MONTREAL, Aug. 5, 2022
/PRNewswire/ - 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 2022,
which ended on June 30, 2022. Lion reports its results in U.S.
dollars and in accordance with International Financial Reporting
Standards ("IFRS").
Q2 2022 FINANCIAL
HIGHLIGHTS
- Delivery of 105 vehicles, an increase of 44 vehicles, as
compared to the 61 delivered in the same period last year.
- Revenue of $29.5 million, up
$12.8 million, as compared to
$16.7 million in Q2 2021.
- Gross loss of $3.5 million, as
compared to a gross profit of $0.9
million in Q2 2021.
- Net earnings of $37.5 million, as
compared to a net loss of $178.5
million in Q2 2021. Net earnings for Q2 2022 include a
$56.9 million gain related to
non-cash decrease in the fair value of share warrant obligations
and a $3.4 million charge related to
non-cash share-based compensation, compared to a $99.3 million charge related to non-cash increase
in the fair value of share warrant obligations, $54.8 million charge related to non-cash
share-based compensation, and $13.7
million of transaction costs included in net loss for Q2
2021.
- Adjusted EBITDA[1] of negative $14.4
million, as compared to negative $5.5
million in Q2 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 $44.3 million, up $41.0
million, as compared to $3.3
million in Q2 2021.
- Additions to intangible assets, which mainly consist of R&D
activities, amounted to $24.6
million, up $13.9 million, as
compared to $10.7 million in Q2
2021.
- Establishment of cross-border $125
million "at-the-market" equity program ("ATM Program").
__________________________________
|
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 700 vehicles on the road, with over 10 million miles
driven.
- Vehicle order book[2] of 2,357 all-electric medium- and
heavy-duty urban vehicles as of August 4,
2022, consisting of 286 trucks and 2,071 buses, representing
a combined total order value of approximately $575 million based on management's
estimates.
- LionEnergy order book2 of 226 charging stations and
related services as of August 4, 2022, representing a combined
total order value of approximately $3.0
million.
- 12 Experience Centers in operation in the United States and Canada.
- Installation of assembly stations continued at the Joliet
Facility in the quarter and manufacturing of Lion C units (for
working stations set up and employees training purposes) began. In
order to accelerate return on investment, the Company decided to
review the cadence of its initial ramp up of production capacity at
the Joliet Facility to align it further with projected deliveries
and to initially focus on bus production.
- The building shell for the battery plant building is
substantially completed. For the Innovation center, the foundation
work has been completed and the steel structure is 90% completed.
The Company's prototype battery packs are currently undergoing
testing and certification and engineering design for one version of
the packs and module line has been finalized. Lion continues to
expect the certification of packs, factory acceptance of production
equipment at JR Automation's facility, and production of packs in
Mirabel to take place prior to the
end of 2022. Site acceptance of production equipment in
Mirabel is expected to be
completed near the beginning of 2023.
- The Company has elected to implement configuration changes to
certain vehicles to increase quality and performance, improve
manufacturing efficiencies, and optimize the development of new
models. Such measures have mainly resulted in the temporary
suspension of commercial production and the projected delivery of
the LionA.
- As of August 4, 2022, Lion had
approximately 1,300 employees, of which over 300 were in its
Engineering and R&D departments.
"We are pleased with our Q2 performance, as in spite of ongoing
supply-chain challenges, for the third quarter in a row, we
delivered a record number of vehicles in the history of Lion,"
commented Marc Bedard, CEO – Founder
of Lion. "As we are nearing the start of operations at our U.S.
manufacturing facility and our battery plant, we also decided to
adjust the cadence of our capital spend. This will enable us to
accelerate return on investment and optimally manage our capital
resources", concluded Marc
Bedard.
________________________________
|
2 See
"Non-IFRS Measures and Other Performance Metrics" section of this
press release. The Company's vehicle and charging stations order
book, expressed as a number of units or the amount of sales
expected to be recognized in the future (at the applicable time of
delivery) in respect of such number of units, is determined by
management based on purchase orders that have been signed, orders
that have been formally confirmed by clients or products in respect
of which formal joint applications for governmental subsidies or
economic incentives have been made by the applicable clients and
the Company. The vehicles included in the vehicle order book as of
August 4, 2022 provided for a delivery period ranging from a
few months to the end of the year ending December 31, 2025.
Substantially all deliveries are subject to the granting of
subsidies and incentives with processing times that are subject to
important variations, and there has been in the past and the
Company expects there will continue to be variances between the
expected delivery periods of orders and the actual delivery times,
and certain delays could be significant. Such variances or delays
could result in the loss of a subsidy or incentive and/or in the
cancellation of certain orders, in whole or in part. The Company's
presentation of the order book should not be construed as a
representation by the Company that the vehicles and charging
stations included in its order book will translate into actual
sales.
|
SELECT EXPLANATIONS ON RESULTS OF
OPERATIONS FOR THE SECOND QUARTER OF FISCAL YEAR 2022
Revenue
For the three months ended June 30,
2022, revenue amounted to $29.5
million, an increase of $12.8
million compared to $16.7
million for the three months ended June 30, 2021. The increase in revenue was
primarily due to an increase in vehicle sales volume of 44 units,
from 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, to 105 units (90 school buses and 15 trucks; 91
vehicles in Canada and 14 vehicles
in the U.S.) for the three months ended June
30, 2022. Revenues for the three months ended June 30, 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.
