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 fourth quarter and fiscal year 2021, which ended on December 31, 2021. Lion reports its results in US dollars and in accordance with International Financial Reporting Standards (“IFRS”).
Q4 2021 Financial Highlights:
Delivery of 71 vehicles, an increase of 25 vehicles, as compared to the 46 delivered in the same period last year. Revenue of $22.9 million, up $9.4 million, as compared to $13.5 million in Q4 2020. Gross profit of $2.2 million, down $0.5 million, as compared to $2.5 million in Q4 2020. Net earnings of $28.3 million in Q4 2021, as compared to a net loss of $53.0 million in Q4 2020. Net earnings for Q4 2021 include a $46.6 million gain related to non-cash decrease in the fair value of share warrant obligations and a $5 million charge related to non-cash share-based compensation, compared to a $31.9 million charge related to non-cash share-based compensation in Q4 2020. Adjusted EBITDA[1] of negative $7.5 million, as compared to nil in Q4 2020, 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 $19.2 million, up $18.3 million, as compared to $0.9 million in Q4 2020. Acquisition of intangible assets, which mainly consist of R&D activities, amounted to $9.7 million, up $2.9 million, as compared to $6.8 million in Q4 2020. As of December 31, 2021, Lion had $241.7 million in cash, and access to a committed revolving credit facility in the maximum principal amount of $100 million (which maximum principal amount was increased to $200 million on January 25, 2022), 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.
BUSINESS UPDATES:
More than 550 vehicles on the road, with over 9 million miles driven. Vehicle order book[2] of 2,325 all-electric medium- and heavy-duty urban vehicles as of February 24, 2022, consisting of 300 trucks and 2,025 buses, representing a combined total order value of approximately $575 million based on management’s estimates. LionEnergy order book2 of 278 charging stations and related services as of February 24, 2022, representing a combined total order value of approximately $3.0 million. 11 Experience Centers in operation in the United States and Canada Took possession of new leased 900,000 sq-ft U.S. manufacturing facility in Joliet, Illinois (the “Joliet Facility”) and continuing with tenant improvement work as well as the installation of critical production and other equipment. Vehicle production is expected to begin in the second half of 2022. Construction advancing at the battery manufacturing plant and innovation center in Mirabel Quebec, (the”Lion Campus”) and the purchase of critical equipment for the battery plant has begun. Production of battery packs and modules expected to begin in the second half of 2022. Launched LionCapital Solutions, a new division dedicated to providing customers with flexible financing solutions specifically tailored to the medium and heavy-duty electric vehicle market. As of February 24, 2022, Lion had approximately 1,000 employees, of which approximately 300 were in its Engineering and R&D departments.
“We are proud of the progress we have made during the last year, which marked, among other things, our transition to a public company. In addition to delivering vehicles across North America, we solidified our commanding leadership in all-electric school buses, continued to strengthen our order book2 in both buses and trucks, and advanced the development of additional vehicle platforms. We also started building our 900,000 square
foot, state-of-the-art manufacturing facility in Joliet, Illinois, which will eventually have the capacity to annually produce up to 20,000 Lion vehicles per year for the U.S. market. Additionally, we began the construction of the Lion Campus, which will house our 5 GhW battery plant and innovation centre,” commented Marc Bedard, CEO –Founder of Lion. “As we look forward to 2022, I would like to thank all employees for their continued dedication, as well as for their flexibility, agility and innovation, which are essential as we strengthen our position as a leader in the electric vehicle sector. “I am confident that the initiatives we have taken on will accelerate growth, while making a concrete, long-term impact on the society we live in,” concluded Marc Bedard.
