Q1 2023 Net Revenue Increased 90% to $3.5
million
Cenntro Electric Group Limited (NASDAQ: CENN) (“Cenntro” or “the
Company”), a leading electric vehicle technology company with
advanced, market-validated electric commercial vehicles (“ECVs”),
today announced its financial results for the first quarter ended
March 31, 2023.
First Quarter 2023 Financial and Operating Highlights
- Net revenue of $3.5 million increased 90% year over year
attributable to higher average selling prices and expanded
go-to-market strategy that includes a direct in-country sales
model.
- Commenced production of the LS400, Teemak and Metro electric
commercial trucks at the Company’s new 100,000 sq. ft. assembly
facility in Jacksonville, FL.
- Commenced production of the LS400 and Metro electric commercial
trucks at the company’s 40,000 sq. ft. assembly facility in Howell,
NJ., in which 25,000 sq. ft. is dedicated to the LS 400 and the
remaining 15,000 sq. ft. is dedicated for other models.
- Commenced assembly and production of battery packs using
lithium iron phosphate (“LFP”) battery cells and proprietary
battery management technologies in our U.S. and German facilities
for the Metro vehicle line.
- Premiered five new vehicles at the 2023 Consumer Electronics
Show (CES®), one of the world’s largest technology trade
shows.
- Achieved certification by the California Air Resources Board
for the LS400, allowing the vehicle to be considered for monetary
incentives including the California Hybrid and Zero-Emission Truck
and Bus Voucher Incentive Project (“HVIP”).
- Entered Central and Latin American markets by adding
dealerships and making initial deliveries in Mexico, the Dominican
Republic, Honduras, and Jamaica.
“The first quarter of 2023 was highlighted by the expansion of
the Howell, New Jersey facility and the opening of the Jacksonville
facility in the U.S. to support demand, large-scale deployment and
sales expansion in U.S. regional markets,” said Peter Wang,
Chairman and Chief Executive Officer. “We continue to make solid
progress towards our goal of becoming a leading designer and
manufacturer of ECVs as supply chain logistics improve, including
the commencement of production and assembly at five facilities
globally. To align with our go-to-market strategy for new growth we
expanded our EV centers by adding three in the U.S to complement EV
centers in Poland, Germany, Spain, Morocco, and the Dominican
Republic.
“In the U.S. our EV facilities now include a 100,000 sq. ft.
facility in Jacksonville, FL dedicated to assembling the LS400,
Teemak and Metro models for U.S. Southeast Region. Our expanded
Howell, New Jersey Assembly facility is producing the LS400 and
Metro vehicles lines predominantly for the Northeastern region of
the U.S. Operations at both facilities include assembly, upfitting,
and pre-delivery inspections.
“During the first quarter of 2023 we also began to assemble and
produce battery packs using lithium iron phosphate (“LFP”) battery
cells and our proprietary battery management technologies at
facilities in Germany and the U.S. By manufacturing our own battery
packs, we hope to enhance supply chain efficiency, improve battery
resilience, and ultimately have better control over one of the most
strategic elements in our supply chain.
“Along with the launch of our U.S. production facilities, we are
quickly ramping our in-country direct sales go-to-market strategy
globally. The availability of Cenntro’s product line and more
specifically the market launch of our LS100 and LS260 allowed
Cenntro and our partner-dealers to make significant market
penetration. Similarly, we have made progress in Europe where
Cenntro’s LS100, LS200 and LS 260 now belong to the N1 vehicle
class which are eligible to receive incentives in all EU countries.
The incentives and subsidies in Europe vary from €780 to €7500
depending on the country and city.
“Looking ahead, we have built a strong foundation to support
growth, based on a diverse lineup of all-electric vehicles and with
production, distribution, and service infrastructure in place. Our
expanded go-to-market model along with our direct sales model is
beginning to gain traction with customers across the globe such as
in the U.S., Poland, Germany, Italy, Spain, Morocco, and the
Dominican Republic. In the months ahead, we are poised to
accelerate commercialization and momentum,” concluded Wang.