For the six months ended June 30,
2022, revenue amounted to $52.2
million, an increase of $29.3
million compared to $22.9
million for the six months ended June
30, 2021. The increase in revenue was primarily due to an
increase in vehicle sales volume of 104 units, from 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, to
189 units (162 school buses and 27 trucks; 171 vehicles in
Canada and 18 vehicles in the
U.S.) for the six months ended June 30,
2022. Revenues for the six months ended June 30, 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.
Cost of Sales
For the three months ended June 30,
2022, cost of sales amounted to $33.0
million, representing an increase of $17.2 million, compared to the three months ended
June 30, 2021. For the six months
ended June 30, 2022, cost of sales
amounted to $56.5 million,
representing an increase of $32.7
million, compared to the six months ended June 30, 2021. The increase for both periods was
primarily due to increased sales volumes and higher production
levels, increased fixed manufacturing and inventory management
system costs related to the ramp-up of production capacity for
future quarters, and the impact of continuing global supply chain
challenges.
Gross Loss
(Profit)
For the three months ended June 30,
2022, gross profit decreased by $4.4
million to negative $3.5
million, compared to positive $0.9
million for the three months ended June 30, 2021. For the six months ended
June 30, 2022, gross loss decreased
by $3.5 million to negative
$4.4 million, compared to negative
$0.9 million for the six months ended
June 30, 2021. The decrease in gross
profit for both periods included the positive gross profit impact
of increased sales volumes, mainly offset by the impact of
increased fixed manufacturing and inventory management system 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 June 30,
2022, administrative expenses decreased by $38.3 million from $50.0 million for the three months ended
June 30, 2021, to $11.7 million. Administrative expenses for
the three months ended June 30, 2022
included $2.6 million of
non-cash share-based compensation, compared to $44.8 million for three months ended
June 30, 2021. Excluding the impact
of non-cash share-based compensation, administrative expenses
increased from $5.2 million for the
three months ended June 30, 2021 to
$9.1 million for the three months
ended June 30,
2022
For the six months ended June 30,
2022, administrative expenses decreased by $33.6 million from $56.3 million for the six months ended
June 30, 2021, to $22.7 million. Administrative expenses for the
six months ended June 30, 2022
included $5.3 million of
non-cash share-based compensation, compared to $47.8 million for six months ended
June 30, 2021. Excluding the impact
of non-cash share-based compensation, administrative expenses
increased from $8.5 million for the
six months ended June 30, 2021 to
$17.4 million for the six months
ended June 30, 2022. The increase was
mainly due to an increase in expenses as a result of Lion becoming
a public company in May 2021, an
increase in expenses resulting from the expansion of Lion's head
office capabilities in anticipation of an expected increase in
business activities, as well as professional fees related to supply
chain and strategic project optimization initiatives.
Selling Expenses
For the three months ended June
30, 2022, selling expenses decreased by $6.6 million, from $13.3 million for the three months ended
June 30, 2021, to $6.7 million. Selling expenses for the three
months ended June 30, 2022 included
$0.8 million of non-cash share-based
compensation, compared to $10.0
million for three months ended June
30, 2021. Excluding the impact of non-cash share-based
compensation, selling expenses increased from $3.3 million for the three months ended
June 30, 2021 to $5.9 million for the three months ended
June 30, 2022. 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.
For the six months ended June 30,
2022, selling expenses decreased by $5.6 million, from $17.7 million for the six months ended
June 30, 2021, to $12.1 million. Selling expenses for the six
months ended June 30, 2022 included
$1.8 million of non-cash share-based
compensation, compared to $12.2
million for six months ended June 30,
2021. Excluding the impact of non-cash share-based
compensation, selling expenses increased from $5.5 million for the six months ended
June 30, 2021 to $10.3 million for the six months ended
June 30, 2022. 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.
Transaction costs
Transaction costs of $13.7 million
for the three and six months ended June 30,
2021 were 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
(Income)
For the three months ended June 30,
2022, finance costs (income) decreased by $3.8 million, from a cost of $3.0 million for the three months ended
June 30, 2021, to income of
$0.8 million. The decrease was
driven primarily by lower interest expense on long-term debt, the
non-recurrence of interest expense on convertible debt instruments
and accretion expense on retractable common shares which were
repaid on May 6, 2021, and the gain
on derecognition of a financial liability related to previously
acquired dealership rights, partially offset by an increase in
interest costs related to lease liabilities. The gain on
derecognition of the financial liability occurred as a result of
the agreement with a private company relating to the previous
acquisition of dealership rights in certain territories in
the United States maturing on
May 7, 2022.
For the six months ended June 30,
2022, finance costs decreased by $6.6
million, from $6.9 million for
the six months ended June 30, 2021,
to $0.3 million. The decrease was
driven primarily by lower interest expense on long-term debt, the
non-recurrence of interest expense on convertible debt instruments
and accretion expense on retractable common shares which were
repaid on May 6, 2021, and the gain
on derecognition of a financial liability related to previously
acquired dealership rights, partially offset by an increase in
interest costs related to lease liabilities. The gain on
derecognition of the financial liability occurred as a result of
the agreement with a private company relating to the previous
acquisition of dealership rights in certain territories in
the United States maturing on
May 7, 2022
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 gain for the three months ended
June 30, 2022, was $1.6 million compared to a loss of $0.1 million for the three months ended
June 30, 2021, largely as a result of
a weakening of the Canadian dollar relative to the US dollar during
the three months ended June 30, 2022,
as compared to the three months ended June
30, 2021.
