MONTREAL, Nov. 6, 2024
/PRNewswire/ - The Lion Electric Company (NYSE: LEV) (TSX: LEV)
("Lion" or the "Company"), a leading manufacturer of all-electric
medium and heavy-duty urban vehicles, today announced its financial
and operating results for the third quarter of fiscal year 2024,
which ended on September 30, 2024. Lion reports its results in
US dollars and in accordance with International Financial Reporting
Standards ("IFRS").
Q3 2024 FINANCIAL HIGHLIGHTS
- Revenue of $30.6 million, down
$49.7 million, as compared to
$80.3 million in Q3 2023.
- Delivery of 89 vehicles, a decrease of 156 vehicles, as
compared to the 245 delivered in Q3 2023.
- Gross loss of $16.0 million, as
compared to gross profit of $5.4
million in Q3 2023.
- Net loss of $33.9 million, as
compared to net loss of $19.9 million
in Q3 2023.
- Adjusted EBITDA1 of negative $19.5 million, as compared to negative
$3.9 million in Q3 2023.
- Additions to property, plant and equipment of $0.4 million, down $15.8
million, as compared to $16.2
million in Q3 2023.
- Additions to intangible assets, which mainly consist of vehicle
and battery development activities, amounted to $6.0 million, down $9.0
million as compared to $15.0
million in Q3 2023.
|
_________________________________
|
|
1
|
Adjusted EBITDA is a
non-IFRS financial measure. See "Non-IFRS Measures and Other
Performance Metrics" section of this press release.
|
BUSINESS UPDATES
- More than 2,200 vehicles on the road, with over 32 million
miles driven (over 52 million kilometers).
- Vehicle order book2 of 1,590 all-electric medium-
and heavy-duty urban vehicles as of November
6, 2024, consisting of 135 trucks and 1,455 buses,
representing a combined total order value of approximately
$420 million based on management's
estimates.
- LionEnergy order book of 366 charging stations and related
services as of November 6, 2024,
representing a combined total order value of approximately
$8 million.
- 12 experience centers in operation in the United States and Canada.
"In Q3, we further adjusted our cost
structure and optimized our operations to continue to execute on
our business strategy to support and promote the increasing
electric school bus demand and maintain our leadership position,
despite the persistent challenges that we and our industry continue
to face and which put significant pressure on our liquidity" stated
Marc Bedard, CEO-Founder of Lion.
"We also experienced very good momentum in the latest rounds of the
EPA Clean School Bus program and will keep our focus on delivering
to push forward the electrification of school buses all over
America" he added.
|
_________________________________
|
|
2
|
See "Non-IFRS Measures
and Other Performance Metrics" section of this press release. The
Company's vehicles and charging stations order book is determined
by management based on purchase orders that have been signed,
orders that have been formally confirmed by clients or products in
respect of which formal joint applications for governmental
programs, subsidies or incentives have been made by the applicable
clients and the Company. The order book is expressed as a number of
units or a total dollar value, which dollar value is determined
based on the pricing of each unit included in the order book. The
vehicles included in the vehicle order book as of November 6, 2024
provided for a delivery period ranging from a few months to the end
of the year ending December 31, 2028, with substantially all of
such vehicles currently providing for deliveries before the end of
the year ending December 31, 2025, which corresponds to the latest
date by which claims are required to be made according to the
current eligibility criteria of the Federal Infrastructure Canada's
Zero Emission Transit Fund "ZETF" program, unless otherwise agreed
by Infrastructure Canada. In addition, all of the deliveries are
subject to the granting of subsidies and incentives with processing
times that are subject to important variations. There has been in
the past and the Company expects there will continue to be
variances between the expected delivery periods of orders and the
actual delivery times, and certain delays could be significant.
Also, there has been in the past and the Company expects there will
continue to be variances in the eligibility criteria of the various
programs, subsidies and incentives introduced by governmental
authorities, including in their interpretation and application.
Such variances or delays could result in the loss of a subsidy or
incentive and/or in the cancellation of certain orders, in whole or
in part. In addition, the Company's current financial position as
well as the uncertainty as to its ability to continue as a going
concern is likely to increase some or all of the risks relating to
the Company's order book. The Company's presentation of the order
book should not be construed as a representation by the Company
that the vehicles and charging stations included in its order book
will translate into actual sales.
|
SELECT EXPLANATIONS ON RESULTS OF OPERATIONS FOR THE THIRD
QUARTER OF FISCAL YEAR 2024
Revenue
For the three months ended September 30, 2024, revenue amounted to
$30.6 million, a decrease of
$49.7 million, compared to the
corresponding period in the prior year. The decrease in revenue was
due to a decrease in vehicle sales volume of 156 units, from 245
units (220 school buses and 25 trucks; 132 vehicles in Canada and 113 vehicles in the U.S.) for the
three months ended September 30,
2023, to 89 units (71 school buses and 18 trucks; 45
vehicles in Canada and 44 vehicles
in the U.S.) for the three months ended September 30, 2024. The decrease in vehicle sales
volume was primarily attributable to the impact of the timing of
EPA rounds and the continued delays and challenges associated with
the granting of subsidies to the Company's clients related to the
ZETF program, as well as the impact on the Company's production
cadence due to the continued integration of its Lion MD batteries
onto its vehicles and the continued ramp-up of production of the
Lion5 and LionD platforms. The Company's objective to preserve
liquidity also had a negative impact on the rate of production and
deliveries during the third quarter.
For the nine months ended September 30, 2024, revenue amounted to
$116.4 million, a decrease of
$76.7 million, compared to the nine
months ended September 30, 2023. The
decrease in revenue was due to a decrease in vehicle sales volume
of 278 units, from 664 units (593 school buses and 71 trucks; 518
vehicles in Canada and 146
vehicles in the U.S.) for the nine months ended September 30, 2023, to 386 units (350 school
buses and 36 trucks; 294 vehicles in Canada and 92 vehicles in the U.S.) for the
nine months ended September 30, 2024.
The decrease in vehicle sales volume was primarily attributable to
the impact of the timing of EPA rounds and the continued delays and
challenges associated with the granting of subsidies to the
Company's clients related to the ZETF program, as well as the
impact on the Company's production cadence due to the continued
integration of its Lion MD batteries onto its vehicles and the
continued ramp-up of production of the Lion5 and LionD platforms.
The Company's objective to preserve liquidity also had a negative
impact on the rate of production and deliveries during the third
quarter.
Cost of Sales
For the three months ended September 30, 2024, cost of sales amounted to
$46.6 million, representing a
decrease of $28.4 million, compared
to the corresponding period in the prior year. The decrease was
primarily due to lower sales volumes, partially offset by increased
manufacturing costs related to the continuing ramp-up of the new
products (LionD, Lion5, and the Lion battery packs) and lower
production volumes (which resulted in higher fixed manufacturing
costs per unit produced).
For the nine months ended September 30, 2024, cost of sales amounted to
$158.7 million, representing a
decrease of $30.8 million, compared
to the nine months ended September 30,
2023. The decrease was primarily due to lower sales volumes,
partially offset by increased manufacturing costs related to the
continuing ramp-up of the new products (LionD, Lion5, and the Lion
battery packs) and lower production volumes (which resulted in
higher fixed manufacturing costs per unit produced).
