Financial Data and Key Metrics - The company achieved a net profit of $13.2 million and adjusted EBITDA of $29 million in Q3 2024, marking a historic milestone [8] - Revenue for Q3 2024 reached $101.4 million, a 27% year-over-year increase from $80.1 million in Q3 2023 [21] - Gross margin improved to 33.2%, up 10.9 percentage points year-over-year [21] - Adjusted gross margin rose to 33.9%, a 9.7 percentage point increase compared to the prior year period [22] - Operating expenses decreased by 38% to $27.5 million in Q3 2024 from $44.7 million in Q3 2023 [24] - Adjusted operating expenses were $22 million in Q3 2024, down $8.4 million from $30.3 million in Q3 2023 [25] Business Line Data and Key Metrics - The EMEA region saw a 212% year-over-year revenue growth, accounting for 59% of total revenue in Q3 2024 [26] - The company secured new business developments in the Commercial Vehicle segment, including partnerships with Propel, XCMG, and LGMG [16][17][18] - The Heavy Industrials segment increasingly adopted high-performance cells, with success in hybrid and fuel cell OEMs as well as the Agricultural segment [18] Market Data and Key Metrics - The company faced challenges in the U.S. due to policy shifts, which decelerated the rollout of certain light commercial vehicle platforms [14] - Rapidly growing markets like India and Thailand prioritized LFP chemistries for affordability over high performance [14] - The EMEA business is expected to achieve an 80% revenue increase year-over-year for the full year 2024 [33] Company Strategy and Industry Competition - The company is focused on improving efficiency and profitability, with strategic cost-cutting measures in the U.S. and solid business execution in EMEA and APAC [7] - Microvast is a vertically integrated battery technology company, with innovation as the core driver of its business [10] - The company is investing in the commercialization of current and future high-demand advanced products to capture market share [12] - New products include the overhaulable ME6 LFP ESS containers and Silicon Enhanced Cell technologies, with progress on all solid-state batteries [11][38] Management Commentary on Operating Environment and Future Outlook - The company expects Q4 2024 revenue to be in the range of $90 million to $95 million, with full-year revenue growth anticipated at 15% to 18% [32] - The company is targeting sustained positive adjusted EBITDA contributions from its established business in EMEA and APAC [34] - Microvast is focused on product development, operational efficiencies, key customer growth, reducing liabilities, and strategic cost-cutting [35] Other Important Information - The company holds more than 775 patents, either granted or pending, with products powering equipment worldwide [37] - Microvast unveiled new cell technologies leveraging silicon at IAA 2024 in Germany, providing improved energy density for high-performance applications [39] Q&A Session - No Q&A session was recorded in the provided document [39]

Q3 2024 Disclaimer 2 Forward-Looking Statements This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "will likely result," "are expected to," "will continue," "is antic ...