Foreign exchange gain for the six months ended
June 30, 2022, was $0.7 million compared to a gain of $0.1 million for the six months ended
June 30, 2021, largely as a result of
a weakening of the Canadian dollar relative to the US dollar during
the three months ended June 30, 2022,
as compared to the three months ended June
30, 2021.
Change in fair value of share
warrant obligations
Share warrant obligations relate 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. Change in fair value of share warrant obligations
resulted in a gain of $56.9 million
for the three months ended June 30,
2022, compared to a charge of $99.3 million for the three months ended
June 30, 2021, and resulted in a gain
of $78.4 million for the six months
ended June 30, 2022, compared to a
charge of $99.2 million for the six
months ended June 30, 2021. The gains
for the three and six months ended June 30,
2022 result 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 June 30,
2022, net earnings were $37.5 million, as compared to a net loss of
$178.5 million for the three months
ended June 30, 2021. The increase in
net earnings (loss) for the three months ended June 30, 2022 compared to the three months ended
June 30, 2021 was largely due to the
gain related to the fair value of share warrant obligations, lower
non-cash share-based compensation, and the non-recurrence of
transaction costs incurred during the three months ended
June 30, 2021, and lower finance
costs, partially offset by the gross loss and higher administrative
and selling expenses (excluding share-based compensation).
For the six months ended June 30,
2022, net earnings were $39.6
million, as compared to a net loss of $194.6 million for the six months ended
June 30, 2021. The increase in net
earnings (loss) for the three months ended June 30, 2022 compared to the six months ended
June 30, 2021 was largely due
to the gain related to the fair value of share warrant obligations,
lower non-cash share-based compensation, the non-recurrence of
transaction costs incurred during the six months ended June 30, 2021, and lower finance costs, partially
offset by the gross loss and higher administrative and selling
expenses (excluding share-based compensation).
BOARD OF DIRECTORS
Ms. Latasha Akoma and Mr. Dane L.
Parker, Operating Partner at GenNx360 Capital Partner, and
Retired Chief Sustainability Officer and Vice President,
Sustainable Workplaces at General Motors, respectively, have been
appointed to the Board of Directors of Lion as independent
Directors.
Latasha
Akoma
Ms. Akoma, who is responsible for driving strong performance,
operational efficiencies, and profitability across the GenNx
portfolio companies, brings over 26 years of managerial experience
in all aspects of manufacturing, operations, and business
strategies.
Prior to joining GenNx360 Capital Partner, she held several
executive leadership positions at Harley-Davidson Motor Company, a
company she joined in 2009 as the Director of Operations, with
responsibility for vehicle assembly and materials management. Prior
to that, Ms. Akoma was a Senior Manager of Paint Operations at
Chrysler (formerly DaimlerChrysler) where she held a variety of
increasing senior leadership positions in operations and general
management.
Dane L.
Parker
As General Motors' first Chief Sustainability Officer, Mr.
Parker was a leading force behind the company's plan to become
carbon neutral by 2040 and aspiration to have zero-emissions from
all new light-duty vehicles by 2035. Mr. Parker also held global
responsibilities for facility design, engineering, construction,
operations, energy procurement and efficiency, real estate,
environmental compliance, as well as workplace strategy.
Prior to General Motor, Mr. Parker was Vice President, Global
Environment, Health and Safety, Facilities and Real Estate for
Dell, Inc. He also spent more than 13 years at Intel Corporation in
the Technology and Manufacturing organization in a variety of
operational roles, including as Director of Global Environment,
Health and Safety.
CONFERENCE CALL
A conference call and webcast will be held on August 5, 2022, at 8:30
a.m. (Eastern Time) to discuss the results.