Gross Profit (Loss)
For the three months ended September 30, 2024, gross loss increased by
$21.3 million to negative
$16.0 million, compared to positive
$5.4 million for the three months
ended September 30, 2023. The gross
loss was primarily due to the impact of lower sales volumes,
increased manufacturing costs related to the continuing ramp-up of
the new products (LionD, Lion5, and the Lion battery packs) and
lower production volume (which resulted in higher fixed
manufacturing costs per unit produced).
For the nine months ended September 30, 2024, gross loss increased by
$45.8 million to negative
$42.3 million, compared to negative
$3.5 million for the nine months
ended September 30, 2023. The
increase in the gross loss was primarily due to the impact of lower
sales volumes, increased manufacturing costs related to the
continuing ramp-up of the new products (LionD, Lion5, and the Lion
battery packs) and lower production volume (which resulted in
higher fixed manufacturing costs per unit produced).
Administrative Expenses
For the three months ended September 30, 2024, administrative expenses
decreased by $3.3 million, from
$13.0 million for the corresponding
period in the prior year, to $9.7
million. Administrative expenses for the three months ended
September 30, 2024 included
$0.3 million of non-cash share-based
compensation, compared to $1.0
million for the three months ended September 30, 2023. Excluding the impact of
non-cash share-based compensation, administrative expenses
decreased from $12.0 million for the
three months ended September 30,
2023, to $9.4 million for
three months ended September 30,
2024. The decrease was mainly due to a decrease in expenses
and a lower headcount, both resulting from the workforce reduction
and cost reduction initiatives implemented since November 2023, including as part of the
July 2024 Action Plan.
For the nine months ended September 30, 2024, administrative expenses
decreased by $6.7 million, from
$38.5 million for the nine months
ended September 30, 2023, to
$31.8 million. Administrative
expenses for the nine months ended September
30, 2024 included $1.1 million
of non-cash share-based compensation, compared to $3.6 million for the nine months ended
September 30, 2023. Excluding the
impact of non-cash share-based compensation, administrative
expenses decreased from $34.8 million
for the nine months ended September 30,
2023, to $30.7 million for
nine months ended September 30, 2024.
The decrease was mainly due to a decrease in expenses and a lower
headcount, both resulting from the workforce reduction and cost
reduction initiatives implemented since November 2023, including as part of the
July 2024 Action Plan.
Selling Expenses
For the three months ended September 30, 2024, selling expenses decreased by
$1.4 million, from $5.2 million for the three months ended
September 30, 2023, to $3.8 million. Selling expenses for the three
months ended September 30, 2024
included $0.1 million of non-cash
share-based compensation, compared to $0.3
million for the three months ended September 30, 2023. Excluding the impact of
non-cash share-based compensation, selling expenses decreased from
$4.8 million for the three months
ended September 30, 2023, to
$3.7 million for three months ended
September 30, 2024. The decrease was
primarily due to lower sales commission expenses in line with lower
sales volumes and to streamlined selling related expenses,
including lower headcount and marketing costs resulting from the
workforce reduction and cost reduction initiatives implemented
since November 2023, including as
part of the July 2024 Action
Plan.
For the nine months ended September 30, 2024, selling expenses decreased by
$4.7 million, from $16.5 million for the nine months ended
September 30, 2023, to $11.8 million. Selling expenses for the nine
months ended September 30, 2024
included $0.2 million of non-cash
share-based compensation, compared to $1.2
million for the nine months ended September 30, 2023. Excluding the impact of
non-cash share-based compensation, selling expenses decreased from
$15.3 million for the nine months
ended September 30, 2023, to
$11.6 million for nine months ended
September 30, 2024. The decrease
was primarily due to lower sales commission expenses in line with
lower sales volumes and to streamlined selling related expenses,
including lower headcount and marketing costs resulting from the
workforce reduction and cost reduction initiatives implemented
since November 2023, including as
part of the July 2024 Action
Plan.
Restructuring Costs
Restructuring costs of $0.8 million for the three months ended
September 30, 2024 and
$2.2 million for the nine months
ended September 30, 2024 are
comprised mainly of severance costs related to the workforce
reductions and July 2024 Action Plan
as described in section 8.0 of the Company's MD&A for the
three and nine months ended September 30,
2024 entitled "Operational Highlights".
Finance Costs
For the three months ended September 30, 2024, finance costs increased by
$5.3 million, from $7.7 million for the three months ended
September 30, 2023, to $13.0 million for the three months ended
September 30, 2024. Finance costs for
the three months ended September 30,
2024 were net of $0.3 million
of capitalized borrowing costs, compared to $1.6 million for the three months ended
September 30, 2023. Excluding the
impact of capitalized borrowing costs, finance costs increased by
$4.0 million compared to the three
months ended September 30, 2023. The
increase was driven primarily by higher interest expense on
long-term debt, due to higher average debt outstanding during the
third quarter of fiscal 2024 relating to borrowings made under the
Company's senior the Company's senior revolving credit agreement
(the "Revolving Credit Agreement"), its loan agreement entered into
with Investissement Québec (the "IQ Loan"), its loan agreement
entered into with the Strategic Innovation Fund of the Government
of Canada the ("SIF Loan"), its
loan agreement entered into with Finalta Capital and Caisse de
dépôt et placement du Quebec (the
"Finalta-CDPQ Loan Agreement"), its other loan agreement with
Investissement Québec under the ESSOR program (the "ESSOR Loan")
and its financing with respect to a credit facility to finance the
Company's accounts payable related to goods or services purchased
in the normal course of its operations (the "Supplier Credit
Facility"), non-cash interest (including interest paid in kind with
respect to the convertible debentures issued by the Company in
July 2023 (the "Convertible
Debentures")) and accretion expense, and an increase in interest
costs related to lease liabilities, partially offset by lower
financing costs related to the Convertible Debentures and
non-convertible debentures issued by the Company in July 2023 (the "Non-Convertible Debentures").
Finance charges for the three months ended September 30, 2024 included non-cash charges of
$5.6 million related to interest
paid in kind with respect to the Convertible Debentures and
accretion expense.
For the nine months ended September 30,
2024, finance costs increased by $24.8 million, from $11.1
million for the nine months ended September 30, 2023, to $35.9 million for the nine months ended
September 30, 2024. Finance costs for
the nine months ended September 30,
2024 were net of $1.1 million
of capitalized borrowing costs, compared to $4.8 million for the nine months ended
September 30, 2023. Excluding the
impact of capitalized borrowing costs, finance costs increased by
$21.1 million compared to the nine
months ended September 30, 2023. The
increase was driven primarily by higher interest expense on
long-term debt, due to higher average debt outstanding during the
nine months ended September 30, 2024
relating to borrowings made under the Revolving Credit Agreement,
the IQ Loan, the SIF Loan, the Finalta-CDPQ Loan Agreement, the
ESSOR Loan and the Supplier Credit Facility, non-cash interest
(including interest paid in kind with respect to the Convertible
Debentures) and accretion expense, and an increase in interest
costs related to lease liabilities, partially offset by lower
financing costs related to the Convertible Debentures and
Non-Convertible Debentures issued in July
2023. Finance charges for the nine months ended September 30, 2024 included non-cash charges of
$16.6 million related to interest
paid in kind with respect to the Convertible Debentures and
accretion expense.