Edmond Cheng, Chief Financial Officer added, “Sales volume in
the first quarter of 2023 of our electric commercial vehicles
decreased 14.6% year-over-year to 129 compared to 151 in the same
period of 2022. While our overall volume does not register growth,
the volume for our new models, other than Metro, has grown by
approximately 78% to 112 in the first quarter of 2023 from 63 in
the same period last year. These new models will allow the company
to participate in a much larger market segment globally than the
slow-moving market segment. At the same time, we achieved an
increase of net revenue by 90% to approximately $3.5 million for
the first quarter of 2023 compared to approximately $1.8 million in
the same period of 2022. The increase in net revenue is mainly
attributed to approximately $1.1 million and $0.5 million increase
in vehicle and spare-part revenue, respectively.
“The average selling price ('ASP') was approximately $22.0
thousand in the first quarter of 2023, up 93% from approximately
$11.4 thousand in the first quarter of 2022. Our improvement in ASP
was driven by our transition to an in-country direct sales model
and the launch of new models including the LS100, LS200, LS260 and
Teemak. As of March 31, 2023, we had approximately $91.8 million in
cash and cash equivalents on our balance sheet. We also had $36.5
million in inventory which consisted of approximately $24.8 million
in finished goods inventory,” concluded Cheng.
First Quarter 2023 Financial Results
Net Revenues
Net revenue was approximately $3.5 million for the three months
ending March 31, 2023, an increase of 90% from $1.8 million in the
first quarter of 2022. The increase was primarily due to the launch
of the LS100, LS200, and LS260 in the European market and an
improvement in ASP.
Gross Profit
Gross profit was approximately $0.2 million in the first quarter
of 2023, compared with gross profit of approximately $0.4 million
in the first quarter of 2022. Gross margin was 5.6% in the first
quarter of 2023, compared with 19.8% in the first quarter of 2022.
The decrease in our gross profit was caused by (i) the realized
gross margin of our new model Logistar 200 expanding its market in
Europe in 2023 was approximately 3.5% compared to a gross margin of
approximately 12.7% in the same period of 2022; (ii) Our newly
introduced model LS 100, LS 260, and Teemak which only began
testing the market in 2023 recorded negative gross margins of
approximately 3.6%, 8.4%, and 8.2%, respectively.
Operating Expenses
Total operating expenses were approximately $10.8 million in the
first quarter of 2023, compared with $9.7 million in the first
quarter of 2022. The increase was primarily driven by growth in
payroll and related expenses particularly in sales and R&D
engineering, increased selling expenses, and increased in design
and development expenses as we expand globally as well as increased
research and development expenses to broaden our product
portfolio.
Net Loss Attributable to the Company’s Shareholders
Net loss was approximately $11.0 million in the first quarter of
2023, compared with net loss of $9.3 million in the first quarter
of 2022.
Balance Sheet
Cash and cash equivalents were approximately $91.8 million as of
March 31, 2023 compared with $154.0 million as of December 31,
2022.
Adjusted EBITDA1
Adjusted EBITDA was approximately $(9.2) million in the first
quarter of 2023, compared with Adjusted EBITDA of $(0.8) million in
the first quarter of 2022.
We define Adjusted EBITDA as net (loss)/income before net
interest expense, income tax expense and depreciation and
amortization as further adjusted to exclude the impact of
stock-based compensation expense and non-recurring expenses. We
caution investors that amounts presented in accordance with our
definition of Adjusted EBITDA may not be comparable to similar
measures disclosed by our industry peers because not all companies
and analysts calculate Adjusted EBITDA in the same manner. We
present Adjusted EBITDA because we consider it to be an important
supplemental measure of our performance and believe it is
frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in our industry.
Management believes that investors’ understanding of our
performance is enhanced by including this non-GAAP financial
measure as a reasonable basis for comparing our ongoing results of
operations.
