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Microvast (MVST) - 2023 Q4 - Annual Report
MVSTMicrovast (MVST)2024-04-01 21:16
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Company Classification and Growth - The company is classified as an "emerging growth company" under the JOBS Act, which allows it to provide only two years of audited financial statements and reduced disclosure obligations [333]. - The company will maintain its status as an emerging growth company until it reaches total annual gross revenue of 1.235billionorotherspecifiedconditions[334].DividendPolicy−Thecompanydoesnotintendtopaydividendsoncommonstockfortheforeseeablefuture,optingtoretainfundsforbusinessdevelopmentandgrowth[347].StockPerformanceandMarketRisks−Thetradingpriceofthecommonstockisexpectedtobevolatile,influencedbyvariousfactorsincludingmarketconditionsandcompanyperformance[342].−Thecompany’sabilitytoattractresearchcoveragefromsecuritiesanalystsiscrucial,asunfavorablecommentarycouldnegativelyimpactthestockprice[348].ComplianceandLegalRisks−Thecompanyfacesrisksrelatedtocompliancewithanti−corruptionlaws,particularlyinChina,whichcouldadverselyaffectitsbusinessandfinancialcondition[349].−Thecompanyhasimplementedsafeguardstopreventunauthorizedpaymentsincompliancewithanti−corruptionlaws,butrisksremain[349].−Thecompany’sstockholderlitigationprovisionsmaylimitstockholders′abilitytobringclaimsinfavorablejudicialforums,whichcoulddiscouragelawsuits[336].EconomicandOperationalChallenges−TheongoingeffectsoftheCOVID−19pandemichaveledtosignificantvolatilityintheglobaleconomyanddisruptionsinthesupplychain,impactingvehiclesales[353].−Thesalescycleforthecompany′sproductscanbelengthy,sometimesexceedingfouryears,makingrevenueforecastingchallenging[355].−Revenueandoperatingresultsareexpectedtofluctuatesignificantlyduetoexternalfactorssuchaseconomicconditionsandcustomerorderchanges[356].FinancialPerformanceOverview−RevenuesfortheyearendedDecember31,2023,were1.235 billion or other specified conditions [334]. Dividend Policy - The company does not intend to pay dividends on common stock for the foreseeable future, opting to retain funds for business development and growth [347]. Stock Performance and Market Risks - The trading price of the common stock is expected to be volatile, influenced by various factors including market conditions and company performance [342]. - The company’s ability to attract research coverage from securities analysts is crucial, as unfavorable commentary could negatively impact the stock price [348]. Compliance and Legal Risks - The company faces risks related to compliance with anti-corruption laws, particularly in China, which could adversely affect its business and financial condition [349]. - The company has implemented safeguards to prevent unauthorized payments in compliance with anti-corruption laws, but risks remain [349]. - The company’s stockholder litigation provisions may limit stockholders' ability to bring claims in favorable judicial forums, which could discourage lawsuits [336]. Economic and Operational Challenges - The ongoing effects of the COVID-19 pandemic have led to significant volatility in the global economy and disruptions in the supply chain, impacting vehicle sales [353]. - The sales cycle for the company's products can be lengthy, sometimes exceeding four years, making revenue forecasting challenging [355]. - Revenue and operating results are expected to fluctuate significantly due to external factors such as economic conditions and customer order changes [356]. Financial Performance Overview - Revenues for the year ended December 31, 2023, were 204,495 million, a significant increase from 151,976millionin2022,representingagrowthofapproximately34.5151,976 million in 2022, representing a growth of approximately 34.5% [501]. - The gross profit for 2023 was 9,073 million, a recovery from a gross loss of 42,743millionin2022[501].−Operatingexpensesincreasedto42,743 million in 2022 [501]. - Operating expenses increased to 170,691 million in 2023 from 157,448millionin2022,reflectingariseofabout8.0157,448 million in 2022, reflecting a rise of about 8.0% [501]. - The net loss attributable to common stock shareholders decreased to 158,200 million in 2023 from 234,103millionin2022,indicatinganimprovementofapproximately32.4234,103 million in 2022, indicating an improvement of approximately 32.4% [501]. - The comprehensive loss for 2023 was 114,033 million, down from 182,982millionin2022,showingareductionofabout37.5182,982 million in 2022, showing a reduction of about 37.5% [504]. - Basic and diluted net loss per share improved to (0.52) in 2023 from (1.26)in2022[501].CashFlowandLiquidity−AsofDecember31,2023,cashandcashequivalentsdecreasedto(1.26) in 2022 [501]. Cash Flow and Liquidity - As of December 31, 2023, cash and cash equivalents decreased to 44.541 million from 231.420millionin2022,adeclineofapproximately81.7231.420 million in 2022, a decline of approximately 81.7% [496]. - Total cash, cash equivalents, and restricted cash decreased to 88,189 thousand in 2023 from 302,617thousandin2022,showingasignificantdeclineinavailablecashresources[515].