March 31, 2022 were also slightly lower than during the three months ended December 31, 2021.
Cost of Sales
For the three months ended March 31, 2022, cost of sales amounted to $23.6 million, representing an increase of $15.5 million, compared to the three months ended March 31, 2021. The increase was primarily due to increased sales volumes and higher production levels, increased fixed manufacturing costs related to the ramp-up of production capacity for future quarters, and the impact of continuing global supply chain challenges.
Gross Loss
For the three months ended March 31, 2022, gross loss decreased by $0.9 million to negative $0.9 million, compared to negative $1.8 million for the three months ended March 31, 2021. The decrease included the positive gross profit impact of increased sales volumes, mainly offset by the impact of increased fixed manufacturing costs related to the ramp-up of production capacity for future quarters and the impact of continuing global supply chain challenges.
Administrative Expenses
For the three months ended March 31, 2022, administrative expenses (which included $2.8 million of non-cash share-based compensation) increased by $4.7 million from $6.3 million for the three months ended March 31, 2021, to $11.0 million. The increase was mainly due to an increase in expenses reflecting Lion’s status as a public company, and the expansion of Lion’s head office capabilities in anticipation of an expected increase in business activities. Administrative expenses for the three months ended March 31, 2022, also includes an expense of $0.9 million relating to the procurement of director and officer (“D&O”) insurance on terms reflecting the public-company status of Lion, which is materially higher than the expense incurred in prior periods when the Company was a private company.
Selling Expenses
For the three months ended March 31, 2022, selling expenses (which included $1.0 million of non-cash share-based compensation) increased by $1.0 million, from $4.4 million for the three months ended March 31, 2021, to $5.4 million. The increase was primarily due to Lion expanding its sales force in anticipation of the ramp-up of production capacity, and an increase in expenses as a result of the opening and operations of new Experience Centers.
Finance Costs
For the three months ended March 31, 2022, finance costs decreased by $2.7 million, from $3.9 million for the three months ended March 31, 2021, to $1.2 million. The decrease was driven primarily by lower interest expense on long term debts, the non-recurrence of interest expense on convertible debt instruments and accretion expense on retractable common shares which were repaid on May 6, 2021, partially offset by an increase in interest costs related to lease liabilities.
Foreign Exchange Loss (Gain)
Foreign exchange gains and losses relate primarily to the revaluation of net monetary assets denominated in foreign currencies to the functional currencies of the related Lion entities. Foreign exchange loss for the three months ended March 31, 2022, was $0.9 million compared to a gain of $0.2 million for the three months ended March 31, 2021, largely as a result of a strengthening of the Canadian dollar relative to the US dollar during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021.
Change in fair value of share warrant obligations
Change in fair value of share warrant obligations resulted in a gain of $21.5 million for the three months ended March 31, 2022, compared to a gain of $0.1 million for the three months ended March 31, 2021, and was related to the warrants issued to a specified customer in July 2020 and the public and private warrants issued as part of the closing of the Business Combination on May 6, 2021. The gain for the three months ended March 31, 2022 results mainly from the decrease in the market price of Lion equity as compared to the previous valuations.
Net Earnings (Loss)
For the three months ended March 31, 2022, net earnings were $2.1 million, as compared to a net loss of $16.1 million for the three months ended March 31, 2021. The increase in net earnings (loss) for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was largely due to the gain related to the fair value of share warrant obligations, partially offset by higher administrative and selling expenses.
COMPANY HEADCOUNT
As of May 3, 2022, Lion had approximately 1,100 employees, of which over 300 were in its Engineering and R&D departments.
FINANCIAL REPORT
This release should be read together with our 2022 first quarter financial report, including the unaudited condensed interim consolidated financial statements of the Company as at and for the quarter ended March 31, 2022 and related management’s discussion and analysis (“MD&A”), which will be filed by the Company with applicable Canadian securities regulatory authorities and with the U.S. Securities and Exchange Commission and which will be available on our website at www.thelionelectric.com.
2022 ANNUAL MEETING OF SHAREHOLDERS
Lion will be holding its 2022 Annual Meeting of Shareholders (the “Meeting”) as a completely virtual meeting via live webcast on May 6, 2022, at 11:00 a.m. (Eastern Time). The decision to hold a virtual meeting only was made in an effort to contain the spread of the coronavirus (COVID-19) and to prioritize and support the well-being of Lion’s shareholders, employees and other Meeting attendees.
All shareholders, regardless of their geographic location, will have an equal opportunity to participate at the virtual Meeting at https://web.lumiagm.com/442208210. To access the online Meeting platform, participants will need an Internet-connected device, such as laptops, computers, tablets or cellphones.
The Company’s management information circular and notice of annual meeting of shareholders relating to the Meeting are available on Lion’s website at www.thelionelectric.com under the “Events and Presentations” page of the “Investors” section, and have been filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
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 buses and minibuses for the school, paratransit and mass transit segments. 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.
