MONTREAL, Canada – The Lion Electric Company (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 2024, which ended on March 31, 2024. Lion reports its results in US dollars and in accordance with International Financial Reporting Standards (“IFRS”).
Q1 2024 Financial Highlights
Revenue of $55.5 million, up $0.8 million, as compared to $54.7 million in Q1 2023.
Delivery of 196 vehicles, a decrease of 24 vehicles, as compared to the 220 delivered in Q1 2023.
Gross loss, reflecting higher manufacturing costs due to the introduction of new products, of $11.1 million as compared to a gross loss of $2.3 million in Q1 2023.
Net loss of $21.7 million, as compared to net loss of $15.6 million in Q1 2023.
Adjusted EBITDA1 of negative $17.3 million, as compared to negative $14.5 million in Q1 2023.
Additions to property, plant and equipment of $0.4 million, down $22.7 million, as compared to $23.1 million in Q1 2023.
Additions to intangible assets, which mainly consist of vehicle and battery development activities, amounted to $11.3 million, ($8.2 million net of government assistance received), down $5.2 million as compared to $16.5 million in Q1 2023.
Business Updates
More than 2,000 vehicles on the road, with over 25 million miles driven (over 40 million kilometers).
Vehicle order book2 of 2,004 all-electric medium- and heavy-duty urban vehicles as of May 7, 2024, consisting of 211 trucks and 1,793 buses, representing a combined total order value of approximately $475 million based on management’s estimates.
LionEnergy order book of 350 charging stations and related services as of May 7, 2024, representing a combined total order value of approximately $8 million.
12 experience centers in operation in the United States and Canada.
Initial deliveries to customers of Lion5 trucks (delivered with medium duty Lion battery packs) and of LionD buses during the first quarter of 2024.
On April 18, 2024, the Company announced a reduction of its workforce, combined with other cost-cutting measures, including in areas such as third-party inventory logistics, lease expenses, consulting, product development and professional fees. The workforce reduction affected approximately 120 employees in overhead and product development functions. These measures were aimed at further reducing the Company’s operating expenses and aligning its cost structure to current market dynamics, notably delays experienced with the ZETF, which continue to adversely impact the Company’s school bus deliveries.
“Despite a challenging first quarter marked by turbulence in the electric vehicle sector, our commitment to long-term growth remains unwavering. This drove us to make the tough decision to streamline our workforce and implement cost-saving measures. While difficult, this move was essential to fortify our liquidity in the face of market volatility, ensuring sustainability without compromising production capacity,” commented Marc Bedard, CEO-Founder of Lion. “As we commence deliveries of the LionD and Lion5, our focus for the remainder of the year is on ramping up purchase orders and accelerating deliveries, essential steps in reaching profitability,” he concluded.
Select Explanations On Results Of Operations For The First Quarter Of Fiscal Year 2024
Revenue
For the three months ended March 31, 2024, revenue amounted to $55.5 million, an increase of $0.8 million, compared to the three months ended March 31, 2023. The increase in revenue was primarily due to the impact of a higher proportion of U.S. vehicle sales (which results in a more favorable product mix), partially offset by the impact of a decrease in vehicle sales volume of 24 units, from 220 units (207 school buses and 13 trucks; 215 vehicles in Canada and 5 vehicles in the U.S.) for the three months ended March 31, 2023, to 196 units (184 school buses and 12 trucks; 165 vehicles in Canada and 31 vehicles in the U.S.) for the three months ended March 31, 2024.
Cost of Sales
For the three months ended March 31, 2024, cost of sales amounted to $66.6 million, representing an increase of $9.7 million, compared to the three months ended March 31, 2023. The increase was primarily due to increased manufacturing costs related to the ramp-up of the new products (LionD, Lion5, and the Lion battery packs) partially offset by lower vehicle sales volumes.
Gross Loss
For the three months ended March 31, 2024, gross loss increased by $8.9 million to negative $11.1 million, compared to negative $2.3 million for the three months ended March 31, 2023. The decrease was primarily due to increased manufacturing costs related to the ramp-up of the new products (LionD, Lion5, and the Lion battery packs).
Administrative Expenses
For the three months ended March 31, 2024, administrative expenses decreased by $1.9 million, from $13.0 million for the three months ended March 31, 2023, to $11.1 million. Administrative expenses for the three months ended March 31, 2024 included $0.3 million of non-cash share-based compensation, compared to $1.0 million for the three months ended March 31, 2023. Excluding the impact of non-cash share-based compensation, administrative expenses decreased from $12.0 million for the three months ended March 31, 2023, to $10.8 million for three months ended March 31, 2024. The decrease was mainly due to a decrease in expenses and a lower headcount, both resulting from the workforce reduction and cost reduction initiatives implemented starting in November 2023. As a percentage of sales, administrative expenses were 20% of revenues for the three months ended March 31, 2024, compared to 24% for the three months ended March 31, 2023.