Foreign Exchange Loss (Gain)
Foreign exchange loss (gain) relates
primarily to the revaluation of net monetary assets denominated in
foreign currencies to the functional currencies of the related Lion
entities. For the three months ended September 30, 2024, the foreign exchange gain was
$1.6 million, compared to a foreign
exchange loss of $2.9 million
for the three months ended September
30, 2023. For the nine months ended September 30, 2024, the foreign exchange loss was
$1.9 million, compared to a foreign
exchange gain of $0.1 million for the
nine months ended September 30,
2023.The change in foreign exchange loss (gain) related primarily
to the impact of changes in foreign currency rates (impact of
changes in the Canadian dollar relative to the U.S. dollar).
Change in Fair Value of Conversion Options on Convertible
Debt Instruments
For the three and nine months ended September 30, 2024,
change in fair value of conversion options on convertible debt
instruments resulted in a gain of $4.5
million and $27.8 million,
respectively, compared to a gain of $3.4
million for both the three and nine months ended
September 30, 2023, related to the revaluation of the
conversion options on the Convertible Debentures issued in
July 2023 resulting mainly from the
decrease in the market price of Lion equity as compared to the
previous valuations.
Change in Fair Value of Share Warrant
Obligations
For the three and nine months ended
September 30, 2024, the change in fair value of share warrant
obligations resulted in gains of $3.1
million and $23.2 million,
respectively, compared to gains of $0.2
million and $11.9 million,
respectively for the three and nine months ended September 30,
2023, related to the Specific Customer Warrants, the public and
private Business Combination Warrants, the 2022 Warrants, and the
July 2023 Warrants, and resulting
mainly from the decrease in the market price of Lion equity as
compared to the previous valuations.
Net Loss
The net loss of $33.9
million for the three months ended September 30, 2024 as compared to the net loss of
$19.9 million for the same period
prior year was mainly due to the higher gross loss and higher
finance costs, partially offset by the impact of the reduction in
administrative and selling expenses as well as higher gains related
to non-cash decrease in the fair value of share warrant obligations
and the conversion options on convertible debt instruments.
The net loss of $74.9
million for the nine months ended September 30, 2024 as compared to the net loss of
$47.2 million for the same period
prior year was mainly due to the higher gross loss and higher
finance costs, partially offset by the impact of the reduction in
administrative and selling expenses as well as higher gains related
to non-cash decrease in the fair value of share warrant obligations
and the conversion options on convertible debt instruments.
BASIS OF PRESENTATION
Refer to note 2 of the Company's unaudited
condensed interim consolidated financial statements for the three
and nine months ended September 30,
2024 which also indicates the existence of material
uncertainty that may cast significant doubt on the Company's
ability to continue as a going concern. Based on the current
assessment of management, it is not certain that cash and
forecasted cash flows from operations will be sufficient to meet
the Company's obligations coming due over the next twelve months,
and, as a result, the Company's ability to continue as a going
concern is dependent on, among other things, its ability to raise
additional funds in order to meet its capital requirements and
satisfy its obligations as they become due (such as upcoming
interest payment obligations under, and repayment at maturity of,
certain of its debt instruments), including in connection with the
expiration of the covenant relief period (as defined below) on
November 15, 2024 and/or the maturity
of the Finalta-CDPQ Loan Agreement on November 30, 2024. The Company expects that it
will need to negotiate further amendments or concessions or waivers
to agreements with the holders of its debt instruments in
connection with the expiry of the covenant relief period and
upcoming maturity of the Finalta-CDPQ Loan Agreement. See section
2.0 of the Company's MD&A entitled "Basis of Presentation" for
additional information.
CONFERENCE CALL
A conference call and webcast will be held on November 6,
2024, at 5:30 p.m. (Eastern Time) to
discuss the results. To participate in the conference call, please
dial (404) 975-4839 or (833)-470-1428 (toll free) using the Access
Code 946933. An investor presentation and a live webcast of the
conference call will also be available at www.thelionelectric.com
under the "Events and Presentations" page of the "Investors"
section. An archive of the event will be available for a period of
time shortly after the conference call.
FINANCIAL REPORT
This release should be read together with the 2024 third quarter
financial report, including the unaudited condensed interim
consolidated financial statements of the Company and the related
notes as at September 30, 2024 and for the three and nine
months ended September 30, 2024 and
2023, and the related management discussion and analysis
("MD&A"), which will be filed by the Company with applicable
Canadian securities regulatory authorities and with the U.S.
Securities and Exchange Commission, and which will be available on
SEDAR+ as well as on our website at www.thelionelectric.com.
Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the MD&A.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
September 30, 2024 and December 31, 2023
(in US
dollars)
|
(Unaudited)
|
|
|
|
Sep 30,
2024
|
|
Dec 31, 2023
|
|
$
|
|
$
|
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash
|
26,287,968
|
|
29,892,966
|
|
Accounts
receivable
|
48,724,699
|
|
75,641,780
|
|
Inventories
|
215,103,160
|
|
249,606,756
|
|
Prepaid expenses and
other current assets
|
2,181,322
|
|
1,553,276
|
|
Current
assets
|
292,297,149
|
|
356,694,778
|
|
Non-current
|
|
|
|
|
Other non-current
assets
|
7,879,733
|
|
6,994,815
|
|
Property, plant and
equipment
|
186,611,153
|
|
198,536,683
|
|
Right-of-use
assets
|
90,986,710
|
|
89,663,139
|
|
Intangible
assets
|
189,170,558
|
|
175,703,257
|
|
Contract
asset
|
13,255,046
|
|
13,528,646
|
|
Non-current
assets
|
487,903,200
|
|
484,426,540
|
|
Total
assets
|
780,200,349
|
|
841,121,318
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Current
|
|
|
|
|
Trade and other
payables
|
57,905,846
|
|
92,424,961
|
|
Deferred revenue and
other deferred liabilities
|
44,253,046
|
|
18,267,139
|
|
Current portion of
long-term debt and other debts
|
149,540,872
|
|
27,056,476
|
|
Current portion of
lease liabilities
|
8,190,021
|
|
7,984,563
|
|
Current
liabilities
|
259,889,785
|
|
145,733,139
|
|
Non-current
|
|
|
|
|
Long-term debt and
other debts
|
143,095,183
|
|
197,885,889
|
|
Lease
liabilities
|
87,217,483
|
|
83,972,023
|
|
Share warrant
obligations
|
5,521,709
|
|
29,582,203
|
|
Conversion options on
convertible debt instruments
|
4,041,036
|
|