To participate in the conference call, dial (226) 828-7575 or
(833) 950-0062 (toll free) using the Access Code 842480. 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 our 2022 second
quarter financial report, including the unaudited condensed interim
consolidated financial statements of the Company as at and for the
quarter ended June 30, 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.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
June 30, 2022 and December 31, 2021
(Unaudited)
|
June 30,
2022
|
|
December 31,
2021
|
|
$
|
|
$
|
ASSETS
|
|
|
|
Current
|
|
|
|
Cash
|
83,003,512
|
|
241,702,030
|
Accounts
receivable
|
33,074,111
|
|
37,899,085
|
Inventories
|
151,710,910
|
|
115,978,979
|
Prepaid expenses and
other current assets
|
5,737,143
|
|
4,647,163
|
Current
assets
|
273,525,676
|
|
400,227,257
|
Non-current
|
|
|
|
Other non-current
assets
|
821,548
|
|
793,298
|
Property, plant and
equipment
|
109,844,834
|
|
32,668,158
|
Right-of-use
assets
|
57,282,564
|
|
60,902,362
|
Intangible
assets
|
117,283,055
|
|
81,899,830
|
Contract
asset
|
13,885,602
|
|
14,113,415
|
Non-current
assets
|
299,117,603
|
|
190,377,063
|
Total
assets
|
572,643,279
|
|
590,604,320
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
|
|
|
|
Trade and other
payables
|
61,004,762
|
|
40,409,565
|
Current portion of
long-term debt and other debts
|
10,431,833
|
|
13,015,584
|
Current portion of
lease liabilities
|
5,158,751
|
|
4,691,344
|
Current
liabilities
|
76,595,346
|
|
58,116,493
|
Non-current
|
|
|
|
Long-term debt and
other debts
|
3,739,753
|
|
62,086
|
Lease
liabilities
|
54,396,223
|
|
57,517,973
|
Share warrant
obligations
|
27,281,847
|
|
106,225,934
|
Non-current
liabilities
|
85,417,823
|
|
163,805,993
|
Total
liabilities
|
162,013,169
|
|
221,922,486
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Share
capital
|
418,712,958
|
|
418,709,160
|
Contributed
surplus
|
129,795,436
|
|
122,637,796
|
Deficit
|
(130,142,467)
|
|
(169,755,726)
|
Cumulative translation
adjustment
|
(7,735,817)
|
|
(2,909,396)
|
Total shareholders'
equity
|
410,630,110
|
|
368,681,834
|
Total shareholders'
equity and liabilities
|
572,643,279
|
|
590,604,320
|
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE
EARNINGS (LOSS)
For the three and six months ended
June 30, 2022 and
2021
(Unaudited)
|
Three months
ended
|
|
Six months
ended
|
|
June
30, 2022
|
|
June 30,
2021
|
|
June 30,
2022
|
|
June 30,
2021
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue
|
29,521,016
|
|
16,688,939
|
|
52,167,809
|
|
22,914,417
|
Cost of
sales
|
32,972,183
|
|
15,789,144
|
|
56,530,748
|
|
23,821,445
|
Gross profit
(loss)
|
(3,451,167)
|
|
899,795
|
|
(4,362,939)
|
|
(907,028)
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
11,702,795
|
|
50,002,162
|
|
22,680,204
|
|
56,272,131
|
Selling
expenses
|
6,722,480
|
|
13,338,268
|
|
12,097,982
|
|
17,721,847
|
Transaction
costs
|
—
|
|
13,654,851
|
|
—
|
|
13,654,851
|
Operating
loss
|
(21,876,442)
|
|
(76,095,486)
|
|
(39,141,125)
|
|
(88,555,857)
|
|
|
|
|
|
|
|
|
Finance costs
(income)
|
(831,959)
|
|
3,001,634
|
|
346,449
|
|
6,909,024
|
Foreign exchange (gain)
loss
|
(1,620,682)
|
|
102,562
|
|
(710,040)
|
|
(76,091)
|
Change in fair value of
share warrant obligations
|
(56,934,623)
|
|
99,290,459
|
|
(78,390,793)
|
|
99,215,214
|
Net earnings
(loss)
|
37,510,822
|
|
(178,490,141)
|
|
39,613,259
|
|
(194,604,004)
|
Other comprehensive
earnings (loss)
|
|
|
|
|
|
|
|
Item that will be
subsequently reclassified to net earnings (loss)
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
(8,075,506)
|
|
(1,717,926)
|
|
(4,826,421)
|
|
(3,020,393)
|
Comprehensive
Earnings (Loss)
|
29,435,316
|
|
(180,208,067)
|
|
34,786,838
|
|
(197,624,397)
|
|
|
|
|
|
|
|
|
Earnings (Loss) per
share
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
0.20
|
|
(1.13)
|
|
0.21
|
|
(1.45)
|
Diluted earnings (loss)
per share
|
0.19
|
|
(1.13)
|
|
0.20
|
|
(1.45)
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three
and six months ended June 30, 2022
and 2021
(Unaudited)
|
Three months
ended
|
|
Six months
ended
|
|
Jun 30,
2022
|
|
Jun 30, 2021
|
|
Jun 30,
2022
|
|
Jun 30, 2021
|
|
$
|
|
$
|
|
$
|
|
$
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
37,510,822
|
|
(178,490,141)
|
|
39,613,259
|
|
(194,604,004)
|
Non-cash
items:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,739,172
|
|
1,548,572
|
|
4,722,426
|
|
2,532,382
|
Share-based
compensation
|
3,363,082
|
|
54,799,496
|
|
7,157,640
|
|
60,004,848
|
Accretion expense on
common shares, retractable
|
—
|
|
415,850
|
|
—
|
|
2,031,863
|
Accretion and
revaluation expense on balance of purchase price payable related to
the acquisition of the dealership rights
|
26,514
|
|
133,724
|
|
82,850
|
|
286,844
|
Accretion expense on
convertible debt instruments
|
—
|
|
1,705,883
|
|
—
|
|
2,503,097
|
Gain on derecognition
of the balance of purchase price payable related to the acquisition
of the dealership rights
|
(2,130,583)
|
|
—
|
|
(2,130,583)
|
|
—
|
Change in fair value
of share warrant obligations
|
(56,934,623)
|
|
99,290,459
|
|
(78,390,793)
|
|
99,215,214
|
Unrealized foreign
exchange gain
|
(62,362)
|
|
(398,443)
|
|
(270,106)
|
|
(434,369)
|
Net change in non-cash
working capital items
|
(2,568,999)
|
|
(19,658,089)
|
|
(23,314,671)
|
|
(22,252,943)
|
Cash flows used in
operating activities
|
(18,056,977)
|
|
(40,652,689)
|
|
(52,529,978)
|
|
(50,717,068)
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
