- Earnings call transcript Q3 2022

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Operator

Thank you for standing by. This is your conference operator. Welcome to the Microvast Third Quarter 2022 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Monica Gould, Investor Relations for Microvast. ahead. go Please

Monica Gould

call. and which us , at Officer; to audience Investor XXXX of host the Craig issued section call, Thank third Relations be its Sascha thank found Kelterborn, ir.microvast.com. joining quarter today's will Officer, today. Chief press Revenue website of President for this Webster, Microvast release, you, earnings Financial you Ahead can and our and the Chief on

accompany presentation addition, remarks. management's have to a our In prepared slide to we website posted

As to of are as a not and we subsequent date light that should statements forward-looking as note or of any materially These statements and we to will on this undertake to only to be statements views results It the are or events. reminder, from publicly please could current in revision be assumptions any differ expectations. making results relied future call. based risks obligation subject revise and uncertainties variety views no that of today. forward-looking These and cause expectations upon our these statements actual as reflect of information of about new on release representative a

financial important with XX, the XXXX, factors to refer XX-K further March on our the Form and filed SEC, For affect annual our and discussion filed including material filings risks results, the that of other today. earlier please could our report XX-Q on

in not measures measures, and substitute of available discuss may comparable measures turn that, measures release. be our have are considered at for from the call been the financial adjusted over These as to end believe in Sascha These of we our including And webcast the we net performance. gross which non-GAAP to tables with useful remarks. Investor isolation I'll of for call, today's Microvast's GAAP website. be or non-GAAP some addition during as included company will addition, results. section non-GAAP EBITDA, A replay profit, adjusted and press also most on In this Relations adjusted opening a loss to GAAP metric should of the their in call reconciled supplemental

Sascha Kelterborn

Thank market cover X highlights $XX.X supply chain order Europe, challenges third despite all growth a delivering few you X.X% us. currency difficult continuing of XXXX, from to strong I quarter. as Thank you, quarter during Everyone, third a by for the Slide a led We of turn million, QX healthy strong the million, please by million Monica. $XXX.X China. posted joining conditions revenue in customer ended demand in We $XX.X headwinds. with and a a driven in the backlog quarter, intake

the from an during and quarter SAIC of order included over $XX $XX excess million. wins third key from for million an in BAZN Some order

relationships Shell ongoing level as result as to disruptions benefit We Iveco others. as at worldwide material prices remain Group, and customer a well from inflation. of chain [indiscernible] also continue Raw [indiscernible] with an elevated supply

anticipated of across cost the the than track unit year. to at we higher the Our continue beginning significantly board

supply longer-term trends and/or actively our strategies, supply increasing identifying contracts, where additional possible. and where optimizing are prices possible, monitoring these of implementing including sources We and new selling

all However, like elevated of materials into key remain especially through we material the to and the for raw expect lithium, XXXX prices, end XXXX. possibly certain way

[indiscernible] to a Kalmar targeted Automobile XXXX. across of terminals, system partnership XX-ton this leading ports, in the heavy hours our its lock key deliver. part vehicle turn partnerships to our Microvast Shell Slide new truck the increase solutions capacity increase Shaanxi highlights power XX-megawatt into hybrid joined and hours and purchase ultrafast turn charging volume extremely will industry mining modular will developing have performance. of capability to vehicle led call electric which order OEM, the Kalmar, supply goal now battery the review and use solutions Please LTO is expect some with is battery a Microvast which commitments. is the QX by a deliveries range the in custom high-powered be will a life ultrafast after hydrogen globe, agreement conditions, manufacturer additional market. mining solution tractor critical to with anticipated and system to of Microvast formed tractor high higher charging Sino-Synergy, operational full up This under enable use commercial to consortium the in to QX handling X, which services offers to end-to-end high-power wide of their whose our collaborating solution will anticipated extended XXXX, to with to to volume production to financial X-megawatt Microvast I with truck C-rate industry. XXXX. cycles centers is in we industries Craig over fuel Microvast truck XXXX. portfolio. to XX,XXX through hybrid heavy-duty to our an with volume manufacturing support offer for expect we of online Group, up in China our enabling normal and with a deliveries battery long that XX-ton a us an visibility, Huzhou, ultra-high-voltage forward Looking the for bring we capabilities. new Cargotec, in distribution cell of their cargo and commercial consortium