25,034,073
|
|
Non-current
liabilities
|
239,875,411
|
|
336,474,188
|
|
Total
liabilities
|
499,765,196
|
|
482,207,327
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Share
capital
|
489,454,628
|
|
489,362,920
|
|
Contributed
surplus
|
141,195,903
|
|
139,569,185
|
|
Deficit
|
(330,654,757)
|
|
(255,746,097)
|
|
Cumulative translation
adjustment
|
(19,560,621)
|
|
(14,272,017)
|
|
Total shareholders'
equity
|
280,435,153
|
|
358,913,991
|
|
Total shareholders'
equity and liabilities
|
780,200,349
|
|
841,121,318
|
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE
EARNINGS
For the three and nine months ended September 30, 2024 and 2023
(in US
dollars)
|
(Unaudited)
|
|
(Unaudited)
|
|
Three months
ended
|
|
Nine months
ended
|
|
Sep 30,
2024
|
|
Sep 30,
2023
|
|
Sep 30,
2024
|
|
Sep 30,
2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Revenue
|
30,626,604
|
|
80,347,614
|
|
116,383,520
|
|
193,066,862
|
|
Cost of
sales
|
46,580,060
|
|
74,982,572
|
|
158,694,253
|
|
189,540,202
|
|
Gross profit
(loss)
|
(15,953,456)
|
|
5,365,042
|
|
(42,310,733)
|
|
3,526,660
|
|
|
|
|
|
|
|
|
|
Administrative
expenses
|
9,695,244
|
|
12,986,754
|
|
31,756,737
|
|
38,468,226
|
|
Selling
expenses
|
3,777,272
|
|
5,176,768
|
|
11,812,942
|
|
16,503,134
|
|
Restructuring
costs
|
780,260
|
|
—
|
|
2,163,269
|
|
—
|
|
Operating
loss
|
(30,206,232)
|
|
(12,798,480)
|
|
(88,043,681)
|
|
(51,444,700)
|
|
|
|
|
|
|
|
|
|
Finance
costs
|
13,024,254
|
|
7,728,320
|
|
35,934,083
|
|
11,149,758
|
|
Foreign exchange loss
(gain)
|
(1,616,813)
|
|
2,861,193
|
|
1,907,293
|
|
(104,113)
|
|
Change in fair value of
conversion options on convertible debt instruments
|
(4,538,039)
|
|
(3,355,932)
|
|
(27,755,832)
|
|
(3,355,932)
|
|
Change in fair value of
share warrant obligations
|
(3,129,649)
|
|
(179,488)
|
|
(23,220,565)
|
|
(11,910,809)
|
|
Net
loss
|
(33,945,985)
|
|
(19,852,573)
|
|
(74,908,660)
|
|
(47,223,604)
|
|
Other comprehensive
loss
|
|
|
|
|
|
|
|
|
Item that will be
subsequently
reclassified to net loss
|
|
|
|
|
|
|
|
|
Foreign currency
translation
adjustment
|
2,844,623
|
|
(6,201,228)
|
|
(5,288,604)
|
|
1,161,192
|
|
Comprehensive loss
for the period
|
(31,101,362)
|
|
(26,053,801)
|
|
(80,197,264)
|
|
(46,062,412)
|
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
Basic loss per
share
|
(0.15)
|
|
(0.09)
|
|
(0.33)
|
|
(0.21)
|
|
Diluted loss per
share
|
(0.15)
|
|
(0.09)
|
|
(0.33)
|
|
(0.21)
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three
and nine months ended September 30,
2024 and 2023
(in US Dollars)
|
(Unaudited)
|
|
(Unaudited)
|
|
Three months
ended
|
|
Nine months
ended
|
|
Sep 30,
2024
|
|
Sep 30, 2023
|
|
Sep 30,
2024
|
|
Sep 30, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net loss
|
(33,945,985)
|
|
(19,852,573)
|
|
(74,908,660)
|
|
(47,223,604)
|
|
Non-cash
items:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
9,044,054
|
|
7,240,088
|
|
26,239,530
|
|
17,715,104
|
|
Share-based
compensation
|
438,191
|
|
1,324,325
|
|
1,305,275
|
|
4,794,878
|
|
Accretion
expense
|
3,064,258
|
|
2,275,078
|
|
9,138,265
|
|
2,275,078
|
|
Interest paid in kind
on convertible debt instruments
|
2,504,005
|
|
—
|
|
7,454,040
|
|
—
|
|
Interest capitalized
to long-term debt and other debts
|
559,764
|
|
—
|
|
559,764
|
|
—
|
|
Non-cash issuance of
closing fee shares through 2023
Debentures Financing
|
—
|
|
623,336
|
|
—
|
|
623,336
|
|
Change in fair value
of share warrant obligations
|
(3,129,649)
|
|
(179,488)
|
|
(23,220,565)
|
|
(11,910,809)
|
|
Change in fair value
of conversion options on convertible debt
instruments
|
(4,538,039)
|
|
(3,355,932)
|
|
(27,755,832)
|
|
(3,355,932)
|
|
Unrealized foreign
exchange gain (loss)
|
(2,784,007)
|
|
(91,679)
|
|
1,133,498
|
|
(1,323,027)
|
|
Net change in non-cash
working capital items
|
49,925,334
|
|
(31,679,272)
|
|
48,486,016
|
|
(47,840,935)
|
|
Cash flows used in
operating activities
|
21,137,926
|
|
(43,696,117)
|
|
(31,568,669)
|
|
(86,245,911)
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Acquisition of
property, plant and equipment
|
(1,436,487)
|
|
(22,394,406)
|
|
(6,824,835)
|
|
(67,790,857)
|
|
Addition to intangible
assets
|
(4,604,831)
|
|
(16,057,154)
|
|
(27,040,490)
|
|
(56,513,413)
|
|
Proceeds from Mirabel
battery building sale-leaseback
|
—
|
|
—
|
|
—
|
|
20,506,589
|
|
Government assistance
related to property, plant and equipment and
intangible assets
|
2,765,526
|
|
1,690,284
|
|
7,164,621
|
|
7,441,552
|
|
Cash flows used in
investing activities
|
(3,275,792)
|
|
(36,761,276)
|
|
(26,700,704)
|
|
(96,356,129)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Increase in long-term
debt and other debts
|
17,067,371
|
|
36,875,044
|
|
73,669,446
|
|
106,099,764
|
|
Repayment of long-term
debt and other debts
|
(9,475,665)
|
|
(103,985,678)
|
|
(13,846,612)
|
|
(126,481,649)
|
|
Payment of lease
liabilities
|
(1,980,505)
|
|
(1,711,692)
|
|
(5,994,176)
|
|
(4,427,228)
|
|
Proceeds from issuance
of shares through "at-the-market" equity
program, net of issuance costs
|
—
|
|
2,341,367
|
|
—
|
|
8,580,405
|
|
Proceeds from the
issuance of units through the December 2022
Offering - Warrants
|
—
|
|
—
|
|
—
|
|
2,907,226
|
|
Proceeds from the
issuance of units through the December 2022
Offering - Common Shares, net of issuance costs
|
—
|
|
—
|
|
—
|
|
4,175,836
|
|
Proceeds from the 2023
Debentures Financing, net of issuance costs
|
—
|
|
139,090,995
|
|
—
|
|
139,090,995
|
|
Cash flows from
financing activities
|
5,611,201
|
|
72,610,036
|
|
53,828,658
|
|
129,945,349
|
|
Effect of exchange rate
changes on cash held in foreign currency
|
811,892
|
|
(636,555)
|
|
835,717
|
|
58,773
|
|
Net increase
(decrease) in cash
|
24,285,227
|
|
(8,483,912)
|
|
(3,604,998)
|
|
(52,597,918)
|
|
Cash, beginning of
year
|
2,002,741
|
|
44,152,979
|
|
29,892,966
|
|
88,266,985
|
|
Cash, end of
period
|
26,287,968
|
|
35,669,067
|
|
26,287,968
|
|
35,669,067
|
|
Other information on
cash flows related to operating activities:
|
|
|
|
|
|
|
|
|
Interest
paid
|
355,215
|
|
3,360,744
|
|
9,975,594
|
|
7,218,418
|
|
Interest paid under
lease liabilities
|
1,313,555
|
|
1,227,560
|
|
3,824,020
|
|
3,354,611
|
NON-IFRS MEASURES AND OTHER PERFORMANCE METRICS
This press release makes reference to
Adjusted EBITDA, which is a non-IFRS financial measure, as well as
other performance metrics, including the Company's order book,
which are defined below. These measures are neither required nor
recognized measures under IFRS, and, as a result, do not have a
standardized meaning prescribed by IFRS and are therefore unlikely
to be comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement those IFRS measures by providing further understanding
of the Company's results of operations from management's
perspective. Accordingly, they should not be considered in
isolation nor as a substitute for analysis of the Company's
financial information reported under IFRS. Lion compensates for
these limitations by relying primarily on Lion's IFRS results and
using Adjusted EBITDA and order book on a supplemental basis.
