Microvast (MVST) - 2025 Q1 - Quarterly Report

Financial Performance - For the three months ended March 31, 2025, revenue increased by $35.1 million to$116.5 million, representing a 43.2% year-over-year growth[143]. - Revenue from Europe increased to $60.1 million, accounting for 52$81.4 million in Q1 2024 to approximately $116.5 million in Q1 2025, driven by a sales volume increase from approximately 353.3 MWh to approximately 535.7 MWh[173]. - Gross profit rose to$43.0 million in Q1 2025, a 149.7% increase compared to $17.2 million in Q1 2024, with gross margin improving from 21.2$18.9 million and operating cash flow of $7.2 million in Q1 2025, with an order backlog of$350.5 million expected to be fulfilled in 2025 and 2026[189]. - The company generated $7.2 million in net cash from operating activities for the three months ended March 31, 2025, compared to$2.0 million in the same period of 2024, reflecting improved profitability[198][200]. Operational Highlights - The order backlog stood at $350.5 million, with the majority expected to be fulfilled in 2025 and 2026[143]. - As of March 31, 2025, the company had a backlog of approximately$350.5 million for electric vehicle battery systems, equivalent to about 1,606.5 MWh[152]. - The company introduced the Mega Energizer 6 MWh ESS container featuring LFP battery technology, which offers a cycle life exceeding 10,000 cycles and a lifespan of up to 30 years[141]. - The company has made significant investments in capacity expansion in Huzhou, China, completing a 2 GWh cell, module, and tray capacity expansion for the 53.5Ah cell technology[153]. - The company expanded its R&D footprint in Orlando by purchasing a 75,000 square foot facility dedicated to R&D, with plans for further expansion[150]. Cost Management - General and administrative expenses decreased by $13.3 million or 56.1$3.2 million or 28.2% in Q1 2025 compared to Q1 2024, attributed to reduced share-based compensation and headcount[178]. - The company recorded a gain of $43.2 million from changes in the fair value of the convertible loan in Q1 2025, significantly impacting overall profitability[179]. Liquidity and Financing - As of March 31, 2025, the company had a cash position of$123.0 million, including $64.4 million in cash and cash equivalents[180]. - The company secured a$28.2 million bank loan in Q1 2025 to enhance liquidity, with additional funds received in April and May 2025[185]. - The company is actively pursuing the sale of non-core U.S. real estate assets to enhance liquidity without affecting core operations[186]. - Cash used in investing activities for the three months ended March 31, 2025, totaled $2.3 million, primarily for capital expenditures related to manufacturing facility expansion[201]. - Cash generated from financing activities amounted to$9.5 million during the three months ended March 31, 2025, driven by $28.2 million in bank borrowings[202]. Strategic Focus - The company is focused on reducing reliance on overseas suppliers to strengthen national energy independence and drive long-term revenue growth[136]. - The company plans to pivot production from NMC to 565Ah lithium iron phosphate (LFP) batteries due to funding constraints impacting the Clarksville, Tennessee facility[140]. - The company is seeking alternative sources of capital to support its U.S. operations and complete the Tennessee facility expansion[193]. - The company may need to seek additional equity or debt financing to meet future capital requirements, which could adversely affect its business if not secured[194]. Risk Management - The company has a dedicated credit management team to mitigate credit risk, with a hypothetical 100-basis-point increase in expected loss rates potentially increasing the allowance for credit losses by approximately$0.7 million[209][210]. - An immediate 10% adverse change in foreign exchange rates on RMB-denominated accounts would result in a foreign currency loss of $14.2 million[207]. - The company has$62.1 million in non-cancelable purchase commitments as of March 31, 2025, most of which are short-term[196]. Seasonal Trends - The company has historically experienced higher sales during the third and fourth fiscal quarters compared to the first and second quarters, although the exact nature of seasonality remains uncertain[211].