US-GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
RECONCILIATION
Three Months Ended March
31,
2023
2022
(Expressed in U.S. Dollars)
(Unaudited)
Net loss
$
(11,113,977
)
$
(9,348,369
)
Interest expense, net
54,415
(64,201
)
Income tax expense
—
—
Depreciation and amortization
330,632
140,430
Share-based compensation expense
1,153,808
199,416
Loss on redemption of convertible
promissory notes
2,001
-
Loss on exercise of warrants
212,870
Change in fair value of convertible
promissory notes and derivative liability
126,272
-
Expenses related to one-off payment
inherited from the original Naked Brand Group
8,299,178
Adjusted EBITDA
$
(9,233,979
)
$
(773,546
)
1 Represents a non-GAAP financial measure.
About Cenntro Electric Group Ltd.
Cenntro Electric Group Ltd. (or "Cenntro") (NASDAQ: CENN) is a
leading designer and manufacturer of electric commercial vehicles.
Cenntro's purpose-built ECVs are designed to serve a variety of
organizations in support of city services, last-mile delivery, and
other commercial applications. Cenntro plans to lead the
transformation in the automotive industry through scalable,
decentralized production, and smart driving solutions empowered by
the Cenntro iChassis. For more information, please visit Cenntro's
website at: www.cenntroauto.com.
Forward-Looking Statements
This communication contains "forward-looking statements" within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include all statements that are not historical facts.
Such statements may be, but need not be, identified by words such
as "may,'' "believe,'' "anticipate,'' "could,'' "should,''
"intend,'' "plan,'' "will,'' "aim(s),'' "can,'' "would,''
"expect(s),'' "estimate(s),'' "project(s),'' "forecast(s)'',
"positioned,'' "approximately,'' "potential,'' "goal,''
"strategy,'' "outlook'' and similar expressions. Examples of
forward-looking statements include, among other things, statements
regarding assembly and distribution capabilities, decentralized
production, and fully digitalized autonomous driving solutions. All
such forward-looking statements are based on management's current
beliefs, expectations, and assumptions, and are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from the results expressed or implied in this
communication. For additional risks and uncertainties that could
impact Cenntro's forward-looking statements, please see disclosures
contained in Cenntro's public filings with the Securities and
Exchange Commission (the “SEC”), including the "Risk Factors" in
Cenntro's Annual Report on Form 10-K filed with the SEC on June 30,
2023 and which may be viewed at www.sec.gov.
CENNTRO ELECTRIC GROUP
LIMITED
CONSOLIDATED BALANCE
SHEETS
(Expressed in U.S. dollars,
except for the number of shares)
Mach 31, 2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
91,847,734
$
153,966,777
Restricted cash
92,461
130,024
Accounts receivable, net
2,732,834
565,398
Inventories
36,546,917
31,843,371
Prepayment and other current assets
15,596,764
16,138,330
Deferred cost- current
20,026
-
Amounts due from related parties
343,353
366,936
Total current assets
147,180,089
203,010,836
Non-current assets:
Long-term investment, net
5,239,512
5,325,741
Investment in equity securities
30,412,211
29,759,195
Property, plant and equipment, net
17,265,446
14,962,591
Intangible assets, net
4,558,185
4,563,792
Right-of-use assets
13,865,063
8,187,149
Deferred cost- non-current
243,251
-
Other non-current assets, net
2,306,597
2,039,012
Total non-current assets
73,890,265
64,837,480
Total Assets
$
221,070,354
$
267,848,316
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities:
Accounts payable
$
2,899,119
$
3,383,021
Accrued expenses and other current
liabilities
3,668,415
5,048,641
Contractual liabilities
2,656,151
2,388,480
Operating lease liabilities, current
2,779,279
1,313,334
Convertible promissory notes
17,903,274
57,372,827
Deferred government grant, current
56,009
26,533
Amounts due to related parties
46,900
716,372
Total current liabilities
30,009,147
70,249,208
Non-current liabilities:
Deferred government grant, non-current
1,036,172
497,484
Derivative liability - investor
warrant
12,392,632
14,334,104
Derivative liability - placement agent
warrant
3,457,067
3,456,404