Readers should not rely on any single financial measure to evaluate
Lion's business.
Adjusted EBITDA
"Adjusted EBITDA" is defined as net earnings
(loss) before finance costs, income tax expense or benefit, and
depreciation and amortization, adjusted to exclude restructuring
costs, share-based compensation, change in fair value of conversion
options on convertible debt instruments, change in fair value of
share warrant obligations, foreign exchange (gain) loss and
transaction and other non-recurring expenses. Lion uses adjusted
EBITDA to facilitate a comparison of the profitability of its
business on a consistent basis from period-to-period and to provide
a further understanding of factors and trends affecting its
business. The Company also believes this measure is useful for
investors to assess the Company's profitability, its cost structure
and its ability to service debt and to meet other payment
obligations. However, readers should be aware that when evaluating
Adjusted EBITDA, Lion may incur future expenses similar to those
excluded when calculating Adjusted EBITDA. In addition, Lion's
presentation of these measures should not be construed as an
inference that Lion's future results will be unaffected by unusual
or non-recurring items. Readers should review the reconciliation of
net earnings (loss), the most directly comparable IFRS financial
measure, to Adjusted EBITDA presented by the Company under section
12.0 of the Company's MD&A for the three and nine months ended
September 30, 2024 entitled "Results
of Operations - Reconciliation of Adjusted EBITDA."
Order Book
This press release also makes
reference to the Company's "order book" with respect to vehicles
(trucks and buses) as well as charging stations. The Company's
vehicles and charging stations order book is determined by
management based on purchase orders that have been signed, orders
that have been formally confirmed by clients, or products in
respect of which formal joint applications for governmental
programs, subsidies or incentives have been made by the applicable
clients and the Company. The order book is expressed as a number of
units or a total dollar value, which dollar value is determined
based on the pricing of each unit included in the order book as
further explained under "Pricing" in section 9.0 of the MD&A
entitled "Order Book". The vehicles included in the vehicle order
book as of November 6, 2024 provided for a delivery period
ranging from a few months to the end of the year ending
December 31, 2028, with substantially
all of such vehicles currently providing for deliveries before the
end of the year ending December 31,
2025, which corresponds to the latest date by which claims
are required to be made according to the current eligibility
criteria of the Federal Infrastructure Canada's Zero Emission
Transit Fund "ZETF" program, unless otherwise agreed by
Infrastructure Canada. In addition, substantially all deliveries
are subject to the granting of subsidies and incentives with
processing times that are subject to important variations. There
has been in the past and the Company expects there will continue to
be variances between the expected delivery periods of orders and
the actual delivery times, and certain delays could be significant.
Also, there has been in the past and the Company expects there will
continue to be variances in the eligibility criteria of the various
programs, subsidies and incentives introduced by governmental
authorities, including in their interpretation and application.
Such variances or delays could result in the loss of a subsidy or
incentive and/or in the cancellation of certain orders, in whole or
in part. In addition, the Company's current financial position as
well as the material uncertainty as to its ability to continue as a
going concern is likely to increase some or all of the risks
relating to the Company's order book. See "Increased Risks relating
to Order Book" under section 9.0 of the MD&A entitled "Order
Book."
The Company's presentation of the order book should not be
construed as a representation by the Company that the vehicles and
charging stations included in its order book will translate into
actual sales. See the section below for a full description of the
methodology used by the Company in connection with the order book
and certain important risks and uncertainties relating to such
methodology and the presentation of the order book.
|
General
Principle:
|
The Company's vehicle
and charging stations order book is determined by management based
on purchase orders that have been signed, orders that have been
formally confirmed by clients or products in respect of which
formal joint applications for governmental programs, subsidies or
incentives have been made by the applicable clients and the
Company. The order book is expressed as a number of units or a
total dollar value, which dollar value is determined based on the
pricing of each unit included in the order book as further
explained below under the section entitled "Pricing".
The vehicles included
in the vehicle order book as of November 6, 2024 provided for
a delivery period ranging from a few months to the end of the year
ending December 31, 2028, with substantially all of such vehicles
currently providing for deliveries before the end of the year
ending December 31, 2025, which corresponds to the latest date by
which claims are required to be made according to the current
eligibility criteria of the ZETF, unless otherwise agreed by
Infrastructure Canada. In addition, substantially all of the
vehicle orders included in the order book are subject to the
granting of governmental subsidies and incentives, including
programs in respect of which applications relating to vehicles of
Lion have not yet been fully processed to date. The processing
times of governmental programs, subsidies and incentives are also
subject to important variations. As further described below under
the sections entitled "Delivery Periods" and "Ongoing Evaluation;
Risk Factors", there has been in the past and the Company expects
there will continue to be variances between the expected delivery
periods of orders and the actual delivery times, and certain delays
could be significant. Also, there has been in the past and the
Company expects there will continue to be variances in the
eligibility criteria of the various programs, subsidies and
incentives introduced by governmental authorities, including in
their interpretation and application. Such variances or delays
could result in the loss of a subsidy or incentive and/or in the
cancellation of certain orders, in whole or in part. In addition,
the Company's current financial position and the uncertainty
related thereto may negatively impact governmental authorities'
perception of the Company and the processing of governmental
subsidies or incentives on which substantially all of the vehicles
included in the order book are conditioned upon, including in
connection with the Company's current discussions with the Canadian
Federal government regarding the application of the ZETF
program.
