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Microvast Reports 2023 Financial Results

Bay Street

STAFFORD, Texas, April 01, 2024 (GLOBE NEWSWIRE) — Microvast Holdings, Inc. (NASDAQ:MVST) (“Microvast” or the “Company”), a technology innovator that designs, develops and manufactures lithium-ion battery solutions, announced today its consolidated financial results for the fourth quarter and full fiscal year ended December 31, 2023 (“Q4 2023” and “FY 2023,” respectively).

“We achieved record revenue in the fourth quarter of 2023 bringing our full year revenue growth to 49.9% and we delivered these revenues at a gross margin close to our targeted level. The revenue growth achieved in EMEA is really encouraging and we would expect this to continue into 2024, with the possibility of this region also hitting breakeven this year.” said Yang Wu, Microvast’s Founder, Chairman, and Chief Executive Officer. “In APAC, with the Huzhou Phase 3.1 expansion now in full operation since Q3 of last year, we anticipate another year of steady revenue growth from mature operations that are now self funding and profitable. To get the U.S. to the same mature and steady state requires us to secure financing to complete Clarksville Phase 1A. This remains a key initiative that we hope to bring to a successful close as early as possible.”

“The combination of growing revenues, gross margin improvement of 14.3 percentage points, and keeping our adjusted operating costs increase to 11% allowed us to achieve a meaningful reduction in our adjusted net loss this year.” said Craig Webster, Microvast’s Chief Financial Officer. “Maintaining the strong revenue growth and gross margin profiles generated by our APAC and EMEA operations will be a key focus for us in 2024, whilst also providing the foundations to improve our overall liquidity position and make further headway in reducing our operating losses.”

Full Year 2023 Highlights

Fourth Quarter 2023 Highlights

Please refer to the tables at the end of this press release for reconciliations of gross profit to non-GAAP adjusted gross profit, net loss to non-GAAP adjusted net loss, non-GAAP EBITDA to non-GAAP adjusted EBITDA.

Q1 2024 Outlook

Webcast Information

Company management will host a conference call and webcast on April 1, 2024, at 4:00 p.m. Central Time, to discuss the Company’s financial results. The live webcast and accompanying slide presentation will be accessible from the Events & Presentations section of Microvast’s investor relations website (https://ir.microvast.com/events-presentations/events). A replay will be available following the conclusion of the event.

About Microvast

Microvast is a global leader in providing battery technologies for electric vehicles and energy storage solutions. With a legacy of over 17 years, Microvast has consistently delivered cutting-edge battery systems that empower a cleaner and more sustainable future. The company’s innovative approach and dedication to excellence have positioned it as a trusted partner for customers around the world. Microvast was founded in 2006 and is headquartered in Stafford, Texas.

For more information, please visit www.microvast.com or follow us on LinkedIn or Twitter (@microvast).

Contact:

Investor Relations
ir@microvast.com

Cautionary Statement Regarding Forward-Looking Statements

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “plan,” “project,” “predict,” “outlook” “should,” “will,” “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These forward-looking statements include, but are not limited to, statements regarding our industry and market sizes, and future opportunities for us. Such forward-looking statements are based upon the current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.

Many factors could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements, including, among others: (1) our ability to remain a going concern; (2) risk that we may not be able to execute our growth strategies or achieve profitability; (3) risk that we will be unable to raise additional capital to execute our business plan or pay our debts as they come due, which may not be available on acceptable terms or at all; (4) restrictions in our existing and any future credit facilities; (5) risks of operations in China; (6) the effects of mechanics liens filed by contractors that we do not have sufficient funds to pay; (7) the effects of existing and future litigation; (8) changes in general economic conditions, including increases in interest rates and associated Federal Reserve policies, a potential economic recession, and the impact of inflation on our business; (9) changes in the highly competitive market in which we compete, including with respect to our competitive landscape, technology evolution or regulatory changes; (10) changes in availability and price of raw materials; (11) labor relations, including the ability to attract, hire and retain key employees and contract personnel; (12) heightened awareness of environmental issues and concern about global warming and climate change; (13) risk that we are unable to secure or protect our intellectual property; (14) risk that our customers or third-party suppliers are unable to meet their obligations fully or in a timely manner; (15) risk that our customers will adjust, cancel or suspend their orders for our products; (16) risk of product liability or regulatory lawsuits or proceedings relating to our products or services; (17) the effectiveness of our information technology and operational technology systems and practices to detect and defend against evolving cyberattacks; (18) changing laws regarding cybersecurity and data privacy, and any cybersecurity threat or event; (19) the effects and associated cost of compliance with existing and future laws and governmental regulations, such as the Inflation Reduction Act; (20) economic, financial and other impacts such as a pandemic, including global supply chain disruptions; and (21) the impacts of geopolitical events, including the ongoing conflicts between Russia and Ukraine and between Israel and Hamas. Microvast’s annual, quarterly and other filings with the U.S. Securities and Exchange Commission identify, address and discuss these and other factors in the sections entitled “Risk Factors.”

