MONTREAL, Feb. 29,
2024 /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 fourth
quarter and fiscal year ended on December 31, 2023. Lion
reports its results in US dollars and in accordance with
International Financial Reporting Standards ("IFRS").
Q4 2023 FINANCIAL HIGHLIGHTS
- Revenue of $60.4 million, up
$13.7 million, as compared to
$46.8 million in Q4 2022.
- Delivery of 188 vehicles, an increase of 14 vehicles, as
compared to the 174 delivered in Q4 2022.
- Gross loss of $9.1 million as
compared to a gross loss of $4.8
million in Q4 2022.
- Adjusted gross profit1 of $0.8 million as compared to adjusted gross loss
of $4.8 million in Q4 2022.
- Net loss of $56.5 million in Q4
2023, as compared to net loss of $4.6
million in Q4 2022.
- Adjusted EBITDA2 of negative $6.3 million, as compared to negative
$13.9 million in Q4 2022.
- Additions to property, plant and equipment related to the
Joliet Facility and the Lion Campus, amounted to $13.7 million, down $25.4
million, as compared to $39.1
million in Q4 2022. See section 8.0 of the Company's
MD&A for the three and twelve months ended December 31, 2023 entitled "Operational
Highlights" for more information related to the Joliet Facility and
the Lion Campus.
- Additions to intangible assets, which mainly consist of vehicle
and battery development activities, amounted to $17.8 million, down $3.5
million as compared to $21.3
million in Q4 2022.
- Impairment of intangible assets and property, plant and
equipment of $36.0 million and
write-down of inventory of $9.8
million related to the LionA and LionM minibuses for which
the Company made the decision to indefinitely delay the start of
commercial production, as announced on November 7, 2023.
|
________________________________
|
|
1 Adjusted
gross profit (loss) is a non-IFRS financial measure. See
"Non-IFRS Measures and Other Performance Metrics" section of this
press release.
|
|
2 Adjusted
EBITDA is a non-IFRS financial measure. See "Non-IFRS Measures and
Other Performance Metrics" section of this press
release.
|
FY 2023 FINANCIAL HIGHLIGHTS
- Delivery of 852 vehicles, an increase of 333 vehicles, as
compared to the 519 delivered in fiscal 2022.
- Revenue of $253.5 million, up
$113.6 million, as compared to
$139.9 million in fiscal 2022.
- Gross loss of $5.5 million, as
compared to gross loss of $12.9
million in fiscal 2022.
- Adjusted gross profit of $4.3
million as compared to adjusted gross loss of $12.9 million in fiscal 2022.
- Net loss of $103.8 million, as
compared to net earnings of $17.8
million in fiscal 2022.
- Adjusted EBITDA of negative $34.3
million, as compared to negative $54.8 million in fiscal 2022.
- Additions to property, plant and equipment related to the
Joliet Facility and the Lion Campus, amounted to $72.2 million, down $75.8
million, as compared to $148.0
million in fiscal 2022. See section 8.0 of the Company's
MD&A for the three and twelve months ended December 31, 2023 entitled "Operational
Highlights" for more information related to the Joliet Facility and
the Lion Campus.
- Additions to intangible assets, which mainly consist of vehicle
and battery development activities, amounted to $67.2 million, down $11.9
million, as compared to $79.1
million in fiscal 2022.
- Impairment of intangible assets and property, plant and
equipment of $36.0 million and
write-down of inventory of $9.8
million related to the LionA and LionM minibuses for which
the Company made the decision to indefinitely delay of the start of
commercial production, as announced on November 7, 2023.
BUSINESS UPDATES
- More than 1,850 vehicles on the road, with over 22 million
miles driven (over 36 million kilometers).
- Vehicle order book3 of 2,076 all-electric medium-
and heavy-duty urban vehicles as of February
28, 2024, consisting of 285 trucks and 1,791 buses,
representing a combined total order value of approximately
$500 million based on management's
estimates.
- LionEnergy order book of 132 charging stations and related
services as of February 28, 2024,
representing a combined total order value of approximately
$4 million.
- 12 experience centers in operation in the United States and Canada.
- Initiated commercial production of LionD units which led to the
completion of first deliveries to customers in January 2024.
- Successfully completed the final certification for medium duty
Lion battery packs, paving the way for initial deliveries of Lion5
trucks.
|
________________________________
|
|
3 See
"Non-IFRS Measures and Other Performance Metrics" section of this
press release. The Company's vehicle and charging stations order
book 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 programs, subsidies or incentives have been made by
the applicable clients and the Company. The order book is expressed
as a number of units or a total dollar value, which dollar value is
determined based on the pricing of each unit included in the order
book. The vehicles included in the vehicle order book as of
February 28, 2024 provided for a delivery period ranging from
a few months to the end of the year ending December 31, 2026, with
substantially all of such vehicles currently providing for
deliveries before the end of the year ending December 31, 2025. In
addition, substantially all of the vehicle orders included in the
order book are subject to the granting of governmental subsidies
and incentives, including programs in respect of which applications
relating to vehicles of Lion have not yet been fully processed to
date. The processing times of governmental programs, subsidies and
incentives are also 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.
Also, there has been in the past and the Company expects there will
continue to be variances in the eligibility criteria of the various
programs, subsidies and incentives introduced by governmental
authorities, including in their interpretation and application.
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.
|
The Company decided to proceed with the temporarily lay off of
approximately 100 employees, mostly impacting the nightshift
production workforce at its Saint-Jerome manufacturing facility. The
measure aims at further rationalizing the Company's cost structure
in the context of prolonged challenges experienced by the Company,
including delays and challenges associated with the processing and
granting of various governmental subsidies and incentives, notably
the ZETF program, which continue to negatively impact the
Company's scheduled deliveries and sales efforts, and at further
aligning its production workforce with current production
requirements. The Company will reassess its production needs in the
context of any future developments, including any developments
relating to the foregoing challenges.
"2023 has been a year of significant progress, marked by record
vehicle deliveries and revenue, which translated into positive
adjusted gross margins, and also by several achievements, including
the construction and operation of our two new factories and the
start of commercial production of our Lion5 electric truck and our
LionD electric school bus. However, this past year has not been
without its challenges, particularly as it relates to a volatile
incentive environment that slowed down the pace of orders and
deliveries," commented Marc Bedard,
CEO - Founder of Lion. "In 2024, with the growth capex investments
now behind us, we will focus on driving growth in orders and
deliveries, while diligently controlling costs and keeping a tight
control of our liquidity, as we expect the volatile environment to
persist for at least the next few months. Despite facing such
uncertain environment, we remain committed to leveraging all
investments made over the last 15 years, with the ultimate
objective to reach profitability." concluded Marc Bedard.