The Company's
presentation of the order book should not be construed as a
representation by the Company that the vehicles and charging
stations included in its order book will translate into actual
sales.
|
|
Delivery
Periods:
|
The Company's order
book refers to products that have not yet been delivered but which
are reasonably expected by management to be delivered within a time
period that can be reasonably estimated and includes, in the case
of charging stations, services that have not been completed but
which are reasonably expected by management to be completed in
connection with the delivery of the product.
Purchase orders and
applications relating to vehicles of Lion generally provide for a
time period during which the client expects delivery of the
vehicles. Such period can vary from a specific date, a number or
range of months after the issuance of the order or application, or
a calendar year. The vehicles included in the vehicle order book as
of November 6, 2024 provided for a delivery period, subject to
the satisfaction of the conditions set forth in each order (which,
in substantially all cases as further discussed herein, relate to
the approval of governmental subsidies and grants), ranging from a
few months to the end of the year ending December 31, 2028, with
substantially all of such vehicles currently providing for
deliveries before the end of the year ending December 31, 2025,
which corresponds to the latest date by which claims are required
to be made according to the current eligibility criteria of the
ZETF, unless otherwise agreed by Infrastructure Canada. Delivery
periods are disclosed from time to time by the Company when
available in respect of material orders. Delivery periods should
not be construed as a representation or a guarantee by the Company
that the actual delivery time will take place as scheduled. Given
the nature of the business and the products of the Company, the
implied lead time for the production and delivery of a vehicle
(which may be impacted, among other things, by supply chain
challenges or changes in specifications as well as the Company's
production cadence), the nature of certain customers of the Company
(in many cases, fleet owners operating capital intensive operations
which require financing and ongoing scheduling flexibility), and
the fact that, as further described herein, substantially all of
the vehicle orders included in the order book are subject to the
granting of governmental subsidies and incentives, actual delivery
times may be subject to important variations or delays. In
addition, the workforce reduction and other cost-cutting measures
implemented by the Company aimed at managing liquidity have
negatively impacted production cadence and vehicle deliveries, and
the Company expects that its current financial position and results
of operations will continue to impact production cadence and
vehicle deliveries as it continues to focus on managing its
liquidity in order to meet its capital requirements and satisfy its
obligations as they become due. Please refer to the section
entitled "Ongoing Evaluation; Risk Factors" of the MD&A for the
three and nine months ended September 30, 2024 regarding the
potential impact of variations or delays in deliveries.
|
|
Pricing:
|
When the Company's
order book is expressed as an amount of sales, such amount has been
determined by management based on the current specifications or
requirements of the applicable order, assumes no changes to such
specifications or requirements and, in cases where the pricing of a
product or service may vary in the future, represents management's
reasonable estimate of the prospective pricing as of the time such
estimate is reported. A small number of vehicles included in the
order book have a pricing that remains subject to confirmation
based on specifications and other options to be agreed upon in the
future between the applicable client and the Company. For purposes
of the determination of the order book and the value allocated to
such orders, management has estimated the pricing based on its
current price lists and certain other assumptions relating to
specifications and requirements deemed reasonable in the
circumstances.
|
|
Performance
Metric:
|
The order book is
intended as a supplemental measure of performance that is neither
required by, nor presented in accordance with, IFRS, and is neither
disclosed in nor derived from the financial statements of the
Company. The Company believes that the disclosure of its order book
provides an additional tool for investors to use in evaluating the
Company's performance, market penetration for its products, and the
cadence of capital expenditures and tooling.
The Company's
computation of its order book is subject to the specific
methodology described herein and may not be comparable to other
similarly entitled measures computed by other companies, because
all companies may not calculate their order book in the same
fashion. Other companies also sometimes refer to or use "order
backlog" or "order intake" as performance metrics, which are most
likely not calculated on the same basis as the Company's order
book. In addition, as explained above, the Company's presentation
of the order book is calculated based on the orders and the
applications made as of the time that the information is presented,
and it is not based on the Company's assessment of future events
and should not be construed as a representation by the Company that
the vehicles and charging stations included in its order book will
translate into actual sales.
|
|
Ongoing Evaluation;
Risk Factors:
|
A portion of the
vehicles or charging stations included in the Company's order book
may be cancellable in certain circumstances (whether by reason of a
delivery delay, unavailability of a program, subsidy or incentive
or otherwise) within a certain period. Management reviews the
composition of the order book every time it is reported in order to
determine whether any orders should be removed from the order book.
For purposes of such exercise, management identifies orders that
have been or are reasonably likely to be cancelled and examines,
among other things, whether conditions attaching to the order are
reasonably likely to result in a cancellation of the order in
future periods as well as any other available information deemed
relevant, including ongoing dialogue with clients and governments.
Such exercise may result from time to time in orders that have
previously been included in the order book being removed even if
they have not been formally canceled by the client. See the first
paragraph of section 9.0 of the MD&A for the three and nine
months ended September 30, 2024 entitled "Order Book" for a
presentation of the variance in the total number of units and the
total dollar value of the vehicles and charging stations included
in the Company's order book since July 30, 2024, being the
last date on which such information was presented.
The Company cannot
guarantee that its order book will be realized in full, in a timely
manner, or at all, or that, even if realized, revenues generated
will result in profits or cash generation as expected, and any
shortfall may be significant. The Company's conversion of its order
book into actual sales is dependent on various factors, including
those described below and under section 23.0 entitled "Risk
Factors" of the Company's MD&A for the years ended
December 31, 2023 and 2022. For instance, a customer may
voluntarily or involuntarily default on an order, may become
subject to bankruptcy or insolvency or cease its business
operations. In addition, substantially all of the vehicle orders
included in the order book are subject to conditions relating to
the granting of governmental subsidies or incentives to Lion's
customers or a specified timing for the delivery of the vehicle
and, in a limited number of cases, the availability of certain
specifications and options or the renewal of certain routes by
governmental or school authorities. As a result, the Company's
ability to convert its order book into actual sales is highly
dependent on the granting and timing of governmental subsidies and
incentives, most notably subsidies and incentives under the Quebec
government's 2030 Plan for a Green Economy (the "Quebec Green
Economy Plan"), Federal Infrastructure Canada's ZETF, the
Government of Canada Incentives for Medium- and Heavy-Duty
Zero-Emission Vehicles (iMHZEV) Program, the U.S. Environmental
Protection Agency Clean School Bus Program and California's Hybrid
and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP).
Approximately half of the vehicles included in the order book are
contingent upon grants under the ZETF, in respect of which
applications relating to vehicles of Lion have not yet been fully
processed to date and December 31, 2025 is the latest date by which
claims are required to be made according to the current eligibility
criteria of the ZETF program, unless otherwise agreed by
Infrastructure Canada. During the nine months ended September 30,
2024, only one application for 200 school buses under the program
submitted by one of Lion's customers was approved by the ZETF which
resulted in the delivery of 70 school buses by Lion. Lion continues
to be actively engaged in discussions with the Canadian Federal
government regarding the application of the program. If the
above-mentioned delays persist, the orders relating to such
vehicles may be cancelled, in whole or in part, or be subject to
renegotiation.