(32,239,014)
|
|
(3,284,824)
|
|
(68,033,364)
|
|
(4,396,723)
|
Acquisition of
intangible assets
|
(23,907,201)
|
|
(10,716,772)
|
|
(38,689,711)
|
|
(17,166,957)
|
Government assistance
related to intangible assets
|
—
|
|
1,321,125
|
|
—
|
|
1,777,315
|
Cash flows used in
investing activities
|
(56,146,215)
|
|
(12,680,471)
|
|
(106,723,075)
|
|
(19,786,365)
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
Net change in credit
facilities
|
—
|
|
(21,239,925)
|
|
—
|
|
(16,262,610)
|
Repayment of loans on
research and development tax credits and subsidies
receivable
|
—
|
|
—
|
|
—
|
|
(2,745,712)
|
Increase in long-term
debt
|
3,703,805
|
|
—
|
|
3,703,805
|
|
15,775,473
|
Repayment of long-term
debt and other debts
|
(69,330)
|
|
(41,035,572)
|
|
(373,108)
|
|
(41,405,598)
|
Repayment of
convertible debt instruments
|
—
|
|
(23,903,068)
|
|
—
|
|
(23,903,068)
|
Payment of lease
liabilities
|
(1,120,721)
|
|
(582,250)
|
|
(2,337,538)
|
|
(1,029,975)
|
Proceeds from issuance
of shares through private placement, net of issuance
costs
|
—
|
|
196,255,491
|
|
—
|
|
196,255,491
|
Proceeds from the
issuance of shares through exercise of stock options and
warrants
|
3,798
|
|
54,394
|
|
3,798
|
|
54,394
|
Proceeds from issuance
of shares through business combination transaction
|
—
|
|
308,232,870
|
|
—
|
|
308,232,870
|
Cash flows from
financing activities
|
2,517,552
|
|
417,781,940
|
|
996,957
|
|
434,971,265
|
Effect of exchange rate
changes on cash held in foreign currency
|
(770,489)
|
|
(10,501)
|
|
(442,423)
|
|
(72,547)
|
Net (decrease)
increase in cash
|
(72,456,128)
|
|
364,438,279
|
|
(158,698,518)
|
|
364,395,285
|
Cash (bank overdraft),
beginning of period
|
155,459,640
|
|
(134,070)
|
|
241,702,030
|
|
(91,076)
|
Cash, end of
period
|
83,003,512
|
|
364,304,209
|
|
83,003,512
|
|
364,304,209
|
Other information on
cash flows related to operating activities:
|
|
|
|
|
|
|
|
Interest
paid
|
504,134
|
|
2,950,374
|
|
854,120
|
|
4,000,843
|
Interest paid under
lease liabilities
|
767,975
|
|
107,732
|
|
1,540,062
|
|
189,605
|
NON-IFRS MEASURES AND OTHER
PERFORMANCE METRICS
This press release makes reference to Adjusted EBITDA, which is
a non-IFRS financial measure, as well as other performance metrics,
including the Company's order book, which are defined below. These
measures are not recognized measures under IFRS, do not have a
standardized meaning prescribed by IFRS and are therefore unlikely
to be comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement those IFRS measures by providing further understanding
of the Company's results of operations from management's
perspective. Accordingly, they should not be considered in
isolation nor as a substitute for analysis of the Company's
financial information reported under IFRS. Lion compensates for
these limitations by relying primarily on Lion's IFRS results and
using Adjusted EBITDA and order book on a supplemental basis.
Readers should not rely on any single financial measure to evaluate
Lion's business.
Adjusted EBITDA
"Adjusted EBITDA" is defined as net earnings (loss) before
finance costs, income tax expense or benefit, and depreciation and
amortization, adjusted for share-based compensation, changes in
fair value of share warrant obligations, foreign exchange (gain)
loss and transaction and other non-recurring expenses. Adjusted
EBITDA is intended as a supplemental measure of performance that is
neither required by, nor presented in accordance with, IFRS. Lion
believes that the use of Adjusted EBITDA provides an additional
tool for investors to use in evaluating ongoing operating results
and trends and in comparing Lion's financial measures with those of
comparable companies, which may present similar non-IFRS financial
measures to investors. However, readers should be aware that when
evaluating Adjusted EBITDA, Lion may incur future expenses similar
to those excluded when calculating Adjusted EBITDA. In addition,
Lion's presentation of these measures should not be construed as an
inference that Lion's future results will be unaffected by unusual
or non-recurring items. Lion's computation of Adjusted EBITDA may
not be comparable to other similarly entitled measures computed by
other companies, because all companies may not calculate Adjusted
EBITDA in the same fashion. Readers should review the
reconciliation of net earnings (loss), the most directly comparable
IFRS financial measure, to Adjusted EBITDA presented by the Company
under section 13.0 of the Company's MD&A for the three and six
months ended June 30, 2022 entitled
"Results of Operations - Reconciliation of Adjusted EBITDA."
Order Book
This press release also makes reference to the Company's "order
book" with respect to vehicles (trucks and buses) as well as
charging stations. The Company's vehicle and charging stations
order book, expressed as a number of units or the amount of sales
expected to be recognized in the future (at the applicable time of
delivery) in respect of such number of units, is determined by
management based on purchase orders that have been signed, orders
that have been formally confirmed by clients or products in respect
of which formal joint applications for governmental subsidies or
economic incentives have been made by the applicable clients and
the Company. The vehicles included in the vehicle order book as of
August 4, 2022 provided for a
delivery period ranging from a few months to the end of the year
ending December 31, 2025.