SELECT EXPLANATIONS ON RESULTS OF OPERATIONS FOR THE FOURTH
QUARTER AND FISCAL YEAR ENDED DECEMBER 31,
2023
Revenue
For the three months ended December 31,
2023, revenue amounted to $60.4
million, an increase of $13.7
million, compared to the corresponding period in the prior
year. The increase in revenue was primarily due to an increase in
vehicle sales volume of 14 units, from 174 units (139 school buses
and 35 trucks; 160 vehicles in Canada and 14 vehicles in the U.S.) for the
three months ended December 31, 2022,
to 188 units (178 school buses and 10 trucks; 107 vehicles in
Canada and 81 vehicles in the
U.S.) for the three months ended December
31, 2023, including the impact of a higher proportion of
U.S. vehicle sales than in the corresponding period in the prior
year.
For the year ended December 31,
2023, revenue amounted to $253.5
million, an increase of $113.6
million, compared to the year ended December 31, 2022. The increase in revenue was
primarily due to an increase in vehicle sales volume of 333 units,
from 519 units (409 school buses and 110 trucks; 471 vehicles in
Canada and 48 vehicles in the
U.S.) for the year ended December 31,
2022, to 852 units (771 school buses and 81 trucks; 625
vehicles in Canada and 227
vehicles in the U.S.) for the year ended December 31, 2023. Revenues for the year ended
December 31, 2023 were positively
impacted by the impact of a higher proportion of U.S. vehicle sales
as compared to fiscal 2022, however were negatively impacted by
delays in the processing and granting of subsidies, which resulted
in the postponement of deliveries of vehicles which were ready for
delivery.
Cost of Sales
For the three months ended December
31, 2023, cost of sales amounted to $69.5 million, representing an increase of
$17.9 million compared to
$51.5 million in the corresponding
period in the prior year. The increase was primarily due to the
$9.8 million write-down of inventory
to net realizable value as a result of the decision to indefinitely
delay the start of commercial production of the LionA and LionM
minibuses, increased sales volumes and higher production levels,
increased fixed manufacturing and inventory management system costs
related to the ramp-up of production capacity, higher raw material
and commodity costs, and the impact of the inflationary
environment.
For the year ended December 31,
2023, cost of sales amounted to $259.0 million, representing an increase of
$106.2 million, compared to the year
ended December 31, 2022. The increase
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, higher
raw material and commodity costs, and the impact of the
inflationary environment. In addition, cost of sales were impacted
by the $9.8 million write-down of
inventory to net realizable value as a result of the decision to
indefinitely delay the commercial production of the LionA and LionM
minibuses.
Gross Loss
For the three months ended December 31,
2023, gross loss increased by $4.3
million, from a gross loss of $4.8
million for the corresponding period in the prior year, to a
gross loss of $9.1 million for the
three months ended December 31, 2023.
The increase in gross loss was primarily due to the negative impact
of the $9.8 million write-down of
inventory to net realizable value as a result of the decision to
indefinitely delay the start of commercial production of the LionA
and LionM minibuses, increased fixed manufacturing costs and
inventory management system costs related to the ramp-up of future
production capacity, higher raw material and commodity costs,
product mix, and the impact of continuing global supply chain
challenges and inflationary environment, partially offset by the
positive gross profit impact of increased sales volumes.
For the year ended December 31,
2023, gross loss improved by $7.4
million to negative $5.5
million, compared to negative $12.9
million for the year ended December
31, 2022. The improvement was primarily due to the positive
impact of increased sales volumes, favorable product mix, and
higher manufacturing throughput, partially offset by higher raw
material and commodity costs, higher inventory management system
costs related to the ramp-up of production capacity, and the impact
of the inflationary environment. Gross loss for the year ending
December 31, 2023 was also negatively
impacted by the $9.8 million
write-down of inventory to net realizable value as a result of the
decision to indefinitely delay the commercial production of the
LionA and LionM minibuses.
Administrative Expenses
For the three months ended December 31,
2023, administrative expenses increased by $3.0 million, from $10.0
million for the three months ended December 31, 2022, to $13.0 million for the three months ended
December 31, 2023. Administrative
expenses for the three months ended December
31, 2023 included $1.4 million
of non-cash share-based compensation, compared to $2.1 million for the three months ended
December 31, 2022. Excluding the
impact of non-cash share-based compensation, administrative
expenses increased from $7.9 million
for the three months ended December 31,
2022, to $11.6 million for the
three months ended December 31, 2023.
The increase was mainly due to an increase in expenses, including
higher headcount, resulting from the expansion of Lion's head
office and general corporate capabilities.
For the year ended December 31,
2023, administrative expenses increased by $6.6 million, from $44.8
million for the year ended December
31, 2022, to $51.5 million.
Administrative expenses for the year ended December 31, 2023 included $58.0 million of non-cash share-based
compensation, compared to $59.0
million for the year ended December
31, 2022. Excluding the impact of non-cash share-based
compensation, administrative expenses increased from $35.3 million for the year ended December 31, 2022 to $35.3
million for year ended December 31,
2023. The increase was mainly due to an increase in expenses
and a higher headcount, both resulting from the expansion of Lion's
head office and general corporate capabilities. As a percentage of
sales, administrative expenses represented 20% of net sales for the
year ended December 31, 2023,
compared to 32% for the year ended December
31, 2022.
Selling Expenses
For the three months ended December 31,
2023, selling expenses decreased by $2.5 million, from $5.6
million for the three months ended December 31, 2022, to $3.1
million for the three months ended December 31, 2023. Selling expenses for the three
months ended December 31, 2023
included a recovery of $1.0 million
of non-cash share-based compensation, compared to a charge of
$0.4 million for the three months
ended December 31, 2022. Excluding
the impact of non-cash share-based compensation, selling expenses
decreased from $5.2 million for the
three months ended December 31, 2022,
to $4.1 million for the three months
ended December 31, 2023. The decrease
was primarily due to streamlined selling related expenses and lower
marketing costs, partially offset by higher sales commissions
related to higher revenue.
For the year ended December 31,
2023, selling expenses decreased by $3.3 million, from $23.0
million for the year ended December
31, 2022, to $19.7 million.