Actual results, performance or achievements may differ materially, and potentially adversely, from any forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as forward-looking statements are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. All information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date hereof except as may be required under applicable securities laws. Forecasts and estimates regarding our industry and end markets are based on sources we believe to be reliable, however, there can be no assurance these forecasts and estimates will prove accurate in whole or in part.

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, Microvast has disclosed in this earnings release non-GAAP financial measures, including non-GAAP adjusted gross profit (loss), non-GAAP adjusted EBITDA and non-GAAP adjusted net loss, which are non-GAAP financial measures as defined under the rules of the SEC. These are intended as supplemental measures of our financial performance that are not required by, or presented in accordance with U.S. generally accepted accounting principles (“GAAP”).

Reconciliations to the most comparable GAAP measures, gross profit (loss) and net income (loss), are contained in tabular form in the unaudited financial statements below. Non-GAAP adjusted gross profit (loss) is GAAP gross profit (loss) as adjusted for non-cash stock-based compensation expense included in cost of revenues. Non-GAAP adjusted net loss is GAAP net loss as adjusted for non-cash stock-based compensation expense and change in valuation of warrant liabilities. Non-GAAP adjusted net loss per common share is GAAP net loss per common share as adjusted for non-cash stock-based compensation expense and change in valuation of warrant liabilities per common share. Non-GAAP adjusted EBITDA is defined as net loss excluding depreciation and amortization, non-cash settled share-based compensation expense, interest expense, interest income, changes in fair value of our warrant liability and income tax expense or benefit.

We use non-GAAP adjusted gross profit (loss), non-GAAP adjusted EBITDA and non-GAAP adjusted net loss for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We consider them to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We believe that these non-GAAP financial measures, when taken together with their most directly comparable GAAP measures, gross profit (loss) and net income (loss), provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results.

We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to our historical performance. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors.

Non-GAAP financial measures have limitations as an analytical tool, and you should not consider them in isolation, or as a substitute for, financial information prepared in accordance with GAAP. For example, our calculation of non-GAAP adjusted EBITDA may differ from similarly titled non-GAAP measures, if any, reported by our peer companies, or our peer companies may use other measures to calculate their financial performance, and therefore our use of non-GAAP adjusted EBITDA may not be directly comparable to similarly titled measures of other companies. The principal limitation of non-GAAP adjusted EBITDA is that it excludes significant expenses and income that are required by GAAP to be recorded in our financial statements. In addition, it is subject to inherent limitations as it reflects the exercise of judgments by management about which expense and income are excluded or included in determining this non-GAAP financial measure. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. In addition, such financial information is unaudited and does not conform to SEC Regulation S-X and, as a result, such information may be presented differently in our future filings with the SEC. For example, with respect to the warrant liability resulting from the merger, we now exclude changes in fair value from net loss in our non-GAAP adjusted EBITDA and non-GAAP adjusted net loss calculation, which had not been done in prior periods.

 
MICROVAST HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  December 31,
2022		   December 31,
2023
Assets      
Current assets:      
Cash and cash equivalents $ 231,420     $ 44,541  
Restricted cash, current   70,732       37,477  
Short-term investments   25,070       5,634  
Accounts receivable (net of allowance for credit losses of $4,407 and $4,571 as of December 31, 2022 and 2023, respectively)   119,304       138,717  
Notes receivable   2,196       23,736  
Inventories, net   84,252       149,749  
Prepaid expenses and other current assets   12,093       25,752  
Total Current Assets   545,067       425,606  
Restricted cash, non-current   465       6,171  
Property, plant and equipment, net   335,140       620,667  
Land use rights, net   12,639       11,984  
Acquired intangible assets, net   1,636       3,136  
Operating lease right-of-use assets   16,368       19,507  
Other non-current assets   73,642       9,661  
Total Assets $ 984,957     $ 1,096,732  
       