Select Explanations on results of operations for the fourth quarter and fiscal year 2021:
For the three months ended December 31, 2021, revenue amounted to $22.9 million, an increase of $9.4 million, compared to the corresponding period in the prior year. The increase in revenue was primarily due to an increase in vehicle sales volume of 25 units, from 46 units (all school buses; 28 vehicles in Canada and 18 vehicles in the U.S.) for the three months ended December 31, 2020 to 71 units (57 school buses and 14 trucks; 43 vehicles in Canada and 28 vehicles in the U.S.) for the three months ended December 31, 2021. Revenues for the three months ended December 31, 2021 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. Although deliveries for the three months ended December 31, 2021 were sequentially higher than previous quarter deliveries within fiscal 2021, we still expect manufacturing and deliveries for the first quarter of fiscal 2022 to be impacted by supply chain challenges, however we expect these issues to be reduced as we move forward in the year.
For the year ended December 31, 2021, revenue amounted to $57.7 million, an increase of $34.3 million, compared to the year ended December 31, 2020. The increase in revenue was primarily due to an increase in vehicle sales volume of 116 units, from 80 units (all school buses; 47 vehicles in Canada and 33 vehicles in the U.S.) for the year ended December 31, 2020, to 196 units (151 school buses and 45 trucks; 134 vehicles in Canada and 62 vehicles in the U.S.) for the year ended December 31, 2021. Revenues for the year ended December 31, 2021 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.
Cost of Sales:
For the three months ended December 31, 2021, cost of sales amounted to $20.7 million, representing an increase of $9.7 million compared to $11.0 million in the corresponding period in the prior year. The increase compared to the corresponding prior period 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.
For the year ended December 31, 2021, cost of sales amounted to $57.7 million, representing an increase of $37.4 million, compared to the year ended December 31, 2020. 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 Prot:
For the three months ended December 31, 2021, gross profit decreased by $0.3 million, from $2.5 million for the corresponding period in the prior year, to $2.2 million for the three months ended December 31, 2021. The decrease was primarily due to 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, partially offset by the positive gross profit impact of increased sales volumes.
For the year ended December 31, 2021, gross profit decreased by $3.1 million to nil, compared to $3.1 million for the year ended December 31, 2020. The decrease was primarily due to 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, partially offset by the positive gross profit impact of increased sales volumes.
Administrative Expenses:
For the three months ended December 31, 2021, administrative expenses (which include $4.3 million of non-cash share-based compensation) decreased by $19.2 million, from $31.3 million for the three months ended December 31, 2020, to $12.2 million for the three months ended December 31, 2021. The decrease was primarily due to a decrease in non-cash share-based compensation of $25.1 million, partially offset by an increase in expenses reflecting Lion’s transition to being 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 December 31, 2021, 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.
For the year ended December 31, 2021, administrative expenses (which included $56.7 million of non-cash share-based compensation) increased by $18.5 million, from $59.9 million for the year ended December 31, 2020, to $78.4 million. The increase was mainly due to an increase in expenses reflecting Lion’s transition to being a public company, and the expansion of Lion’s head officer capabilities in anticipation of an expected increase in business activities, as well as non-cash share-based compensation. Administrative expenses for the year ended December 31, 2021, also includes an expense of $2.5 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 December 31, 2021, selling expenses (which include $0.6 million of non-cash share-based compensation) increased by $0.6 million, from $4.2 million for the three months ended December 31, 2020, to $4.8 million for the three months ended December 31, 2021. The increase was primarily due to the impact of Lion expanding its sales force, and to an increase in expenses associated with Experience Centers, partially offset by a decrease in non-cash share-based compensation of $1.9 million.
For the year ended December 31, 2021, selling expenses (which included $14.4 million of non-cash share-based compensation) increased by $12.0 million, from $15.7 million for the year ended December 31, 2020, to $27.7 million. The increase was primarily due to an increase in non-cash share-based compensation of $4.2 million as well as to Lion expanding its sales force in anticipation of the ramp-up of production capacity, and an increase in expenses associated with Experience Centers as a result of the opening and operations of new Experience Centers.
Transaction Costs:
Transaction costs of $13.7 million for the year ended December 31, 2021 were incurred in the second quarter of 2021 and related to the completion of the Company’s business combination and plan of reorganization on May 6, 2021 pursuant to which Lion became a public company (the “Business Combination”) and were mainly composed of legal, banking, and other professional fees.