Selling expenses for the year ended December
31, 2023 included $0.2 million
of non-cash share-based compensation, compared to $2.9 million for the year ended December 31, 2022. Excluding the impact of
non-cash share-based compensation, selling expenses decreased from
$20.1 million for the year ended
December 31, 2022, to $19.5 million for year ended December 31, 2023. The slight decrease was
primarily due to streamlined selling related expenses, including
lower headcount and marketing costs, partially offset by higher
sales commissions related to higher revenue.
Restructuring Costs
Restructuring costs of $1.4
million for the three months ended December 31, 2023 and fiscal 2023 are comprised
mainly of severance costs related to the workforce reduction
announced on November 27, 2023.
Impairment of Intangible Assets and Property, Plant and
Equipment
Impairment of intangible assets and property, plant and
equipment of $36.0 million for
the three months ended December 31,
2023 and fiscal 2023 relates to the write-down of previously
capitalized vehicle development costs and property, plant and
equipment which resulted from the Company's decision to
indefinitely delay the start of commercial production of the LionA
and LionM minibuses, as announced on November 7, 2023.
Finance Costs (Income)
For the three months ended December 31,
2023, finance costs increased by $7.6 million compared to the corresponding
period in the prior year. Finance costs for the three months ended
December 31, 2023 were net of
$1.8 million of capitalized borrowing
costs, compared to $5.1 million
for the three months ended December 31,
2022. Excluding the impact of capitalized borrowing costs,
finance costs increased by $4.3
million compared to the three months ended December 31, 2022. The increase was driven
primarily by higher interest expense on long-term debt, due to
higher average debt outstanding during the quarter relating to
borrowings made under the Revolving Credit Agreement, the IQ Loan,
the SIF Loan, the Finalta-CDPQ Loan Agreement, and the Supplier
Credit Facility, interest and accretion expense as well as
financing costs related to the Convertible Debentures and
Non-Convertible Debentures issued in July
2023, and an increase in interest costs related to lease
liabilities, including for the Battery Plant.
For the year ended December 31,
2023, finance costs increased by $16.9 million, from $1.0
million for the year ended December
31, 2022, to $17.9 million for
the year ended December 31, 2023.
Finance costs for the year ended December
31, 2023 were net of $6.5
million of capitalized borrowing costs, compared to
$5.1 million for the year ended
December 31, 2022. Excluding the
impact of capitalized borrowing costs, finance costs increased by
$18.3 million compared to the
year ended December 31, 2022. The
increase was driven primarily by higher interest expense on
long-term debt, due to higher average debt outstanding during the
year relating to borrowings made under the Revolving Credit
Agreement, the IQ Loan, the SIF Loan, the Finalta-CDPQ Loan
Agreement, and the Supplier Credit Facility (as such terms are
defined below), interest and accretion expense as well as financing
costs related to the Convertible Debentures and Non-Convertible
Debentures issued in July 2023, and
an increase in interest costs related to lease liabilities,
including for the Battery Plant. In addition, finance costs for the
year ended December 31, 2022 included
a gain of $2.1 million on the
derecognition of the financial liability occurred as a result of
the termination of an agreement maturing on May 7, 2022 granting a private company with
dealership rights in certain regions in the United States.
Foreign Exchange Loss (Gain)
Foreign exchange gains (loss) for both periods relate primarily
to the revaluation of net monetary assets denominated in foreign
currencies to the functional currencies of the related Lion
entities. For the three months ended December 31, 2023, foreign exchange gain was
$2.2 million, compared a loss of
$0.6 million in the corresponding
period in the prior year, related primarily to the impact of
changes in the Canadian dollar relative to the U.S. dollar.
Foreign exchange loss (gain) relates primarily to the
revaluation of net monetary assets denominated in foreign
currencies to the functional currencies of the related Lion
entities. For the year ended December 31,
2023, foreign exchange gain was $2.3
million, compared to a loss of $2.0
million in the prior year, related primarily to the impact
of changes in foreign currency rates, related primarily to the
impact of changes in the Canadian dollar relative to the U.S.
dollar.
Change in Fair Value of Conversion Options on Convertible
Debt Instruments
For the three months ended December 31,
2023, change in fair value of conversion options on
convertible debt instruments was a gain of $1.6 million, and was related to the revaluation
of the conversion options on the Convertible Debentures issued in
July 2023.
For the year ended December 31,
2023, change in fair value of conversion options on
convertible debt instruments was a gain of $5.0 million, and was related to the revaluation
of the conversion options on the Convertible Debentures issued in
July 2023.
Change in Fair Value of Share Warrant
Obligations
Change in fair value of share warrant obligations moved from a
gain of $15.4 million for the three
months ended December 31, 2022, to a
gain of $9.1 million, for the three
months ended December 31, 2023. The
gain for the three months ended December 31,
2023, was related to the Specific Customer Warrants, the
public and private Business Combination Warrants, the 2022
Warrants, and the July 2023 Warrants,
and resulted mainly from the decrease in the market price of Lion
equity as compared to the previous valuations.
Change in fair value of share warrant obligations moved from a
gain of $101.5 million for the year
ended December 31, 2022, to a gain of
$21.0 million, for the year ended
December 31, 2023. The gain for the
year ended December 31, 2023 was
related to the Specific Customer Warrants, the public and private
Business Combination Warrants, the 2022 Warrants, and the
July 2023 Warrants, and resulted
mainly from the decrease in the market price of Lion equity as
compared to the previous valuations.
Net Earnings (Loss)
The net loss for the three months ended December 31, 2023 as compared to the net loss for
the corresponding prior period is higher as it includes the impacts
of the inventory write-down and the impairment charge related to
the delay of start of commercial production of the LionA and LionM
minibuses, and it reflects higher administrative and selling
expenses and finance costs, and lower gains related to non-cash
decrease in the fair value of share warrant obligations, as
compared to the comparative period in the prior year.
The net loss of $103.8 million for
the year ended December 31, 2023 as
compared to the net loss of $17.8
million for the prior year was largely due to an improvement
in gross loss, inclusive of the impact of the inventory write-down
related to the delay of the start of commercial production of the
LionA and LionM minibuses, more than offset by higher
administrative and selling expenses, the impairment charge related
to the delay of the start of commercial production of the LionA and
LionM minibuses, higher finance costs, and lower gains related to
non-cash decrease in the fair value of share warrant
obligations.