Liabilities      
Current liabilities:      
Accounts payable $ 44,985     $ 112,618  
Advance from customers   54,207       43,087  
Accrued expenses and other current liabilities   66,720       148,284  
Income tax payables   658       655  
Short-term bank borrowings   17,398       35,392  
Notes payable   68,441       63,374  
Total Current Liabilities   252,409       403,410  
Long-term bank borrowings   28,997       43,761  
Long-term bonds payable   43,888       43,157  
Warrant liability   126       67  
Share-based compensation liability   131       199  
Operating lease liabilities   14,347       17,087  
Other non-current liabilities   32,082       24,861  
Total Liabilities $ 371,980     $ 532,542  
       
Total Equity $ 612,977     $ 564,190  
Total Liabilities and Equity $ 984,957     $ 1,096,732  
 
MICROVAST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  Year Ended
December 31,
    2022       2023  
Revenues $ 204,495     $ 306,617  
Cost of revenues   (195,422 )     (249,390 )
Gross profit   9,073       57,227  
Operating expenses:      
General and administrative expenses   (104,572 )     (97,291 )
Research and development expenses   (43,508 )     (45,004 )
Selling and marketing expenses   (22,611 )     (23,614 )
Total operating expenses   (170,691 )     (165,909 )
Subsidy income   1,672       1,953  
Loss from operations   (159,946 )     (106,729 )
Other income and expenses:      
Interest income   3,179       3,609  
Interest expense   (3,323 )     (2,628 )
Gain on changes in fair value of warrant liability   979       59  
Other income (expense), net   944       (713 )
Loss before provision for income tax   (158,167 )     (106,402 )
Income tax expense   (33 )     (10 )
Net loss $ (158,200 )   $ (106,412 )
Less: net loss attributable to noncontrolling interests   —       (76 )
Net loss attributable to Microvast Holdings, Inc.’s shareholders   (158,200 )     (106,336 )
Net loss per common share      
Basic and diluted $ (0.52 )   $ (0.34 )
Weighted average shares used in calculating net loss per share of common stock:      
Basic and diluted   303,279,188       310,909,379  
 
MICROVAST HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  Three Months Ended
December 31, 
    2022       2023  
Revenues $ 64,797     $ 104,575  
Cost of revenues   (62,571 )     (81,551 )
Gross profit   2,226       23,024  
Operating expenses:      
General and administrative expenses   (21,551 )     (27,944 )
Research and development expenses   (10,498 )     (11,395 )
Selling and marketing expenses   (5,242 )     (6,698 )
Total operating expenses   (37,291 )     (46,037 )
Subsidy income   439       797  
Loss from operations   (34,626 )     (22,216 )
Other income and expenses:      
Interest income   1,575       128  
Interest expense   (858 )     (1,191 )
Gain on changes in fair value of warrant liability   58       84  
Other income (expense), net   186       (1,386 )
Loss before provision for income tax   (33,665 )     (24,581 )
Income tax expense   (33 )     (10 )
Net loss $ (33,698 )   $ (24,591 )
Less: Net loss attributable to noncontrolling interest   —       (55 )
Net loss attributable to Microvast Holdings, Inc.’s shareholders $ (33,698 )   $ (24,536 )
Net loss per common share      
Basic and diluted $ (0.11 )   $ (0.08 )
Weighted average shares used in calculating net loss per share of common stock      
Basic and diluted   307,604,827       314,966,888  
 
MICROVAST HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  Year Ended
December 31,
    2022       2023  
Cash flows from operating activities      
Net loss $ (158,200 )   $ (106,412 )
Adjustments to reconcile net loss to net cash used in operating activities:      
(Gain)/loss on disposal of property, plant and equipment   (14 )     1,947  
Depreciation of property, plant and equipment   19,811       22,141  
Amortization of land use rights and intangible assets   554       787  
Noncash lease expenses   2,214       2,764  
Share-based compensation   90,808       64,971  
Changes in fair value of warrant liability   (979 )     (59 )
Allowance of credit losses   1,640       236  
Provision for obsolete inventories   4,789       3,613  
Impairment loss from property, plant and equipment   1,798       504  
Product warranty   14,097       12,688  
Changes in operating assets and liabilities:      
Notes receivable   3,187       (25,338 )
Accounts receivable   (38,924 )     (21,759 )
Inventories   (43,694 )     (74,406 )
Prepaid expenses and other current assets   3,628       (14,291 )
Amounts due from/to related parties   85       —  
Operating lease right-of-use assets   (19,375 )     (5,446 )
Other non-current assets   (282 )     (547 )
Notes payable   13,490       (3,507 )
Accounts payable   7,146       68,576  
Advance from customers   53,022       (10,949 )
Accrued expenses and other liabilities   (24,674 )     6,602  
Operating lease liabilities   14,999       2,266  
Other non-current liabilities   946       316  
Net cash used in operating activities   (53,928 )     (75,303 )
       