Any termination,
modification, delay or suspension of any governmental programs,
subsidies and incentives, including, most importantly as of the
date hereof, the ZETF, the Quebec Green Economy Plan or the EPA
Program could result in delayed deliveries or the cancellation of
all or any portion of orders, which, in turn, could have a material
and adverse effect on the Company's business, results of operations
or financial condition.
The Company's
conversion of its order book into actual sales is also dependent on
its ability to economically and timely manufacture its vehicles, at
scale. The Company delivered 519 vehicles during the year ended
December 31, 2022, 852 vehicles during the year ended
December 31, 2023 and 386 vehicles during the nine months
ended September 30, 2024. As of November 6, 2024, the
Company's vehicle order book stood at 1,590 vehicles. The execution
of the Company's growth strategy and the conversion of its order
book, which currently provides for deliveries ranging from a few
months to the end of the year ending December 31, 2028, will
require that the Company increases its production cadence. While
the Saint-Jerome facility and Joliet Facility currently have the
infrastructure in place, including in terms of production lines and
equipment, to achieve a production capacity of up to 2,500 vehicles
and 2,500 buses, respectively, on an annual basis (see section 5.0
of the MD&A for the three and nine months ended September 30,
2024 entitled "Company Overview" and "Product Development and
Manufacturing" under section 10.0 of the MD&A for the three and
nine months ended September 30, 2024 entitled "Key Factors
Affecting Lion's Performance" for further details), the Company's
operations are currently being conducted on a lower scale and it
has limited experience to date in high volume manufacturing. In
addition, as of November 6, 2024, 96 units included in the
order book, consisting of trucks and representing a combined total
order value of approximately $35 million, related to products which
had been developed and were being sold, but that were not currently
in commercial production. See "Products and Solutions" in section
6.2 of the Company's Annual Information Form for the year ended
December 31, 2023 entitled "Business of the Company". Any failure
by the Company to successfully develop its vehicles, source its key
components, and scale its manufacturing processes within projected
costs and timelines could have a material adverse effect on its
business, results of operations or financial condition. As a
result, the Company's realization of its order book is subject to a
number of risks and uncertainties, including the risks described in
section 3.0 of the MD&A for the three and nine months ended
September 30, 2024 entitled "Caution Regarding Forward-Looking
Statements" and section 23.0 entitled "Risk Factors" of the
Company's MD&A for the years ended December 31, 2023 and
2022, and there can be no assurance that the Company will be
successful in converting all or a significant portion of its order
book into actual sales.
|
RECONCILIATION OF ADJUSTED EBITDA
The following table reconciles net loss to Adjusted EBITDA for
the three and nine months ended September
30, 2024 and 2023:
|
Unaudited - Three
months ended
September 30,
|
|
Unaudited - Nine
months ended
September 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(in
thousands)
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Revenue
|
$30,627
|
|
$80,348
|
|
$116,384
|
|
$193,067
|
|
|
|
|
|
|
|
|
|
Net loss
|
($33,946)
|
|
($19,853)
|
|
($74,909)
|
|
($47,224)
|
|
Restructuring
costs(1)
|
$780
|
|
$—
|
|
$2,163
|
|
$—
|
|
Finance
costs
|
$13,024
|
|
$7,728
|
|
$35,934
|
|
$11,150
|
|
Depreciation and
amortization
|
$9,044
|
|
$7,240
|
|
$26,240
|
|
$17,715
|
|
Share-based
compensation(2)
|
$438
|
|
$1,324
|
|
$1,305
|
|
$4,795
|
|
Change in fair value of
conversion options on
convertible debt instruments(3)
|
($4,538)
|
|
($3,356)
|
|
($27,756)
|
|
($3,356)
|
|
Change in fair value of
share warrant
obligations(4)
|
($3,130)
|
|
($179)
|
|
($23,221)
|
|
($11,911)
|
|
Foreign exchange loss
(gain)(5)
|
($1,617)
|
|
$2,861
|
|
$1,907
|
|
($104)
|
|
Transaction and other
non-recurring expenses(6)
|
$416
|
|
$374
|
|
$917
|
|
$951
|
|
Adjusted
EBITDA
|
($19,527)
|
|
($3,860)
|
|
($57,419)
|
|
($27,984)
|
|
(1)
|
Represents the
restructuring costs (mainly severance costs) recognized in
connection with workforce reduction and measures implemented by the
Company (including the July 2024 Action Plan), as described in Note
12 to the condensed interim consolidated financial statements as at
September 30, 2024 and for the three and nine months ended
September 30, 2024, and 2023. See also "Workforce Reduction" in
section 8.0 of the MD&A for the three and nine months ended
entitled September 30, 2024 "Operational Highlights."
|
|
(2)
|
Represents non-cash
expenses recognized in connection with the issuance of stock
options, restricted share units, and deferred share units issued
under Lion's omnibus incentive plan as described in Note 11 to the
condensed interim consolidated financial statements as at September
30, 2024 and for the three and nine months ended September 30,
2024, and 2023.
|
|
(3)
|
Represents non-cash
change in the fair value of the conversion options on convertible
debt instruments as described in Note 9 to the condensed interim
consolidated financial statements as at September 30, 2024 and for
the three and nine months ended September 30, 2024, and
2023.
|
|
(4)
|
Represents non-cash
change in the fair value of the share warrant obligations as
described in Note 10 to the condensed interim consolidated
financial statements as at September 30, 2024 and for the three and
nine months ended September 30, 2024, and 2023.
|
|
(5)
|
Represents losses
(gains) relating to foreign exchange translation.
|
|
(6)
|
For the three and nine
months ended September 30, 2024, and 2023, represents non-recurring
professional, legal and consulting fees.
|
ABOUT LION ELECTRIC
Lion Electric is an innovative
manufacturer of zero-emission vehicles. The company creates,
designs and manufactures all-electric class 5 to class 8 commercial
urban trucks and all-electric school buses. Lion is a North
American leader in electric transportation and designs, builds and
assembles many of its vehicles' components, including chassis,
battery packs, truck cabins and bus bodies.
Always actively seeking new and reliable
technologies, Lion vehicles have unique features that are
specifically adapted to its users and their everyday needs. Lion
believes that transitioning to all-electric vehicles will lead to
major improvements in our society, environment and overall quality
of life. Lion shares are traded on the New York Stock Exchange and
the Toronto Stock Exchange under the symbol LEV.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking information" and
"forward-looking statements" within the meaning of applicable
securities laws and within the meaning of the United States Private
Securities Litigation Reform Act of 1995 (collectively,
"forward-looking statements"). Any statements contained in this
press release that are not statements of historical fact, including
statements about Lion's beliefs and expectations, are
forward-looking statements and should be evaluated as such.
Forward-looking statements may be identified by the use of words
such as "believe," "may," "will," "continue," "anticipate,"
"intend," "expect," "should," "would," "could," "plan," "project,"
"potential," "seem," "seek," "future," "target" or other similar
expressions and any other statements that predict or indicate
future events or trends or that are not statements of historical
matters, although not all forward-looking statements may contain
such identifying words.