CONFERENCE CALL
A conference call and webcast will be held on February 29, 2024, at 8:30
a.m. (Eastern Time) to discuss the results. To participate
in the conference call, please dial (404) 975-4839 or (833)
470-1428 (toll free) using the Access Code 863541. An investor
presentation and a live webcast of the conference call will also be
available at www.thelionelectric.com under the "Events and
Presentations" page of the "Investors" section. An archive of the
event will be available for a period of time shortly after the
conference call.
FINANCIAL REPORT
This release should be read together with the annual audited
consolidated financial statements of the Company and the related
notes for the years ended December 31,
2023 and 2022, and the related management discussion and
analysis ("MD&A") for the three and twelve months ended
December 31, 2023, 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 SEDAR+ as well as on our website at
www.thelionelectric.com. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the MD&A.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
December 31, 2023 and December 31, 2022
(in US
dollars)
|
Dec 31,
2023
|
|
Dec 31, 2022
|
|
$
|
|
$
|
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash
|
29,892,966
|
|
88,266,985
|
|
Accounts
receivable
|
75,641,780
|
|
62,971,542
|
|
Inventories
|
249,606,756
|
|
167,191,935
|
|
Prepaid expenses and
other current assets
|
1,553,276
|
|
5,067,513
|
|
Current
assets
|
356,694,778
|
|
323,497,975
|
|
Non-current
|
|
|
|
|
Other non-current
assets
|
6,994,815
|
|
1,073,226
|
|
Property, plant and
equipment
|
198,536,683
|
|
160,756,328
|
|
Right-of-use
assets
|
89,663,139
|
|
60,508,354
|
|
Intangible
assets
|
175,703,257
|
|
151,364,023
|
|
Contract
asset
|
13,528,646
|
|
13,211,006
|
|
Non-current
assets
|
484,426,540
|
|
386,912,937
|
|
Total
assets
|
841,121,318
|
|
710,410,912
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
|
|
|
|
|
Trade and other
payables
|
92,424,961
|
|
75,222,042
|
|
Deferred revenue and
other deferred liabilities
|
18,267,139
|
|
634,971
|
|
Current portion of
long-term debt and other debts
|
27,056,476
|
|
24,713
|
|
Current portion of
lease liabilities
|
7,984,563
|
|
5,210,183
|
|
Current
liabilities
|
145,733,139
|
|
81,091,909
|
|
Non-current
|
|
|
|
|
Long-term debt and
other debts
|
197,885,889
|
|
110,648,635
|
|
Lease
liabilities
|
83,972,023
|
|
58,310,032
|
|
Share warrant
obligations
|
29,582,203
|
|
23,243,563
|
|
Conversion options on
convertible debt instruments
|
25,034,073
|
|
—
|
|
Non-current
liabilities
|
336,474,188
|
|
192,202,230
|
|
Total
liabilities
|
482,207,327
|
|
273,294,139
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Share
capital
|
489,362,920
|
|
475,950,194
|
|
Contributed
surplus
|
139,569,185
|
|
134,365,664
|
|
Deficit
|
(255,746,097)
|
|
(151,979,960)
|
|
Cumulative translation
adjustment
|
(14,272,017)
|
|
(21,219,125)
|
|
Total shareholders'
equity
|
358,913,991
|
|
437,116,773
|
|
Total shareholders'
equity and liabilities
|
841,121,318
|
|
710,410,912
|
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND COMPREHENSIVE
EARNINGS (LOSS)
For the years ended December 31, 2023 and 2022
(in US
dollars)
|
(Unaudited)
|
|
(Audited)
|
|
Three months
ended
|
|
Year
ended
|
|
Dec 31,
2023
|
|
Dec 31,
2022
|
|
Dec 31,
2023
|
|
Dec 31,
2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revenue
|
60,428,739
|
|
46,768,660
|
|
253,495,601
|
|
139,914,470
|
|
Cost of
sales
|
69,479,799
|
|
51,533,378
|
|
259,020,001
|
|
152,861,775
|
|
Gross
loss
|
(9,051,060)
|
|
(4,764,718)
|
|
(5,524,400)
|
|
(12,947,305)
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
13,011,219
|
|
9,996,995
|
|
51,479,445
|
|
44,843,042
|
|
Selling
expenses
|
3,146,991
|
|
5,643,130
|
|
19,650,125
|
|
22,973,972
|
|
Restructuring
costs
|
1,426,487
|
|
—
|
|
1,426,487
|
|
—
|
|
Impairment of
intangible assets and
property, plant and equipment
|
35,998,123
|
|
—
|
|
35,998,123
|
|
—
|
|
Operating
loss
|
(62,633,880)
|
|
(20,404,843)
|
|
(114,078,580)
|
|
(80,764,319)
|
|
|
|
|
|
|
|
|
|
Finance
costs
|
6,742,686
|
|
(891,329)
|
|
17,892,444
|
|
955,422
|
|
Foreign exchange (gain)
loss
|
(2,155,426)
|
|
558,551
|
|
(2,259,539)
|
|
1,972,679
|
|
Change in fair value of
conversion options
on convertible debt instruments and
interest paid in kind
|
(1,626,304)
|
|
—
|
|
(4,982,236)
|
|
—
|
|
Change in fair value of
share warrant
obligations
|
(9,052,303)
|
|
(15,434,253)
|
|
(20,963,112)
|
|
(101,468,186)
|
|
Net income
(loss)
|
(56,542,533)
|
|
(4,637,812)
|
|
(103,766,137)
|
|
17,775,766
|
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
Item that will be
subsequently
reclassified to net earnings (loss)
|
|
|
|
|
|
|
|
|
Foreign currency
translation
adjustment
|
5,785,916
|
|
3,522,926
|
|
6,947,108
|
|
(18,309,729)
|
|
Comprehensive
earnings (loss) for the
period
|
(50,756,617)
|
|
(1,114,886)
|
|
(96,819,029)
|
|
(533,963)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per share
|