Craig Webster

few our turn main Thank discussing you, I'll Sascha. our the X, XXXX I'll summarize spend P&L. to from financial Please items Slide QX the line QX results. minutes next

gross result compared million expense QX $XX.X First share-based sales, translates revenue prior gross later This in compared in note that noncash we to $X XXXX, to million was in contributor loss a period. recognizing margin XXXX, to take quarter XXXX. higher adjusted business achieved decrease of in which quarter QX XXXX. noted in in the the I Sascha in quarter through was of basis, QX compensation from the million quarter of compared XXXX. a in prior we compared with combination. row our third the $XX.X year-over-year a of X-month came the million SBC the despite QX accelerated settled in shown the largest XXXX, growth. of million, challenges QX earlier, in an adjusted breakdown in to geographic point in headwinds. but the adjusting we the in posted and gross million QX in seventh would during revenue cost QX $X marks this a XXX.X of in will like XXXX currency expense SBC adjusted in SBC QX slide, million expenses year-to-date improvement. expense, X.X% XXXX. a $XXX.X growth gross million was revenue $XX XX.X% vesting compared million connection The to that some to along to XX% to million QX XXXX totaled million decline profit some encountered Operating operating of in million On year have After of upon you $XX.X quarter, percentage This $XX.X in in off, XX.X% gross $XX.X were from loss as I expenses We with the $XX.X was up $XX.X period. prior a profit negative into for $XX.X The

are in it non-GAAP liability previously, convertible $XX.X and QX of the $XX.X million X-month included compared XX, notes, release. adjusted at cash the comparable and ended illustrated tables noncash losses. our our our GAAP the accurate We revenue expense million financial expenses adjusting in a in to fair end as to representation earnings in Slide metrics expense net metrics is in most mentioned SG&A, to both believe QX expense loss to for the for operating the breakdown QX loss to X- and SBC press expense I compared of the noncash and periods was was million. in warrant to of a After After XXXX. SBC especially shows adjusted period. $XX.X $XX.X prior noncash XXXX, performance, XXXX. Slide relates in GAAP operating as and was loss year our of significant expenses more QX net in contributor in for operating As compared of of adjusting net geographic X. QX million X Reconciliations million XXXX September value was SBC operating changes GAAP loss our these $XXX.X XXXX XXXX operating

success quarter, in the can of China out of linked customer showed not potential as orders XX% year-over-year. third increase see, orders pushed This Asia other was our to the decline for were did you some materialize, confirmed their business QX. markets a As a offset by XX% Pacific and partially

XXXX. earlier, As we challenging revenue conditions a market of result to XX% in Europe compared in QX noted the region declined the

new our growth pick cell in XX.X some anticipation in XXXX. have the we up we in starting exciting expect However, rate especially of region, coming and projects to up the ampere-hour

quarter X.X QX from Our as cash was equivalents our balance and as in receivables the provided see you will reducing cash Huzhou mostly sheet XA XXXX, $XX.X account with primarily due during receivables. collections ended CapEx cash solid, customers cash flow million, was on remains activities Clarksville the our cash, of notes the totaled million. million. by to free We Slide and $XX.X quarter spend which Net $XXX.X Negative cash of a million and of $X.X was operating which result on restricted XX.

and $X totaling projects. our ongoing had facilities million capital expenditures to also We improvements from R&D existing

the fourth million be expansion current be quarter for Our $XX capital of capacity $XXX our on for in used will and to estimates expenditure range million will primarily our the projects.