Substantially all deliveries are subject to the granting of
subsidies and incentives with processing times that are subject to
important variations, and there has been in the past and the
Company expects there will continue to be variances between the
expected delivery periods of orders and the actual delivery times,
and certain delays could be significant. Such variances or delays
could result in the loss of a subsidy or incentive and/or in the
cancellation of certain orders, in whole or in part.
The Company's presentation of the order book should not be
construed as a representation by the Company that the vehicles and
charging stations included in its order book will translate into
actual sales. See the section below for a full description of the
methodology used by the Company in connection with the order book
and certain important risks and uncertainties relating to such
methodology and the presentation of the order book.
Order Book Methodology
General Principle
The Company's vehicle and charging stations order book,
expressed as a number of units or the amount of sales expected to
be recognized in the future (at the applicable time of delivery) in
respect of such number of units, is determined by management based
on purchase orders that have been signed, orders that have been
formally confirmed by clients or products in respect of which
formal joint applications for governmental subsidies or economic
incentives have been made by the applicable clients and the
Company. The vehicles included in the vehicle order book as of
August 4, 2022 provided for a
delivery period ranging from a few months to the end of the year
ending December 31, 2025.
Substantially all deliveries are subject to the granting of
subsidies and incentives with processing times that are subject to
important variations, and there has been in the past and the
Company expects there will continue to be variances between the
expected delivery periods of orders and the actual delivery times,
and certain delays could be significant. Such variances or delays
could result in the loss of a subsidy or incentive and/or in the
cancellation of certain orders, in whole or in part.
The Company's presentation of the order book should not be
construed as a representation by the Company that the vehicles and
charging stations included in its order book will translate into
actual sales.
Delivery Periods
The Company's order book refers to products that have not yet
been delivered but which are reasonably expected by management to
be delivered within a time period that can be reasonably estimated
and includes, in the case of charging stations, services that have
not been completed but which are reasonably expected by management
to be completed in connection with the delivery of the product.
Purchase orders and applications generally provide for a time
period during which the client expects delivery of the vehicles.
Such period can vary from a specific date, a number or range of
months after the issuance of the order or application, or a
calendar year. The vehicles included in the vehicle order book as
of August 4, 2022 provided for a
delivery period, subject to the satisfaction of the conditions set
forth in each order (which, in substantially all cases as further
discussed herein, relate to the approval of governmental subsidies
and grants), ranging from a few months to the end of the year
ending December 31, 2025. Delivery
periods are disclosed from time to time by the Company when
available in respect of material orders. Delivery periods should
not be construed as a representation or a guarantee by the Company
that the actual delivery time will take place as scheduled. Given
the nature of the business and the products of the Company, the
implied lead time for the production and delivery of a vehicle
(which may be impacted, among other things, by supply chain
challenges or changes in specifications), the nature of certain
customers of the Company (in many cases, fleet owners operating
capital intensive operations which require financing and ongoing
scheduling flexibility), and the fact that, as further described
herein, substantially all deliveries are subject to the granting of
subsidies and incentives with processing times that are subject to
important variations, there has been in the past and the Company
expects there will continue to be variances between the expected
delivery periods of orders and the actual delivery times, and
certain delays could be significant. Such variances or delays could
result in the loss of a subsidy or incentive and/or in the
cancellation of certain orders, in whole or in part.
Pricing
When the Company's order book is expressed as an amount of
sales, such amount has been determined by management based on the
current specifications or requirements of the applicable order,
assumes no changes to such specifications or requirements and, in
cases where the pricing of a product or service may vary in the
future, represents management's reasonable estimate of the
prospective pricing as of the time such estimate is reported. A
small number of vehicles included in the order book have a pricing
that remains subject to confirmation based on specifications and
other options to be agreed upon in the future between the
applicable client and the Company. For purposes of the
determination of the order book and the value allocated to such
orders, management has estimated the pricing based on its current
price lists and certain other assumptions relating to
specifications and requirements deemed reasonable in the
circumstances.
Performance Metric
The order book is intended as a supplemental measure of
performance that is neither required by, nor presented in
accordance with, IFRS, and is neither disclosed in nor derived from
the financial statements of the Company. The Company believes that
the disclosure of its order book provides an additional tool for
investors to use in evaluating the Company's performance, market
penetration for its products, and the cadence of capital
expenditures and tooling.
The Company's computation of its order book may not be
comparable to other similarly entitled measures computed by other
companies, because all companies may not calculate their order
book, order backlog, or order intake in the same fashion. In
addition, as explained above, the Company's presentation of the
order book is calculated based on the orders and the applications
made as of the time that the information is presented, and it is
not based on the Company's assessment of future events and should
not be construed as a representation by the Company that the
vehicles and charging stations included in its order book will
translate into actual sales.
Ongoing Evaluation; Risk Factors
A portion of the vehicles or charging stations included in the
Company's order book may be cancellable in certain circumstances
(whether by reason of a delivery delay, unavailability of a subsidy
or incentive or otherwise) within a certain period. Management
reviews the composition of the order book every time it is reported
in order to determine whether any orders should be removed from the
order book. For purposes of such exercise, management identifies
orders that have been or are reasonably likely to be cancelled and
examines, among other things, whether conditions attaching to the
order are reasonably likely to result in a cancellation of the
order in future periods as well as any other available information
deemed relevant, including ongoing dialogue with clients. Such
exercise may result from time to time in orders that have
previously been included in the order book being removed even if
they have not been formally canceled by the client.