(0.25)
|
|
(0.02)
|
|
(0.46)
|
|
0.09
|
|
Diluted earnings (loss)
per share
|
(0.25)
|
|
(0.02)
|
|
(0.46)
|
|
0.09
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years
ended December 31, 2023 and 2022
(in US Dollars)
|
(Unaudited)
|
|
(Audited)
|
|
Three months
ended
|
|
Year
ended
|
|
Dec 31,
2023
|
|
Dec 31, 2022
|
|
Dec 31,
2023
|
|
Dec 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
(56,542,533)
|
|
(4,637,812)
|
|
(103,766,137)
|
|
17,775,766
|
|
Non-cash
items:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
8,359,468
|
|
3,723,559
|
|
26,074,572
|
|
11,492,473
|
|
Impairment of
inventory
|
12,022,984
|
|
478,889
|
|
12,022,984
|
|
478,889
|
|
Impairment of
intangible assets and property, plant and
equipment
|
35,998,123
|
|
—
|
|
35,998,123
|
|
—
|
|
Share-based
compensation
|
408,643
|
|
2,521,960
|
|
5,203,521
|
|
12,362,070
|
|
Accretion
expense
|
3,388,287
|
|
—
|
|
5,663,365
|
|
—
|
|
Accretion and
revaluation expense on balance of purchase price
payable related to the acquisition of the dealership
rights
|
—
|
|
—
|
|
—
|
|
82,850
|
|
Gain on derecognition
of the balance of purchase price payable
related to the acquisition of the dealership rights
|
—
|
|
—
|
|
—
|
|
(2,130,583)
|
|
Non-cash issuance of
closing fee shares through 2023
Debentures Financing
|
—
|
|
—
|
|
623,336
|
|
—
|
|
Change in fair value
of share warrant obligations
|
(9,052,303)
|
|
(15,434,253)
|
|
(20,963,112)
|
|
(101,468,186)
|
|
Change in fair value
of conversion options on convertible debt
instruments and interest paid in kind
|
(1,626,304)
|
|
—
|
|
(4,982,236)
|
|
—
|
|
Unrealized foreign
exchange loss (gain)
|
(2,783,193)
|
|
(10,785)
|
|
(4,106,220)
|
|
821,424
|
|
Net change in non-cash
working capital items
|
(10,133,717)
|
|
(17,247,824)
|
|
(57,974,652)
|
|
(58,967,500)
|
|
Finance costs
attributable to 2023 Debenture financing
|
(3,829,850)
|
|
—
|
|
(3,829,850)
|
|
—
|
|
Cash flows used in
operating activities
|
(23,790,395)
|
|
(30,606,266)
|
|
(110,036,306)
|
|
(119,552,797)
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
(10,501,121)
|
|
(39,642,755)
|
|
(78,291,978)
|
|
(129,573,638)
|
|
Addition to intangible
assets
|
(18,660,272)
|
|
(20,805,023)
|
|
(75,173,685)
|
|
(78,284,126)
|
|
Disposition of
property, plant and equipment
|
—
|
|
—
|
|
—
|
|
24,413
|
|
Proceeds from Mirabel
battery building sale-leaseback
|
—
|
|
—
|
|
20,506,589
|
|
—
|
|
Government assistance
related to property, plant and equipment and
intangible assets
|
2,011,244
|
|
3,226,696
|
|
9,452,796
|
|
3,226,696
|
|
Cash flows used in
investing activities
|
(27,150,149)
|
|
(57,221,082)
|
|
(123,506,278)
|
|
(204,606,655)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Increase in long-term
debt and other debts
|
65,587,727
|
|
62,638,399
|
|
171,687,491
|
|
111,576,513
|
|
Repayment of long-term
debt and other debts
|
(21,823,809)
|
|
(9,928,509)
|
|
(148,305,458)
|
|
(10,348,894)
|
|
Payment of lease
liabilities
|
(2,085,003)
|
|
(1,219,492)
|
|
(6,512,231)
|
|
(4,977,183)
|
|
Proceeds from issuance
of shares through "at-the-market" equity
program, net of
issuance costs
|
—
|
|
10,164,952
|
|
8,580,405
|
|
29,351,308
|
|
Proceeds from the
issuance of units through the December 2022
Offering - Warrants
|
—
|
|
19,909,398
|
|
2,907,226
|
|
19,913,196
|
|
Proceeds from the
issuance of units through the December 2022
Offering - Common Shares, net of issuance costs
|
—
|
|
27,264,038
|
|
4,175,836
|
|
27,264,038
|
|
Proceeds from the 2023
Debentures Financing
|
3,829,850
|
|
—
|
|
142,920,845
|
|
—
|
|
Proceeds from the
issuance of shares through exercise of stock
options and warrants
|
—
|
|
23,173
|
|
—
|
|
23,173
|
|
Cash flows from
financing activities
|
45,508,765
|
|
108,851,959
|
|
175,454,114
|
|
172,802,151
|
|
Effect of exchange rate
changes on cash held in foreign currency
|
(344,322)
|
|
628,959
|
|
(285,549)
|
|
(2,077,744)
|
|
Net decrease in
cash
|
(5,776,101)
|
|
21,653,570
|
|
(58,374,019)
|
|
(153,435,045)
|
|
Cash, beginning of
year
|
35,669,067
|
|
66,613,415
|
|
88,266,985
|
|
241,702,030
|
|
Cash, end of
period
|
29,892,966
|
|
88,266,985
|
|
29,892,966
|
|
88,266,985
|
|
Income taxes
paid
|
—
|
|
—
|
|
—
|
|
—
|
|
Interest
paid
|
3,900,718
|
|
835,592
|
|
11,119,136
|
|
2,386,930
|
|
Interest paid under
lease liabilities
|
1,301,422
|
|
819,786
|
|
4,656,033
|
|
3,162,932
|
NON-IFRS MEASURES AND OTHER PERFORMANCE METRICS
This press release makes reference to Adjusted gross profit
(loss), Adjusted gross margin, and Adjusted EBITDA, which are
non-IFRS financial measures, as well as other performance metrics,
including the Company's order book, which are defined below. These
measures are neither required nor recognized measures under IFRS,
and, as a result, 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 gross profit (loss),
Adjusted gross margin, Adjusted EBITDA, and order book on a
supplemental basis. Readers should not rely on any single financial
measure to evaluate Lion's business.
