Microvast (MVST) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Revenue for Q3 2023 was $80.1 million, a 107$38.6 million in Q3 2022, driven by strong demand in Europe and Asia Pacific markets [62][85] - Gross margin improved to 22.3% in Q3 2023 compared to 5.2% in Q3 2022, with adjusted gross margin reaching 24.2%, a 14 percentage point increase year-over-year [4][27] - Adjusted net loss for Q3 2023 was $10.3 million, compared to an adjusted net loss of$17.4 million in Q3 2022, showing progress in narrowing losses [86] - Year-to-date revenue was $202 million, up 45$139.7 million in the prior year 9-month period [27] - Adjusted operating expenses year-to-date were $72.8 million, down from$75.1 million in the prior year 9-month period, mainly due to higher share-based compensation in the previous year [10] Business Line Data and Key Metrics - The commercial vehicle business saw a 45% year-to-date revenue growth compared to 2022, driven by strong demand in Europe and Asia Pacific [11][62] - The 53.5 amp hour cell, a key product, is now being produced at over 70% utilization, with a target to reach 90% by year-end [5][29] - The company delivered approximately 100 megawatt hours to JBM Group during the quarter, a major Indian bus OEM [84] - The backlog reached a record $678.7 million, with over 84$70 million available for further expansion in Huzhou, with $35 million allocated for the Phase 3.2 expansion [71] - Total debt outstanding is$99.5 million, with only $5 million due in Q4 2023 and$40.2 million due by December 2025, all related to China operations [30] - The company is targeting full-year 2023 revenue in the range of $292 million to$302 million, representing 43% to 48% year-over-year growth [72] Q&A Session Summary Question: What factors are contributing to the gross margin improvement, and what are the targeted gross margins? - The improvement in gross margins is driven by better utilization, yield improvements, and favorable raw material prices [15][16] - The company is targeting 20% to 25% adjusted gross margin in Q4 2023 [16] Question: What is the reason for the delay in Clarksville Phase 1A, and how will it impact the ramp-up? - The delay is due to modifications learned from the Huzhou Phase 3.1 line, which will accelerate the ramp-up in Q2 2024 [17][81] Question: Can you comment on the inventory build-up for the 53.5 amp hour cell? - The company is building inventory to meet Q4 revenue guidance and backlog orders for Q1 2024 [120] Question: What is the outlook for the U.S battery storage market? - The U.S battery storage market remains strong, with Clarksville enabling customers to achieve additional domestic content, which is critical for project financing [103] Question: How is the 53.5 amp hour cell impacting customer deals and pricing? - The proven manufacturing consistency and high yields are improving the company's leverage with customers, potentially driving price increases [55]