Financial Performance - Q3 2024 revenue reached $101.4 million, a 26.6% increase from $80.1 million in Q3 2023[2] - Net profit for Q3 2024 was $13.2 million, compared to a net loss of $26.2 million in Q3 2023[2] - Adjusted EBITDA for Q3 2024 was positive $28.6 million, a significant improvement from negative $5.3 million in Q3 2023[2] - Year-to-date revenue for 2024 was $266.4 million, a 31.9% increase from $202.0 million in the same period of 2023[3] - Revenues for the nine months ended September 2024 reached $266,414,000, a 32% increase from $202,042,000 in the same period of 2023[32] - Adjusted net profit for the three months ended September 2024 was $16,782,000, compared to a loss of $10,268,000 in the same period of 2023[34] - The company reported a net profit of $13,247,000 for the three months ended September 2024, a significant improvement from a loss of $26,172,000 in the same period of 2023[34] Profitability and Margins - Gross margin improved to 33.2%, up from 22.3% in Q3 2023, marking a 10.9 percentage point increase[2] - Gross profit for the three months ended September 30, 2024, was $33,612 thousand, compared to $17,884 thousand in the same period of 2023, representing an increase of 87.8%[24] - Gross profit for the nine months ended September 2024 was $78,032,000, representing a gross margin of 29.3%, compared to $34,203,000 and a gross margin of 16.9% in the prior year[32] - The adjusted gross margin for the nine months ended September 2024 was 30.6%, up from 19.2% in the same period of 2023[31] Expenses and Cost Management - Operating expenses decreased to $27.5 million in Q3 2024 from $44.7 million in Q3 2023[2] - Total operating expenses decreased to $27,508 thousand for the three months ended September 30, 2024, down from $44,674 thousand in the same period of 2023, a reduction of 38.5%[24] - Research and development expenses for the three months ended September 30, 2024, were $10,692 thousand, down from $13,241 thousand in the same period of 2023, a decrease of 19.2%[24] Cash Flow and Liquidity - As of September 30, 2024, cash and cash equivalents totaled $115.0 million, compared to $93.8 million at the end of 2023[2] - Cash and cash equivalents increased to $63,585 thousand as of September 30, 2024, compared to $44,541 thousand as of December 31, 2023, an increase of 42.7%[23] - The company reported a net cash used in operating activities of $3,287 thousand for the nine months ended September 30, 2024, compared to $70,350 thousand in the same period of 2023, indicating improved cash flow management[26] - Cash, cash equivalents, and restricted cash at the end of the period totaled $114,967,000, an increase from $89,212,000 at the end of September 2023[29] Capital Expenditures and Investments - Capital expenditures in Q3 2024 were $30.6 million, down from $59.9 million in Q3 2023[2] - The company is focusing on R&D for new products, including the ME6 ESS container solution and solid-state batteries[5] Balance Sheet and Liabilities - Total current assets increased to $437,571 thousand as of September 30, 2024, from $425,606 thousand as of December 31, 2023, a growth of 2.3%[23] - Total liabilities decreased to $511,797 thousand as of September 30, 2024, from $532,542 thousand as of December 31, 2023, a decline of 3.9%[23] Borrowings and Financial Activities - The company generated $70,373,000 from borrowings in the nine months ended September 2024, significantly up from $18,439,000 in the same period of 2023[28] - The company incurred a loss on disposal of property, plant, and equipment amounting to $810 thousand for the nine months ended September 30, 2024[26] - Non-cash settled share-based compensation for the nine months ended September 2024 amounted to $30,298,000, compared to $51,602,000 in the same period of 2023[34] - The company experienced an effect of exchange rate changes resulting in a decrease of $4,598,000 in cash flows[28]