−Thecompanyreportedanetcashusedinoperatingactivitiesof302,617 thousand in 2022, showing a significant decline in available cash resources [515]. - The company reported a net cash used in operating activities of 75,303 thousand for 2023, compared to 53,928thousandin2022,indicatingincreasedcashoutflowsfromoperations[513].−Managementhasconcludedthatexistingcashandcashequivalentswillnotbesufficienttofundoperationsandcapitalexpendituresforthenexttwelvemonths[531].AssetsandLiabilities−Totalassetsrosefrom53,928 thousand in 2022, indicating increased cash outflows from operations [513]. - Management has concluded that existing cash and cash equivalents will not be sufficient to fund operations and capital expenditures for the next twelve months [531]. Assets and Liabilities - Total assets rose from 984.957 million in 2022 to 1.096732billionin2023,anincreaseofapproximately11.31.096732 billion in 2023, an increase of approximately 11.3% [496]. - Total liabilities increased significantly from 371.980 million in 2022 to 532.542millionin2023,representingariseofabout43.1532.542 million in 2023, representing a rise of about 43.1% [496]. - The accumulated deficit grew from 791.165 million in 2022 to 897.501millionin2023,indicatinganincreaseofapproximately13.4897.501 million in 2023, indicating an increase of approximately 13.4% [498]. - The company’s total shareholders' equity as of December 31, 2023, was 564,190 thousand, a decrease from 612,977thousandattheendof2022,indicatingadeclineinnetworth[510].ResearchandDevelopment−Researchanddevelopmentexpensesroseto612,977 thousand at the end of 2022, indicating a decline in net worth [510]. Research and Development - Research and development expenses rose to 43,508 million in 2023, compared to 34,385millionin2022,markinganincreaseofapproximately26.334,385 million in 2022, marking an increase of approximately 26.3% [501]. - The Group's research and development expenses primarily consist of salaries, raw materials, and general expenses associated with R&D activities [572]. Inventory and Receivables - Accounts receivable increased from 119,304 million in 2022 to 138,717millionin2023,reflectingagrowthofabout16.3138,717 million in 2023, reflecting a growth of about 16.3% [496]. - Total inventories rose significantly from 84,252 in 2022 to 149,749in2023,markinganincreaseofabout77.6149,749 in 2023, marking an increase of about 77.6% [617]. Capital Expenditures and Investments - The company incurred 186,788 thousand in capital expenditures for property, plant, and equipment in 2023, up from 150,880thousandin2022,indicatingongoinginvestmentingrowth[514].−TheGroupcompletedacapacityexpansionprojectinChinawithatotalprojectamountof150,880 thousand in 2022, indicating ongoing investment in growth [514]. - The Group completed a capacity expansion project in China with a total project amount of 168,467 in Q3 2023 [621]. Funding and Financing - An estimated additional funding of 150,000to150,000 to 170,000 is required to complete the Tennessee capacity expansion [529]. - The Group is pursuing a Proposed Term Loan of 150,000tosupporttheTennesseecapacityexpansion,withamaturitytermoffouryears[534].−TheGroupisevaluatingvariousfundinginitiatives,includingdebtorequityissuanceandthesaleofnon−coreU.S.realestateassets[535].−TheGrouphasengagedaninvestmentbanktoassessstrategicalternativesandsolicitadditionalfinancingfromthird−partysources[536].WarrantsandShareholderEquity−TheCompanyassumed27,600,000PublicWarrantsand837,000PrivateWarrantsupontheMerger,withanexercisepriceof150,000 to support the Tennessee capacity expansion, with a maturity term of four years [534]. - The Group is evaluating various funding initiatives, including debt or equity issuance and the sale of non-core U.S. real estate assets [535]. - The Group has engaged an investment bank to assess strategic alternatives and solicit additional financing from third-party sources [536]. Warrants and Shareholder Equity - The Company assumed 27,600,000 Public Warrants and 837,000 Private Warrants upon the Merger, with an exercise price of 11.50 per share [647]. - None of the Public Warrants or Private Warrants have been exercised during the year ended December 31, 2023 [647]. - The Public Warrants will expire five years after the completion of the Merger or earlier upon redemption or liquidation [648].