Adjusted Gross Profit (Loss) and Adjusted Gross Margin
Adjusted gross profit (loss) is defined as gross profit (loss)
before the impact of a non-cash charge to gross profit (loss)
resulting from the inventory write-down recorded by the Company in
connection with its decision to indefinitely delay the start of
commercial production of the LionA and LionM minibuses, as
described in section 8.0 of the Company's MD&A for the three
and twelve months ended December 31,
2023 entitled "Operational Highlights" and section 13.0 of
the Company's MD&A for the three and twelve months ended
December 31, 2023 entitled "Results
of Operations". Adjusted gross margin is calculated as Adjusted
gross profit (loss) divided by revenue. The Company has elected to
introduce Adjusted gross profit (loss) and Adjusted gross margin in
order to measure its performance at the gross margin level without
the impact of this non-cash charge, which can affect the
comparability of its financial results and could potentially
distort the analysis of trends in its business performance. The
Company believes that these measures are useful to management and
investors as they facilitate period-to-period comparisons of the
Company's costs of sales and gross profit, including how
efficiently the Company uses labor and materials for manufacturing
goods sold to its customers, by excluding the impact of a non-cash
charge that is not directly related to its operating performance.
However, readers should be aware that when evaluating Adjusted
gross profit (loss) and Adjusted gross margin, Lion may incur other
charges similar to that excluded when calculating Adjusted gross
profit (loss) in the future, and the exclusion of this charge
should not be construed as an inference that a charge of a similar
nature will not occur in the future. Readers should review the
reconciliation of gross profit (loss), the most directly comparable
IFRS financial measure, to Adjusted gross profit (loss) and
Adjusted gross margin, which is presented by the Company under
section 13.0 of the Company's MD&A for the three and twelve
months ended December 31, 2023
entitled "Results of Operations - Reconciliation of Adjusted Gross
Profit (Loss) and Adjusted Gross Margin."
Adjusted EBITDA
"Adjusted EBITDA" is defined as net earnings (loss) before
finance costs, income tax expense or benefit, and depreciation and
amortization, adjusted to exclude restructuring costs, share-based
compensation, change in fair value of conversion options on
convertible debt instruments, change in fair value of share warrant
obligations, foreign exchange (gain) loss and transaction and other
non-recurring expenses. Adjusted EBITDA also excludes the impact of
a non-cash impairment charge relating to intangible assets and
property, plant and equipment resulting from the write-down of
previously capitalized vehicle development costs and property,
plant and equipment as well as the impact of a non-cash charge
related to the inventory write-down referred to above, all of which
were recorded by the Company in connection with its decision to
indefinitely delay the start of commercial production of the LionA
and LionM minibuses. Lion uses adjusted EBITDA to facilitate a
comparison of the profitability of its business on a consistent
basis from period-to-period and to provide a further understanding
of factors and trends affecting its business. The Company also
believes this measure is useful for investors to assess the
Company's profitability, its cost structure and its ability to
service debt and to meet other payment obligations. 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. 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 twelve months ended
December 31, 2023 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 vehicles and charging stations
order book 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 programs, subsidies or incentives have been made
by the applicable clients and the Company. The order book is
expressed as a number of units or a total dollar value, which
dollar value is determined based on the pricing of each unit
included in the order book as further explained under "Pricing" in
section 10.0 of the Company's MD&A for the three and twelve
months ended December 31, 2023
entitled "Order Book". The vehicles included in the vehicle order
book as of February 28, 2024 provided
for a delivery period ranging from a few months to the end of the
year ending December 31, 2026, with
substantially all of such vehicles currently providing for
deliveries before the end of the year ending December 31, 2025. In addition, 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. Also, there has been in the past and the Company
expects there will continue to be variances in the eligibility
criteria of the various programs, subsidies and incentives
introduced by governmental authorities, including in their
interpretation and application. 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 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.
|
General
Principle:
|
The Company's vehicle
and charging stations order book 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 programs, subsidies or
incentives have been made by the applicable clients and the
Company. The order book is expressed
as a number of units or a total dollar value, which dollar value is
determined based on the pricing of
each unit included in the order book as further explained below
under the section entitled "Pricing".
The vehicles included
in the vehicle order book as of February 28, 2024 provided for
a delivery
period ranging from a few months to the end of the year ending
December 31, 2026, with
substantially all of such vehicles currently providing for
deliveries before the end of the year ending
December 31, 2025. In addition, substantially all of the vehicle
orders included in the order book are
subject to the granting of governmental subsidies and incentives,
including programs in respect of
which applications relating to vehicles of Lion have not yet been
fully processed to date. The
processing times of governmental subsidies and incentives are also
subject to important variations.
As further described below under the sections entitled "Delivery
Periods" and "Ongoing Evaluation;
Risk Factors", 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. Also, there has been in the past and
the Company expects there will
continue to be variances in the eligibility criteria of the various
programs, subsidies and incentives
introduced by governmental authorities, including in their
interpretation and application. 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 relating to vehicles of Lion 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 February 28,
2024 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, 2026,
with substantially all of such
vehicles currently providing for deliveries before the end of the
year ending December 31, 2025
(which corresponds to the latest date by which claims are required
to be made according to the
current eligibility criteria of the Federal's Infrastructure
Canada's Zero-Emission Transit Fund
("ZETF"), unless otherwise agreed by Infrastructure Canada).
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 of the vehicle orders included in the order book
are subject to the granting of
governmental subsidies and incentives, actual delivery times may be
subject to important variations
or delays. Please refer to the section entitled "Ongoing
Evaluation; Risk Factors" below regarding the
potential impact of variations or delays in deliveries.
|
|
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 is subject to the specific
methodology described
herein and may not be comparable to other similarly entitled
measures computed by other
companies, because all companies may not calculate their order book
in the same fashion. Other
companies also sometimes refer to or use "order backlog" or "order
intake" as performance metrics,
which are most likely not calculated on the same basis as the
Company's order book. 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 program, 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. See the first paragraph
of this section entitled "Order Book" for a presentation of the
variance in the total number of units and the total
dollar value of the vehicles and charging stations included in the
Company's order book since November 6, 2023,
being the last date on which such information was
presented.
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 book into
actual sales is dependent on various factors,
including those described below and under section 23.0 entitled
"Risk Factors" of the Company's MD&A for the
three and twelve months ended December 31, 2023. For instance, a
customer may voluntarily or involuntarily
default on an order, may become subject to bankruptcy or insolvency
or cease its business operations. In
addition, substantially all of the vehicle orders included in the
order book are subject to conditions relating to the
granting of governmental subsidies or incentives or a specified
timing for the delivery of the vehicle 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 (the "Quebec Green Economy
Plan"), Federal Infrastructure Canada's ZETF, the Government of
Canada Incentives for Medium- and Heavy-
Duty Zero-Emission Vehicles (iMHZEV) Program, the U.S.