Revenue Growth and Geographic Expansion - Revenue for the quarter ended September 30, 2024 increased by 27% to $101.4 million compared to $80.1 million in the same period in 2023[164] - Revenue from Europe increased significantly to $59.5 million (59% of total revenue) in 2024, up from $19.0 million (24%) in 2023, reflecting geographic expansion[187] - Revenue from the U.S. grew to $2.6 million (3% of total revenue) in 2024, up from $0.2 million in 2023, indicating early market penetration[187] - Total revenues increased from $202.0 million in 2023 to $266.4 million in 2024, with Europe contributing 51% ($135.1 million) and Asia & Pacific contributing 47% ($125.4 million)[188] - Revenues for the three months ended September 30, 2024, increased by 26.6% to $101.4 million, driven by a sales volume increase from 319.2 MWh to 434.0 MWh[205] - Revenues increased by 31.9% to $266.4 million for the nine months ended September 30, 2024, driven by a sales volume increase from 722.0 MWh to 1,088.9 MWh[214] Profitability and Cost Efficiency - Gross profit margin improved from 22.3% in 2023 to 33.2% in 2024 due to better economies of scale, favorable product mix, and lower raw material prices[207] - Gross margin improved significantly from 16.9% to 29.3% due to better economies of scale, favorable product mix, and lower raw material prices[216] - Net profit attributable to shareholders improved significantly from a loss of $26.1 million in 2023 to a profit of $13.2 million in 2024[204] - LFP batteries are generally 20-40% less expensive per kilowatt-hour compared to NMC batteries, offering cost efficiency and reduced reliance on scarce minerals like cobalt[167] Operational and Strategic Shifts - The company completed a 2 GWh cell, module, and tray capacity expansion for its 53.5Ah cell technology in Huzhou, China, which is now operational and generating revenue[179] - The company plans to shift production at its Tennessee facility from 53.5Ah NMC cells to LFP cells for energy storage solutions, leveraging cost benefits and regulatory compliance[166][180] - The company's ESS products previously assembled in Colorado are now planned to be assembled at the Tennessee facility, pending financing for capital expenditures[180] - Operating expenses increased by 43.4% to $171.9 million, primarily due to a $64.9 million impairment loss related to the strategic shift towards LFP technology in the U.S.[218] - The company recorded a $64.9 million impairment loss on long-lived assets for the nine months ended September 30, 2024, compared to $0.5 million in the same period of 2023[244] Financial Health and Liquidity - The company faces substantial doubt about its ability to continue as a going concern due to liquidity uncertainties, as per ASC Topic 205-40[174] - The company faces substantial doubt about its ability to continue as a going concern due to insufficient cash to fund operations and capital expenditures over the next twelve months[223][224] - The company secured a $29.9 million bank loan in Q3 2024, with an additional $9.9 million received in October 2024[225] - The company is actively pursuing the sale of non-core U.S. real estate assets to increase liquidity without affecting core operations[226] - The company has $119.6 million in bank borrowings and $43.2 million in convertible bonds outstanding as of September 30, 2024[228] - Purchase commitments as of September 30, 2024, amount to $52.3 million, mostly short-term[235] - Net cash used in operating activities for the nine months ended September 30, 2024 was $3.3 million, a significant improvement from $70.4 million in the same period of 2023[237][238] - Net cash used in investing activities for the nine months ended September 30, 2024 was $12.0 million, primarily for capital expenditures related to manufacturing facility expansion[240] - Net cash generated from financing activities for the nine months ended September 30, 2024 was $46.6 million, driven by $70.4 million in bank borrowings and $25.0 million from a convertible loan[241] Expense Management - General and administrative expenses decreased by 52.6% ($13.1 million) in 2024, primarily due to reduced share-based compensation and expenditure control[209] - Research and development expenses decreased by 19.3% ($2.5 million) in 2024, driven by reduced share-based compensation and cost control measures[209] - Selling and marketing expenses decreased by 17.7% ($1.1 million) in 2024, mainly due to reduced share-based compensation and expenditure control[208] - Cost of revenues increased by 8.9% ($5.5 million) in 2024, primarily due to higher sales volume, partially offset by reduced share-based compensation[206] Other Financial Highlights - Other income for the three months ended September 30, 2024, included a $7.7 million gain on payable concession, contributing to a total of $7.4 million in other income[210] - The company recorded a $2.8 million gain from changes in the fair value of warrants and convertible loans in 2024[211] - Net loss increased by 10.0% to $90.0 million, with a $7.0 million increase in operating loss[213] - A 10% adverse change in foreign exchange rates on RMB-denominated accounts as of September 30, 2024 would result in a $15.6 million foreign currency loss[248] - A hypothetical 100 basis points increase in the expected loss rate on the financing receivables portfolio would increase the allowance for credit losses by approximately $0.5 million as of September 30, 2024[250] Order Backlog and Market Demand - Order backlog as of September 30, 2024 stands at $277.7 million for EV battery systems, representing approximately 1,144.1 MWh, with over 58% of orders from Europe and U.S. markets[164] Regulatory and Incentive Compliance - The company's ESS solutions are expected to qualify for U.S. domestic content requirements and Inflation Reduction Act Section 45X energy efficiency incentives[170] Capital Expenditures and Investments - Capital expenditures for 2022 and 2023 were $150.9 million and $186.8 million, respectively, primarily for manufacturing facilities in Huzhou, China, and Clarksville, Tennessee[230]

Core Insights - The rise of SPACs in 2020 and 2021 significantly impacted the electric vehicle (EV) industry, with many companies going public through this method [1] - Microvast Holdings Inc. and FREYR Battery SA are two notable companies in the EV supply chain, specifically in battery production, but both have underperformed compared to the S&P 500 since 2021 [2] Company Overview: Microvast Holdings Inc. - Microvast specializes in designing, developing, and manufacturing lithium-ion battery solutions, with a focus on commercial transportation, heavy equipment, and energy storage [3] - The company holds over 630 patents and manages its entire development process from R&D to manufacturing [4] - In Q2 2024, Microvast reported a record revenue of $84 million, a 12% increase year-over-year, but fell short of analysts' expectations of $87.5 million [5] - The company reported a negative earnings per share (EPS) of 21 cents, worse than the expected negative one cent [5] - Microvast has suspended construction of its factory in Clarksville, Tennessee, due to financing issues, which is expected to create 290 jobs once operational [6] - Following the earnings report and construction news, Microvast's stock reached a 52-week low of around 31 cents [7] Company Overview: FREYR Battery SA - FREYR Battery is focused on creating industrial-scale clean energy battery solutions for energy storage, EV, and marine applications [7] - The company is currently unprofitable and generating little to no revenue, with plans to build its first gigafactory still years away [8] - FREYR reported having $222 million in cash and no debt, projecting a cash runway into 2026 and forecasting first revenue in 2025 [9] - Despite a slight recovery after its earnings report, FREYR's stock is down about 35% in 2024 and trading near its 52-week low [9] Market Context - The global lithium-ion battery market is facing an oversupply issue, which is expected to resolve over the next year [10] - The renewable energy transition is slowing but continues, presenting potential growth opportunities for both Microvast and FREYR [10] Investment Considerations - Microvast is seen as a more favorable investment due to its focus on energy storage solutions, which are expected to be in high demand, particularly with the expansion of data centers [11] - Analysts have set a consensus price target of $4.50 for Microvast, which is over 1,350% higher than its recent price [12]