The Company cannot guarantee that its order book will be
realized in full, in a timely manner, or at all, or that, even if
realized, revenues generated will result in profits or cash
generation as expected, and any shortfall may be significant. The
Company's conversion of its order into actual sales is dependent on
various factors, including those described below and in section
23.0 entitled "Risk Factors" of the Company's MD&A for the
years ended December 31, 2021, 2020
and 2019 and in Item 3.D entitled "Risk Factors" of the Company's
annual report on Form 20-F for the fiscal year ended December 31, 2021. For instance, a customer may
default on an order, may become subject to bankruptcy or insolvency
or cease its business operations. In addition, substantially all of
the orders included in the order book are subject to conditions
relating to the granting of governmental subsidies and incentives
or the timing of deliveries and, in a limited number of cases, the
availability of certain specifications and options or the renewal
of certain routes by governmental or school authorities. As a
result, the Company's ability to convert its order book into actual
sales is highly dependent on the granting and timing of
governmental subsidies and incentives, most notably subsidies and
incentives under the Quebec
government's 2030 Plan for a Green Economy, under the Federal's
Infrastructure Canada's Zero-Emission Transit Fund (ZETF), and
under California's Hybrid and
Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). The
termination, modification, delay or suspension of any such
governmental subsidies and incentives could result in delayed
deliveries or the cancellation of all or any portion of such
orders, which, in turn, could have a material and adverse effect on
the Company's business, results of operations or financial
condition.
The Company's conversion of its order book into actual sales is
also dependent on its ability to economically and timely
manufacture its vehicles, at scale. The Company delivered 196
vehicles during the year ended December 31,
2021, and 189 vehicles during the six months ended
June 30, 2022. As of August 4, 2022, the Company's vehicle order book
stood at 2,357 vehicles. The execution of the Company's growth
strategy and the conversion of its order book will therefore
require significant ramp-up in its production. While the Company's
Saint-Jerome facility currently
has an annual production capacity of 2,500 vehicles at full scale
and it is in the process of establishing its operations at the
Joliet Facility and the Lion Campus, the Company has limited
experience to date in high volume manufacturing of its vehicles. In
addition, as of August 4, 2022, 418
units included in the order book, representing a combined total
order value of approximately $165
million, related to products which had been developed and
were being sold, but that were not currently in commercial
production. Any failure by the Company to successfully develop and
scale its manufacturing processes within projected costs and
timelines could have a material adverse effect on its business,
results of operations or financial condition. As a result, the
Company's realization of its order book could be affected by
variables beyond its control and may not be entirely realized. See
section 3.0 of this MD&A entitled "Caution Regarding
Forward-Looking Statements". See section 3.0 of the Company's
MD&A for the three months ended June 30,
2022 entitled "Caution Regarding Forward-Looking
Statements".
RECONCILIATION OF ADJUSTED EBITDA
The following table reconciles net earnings (loss) to Adjusted
EBITDA for the three and six months ended June 30, 2022 and 2021:
|
Unaudited
|
|
Unaudited
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Revenue
|
$
29,521
|
|
$
16,689
|
|
$
52,168
|
|
$
22,914
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
37,511
|
|
$
(178,490)
|
|
$
39,613
|
|
$
(194,604)
|
Finance costs
(income)
|
$
(832)
|
|
$
3,002
|
|
$
346
|
|
$
6,909
|
Depreciation and
amortization
|
$
2,739
|
|
$
1,264
|
|
$
4,722
|
|
$
2,248
|
Share-based
compensation(1)
|
$
3,363
|
|
$
54,799
|
|
$
7,158
|
|
$
60,005
|
Change in fair value of
share warrant obligations(2)
|
$
(56,935)
|
|
$
99,290
|
|
$
(78,391)
|
|
$
99,215
|
Foreign exchange (gain)
loss(3)
|
$
(1,621)
|
|
$
103
|
|
$
(710)
|
|
$
(76)
|
Transaction and other
non-recurring expenses(4)
|
$
1,363
|
|
$
14,506
|
|
$
1,532
|
|
$
14,916
|
Adjusted
EBITDA
|
$
(14,411)
|
|
$
(5,526)
|
|
$
(25,729)
|
|
$
(11,387)
|
(1) Represents non-cash
expenses recognized in connection with the issuance and revaluation
to fair value of stock options issued to participants under Lion's
stock option plan as described in note 10 to the unaudited
condensed interim consolidated financial statements as at and for
the three and six months ended June 30, 2022 and 2021.
|
(2) Represents non-cash
change in the fair value of the share warrant obligations as
described in note 9 to the unaudited condensed interim consolidated
financial statements as at and for the three and three and six
months ended June 30, 2022 and 2021.
|
(3) Represents
non-cash (gains) losses relating to foreign exchange
translation.
|
(4) For the three and
six months ended June 30, 2022, represents professional fees
related to supply chain and project optimization initiatives and
other non-recurring professional fees. For the three and six months
ended June 30, 2021, represents transaction costs related to the
Business Combination which was completed on May 6, 2021,
professional fees related to financing transactions, and other
non-recurring professional fees.
|
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.