to we with are facility Europe multiyear pleased and into and $XXX loan XXXX payments customer that last the place maturity I'm XXXX. year case a U.S., may especially add explained are million finance a is that balance amortizing have As full during determined delivery project I to payments growing those support is our orders milestones, of December and In the our these quarter, the a phase and in This expansion be completed derisk syndicate out with equipment Huzhou rate a we interest as by construction in pushed our the our it report we sheet. and from expansions to base, capacity construction would our that of broad call, banks. current leverage some of the X.X%. our

kilowatt the under $XX notable initiatives is recently or most a focused turn which brings translates supporting X and cells. of to quarter, details restricted of $XX Slide are and credit This tax gigawatt to hour financing, cell at gigawatt which hours. begin beyond. installation the high in modules, our orders, IRA of strong per the and well to IRA. began our power targets expansion with benefit close new $XXX of of especially advantage the cash, Reduction in a potential in The per of Act, for million of the production production of Please energy and third our which The to both deliveries currently XX, the growth the produced new to facility. Huzhou our expect production benefits announced and initial hour We year $XX and our some positioned for equipment debt hour we phase to cells least high Inflation Manufacturing per of expect will battery kilowatt with XXXX Clarksville efforts XXXX be and on for ramping serial for credit up QX Clarksville take Clarksville in cells very to battery module the be meet the and supports most this With capacity cash equivalents significant cash. tax online Microvast. of and million

facility level our to we the this gigawatt customer vehicle are energy planning this hours. storage and solutions, interest X across commercial increase to Given in of already

cell the there Clarksville, Aside XX% review Sascha tax that will credit. customers technological to is from this benefit I With to produced added outlook. as IRA, clear an XX.X which some of that, is at incremental of advantages back content obtain under qualifying the turn allows it ampere-hour of the to domestic the over our investment the

Sascha Kelterborn

Thanks, Craig. Please turn to Slide XX.

in full tightening are year, XX% be is XXXX. XX% annual the which the expected of to to for range for revenue We guidance

Western further with revenue growth. contracted forecasted poised as remains business strong is customers for our Our

positive projects business, momentum we of visibility well with to as our market new storage for anticipated which are upcoming a penetrate further and XXXX products, Accordingly, geographically good continue recently sales to add to vehicle opportunities currently Europe, optimistic a We customers potential in on as future beyond launched with growth to XXXX our both expected products. energy We as to commercial look of outlook. and drive grow upside will much and are to which vehicle innovative large forward have we SOP result share deployment incorporated across at into launches. in X our new which the be in about they markets, estimate revenue full and deliveries XXXX

contracts improvement are, our Execution year, efforts third, capacity platform business. to and global completing as new next be sustainable achieve we multiyear years the We future on, customer continues customer with customers; truly demands; first, volume therefore, increase for revenue are critical, to we existing our service sets second, target, for planning which and in supply to focusing driving of margin growth through increasing and expansion new the scale projects growth.

also are collaboration which a our of from we expands excited validates but with only separator sustainably market. begin million addressable Energy. to recently polyaramid This We very $XXX not our in [indiscernible] received General our for planning the Motors, technology grant facility leading-edge Department

inflation U.S. the to [indiscernible], advancing while programs, exciting and the made helping going business more has new forward. As reduce creating initiatives for carbon to clean our Act the hard U.S. energy of important government last with works few funding team progress months direct expect opportunities significant Microvast multiple in Reduction we XXXX indirect emissions even and be execute to over

team and start Q&A I would to Our to tireless call and Microvast execute a has turning been to thank of the our their And mission our the global and our Microvast competitive will to like focus-oriented before advantage over personally to team, session. work Microvast. be culture commitment the operator back ability the for

Operator

Instructions]. [Operator

Our & first Oppenheimer Colin Rusch is with from Company. question

Colin Rusch

see improvement? that early the of made the see into the But balance you that of happy levels. Can even at a of the margin during of us gross you quarter, progress through curious part a on to give lower revenue Really out XXXX. little how bit XQ sense you and cadence the playing

Craig Webster

gone year. is lot for And we with prices. that [indiscernible] get look, increasing so into a into helps of is ampere-hour see that scale around It We're that, well volume and our visibility have XX.X this as Thanks playing that we're forecast this. I'd effect like XXXX. expecting Colin. have tied really we're were we Those see of planning, out incredibly really increasing say, next a underpins well. as prices. cell, lot it the starting Customers to negotiations we production effect, for