Financial Performance - Microvast Holdings, Inc. reported a quarterly loss of $0.21 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.05, representing an earnings surprise of -320% [1] - The company posted revenues of $83.68 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 7.76%, compared to year-ago revenues of $74.95 million [2] - The current consensus EPS estimate for the upcoming quarter is -$0.04 on revenues of $94.62 million, and for the current fiscal year, it is -$0.11 on revenues of $365.08 million [7] Stock Performance - Microvast shares have declined approximately 71.7% since the beginning of the year, contrasting with the S&P 500's gain of 11.5% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the market in the near future [6] Industry Outlook - The Technology Services industry, to which Microvast belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]

Revenue and Sales Performance - Revenue for the three months ended June 30, 2024, increased by $8.7 million to $83.7 million, a 12% increase compared to the same period in 2023[138]. - Revenues increased from approximately $121.9 million for the six months ended June 30, 2023, to approximately $165.0 million for the same period in 2024, representing a growth of 35.3%[171]. - Sales volume increased from approximately 270.2 MWh for the three months ended June 30, 2023 to approximately 301.7 MWh for the same period in 2024[172]. - Revenues increased from approximately $121.9 million for the six months ended June 30, 2023, to approximately $165.0 million for the same period in 2024, driven by a sales volume increase from approximately 402.8 MWh to approximately 654.9 MWh[179]. Financial Performance - Gross profit for the six months ended June 30, 2024 was approximately $44.4 million, up 172.2% from $16.3 million in the same period of 2023, with gross margin improving from 13.4% to 26.9%[171]. - Gross margin improved from 13.4% for the six months ended June 30, 2023, to 26.9% for the same period in 2024, attributed to better economies of scale and lower raw material prices[180]. - Operating loss for the six months ended June 30, 2024 was approximately $98.7 million, an increase of 69.8% compared to a loss of $58.2 million in the same period of 2023[171]. - The company recorded a loss of $1.6 million for the three months ended June 30, 2024, mainly due to the change in fair value of a convertible loan with a shareholder[175]. - Cash generated from operating activities was $2.1 million for the six months ended June 30, 2024, compared to a cash outflow of $41.0 million in the same period of 2023[201]. Cost Management - Cost of revenues decreased by $15.0 million, or 14.2%, for the six months ended June 30, 2024 compared to the same period in 2023, primarily due to lower raw material prices[171]. - General and Administrative expenses rose by $3.4 million, or 7.8%, for the six months ended June 30, 2024, primarily due to increased personnel-related expenses and professional fees[183]. - Selling and marketing expenses remained stable for the three months ended June 30, 2024 compared to the same period in 2023[174]. - Research and development expenses for the three months ended June 30, 2024 were stable compared to the same period in 2023, indicating continued investment in new product development[174]. Capacity and Production - As of June 30, 2024, the order backlog for electric vehicle battery systems was approximately $278.6 million, equivalent to about 1,257.1 MWh, with over 63% attributable to Europe and the U.S.[138]. - The company completed a 2 GWh capacity expansion for its 53.5Ah cell technology in Huzhou, China, which is now operational and generating revenue[151]. - The company has made significant investments in capacity expansions in both Huzhou, China, and Tennessee, U.S., to meet anticipated demand[151]. - The company plans to shift production from 53.5Ah cells to lithium iron phosphate (LFP) cells at its Tennessee facility, citing better suitability for energy storage solutions[140]. Strategic Initiatives - The company aims to become a leading global provider of energy storage solutions, emphasizing the importance of green energy for electric vehicles[139]. - LFP batteries are expected to be 20-40% less expensive per kilowatt-hour compared to NMC batteries, enhancing their economic viability for energy storage applications[141]. - The company has expanded its R&D footprint in Orlando with a 75,000 square foot facility to enhance technology and product innovation[149]. Impairment and Financial Risks - Impairment loss of long-lived assets was $64.9 million for the three months ended June 30, 2024, primarily due to a strategic shift towards LFP technology in the U.S.[174]. - The company recorded an impairment loss of long-lived assets amounting to $64.9 million for the six months ended June 30, 2024[208]. - A pause in the construction of the battery plant in Tennessee was decided until additional funding is secured[208]. - The company faces substantial doubt about its ability to continue as a going concern for at least one year from the date of the financial statements due to liquidity uncertainties[146]. Cash Flow and Financing - Cash used in investing activities totaled $7.4 million for the six months ended June 30, 2024, primarily for capital expenditures related to manufacturing facility expansions[204]. - Cash generated from financing activities was $28.5 million for the six months ended June 30, 2024, resulting from bank borrowings and convertible loans[205]. - As of June 30, 2024, the company had bank borrowings of $94.2 million, with interest rates ranging from 3.30% to 4.85% per annum[194]. - The company reduced the number of employees in the U.S. by 82% during the quarter ended June 30, 2024, significantly lowering operating expenditures[190]. Risk Management - An immediate 10% adverse change in foreign exchange rates would result in a foreign currency loss of $13.4 million on Renminbi-denominated accounts as of June 30, 2024[211]. - A hypothetical 100 basis points increase in the expected loss rate on the financing receivables portfolio would lead to an increase in the allowance for credit losses of approximately $0.6 million as of June 30, 2024[212]. - The company closely monitors overdue debts to minimize credit risk and has a team responsible for credit limits and approvals[213]. - The company evaluates long-lived assets for impairment whenever events indicate that the assets might be impaired[207]. Market Trends - The company has historically experienced higher sales during the third and fourth fiscal quarters compared to the first and second quarters[214]. - The company’s project finance loans in China are exposed to movements in the Loan Prime Rate, with a spread of 115 basis points[209]. - The company’s estimates and assumptions regarding financial statements are based on historical experience and may differ from actual results[206].