Cash flows from investing activities      
Purchases of property, plant and equipment   (150,880 )     (186,788 )
Proceeds on disposal of property, plant and equipment   5       1,649  
Purchase of short-term investments   (25,070 )     (5,966 )
Proceeds from maturity of short-term investments   —       25,500  
Net cash used in investing activities   (175,945 )     (165,605 )
       
Cash flows from financing activities      
Proceeds from bank borrowings   58,708       47,852  
Repayment of bonds payable   (29,259 )     (692 )
Repayment of bank borrowings   (24,482 )     (14,119 )
Net cash generated from financing activities   4,967       33,041  
Effect of exchange rate changes   (8,586 )     (6,561 )
Decrease in cash, cash equivalents and restricted cash   (233,492 )     (214,428 )
Cash, cash equivalents and restricted cash at beginning of the year   536,109       302,617  
Cash, cash equivalents and restricted cash at end of the year $ 302,617     $ 88,189  
 
MICROVAST HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS – continued
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  Year Ended
December 31,
    2022       2023  
Reconciliation to amounts on consolidated balance sheets      
Cash and cash equivalents $ 231,420     $ 44,541  
Restricted cash   71,197       43,648  
Total cash, cash equivalents and restricted cash $ 302,617     $ 88,189  
 
MICROVAST HOLDINGS, INC.
RECONCILIATION OF GROSS PROFIT (LOSS) TO ADJUSTED GROSS PROFIT (LOSS)
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  Three Months Ended
December 31,		   Twelve Months Ended
December 31,
    2022       2023       2022       2023  
Revenues $ 64,797     $ 104,575     $ 204,495     $ 306,617  
Cost of revenues   (62,571 )     (81,551 )     (195,422 )     (249,390 )
Gross profit (GAAP) $ 2,226     $ 23,024     $ 9,073     $ 57,227  
Gross margin   3.4 %     22.0 %     4.4 %     18.7 %
               
Non-cash settled share-based compensation (included in cost of revenues)   1,932       1,532       7,677       6,091  
Adjusted gross profit (non-GAAP) $ 4,158     $ 24,556     $ 16,750     $ 63,318  
Adjusted gross margin (non-GAAP)   6.4 %     23.5 %     8.2 %     20.7 %
 
MICROVAST HOLDINGS, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED NET LOSS
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  Three Months Ended
December 31,		   Twelve Months Ended
December 31,
    2022       2023       2022       2023  
Net loss (GAAP) $ (33,698 )   $ (24,591 )   $ (158,200 )   $ (106,412 )
Gain on changes in fair value of warrant liability*   (58 )     (84 )     (979 )     (59 )
Non-cash settled share-based compensation*   17,867       13,318       81,906       64,920  
Adjusted Net Loss (non-GAAP) $ (15,889 )   $ (11,357 )   $ (77,273 )   $ (41,551 )

*The tax effect of the adjustments was nil.

  Three Months Ended
December 31,		   Twelve Months Ended
December 31,
    2022       2023       2022       2023  
Net loss per common share-Basic and diluted (GAAP) $ (0.11 )   $ (0.08 )   $ (0.52 )   $ (0.34 )
Gain on changes in fair value of warranty liability per common share   —       —       —       —  
Non-cash settled share-based compensation per common share   0.06       0.04       0.27       0.21  
Adjusted net loss per common share-Basic and diluted (non-GAAP) $ (0.05 )   $ (0.04 )   $ (0.25 )   $ (0.13 )
 
MICROVAST HOLDINGS, INC.
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA
(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)
 
  Three Months Ended
December 31,		   Twelve Months Ended
December 31,
    2022       2023       2022       2023  
Net loss (GAAP) $ (33,698 )   $ (24,591 )   $ (158,200 )   $ (106,412 )
Interest expense, net   (717 )     1,063       144       (981 )
Income tax expense   33       10       33       10  
Depreciation and amortization   4,784       7,692       20,365       22,928  
EBITDA (non-GAAP) $ (29,598 )   $ (15,826 )   $ (137,658 )   $ (84,455 )
Gain on changes in fair value of warrant liability   (58 )     (84 )     (979 )     (59 )
Non-cash settled share-based compensation   17,867       13,318       81,906       64,920  
Adjusted EBITDA (non-GAAP) $ (11,789 )   $ (2,592 )   $ (56,731 )   $ (19,594 )


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