Operating lease liabilities,
non-current
11,640,499
7,421,582
Total non-current liabilities
28,526,370
25,709,574
Total Liabilities
$
58,535,517
$
95,958,782
Commitments and contingencies
EQUITY
Ordinary shares (No par value; 304,449,091
and 300,841,995 shares issued and outstanding as of March 31, 2023
and December 31, 2022, respectively)
-
-
Additional paid in capital
398,262,089
397,497,817
Accumulated deficit
(230,782,125
)
(219,824,176
)
Accumulated other comprehensive loss
(4,945,127
)
(5,306,972
)
Total equity attributable to
shareholders
162,534,837
172,366,669
Non-controlling interests
-
(477,135
)
Total Equity
$
162,534,837
$
171,889,534
Total Liabilities and Equity
$
221,070,354
$
267,848,316
CENNTRO ELECTRIC GROUP
LIMITED
CONSOLIDATED AND COMBINED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Expressed in U.S. dollars,
except for number of shares)
For the Three Months Ended
March 31,
2023
2022
Net revenues
$
3,470,544
$
1,830,633
Cost of goods sold
(3,275,800
)
(1,467,603
)
Gross profit
194,744
363,030
OPERATING EXPENSES:
Selling and marketing expenses
(1,868,985
)
(1,095,108
)
General and administrative expenses
(7,358,264
)
(8,211,831
)
Research and development expenses
(1,569,919
)
(425,359
)
Total operating expenses
(10,797,168
)
(9,732,298
)
Loss from operations
(10,602,424
)
(9,369,268
)
OTHER EXPENSE:
Interest (expense) income, net
(54,415
)
64,201
Income from long-term investment
19,042
5,937
Impairment of long-term investment
(1,146,128
)
-
Loss on redemption of convertible
promissory notes
(2,001
)
-
Loss on exercise of warrants
(212,870
)
-
Change in fair value of convertible
promissory notes and derivative liability
(126,273
)
-
Change in fair value of equity
securities
653,016
-
Other income (expense), net
358,076
(49,239
)
Loss before income taxes
(11,113,977
)
(9,348,369
)
Income tax expense
-
-
Net loss
(11,113,977
)
(9,348,369
)
Less: net loss attributable to
non-controlling interests
(156,028
)
(36,719
)
Net loss attributable to the Company’s
shareholders
$
(10,957,949
)
$
(9,311,650
)
OTHER COMPREHENSIVE LOSS
Foreign currency translation
adjustment
337,278
253,156
Total comprehensive loss
(10,776,699
)
(9,095,213
)
Less: total comprehensive loss
attributable to non-controlling interests
(180,595
)
(57,588
)
Total comprehensive loss to the
Company’s shareholders
$
(10,596,104
)
$
(9,037,625
)
CENNTRO ELECTRIC GROUP
LIMITED
CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOW
(Expressed in U.S. dollars,
except for number of shares)
For the Three Months Ended
March 31,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash used in operating
activities
$
(17,363,332
)
$
(23,486,438
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equity investment
(622,917
)
-
Purchase of plant and equipment
(2,577,292
)
(82,799
)
Purchase of land use right and
property
(268,993
)
-
Acquisition of CAE's equity interests
(1,924,557
)
(2,843,003
)
Proceeds from disposal of property, plant
and equipment
-
327
Loans provided to third parties
(100,000
)
(1,047,053
)
Net cash used in investing
activities
(5,493,759
)
(3,972,528
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of loans to related parties
-
(1,750,367
)
Repayment of loans to third parties
-
(421,222
)
Purchase of CAE’s loan
-
(13,228,101
)
Reduction of capital
-
(13,930,000
)
Redemption of convertible promissory
notes
(39,583,321
)
-
Payment of expense for the reverse
recapitalization
-
(904,843
)
Net cash used in financing
activities
(39,583,321
)
(30,234,533
)
Effect of exchange rate changes on
cash
283,806
97,755
Net decrease in cash, cash equivalents and
restricted cash
(62,156,606
)
(57,595,744
)
Cash, cash equivalents and restricted cash
at beginning of period
154,096,801
261,664,962
Cash, cash equivalents and restricted cash
at end of period
$
91,940,195
$
204,069,218
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid
$
-
$
377,717
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Cashless exercise of warrants
$
2,168,185
$
-
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230725914515/en/
Investor Relations Contact: MZ North America
CENN@mzgroup.us 949-491-8235
Company Contact: PR@cenntroauto.com
IR@cenntroauto.com
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