Financial Data and Key Metrics - Q2 2024 revenue reached a record $83.7 million, a 12% YoY increase from $75 million in Q2 2023 [5][8] - Gross margin improved to 32.5% in Q2 2024, up from 15.3% in Q2 2023, with adjusted gross margin at 34.3%, a 17 percentage point increase YoY [5][8] - Operating expenses surged to $103.6 million in Q2 2024, primarily due to a $64.9 million impairment loss related to long-lived assets in the US [9] - GAAP net loss was $78.4 million in Q2 2024, compared to a net loss of $26.1 million in Q2 2023, with adjusted net loss at $64.7 million [10] Business Line Data and Key Metrics - EMEA business saw a 401% YoY growth, accounting for 55% of total revenue, up from 13% a year ago [5][10] - The company secured a $40 million order from a Korean e-Bus customer and entered a strategic partnership with Evoy for electric boat motor systems [5][6] - Backlog at the end of Q2 2024 stood at $278.6 million [5] Market Data and Key Metrics - EMEA market drove significant revenue growth, with triple-digit percentage growth in commercial vehicle sales [5][8] - The company began tapping into the Korean market and expects continued growth in APAC and EMEA regions [5][11] Company Strategy and Industry Competition - The company is focusing on operational efficiency and expanding its commercial vehicle footprint, including partnerships and new market entries [5][6] - A strategic shift towards LFP technology in the US led to the impairment of certain assets [9] - New battery technology, including the 565 amp-hour LFP cell and ME6 energy storage solution, is being developed to meet renewable energy customer needs [12] Management Commentary on Operating Environment and Future Outlook - Management highlighted challenges, including delays in light commercial vehicle platform rollouts in Europe and customer delivery delays [6] - For Q3 2024, revenue is expected to be between $85 million and $90 million, with a target gross margin of 25% [11] - EMEA revenue is anticipated to grow over 100% YoY in Q3 2024, driven by increased deliveries to commercial vehicle OEMs [11] Other Important Information - The company is exploring new commercial vehicle markets in the Americas and focusing on financing solutions for the Clarksville facility [11] - The new LFP-based ME6 energy storage solution offers a 30-year lifespan and high energy density, targeting optimized total cost of ownership [12] Q&A Session - No specific questions or answers were provided in the transcript [13]

Q2 2024 Disclaimer 2 Forward-Looking Statements This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "will likely result," "are expected to," "will continue," "is antic ...

Microvast Holdings, Inc. (NASDAQ:MVST) Q1 2024 Earnings Conference Call May 9, 2024 5:00 PM ET Company Participants Yang Wu - Founder, Chairman and CEO Nancy Smith - Interim Chief Financial Officer Conference Call Participants Unidentified Company Representative Thank you, Operator, and thank you everyone for joining us today. With me on today’s call are Mr. Yang Wu, Founder, Chairman and CEO; and Ms. Nancy Smith, Interim CFO. Mr. Wu will start off with a high level overview of the quarter before providing ...