CAUTION REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains "forward-looking information" and
"forward-looking statements" and within the meaning of the United
States Private Securities Litigation Reform Act of 1995
(collectively, "forward-looking statements") within the meaning of
applicable securities laws. Any statements contained in this press
release that are not statements of historical fact, including
statements about Lion's beliefs and expectations, are
forward-looking statements and should be evaluated as such.
Forward-looking statements may be identified by the use of words
such as "believe," "may," "will," "continue," "anticipate,"
"intend," "expect," "should," "would," "could," "plan," "project,"
"potential," "seem," "seek," "future," "target" or other similar
expressions and any other statements that predict or indicate
future events or trends or that are not statements of historical
matters, although not all forward-looking statements contain such
identifying words. These forward-looking statements include
statements regarding the Company's order book and the Company's
ability to convert it into actual sales, the Company's long-term
strategy and future growth, the Company's battery plant and
innovation center project in Quebec and its U.S. manufacturing facility,
and the expected launch of new models of electric vehicles. Such
forward-looking statements are based on a number of estimates and
assumptions that Lion believes are reasonable when made, including
that Lion will be able to retain and hire key personnel and
maintain relationships with customers, suppliers and other business
partners, that Lion will continue to operate its business in the
normal course, that Lion will be able to implement its growth
strategy, that Lion will be able to successfully and timely
complete the construction of its U.S. manufacturing facility and
its Quebec battery plant and
innovation center, that Lion will not suffer any supply chain
challenges or any material disruption in the supply of raw
materials on competitive terms, that Lion will be able to maintain
its competitive position, that Lion will continue to improve its
operational, financial and other internal controls and systems to
manage its growth and size, that its results of operations and
financial condition will not be adversely affected, that Lion will
be able to benefit, either directly or indirectly (including
through its clients), from government subsidies and economic
incentives in the future and that Lion will be able to secure
additional funding through equity or debt financing on terms
acceptable to Lion when required in the future. Such estimates and
assumptions are made by Lion in light of the experience of
management and their perception of historical trends, current
conditions and expected future developments, as well as other
factors believed to be appropriate and reasonable in the
circumstances. However, there can be no assurance that such
estimates and assumptions will prove to be correct.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. Lion
believes that these risks and uncertainties include, but are not
limited to, the following: any adverse changes in U.S. or Canadian
general economic, business, market, financial, political or legal
conditions, including as consequences of the global COVID-19
pandemic and the emergence of COVID-19 variants; any adverse
effects of the Russia-Ukraine war, which continues to affect
economic and global financial markets and exacerbate ongoing
economic challenges; any inability to successfully and economically
manufacture and distribute its vehicles at scale and meet its
customers' business needs; any inability to ramp-up the production
of Lion's products and meet project construction and other project
timelines; any unfavorable fluctuations and volatility in the price
and availability of raw materials included in components used to
manufacture Lion's products; any inability to reduce total cost of
ownership of electric vehicles sold by Lion over time; the reliance
on key management and any inability to attract and/or retain key
personnel; any inability to execute the Company's growth strategy;
the reliance on key suppliers and any inability to maintain an
uninterrupted supply of raw materials; labor shortages (including
as a result of employee turnover, departures, and demands for
higher wages) which may force the Company to operate at reduced
capacity, to lower its production and delivery rates or lower its
growth plans, and could pose additional challenges related to
employee compensation; any inability by Lion to meet the
expectations of its customers in terms of products, specifications,
and services; any inability to maintain the Company's competitive
position; any inability to reduce its costs of supply over time;
any inability to maintain and enhance the Company's reputation and
brand; any significant product repair and/or replacement due to
product warranty claims or product recalls; any failure of
information technology systems or any cybersecurity and data
privacy breaches or incidents; any event or circumstance resulting
in the Company's inability to convert its order book into actual
sales, including the reduction, elimination or discriminatory
application of government subsidies and economic incentives; any
inability to secure adequate insurance coverage or a potential
increase in insurance costs; natural disasters, epidemic or
pandemic outbreaks, boycotts and geo-political events such as civil
unrest and acts of terrorism, the current military conflict between
Russia and Ukraine or similar disruptions; and the
outcome of any legal proceedings that may be instituted against the
Company from time to time.
These and other risks and uncertainties related to the
businesses of Lion are described in greater detail in section 23.0
entitled "Risk Factors" of the Company's annual MD&A for the
fiscal year 2021. Many of these risks are beyond Lion's
management's ability to control or predict. All forward-looking
statements included in this press release are expressly qualified
in their entirety by the cautionary statements contained herein and
the risk factors included in the Company's annual MD&A for the
fiscal year 2021 and in other documents filed with the applicable
Canadian regulatory securities authorities and the Securities and
Exchange Commission.
Because of these risks, uncertainties and assumptions, readers
should not place undue reliance on these forward-looking
statements. Furthermore, forward-looking statements speak only as
of the date they are made. Except as required under applicable
securities laws, Lion undertakes no obligation, and expressly
disclaims any duty, to update, revise or review any forward-looking
information, whether as a result of new information, future events
or otherwise.
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content:https://www.prnewswire.com/news-releases/lion-electric-announces-second-quarter-2022-results-301600576.html
SOURCE Lion Electric