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 second quarter of fiscal year 2021, which ended on June 30, 2021. Lion reports in U.S. dollars and in accordance with IFRS.
Q2 2021 Highlights:
Delivery of 61 vehicles, a significant increase, as compared to the 22 delivered in the same period last year. Revenue of $16.7 million, up $10.6 million, as compared to $6.1 million in Q2 2020. Gross profit of $0.9 million, down $0.1 million, as compared to $1.0 million in Q2 2020. Administrative expenses of $50.0 million, up $48.9 million as compared to $1.1 million in Q2 2020, primarily as a result of significant increase in non-cash share-based compensation of $44.5 million, 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. Selling expenses of $13.3 million, up $12.5 million, as compared to $0.9 million in Q2 2020, primarily as a result of significant increase in non-cash share-based compensation of $10.0 million, the expansion of Lion’s salesforce, as well as an increase in expenses associated with Lion’s Experience Centers. Net Loss of $178.5 million in Q2 2021 as compared to a net loss of $1.3 million in Q2 2020. The net loss for Q2 2021 includes $167.7 million related to non-cash share-based compensation, non-cash increase in the fair value of share warrant obligations, and transaction costs. Adjusted EBITDA1 of negative $5.5 million, as compared to negative $0.1 million in Q2 2020, after adjusting for certain non-cash and non-recurring items such as change in fair value of share warrant obligations, share-based compensation, transaction costs and other non-recurring expenses. Acquisition of intangible assets, which mainly consist of R&D activities, amounted to $10.7 million, up $8.2 million, as compared to $2.5 million in Q2 2020.
At June 30, 2021, Lion had $364.3 million in cash, with an additional borrowing capacity of up to $100 million added on August 11, 2021.
Business Update:
400+ vehicles on the road, with approximately 8 million miles driven. Vehicle order book1 of 965 all-electric medium- and heavy-duty urban vehicles as of August 12th, 2021, consisting of 262 trucks and 703 buses, representing a combined total order value of over $280 million. LionEnergy order book1 of 73 charging stations as of August 12th, 2021, representing a combined total order value of approximately $1.0 million. Initial truck orders from notable new clients such as: Green Mountain Power, Day & Ross, Zūm, and Casella Waste Systems.
The order book also includes a new order from Amazon for 15 Lion8 Tractor trucks, a new order from Zūm Services Inc. for 30 LionA school buses, and a repeat purchase order for 35 LionC buses from the Prince Edward Island provincial government. Significant progress in recruitment, with total company headcount of approximately 900 employees as of the date hereof, along with key strategic hires. 4 new Experience Centers expected to be in operation during the second half of the year. Approximately 80% completion in the construction of the shell building of the 900,000 square-foot Joliet, Illinois manufacturing facility, with vehicle production expected to begin in the second half of 2022; Colliers International retained as construction project manager and Merkur retained as advisors to assist with global project planning as well as for the selection and commissioning of production equipment. Formal announcement of the YMX International Aerocity of Mirabel, Quebec as the site selected for the construction of the Company’s battery plant and innovation center; initiation of the preliminary work (geotechnical and environmental analysis, as well as permitting) and JR Automation, a Hitachi company, retained for battery manufacturing automation and equipment selection. We have also retained Pomerleau, a flagship corporation in the Canadian construction industry, as project manager and general contractor for the construction of the battery plant and innovation center.Entered into a new credit agreement with a syndicate of lenders providing for a committed revolving credit facility in the maximum principal amount of $100 million, to be used for working capital, capital expenditure requirements and general corporate purposes.
“We are pleased with our Q2 2021 performance, as we continue to execute on our growth strategy in a timely manner. We have very strong momentum in client dialogue and focus our efforts on generating purchase orders and delivering our purpose-built vehicles that meet the needs of our growing customer base. Various levels of governments across North America are sending strong signals to support transport electrification, resulting in an increased unprecedented interest from both our public and private clients. This bodes well for our long-term growth,” commented Marc Bedard, CEO – Founder of Lion. “On the operational front, we are advancing the development and commercialization of new platforms and are on track to launch 8 new vehicles by the end of 2022, for a total of 15 models. In parallel, we have made significant progress on our two plant projects and are on-track for the first vehicles to be produced from our Joliet, Illinois manufacturing plant in the second half of 2022, and for the initial battery production at our battery plant in the same timeframe,” concluded Marc Bedard.
Changes to the Board of Directors and Management Team and Update on Company Headcount.
Board of Directors
Mr. Lorenzo Roccia, Chairman of Transatlantic Holdings, an international financial holding company, has been appointed to the Board of Directors of Lion as an independent Director. Mr. Roccia is a Founder & Chairman of Transatlantic Power Holdings and Non-Executive Director of Skyline Renewables, one of the leading independent renewable energy companies in the US with over 1GW+ of wind and solar assets.
Management Team:
The Company announced the appointment of Nathalie Giroux as Vice President, Chief People Officer. In her role, Ms. Giroux will help oversee the development and promotion of best practices in human resources management, operations, organizational development, talent management and talent acquisition.