Finance Costs:
For the three months ended December 31, 2021, nance costs decreased by $1.9 million compared to the corresponding period in the prior year as a result of a significantly lower amount of average debt outstanding during the period as a result of certain debt repayments or reclassification to common shares of these related debts, which occurred on May 6, 2021, as part of the closing of the Business Combination.
For the year ended December 31, 2021 nance costs decreased by $0.3 million, from $8.7 million for the year ended December 31, 2020, to $8.3 million. The decrease was driven primarily by lower accretion expense on retractable common shares, (which were outstanding prior to the Business Combination), partially offset by an increase in borrowing costs due to an increase in the amount of average debt outstanding and an increase in interest expense on convertible debt instruments (up until the respective repayments or reclassification to common shares of these related debts, which occurred on May 6, 2021, as part of the closing of the Business Combination), as well as and an increase in interest costs related to lease liabilities from new Experience Center openings.
Foreign Exchange (Gain) Loss:
Foreign exchange gains and losses for all periods presented relate primarily to the revaluation of net monetary assets denominated in foreign currencies to the functional currencies of the related Lion entities. For three months ended December 31, 2021, foreign exchange loss was $2.3 million, compared a gain of $0.4 million in the corresponding period in the prior year, largely as a result of a strengthening of the Canadian dollar relative to the US dollar during the three months ended December 31, 2021.
Foreign exchange loss for the year ended December 31, 2021, was $1.0 million compared to a gain of $0.7 million year ended December 31, 2020, largely as a result of a strengthening of the Canadian dollar relative to the US dollar during 2021, as compared to 2020.
Change in Fair Value of Share Warrant Obligations:
Change in fair value of share warrant obligations moved from a loss of $17.3 million for the three months ended December 31, 2020, to a gain of $46.6 million, for the three months ended December 31, 2021. The gain for the three months ended December 31, 2021, was related to the warrants issued to a customer in July 2020 and the public and private warrants issued as part of the closing of the Business Combination on May 6, 2021, and resulted 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 resulted in a gain of $85.8 million for the year ended December 31, 2021, compared to a loss of $16.8 million for the year ended December 31, 2020, related to the warrants issued to a 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 year ended December 31, 2021 results mainly from the decrease in the market price of Lion equity as compared to the previous valuations.
Net Earnings (Loss):
The net earnings for the three months ended December 31, 2021 as compared to the net loss for the corresponding prior period were largely due to the decrease in the fair value of share warrant obligations, and lower share-based compensation (included in administrative and selling expenses).
For the year ended December 31, 2021, net loss decreased by $54.0 million, from $97.4 million for the year ended December 31, 2020, to $43.3 million. The lower net loss for the year ended December 31, 2021 as compared to the year ended December 31, 2020 was largely due to the gain related to the fair value of share warrant obligations, partially offset by higher administrative and selling expenses (including share-based compensation) and transaction costs.
Board of Directors Update:
On November 11, 2021, Mr. Ian Robertson resigned from the Board of Directors. On February 24, 2022, Mr. Christopher Jarratt also resigned from the Board of Directors. Messrs. Robertson and Jarratt were both representatives of Northern Genesis Acquisition Corp. and had served as members of the Board since May 2021. As a result, the Board of Directors is now composed of Pierre Larochelle, Marc Bedard, Sheila Colleen Bair, PierreOlivier Perras, Michel Ringuet, Lorenzo Roccia and Pierre Wilkie. Sheila Colleen Bair was appointed as chair of the Nominating and Corporate Governance Committee and Pierre Wilkie was appointed as chair of the Human Resources and Compensation Committee.
Conference Call:
A conference call and webcast will be held on February 25, 2022, at 8:30 a.m. (Eastern Time) to discuss the results. To participate in the conference call, dial (236) 714-3941 or (833) 329-1697 (toll free). 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 audited annual audited consolidated financial statements of the Company and the related notes for the years ended December 31, 2021, 2020 and 2019, and the related annual MD&A for the fiscal year 2021, which will be led 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.