Environmental Protection Agency Clean School Bus
Program and California's Hybrid and Zero-Emission Truck and Bus
Voucher Incentive Project (HVIP). More than
half of the vehicles included in the order book are contingent upon
grants under the ZETF, in respect of which
applications relating to vehicles of Lion have not yet been fully
processed to date and December 31, 2025 is the
latest date by which claims are required to be made according to
the current eligibility criteria of the ZETF
program, unless otherwise agreed by Infrastructure Canada. In
addition, purchase orders obtained in connection
with the first round of funding under the EPA Clean School Bus
Program, require, among other things, that
vehicles be delivered on or prior to October 2024.
Any termination,
modification, delay or suspension of any governmental program,
subsidies and incentives,
including, most importantly as of the date hereof, the ZETF, the
Quebec Green Economy Plan or the EPA Clean
School Bus Program could result in delayed deliveries or the
cancellation of all or any portion of 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
519 vehicles during the year ended December
31, 2022 and 852 vehicles during the year ended December 31, 2023.
As of February 28, 2024, the Company's
vehicle order book stood at 2,076 vehicles. The execution of the
Company's growth strategy and the conversion
of its order book, which currently provides for deliveries ranging
from a few months to the end of the year ending
December 31, 2026, will require that the Company accelerates its
production cadence. While the Saint-Jerome
facility and Joliet Facility currently have the infrastructure in
place, including in terms of production lines and
equipment, to achieve a production capacity of up to 2,500 vehicles
and 2,500 buses, respectively, on an annual
basis (see section 8.0 entitled "Operational Highlights" and
"Product Development and Manufacturing" under
section 11.0 entitled "Key Factors Affecting Lion's Performance" of
the Company's MD&A for the three and twelve
months ended December 31, 2023 for further details), the Company's
operations are currently being conducted
on a lower scale and it has has limited experience to date in high
volume manufacturing. In addition, as of
February 28, 2024, 166 units included in the order book,
consisting of trucks and representing a combined total
order value of approximately $60 million, related to products which
had been developed and were being sold, but
that were not currently in commercial production. See "Products and
Solutions" in section 6.2 of the Company's
Annual Information Form for the year ended December 31, 2023
entitled "Business of the Company". Any failure
by the Company to successfully develop its vehicles, source its key
components, 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 is subject to a number of
risks and uncertainties, including the risks described in section
3.0 of the Company's MD&A for the three and
twelve months ended December 31, 2023 entitled "Caution Regarding
Forward-Looking Statements" and section
23.0 entitled "Risk Factors" of the Company's MD&A for the
three and twelve months ended December 31, 2023,
and there can be no assurance that the Company will be successful
in converting all or a significant portion of its
order book into actual sales.
|
RECONCILIATION OF ADJUSTED GROSS PROFIT (LOSS) AND ADJUSTED
GROSS MARGIN
The following table reconciles gross profit (loss) and gross
margin to Adjusted gross profit (loss) and Adjusted gross margin
for the three months ended December
2023 and 2022, and the years ended December 31, 2023, 2022 and 2021:
|
Three months
ended
December 31,
|
|
Year ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2021
|
|
(in
thousands)
|
|
(in
thousands)
|
|
Revenue
|
$60,429
|
|
$46,769
|
|
$253,496
|
|
$139,914
|
|
$57,710
|
|
Cost of
sales
|
$69,480
|
|
$51,533
|
|
$259,020
|
|
$152,862
|
|
$57,665
|
|
Gross profit
(loss)
|
$(9,051)
|
|
$(4,765)
|
|
$(5,524)
|
|
$(12,947)
|
|
$45
|
|
Inventory write-down
related to
the delay of start of commercial
production of LionA and LionM
minibuses (1)
|
$9,809
|
|
$—
|
|
$9,809
|
|
$—
|
|
$—
|
|
Adjusted gross profit
(loss)
|
$758
|
|
$(4,765)
|
|
$4,285
|
|
$(12,947)
|
|
$45
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
(15.0) %
|
|
(10.2) %
|
|
(2.2) %
|
|
(9.3) %
|
|
0.1 %
|
|
Adjusted gross
margin
|
1.3 %
|
|
(10.2) %
|
|
1.7 %
|
|
(9.3) %
|
|
0.1 %
|
|
(1)
|
During the fourth
quarter of fiscal 2023, the Company decided to indefinitely delay
the start of commercial production of the LionA all-electric mini
school bus, which is designed for school transportation and to
accommodate passengers with special needs, with a capacity of up to
24 passengers. Such decision has also delayed the start of
commercial production of the LionM model, an all-electric minibus
designed to be used for paratransit or as a standard shuttle bus,
and which leverages the same platform as the LionA. The decision
was made to prioritize the commercial production of its other
products (including the Lion8T) and the integration of Lion
batteries to its existing vehicles.
|
RECONCILIATION OF ADJUSTED EBITDA
The following table reconciles net earnings (loss) to Adjusted
EBITDA for the three months ended December
31, 2023 and 2022, and the years ended December 31, 2023, 2022 and 2021:
|
Three months
ended
December 31,
|
|
Year ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
2021
|
|
(in
thousands)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$60,429
|
|
$46,769
|
|
$253,496
|
|
$139,914
|
|
$57,710
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
($56,543)
|
|
($4,638)
|
|
($103,766)
|
|
$17,776
|
|
($43,325)
|
|
Restructuring
costs(1)
|
$1,426
|
|
$—
|
|
$1,426
|
|
$—
|
|
$—
|
|
Impairment of
intangible assets
and property, plant and
equipment(2)
|
$35,998
|
|
$—
|
|
$35,998
|
|
$—
|
|
$—
|
|
Inventory write-down
related to
the delay of start of commercial
production of LionA and LionM
minibuses(3)
|
$9,809
|
|
$—
|
|
$9,809
|
|
$—
|
|
$—
|
|
Finance
costs
|
$6,743
|
|
($891)
|
|
$17,892
|
|
$955
|
|
$8,332
|
|
Depreciation and
amortization
|
$8,359
|
|
$3,724
|
|
$26,075
|
|
$11,492
|
|
$5,260
|
|
Share-based
compensation(4)
|
$409
|
|
$2,522
|
|
$5,204
|
|
$12,362
|
|
$71,081
|
|
Change in fair value of
conversion
options on convertible debt
instruments(5)
|
($1,626)
|
|
$—
|
|
($4,982)
|
|
$—
|
|
$—
|
|
Change in fair value of
share
warrant obligations(6)
|
($9,052)
|
|
($15,434)
|
|
($20,963)
|
|
($101,468)
|
|
($85,796)
|
|
Foreign exchange loss
(gain)(7)
|
($2,155)
|
|
$559
|
|
($2,260)
|
|
$1,973
|
|
$1,037
|
|
Transaction and other
non-
recurring expenses(8)
|
$312
|
|
$245
|
|
$1,262
|
|
$2,140
|
|
$15,815
|
|
Adjusted
EBITDA
|
($6,320)
|
|
($13,915)
|
|
($34,305)
|
|
($54,770)
|
|
($27,596)
|
|
(1)
|
Represents the
restructuring costs (mainly severance costs) recognized in
connection with workforce reduction announced on November 27, 2023,
as described in note 17 to the annual audited consolidated
financial statements as at December 31, 2023 and for the years
ended December 31, 2023, and 2022. See also "Workforce Reduction"
in section 8.0 of this MD&A entitled "Operational
Highlights."