Company Headcount:
As of August 12, 2021, Lion had approximately 900 employees, of which approximately 270 were in its Engineering and R&D departments.
Select Explanation on Results of Operations:
For the three months ended June 30, 2021, revenues amounted to $16.7 million, an increase of $10.6 million, or 175%, compared to the corresponding period in the prior year. The increase in revenue was primarily due to an increase in vehicle sales volume of 39 units, from 22 units for the three months ended June 30, 2020 to 61 units (48 school buses and 13 trucks; 41 vehicles in Canada and 20 vehicles in the U.S.) for the three months ended June 30, 2021.
For the six months ended June 30, 2021, revenues amounted to $22.9 million, an increase of $15.6 million or 214% compared to the corresponding period in the prior year. The increase in revenue was primarily due to an increase in vehicle sales volume of 61 units, from 24 units for the six months ended June 30, 2020, to 85 units (66 school buses and 19 trucks; 63 vehicles in Canada and 22 vehicles in the U.S.) for the six months ended June 30, 2021.
For the three and six months ended June 30, 2021, cost of sales amounted to $15.8 million and $23.8 million, respectively. They increased by $10.8 million and $16.5 million, respectively, compared to the corresponding periods in the prior year. 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 the increase in the cost of raw materials in components used to manufacture Lion’s products.
For the three months ended June 30, 2021, gross profit decreased by $0.1 million, from $1.0 million (17.3% of revenues) for the three months ended June 30, 2020, to $0.9 million (5.4% of revenues) for the three months ended June 30, 2021. For the six months ended June 30, 2021, gross profit decreased by $0.9 million (to negative $0.9 million) compared to the corresponding period in the prior year. The decrease for both periods is 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 the increase in the cost of raw materials in components used to manufacture Lion’s products, partially offset by the positive gross profit impact of increased sales volumes.
For the three months ended June 30, 2021, administrative expenses increased by $48.9 million, from $1.1 million for the three months ended June 30, 2020, to $50.0 million for the three months ended June 30, 2021. The increase was primarily due a significant increase in non-cash share-based compensation of $44.5 million, as well as 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.
For the six months ended June 30, 2021, administrative expenses increased by $54.4 million, from $1.9 million for the six months ended June 30, 2020, to $56.3 million for the six months ended June 30, 2021. The increase was primarily due a significant increase in non-cash share-based compensation of $47.4 million, as well as 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.
For the three months ended June 30, 2021, selling expenses increased by $12.5 million, from $0.9 million for the three months ended June 30, 2020, to $13.3 million for the three months ended June 30, 2021. The increase was primarily due a significant increase in non-cash share-based compensation of $10.0 million, as well as to Lion expanding its sales force, and to an increase in expenses associated with Experience Centers.
For the six months ended June 30, 2021, selling expenses increased by $15.3 million, from $2.5 million for the six months ended June 30, 2020, to $17.7 million for the six months ended June 30, 2021. The increase was primarily due a significant increase in non-cash share-based compensation of $12.1 million as well as to Lion expanding its sales force, and an increase in expenses associated with Experience Centers.
Transaction costs of $13.7 million for the three and six months ended June 30, 2021, were related to the completion of Lion’s business combination with Northern Genesis Acquisition Corp (the “Business Combination”) and were mainly composed of legal, banking, and other professional fees.
For the three and six months ended June 30, 2021, finance costs increased by $1.1 million and $3.1 million, respectively, compared to the corresponding periods in the prior year. The increase was driven primarily 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, partially offset by lower accretion expense on retractable common shares. These costs were incurred 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. The increase was also driven by an increase in interest accretion related to lease liabilities from new Lion Experience Center openings.
Foreign exchange losses and gains for all periods presented relate primarily to the revaluation of net monetary assets denominated in foreign currencies. Foreign exchange loss (gain) for the three and six months ended June 30, 2021, decreased by $1.6 million and $1.1 million respectively, compared to the corresponding periods in the prior year, largely as a result of a strengthening of the Canadian dollar relative to the U.S. dollar during such periods of 2021, as compared to the comparative periods of 2020.
Change in fair value of share warrant obligations increased from nil for the three and six months ended June 31, 2020 (as no warrants had been issued), to losses of $99.3 million and $99.2 million, respectively, for the three and six months ended June 30, 2021. The losses for the three and six months ended June 30, 2021, were 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 increased fair value of Lion equity as compared to the previous valuations.
The net loss incurred for the three and six months ended June 30, 2021, was largely due to higher administrative and selling expenses (including share-based compensation), increase in the fair value of share warrant obligations, and transaction costs.
A conference call and webcast will be held on August 13, 2021, 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). A live webcast of the conference call will also be available at www.thelionelectric.com under the “Events and Presentation” 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 incorporates by reference our 2021 second quarter financial report, including the unaudited interim consolidated financial statements of the Company as at and for the quarter ended June 30, 2021, and related 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
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. For more information visit https://thelionelectric.com/en/products/electric