Selling Expenses
For the three months ended March 31, 2024, selling expenses decreased by $2.1 million, from $5.9 million for the three months ended March 31, 2023, to $3.8 million. Selling expenses for the three months ended March 31, 2024 included $0.1 million of non-cash share-based compensation, compared to $0.4 million for the three months ended March 31, 2023. Excluding the impact of non-cash share-based compensation, selling expenses decreased from $5.5 million for the three months ended March 31, 2023, to $3.7 million for three months ended March 31, 2024. The decrease was primarily due to streamlined selling related expenses, including lower headcount and marketing costs resulting from the workforce reduction and cost reduction initiatives implemented starting in November 2023.
Finance Costs
For the three months ended March 31, 2024, finance costs increased by $9.2 million, from $1.4 million for the three months ended March 31, 2023, to $10.6 million for the three months ended March 31, 2024. Finance costs for the three months ended March 31, 2024 were net of $0.3 million of capitalized borrowing costs, compared to $1.7 million for the three months ended March 31, 2023. Excluding the impact of capitalized borrowing costs, finance costs increased by $7.8 million compared to the three months ended March 31, 2023. The increase was driven primarily by higher interest expense on long-term debt, due to higher average debt outstanding during the first quarter of fiscal 2024 relating to borrowings made under the Revolving Credit Agreement, the IQ Loan, the SIF Loan, the Finalta-CDPQ Loan Agreement, and the Supplier Credit Facility (as such terms are defined below), interest (including interest paid in kind with respect to the Convertible Debentures) and accretion expense as well as financing costs related to the Convertible Debentures and Non-Convertible Debentures issued in July 2023, and an increase in interest costs related to lease liabilities, including for the Battery Plant. Finance charges for the three months ended March 31, 2024 included non-cash charges of $5.5 million related to interest paid in kind with respect to the Convertible Debentures and accretion expense.
Foreign Exchange Loss (Gain)
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 three months ended March 31, 2024, foreign exchange loss was $2.6 million, compared to a gain of $1.2 million in the prior year, related primarily to the impact of changes in foreign currency rates (impact of changes in the Canadian dollar relative to the U.S. dollar).
Change in Fair Value of Conversion Options on Convertible Debt Instruments
For the three months ended March 31, 2024, change in fair value of conversion options on convertible debt instruments resulted in a gain of $10.7 million, and was related to the revaluation of the conversion options on the Convertible Debentures issued in July 2023 resulting mainly from the decrease in the market price of Lion equity as compared to the previous valuations.
Change in Fair Value of Share Warrant Obligations
Change in fair value of share warrant obligations moved from a gain of $5.7 million for the three months ended March 31, 2023, to a gain of $6.7 million, for the three months ended March 31, 2024. The gain for the three months ended March 31, 2024 was related to the Specific Customer Warrants, the public and private Business Combination Warrants, the 2022 Warrants, and the July 2023 Warrants, and resulted mainly from the decrease in the market price of Lion equity as compared to the previous valuations.
Net Loss
The net loss of $21.7 million for the three months ended March 31, 2024 as compared to the net loss of $15.6 million for the prior year was mainly due to the higher gross loss and higher finance costs, partially offset by the impact of the reduction in administrative and selling expenses as well as higher gains related to non-cash decrease in the fair value of share warrant obligations and the conversion options on convertible debt instrument.
Conference Call
A conference call and webcast will be held on May 8, 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 431009. 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.
Annual Meeting Of Shareholders
This year, the Company will be holding its Annual Meeting of Shareholders as a completely virtual meeting, which will be conducted via live webcast on May 15, 2024, at 11:00 a.m. (Eastern Time). Shareholders of the Company, regardless of their geographic location, may attend the Meeting online at https://www.icastpro.ca/elion240515.
The Company’s management information circular and notice of annual meeting of shareholders relating to the Annual Meeting of Shareholders are available on Lion’s website at www.thelionelectric.com in the Investors section, under Events and Presentations, and have been filed on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.
Financial Report
This release should be read together with the 2024 first quarter financial report, including the unaudited condensed interim consolidated financial statements of the Company and the related notes as at March 31, 2024 and for the three months ended March 31, 2024 and 2023, and the related management 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 SEDAR+ as well as on our website at www.thelionelectric.com. Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the MD&A.
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.