These forward-looking statements include statements regarding
the Company's liquidity and capital requirements and management's
forecasts related thereto, the Company's ability to continue as a
going concern, the implementation by the Company of measures and
initiatives aimed at reducing its cost structure, managing its
liquidity and optimizing its balance sheet (including the
July 2024 Action Plan) and the
expected impact thereof, the end of the covenant relief period
agreed to with the lenders under the Revolving Credit Agreement and
the Finalta-CDPQ Loan (the "covenant relief period") and the
upcoming maturity of certain of the Company's debt instruments, the
implementation by the Company of measures to reduce its vehicle and
battery development costs and its inventory levels (including the
Company's fiscal 2024 objectives related thereto), the Company's
order book and the Company's ability to convert it into actual
sales, the expected production capacity of the Company's
manufacturing facilities in Saint-Jerome and the
United States and the Company's battery manufacturing plant
(the "Battery Plant") and innovation center in Quebec (the "Innovation Center"), the sourcing
of lithium-ion battery cells, the Company's future growth and
long-term strategy, the Company's expected product pipeline, and
the development and timing of commercial production of certain
platforms and models. Such forward-looking statements are based on
a number of estimates and assumptions that Lion believes are
reasonable when made, including that Lion will be able to retain
and hire key personnel and maintain relationships with customers,
suppliers and other business partners, that Lion will be able to
continue to operate its business in the normal course, that Lion
will be able to implement its growth strategy, that Lion will be
able to successfully and timely ramp-up manufacturing capacity at
its Saint-Jerome facility, its
U.S. manufacturing facility and at the Battery Plant and Innovation
Center as required in the future, that Lion will not suffer any
supply chain challenges or any material disruption in the supply of
raw materials on competitive terms, that Lion will be able to
maintain its competitive position, that Lion will continue to
improve its operational, financial and other internal controls and
systems to manage its growth and size, that Lion will be able to
benefit, either directly or indirectly (including through
applications made by the Company and/or its clients), on a timely
basis, from governmental programs, subsidies and incentives, that
Lion will not incur any material obligations with respect to
product warranty claims or product recalls, and that Lion will be
able to secure additional funding through equity or debt financing
on terms acceptable to Lion and in the amounts needed when required
in the future. Such estimates and assumptions are made by Lion in
light of the experience of management and their perception of
historical trends, current conditions and expected future
developments, as well as other factors believed to be appropriate
and reasonable in the circumstances. However, there can be no
assurance that such estimates and assumptions will prove to be
correct.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. Lion
believes that these risks and uncertainties include the
following:
- the Company's ability to continue as a going concern, which
will be dependent upon, among other things, the Company's ability
to raise additional funds and/or negotiate further amendments or
concessions or waivers with the holders of its debt instruments
(including in each case in connection with the expiry of the
covenant relief period and upcoming maturity of the Finalta-CDPQ
Loan Agreement);
- any inability to generate sufficient cash flows and/or raise
additional funds to meet its capital requirements and meet its
obligations as they become due (including upcoming interest payment
obligations under, and repayment at maturity of, certain of its
debt instruments), in each case when due and in the amounts
needed;
- any inability to remain in compliance with financial ratios
under, and the terms and conditions of, its debt instruments
(including during or after the covenant relief period);
- any inability to negotiate further amendments or concessions or
waivers to agreements with the holders of its debt instruments when
needed in the future;
- any inability to generate sufficient cash flows and/or raise
additional funds to pursue its growth strategy, when and in the
amounts needed;
- any adverse changes in U.S. or Canadian general economic,
business, market, financial, political or legal conditions,
including as a consequence of the ongoing uncertainties relating to
inflation and interest rates;
- the increased risks relating to the Company's order book
resulting from the uncertainty relating to the Company's financial
position and cash flows;
- any unavailability, reduction, discriminatory application,
delay in processing or elimination of governmental programs,
subsidies or incentives due to policy changes, government
regulations or decisions or otherwise;
- any inability to ramp-up the production of Lion's
products;
- any inability to meet the expectations of the Company's
customers in terms of products, specifications, and services;
- any inability to successfully and economically manufacture and
distribute its vehicles at scale;
- any inability to execute the Company's growth strategy;
- any escalation, deterioration and adverse effects of current
military conflicts, which may affect economic and global financial
markets and exacerbate ongoing economic challenges;
- any unfavorable fluctuations and volatility in the availability
or price of raw materials included in components used to
manufacture the Company's products, including battery cells,
modules and packs;
- the reliance on key suppliers and any inability to maintain an
uninterrupted supply of raw materials;
- any inability to reduce total cost of ownership of electric
vehicles sold by the Company over time;
- the reliance on key management and any inability to attract
and/or retain key personnel;
- labor shortages (including as a result of employee departures,
turnover, demands for higher wages and unionization of employees)
which may force the Company to operate at reduced capacity, to
lower its production and delivery rates or lower its growth plans,
and could pose additional challenges related to employee
compensation;
- any inability to maintain the Company's competitive
position;
- any inability to reduce the Company's costs of supply over
time;
- any inability to maintain and enhance the Company's reputation
and brand;
- any significant product repair and/or replacement due to
product warranty claims or product recalls;
- any failure of information technology systems or any
cybersecurity and data privacy breaches or incidents;
- any inability to secure adequate insurance coverage or a
potential increase in insurance costs;
- natural disasters, epidemic or pandemic outbreaks, boycotts and
geo-political events such as civil unrest, acts of terrorism, the
current ongoing military conflicts or similar disruptions;
- the outcome of any legal proceedings in which the Company is or
may be involved from time to time; and
- any event or circumstance, including the materialization of any
of the foregoing risks and uncertainties, resulting in the
Company's inability to convert its order book into actual
sales.
These and other risks and uncertainties related to the business
of Lion are described in greater detail in section 23.0 entitled
"Risk Factors" of the Company's MD&A for the years ended
December 31, 2023 and 2022. Many of these risks are beyond
Lion's management's ability to control or predict. All
forward-looking statements attributable to Lion or persons acting
on its behalf are expressly qualified in their entirety by the
cautionary statements contained and risk factors identified in the
the Company's MD&A for the three and nine months ended
September 30, 2024 and in other
documents filed with the applicable Canadian regulatory securities
authorities and the U.S. Securities and Exchange Commission (the
"SEC'').
Because of these risks, uncertainties and assumptions, readers
should not place undue reliance on these forward-looking
statements. Furthermore, forward-looking statements speak only as
of the date they are made. Except as required under applicable
securities laws, Lion undertakes no obligation, and expressly
disclaims any duty, to update, revise or review any forward-looking
information, whether as a result of new information, future events
or otherwise.
See section 2.0 of the Company's MD&A for the three and nine
months ended September 30, 2024
entitled "Basis of Presentation," section 15.0 of the Company's
MD&A for the three and nine months ended September 30, 2024 entitled "Liquidity and
Capital Resources," and note 2 of the Company's unaudited condensed
interim consolidated financial statements for the three and nine
months ended September 30, 2024 which
indicate the existence of material uncertainty that may cast
significant doubt on the Company's ability to continue as a going
concern.
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SOURCE The Lion Electric Co.