Colin Rusch

far timing, been any then supply duty, customer And chain. ramps engagement But of around production in terms programs in I'm in Excellent. some into and customers medium of terms ramps. on heavy curious the these number what the these you're move seeing mixed in and have around these obviously, of so take of of of terms given ability production to product their anticipation issues of

Sascha Kelterborn

announced probably Colin, start Iveco of The trade everybody the supplier. you biggest of Hannover, have Iveco knows, are the in we this IAA on commercial battery show. And global heard vehicle the production eDAILY. CEO year the as of on

the that December, So SOP in in have we upcoming SOP already already, starts mentioned further as field and of next year. I beginning projects,

it's moving pandemic, a really a positive is and outlook future. now have was ahead. into the reason why delay we electrification the That's starting. through So There the

Colin Rusch

seeing through Are full are of far? now. really going kind out right seeing of go slow Or you're a gate? so measured start the activity force so here they you And them

Sascha Kelterborn

in have classical you ramp-up every You SOP, a -- phase. have

they ramping are So up.

to improve So manufacturer every They footprint. moving his will the lot forward, -- of commercial ahead, backed to 'XX has up be by projects. need phase, governmental vehicle moving a COX ramp-up

very the plays confident that next in So that and will be that a our everything ramp there we years area. in into up over cards, quick are case

Colin Rusch

through since what up you as little process, that about grant, important announcement? an that been has is far. just a talk the it's so one how final then customer fairly super are can this That's I obviously helpful. guys DOE which to has for with engagement validation think you went Obviously, curious a of competitive bit a to. And me response But

Craig Webster

move been to of to also it's It's that, -- U.S. this close technologies we're becomes of in forward. huge run so want to business technologies like this very to We have Microvast, these like GM's don't super with exploring [indiscernible] the from And back. point. that spun Dr. really have that with technology. awesome looking and grant. exclusively DOE. Colin, as Other a will Mattis are it And want development we Shane at how very have. They it far we forward What the again, in colleagues, if ways we're been a an do us, validation then it's And we they've that separately it be My entity have positive. to to collaboration off did them and a grant, close this to be very some we technology. That this it investors job pay they a then interested. it stand-alone hearing is much that they the

Operator

[Operator Instructions].

Monica Gould

read we is the a and wait to getting from announced received additional feedback received bit in, of for that about come could if And talk being energy through while And about one little recently you storage questions just kind our I'll division, how customers. you're IR we e-mail. this what is that

Sascha Kelterborn

as already a is team, thanks was more they big his the solutions, so we leading. you Zach feedback and success installation Zach just his battery is industry-leading received a on team hours, energy there. see what And solution. will and did an rate ampere-hour and product that. market and market based a an our and product did cycles, XX-foot job about megawatt more long this life It our you highly than soon in are It's X.X hear develop of incredible Sure. They density And XX,XXX great maintenance far job. highlights, of that customer classical can XX.X incredible interested cell on easy to transportation, feedback. to container, again

Monica Gould

to can little Great. grant? received, grant we talk And was selection process the large going the to that how able you DOE large bit such back and secure a then about a Microvast

Craig Webster

the safety. company. polyaramid battery It's the critical Microvast perfect in that safety-first separator. It's It a of battery. took down component Sure. technology. technology. for the It's really critical years most the most to a to is The separator Microvast XX the is part

true importantly, We have significant And one, just such was extensive grant. think that them. commercialize received patent technologies And it we protection develop we also that. of, but, why a can I on large that's we can and a recognition

Monica Gould

that that's up before questions other close call? like have looks we've we closing Sascha, the you the for that any So it do remarks received.

Sascha Kelterborn

like today. Yes. the wish evening. would soon audience positive with with I And thank a for a to again being great I for news. report lot participating And us we everybody further will today. Thanks

Operator

today's Thank conclude conference. you. does This

disconnect this thank participation. lines may time, You for and your your at you

Microvast (MVST) 11 Nov 222022 Q3 Earnings call transcript