|
|
(2)
|
Represents impairment
of previously capitalized vehicle development costs and property,
plant and equipment related to the LionA and LionM minibuses for
which the Company made the decision to indefinitely delay of the
start of commercial production, as announced on November 7, 2023,
as described in Notes 6 and 8 to the annual audited consolidated
financial statements as at December 31, 2023 and for the years
ended December 31, 2023, and 2022.
|
|
(3)
|
Represents the
write-down of inventory to net realizable value as a result of the
decision to indefinitely delay the start of commercial production
of the LionA and LionM minibuses as described in Note 5 to the
annual audited consolidated financial statements as at December 31,
2023 and for the years ended December 31, 2023, and
2022.
|
|
(4)
|
Represents non-cash
expenses recognized in connection with the issuance of stock
options, restricted share units, and deferred share units issued
under Lion's omnibus incentive plan as described in Note 16 to the
annual audited consolidated financial statements as at December 31,
2023 and for the years ended December 31, 2023, and
2022.
|
|
(5)
|
Represents non-cash
change in the fair value of the conversion options on convertible
debt instruments as described in Note 13 to the annual audited
consolidated financial statements as at December 31, 2023 and for
the years ended December 31, 2023, and 2022.
|
|
(6)
|
Represents non-cash
change in the fair value of the share warrant obligations as
described in Note 14 to the annual audited consolidated financial
statements as at December 31, 2023 and for the years ended December
31, 2023, and 2022.
|
|
(7)
|
Represents losses
(gains) relating to foreign exchange translation.
|
|
(8)
|
For the years ended
December 31, 2023, and 2022, represents non-recurring professional,
legal and consulting 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 school buses. 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" within the meaning of applicable
securities laws and within the meaning of the United States Private
Securities Litigation Reform Act of 1995 (collectively,
"forward-looking statements"). 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 may 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 expected production
capacity of the Company's manufacturing facilities in Saint-Jerome and the
United States and the Company's battery manufacturing plant
(the "Battery Plant") and innovation center in Quebec (the "Innovation Center" and
collectively with the Battery Plant, the "Lion Campus"), the
certification of the Lion heavy duty (HD) battery packs, the
sourcing of lithium-ion battery cells, the Company's future growth
and long-term strategy, the Company's liquidity and capital
requirements and management's forecasts related thereto, ongoing
litigation proceedings, the Company's expected product pipeline,
the implementation by the Company of measures aimed at reducing its
vehicle and battery development costs and its inventory levels
(including the Company's fiscal 2024 objectives related thereto),
and the development and timing of commercial production of certain
platforms and models. 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 ramp-up manufacturing capacity at its
Saint-Jerome facility, its U.S.
manufacturing facility and at the Battery Plant and Innovation
Center as required in the future, 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 Lion will be able to
benefit, either directly or indirectly (including through
applications made by the Company and/or its clients), from
governmental programs, subsidies and incentives, that Lion will not
incur any material obligations with respect to product warranty
claims or product recalls, and that Lion will be able to secure
additional funding through equity or debt financing on terms
acceptable to Lion and in the amounts needed if and 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 the
following:
- any adverse changes in U.S. or Canadian general economic,
business, market, financial, political or legal conditions,
including as a consequence of the ongoing uncertainties relating to
inflation and interest rates;
- any unavailability, reduction, discriminatory application,
delay in processing or elimination of governmental programs,
subsidies or incentives due to policy changes, government
regulations or decisions or otherwise;
- any inability to ramp-up the production of Lion's products and
meet project construction and other project milestones and
timelines;
- any inability to meet the expectations of the Company's
customers in terms of products, specifications, and services;
- any inability to successfully and economically manufacture and
distribute its vehicles at scale;
- any inability to raise additional funds to meet its capital
requirements and pursue its growth strategy when and in the amounts
needed, if any;
- any inability to execute the Company's growth strategy;
- any escalation, deterioration and adverse effects of current
military conflicts, which may affect economic and global financial
markets and exacerbate ongoing economic challenges;
- any unfavorable fluctuations and volatility in the availability
or price of raw materials included in components used to
manufacture the Company's products, including battery cells,
modules and packs;
- the reliance on key suppliers and any inability to maintain an
uninterrupted supply of raw materials;
- any inability to reduce total cost of ownership of electric
vehicles sold by the Company over time;
- the reliance on key management and any inability to attract
and/or retain key personnel;
- labor shortages (including as a result of employee departures,
turnover, 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 to maintain the Company's competitive
position;
- any inability to reduce the Company's 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 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, acts of terrorism, the
current ongoing military conflicts or similar disruptions;
- any event or circumstance, including the materialization of any
of the foregoing risks and uncertainties, resulting in the
Company's inability to convert its order book into actual sales;
and
- the outcome of any legal proceedings in which the Company is or
may be involved from time to time.
These and other risks and uncertainties related to the business
of Lion are described in greater detail in section 23.0 entitled
"Risk Factors" of the Company's MD&A for the three and twelve
months ended December 31, 2023. Many
of these risks are beyond Lion's management's ability to control or
predict. All forward-looking statements attributable to Lion or
persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements contained and risk factors
identified in the Company's MD&A for three and twelve months
ended December 31, 2023 and in other
documents filed with the applicable Canadian regulatory securities
authorities and the U.S. 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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SOURCE The Lion Electric Co.