Arrival (NASDAQ: ARVL), pioneer of a unique new method of design
and production of affordable electric vehicles (EVs) by local
Microfactories, today reported financial results for the first
quarter ended March 31, 2022.
“Our ambition is to create better electric
vehicles people love to use and our vision is becoming a reality
with the Arrival zero-emission Bus being our first product to
achieve certification, a critical milestone for our Bus to be
driven on public roads with passengers,” said Denis Sverdlov,
Arrival founder and CEO.
“This is a significant achievement for our
company. As our technologies and components are shared it
contributes to all future vehicle programs which is one of the many
benefits of our vertically integrated approach.
“I am also very pleased to announce we have
already passed over 70% of our Van certification tests and made
strong progress on our Microfactories with our cabin, hoop and
skateboard all assembled using our advanced robotics platform.
Customers want our products and our LOIs continue to grow. With the
great progress on certification we are pushing forward towards
Start of Production in Q3.”
Recent Business Highlights
Bus
- Achieved key
milestone of EU certification and received European Whole Vehicle
Type Approval (EUWVTA) marking a critical step towards Arrival
Buses carrying passengers on public roads in the UK and Europe
- Private road
trials with First Bus drivers in progress; public road trials
planned to start in Q3 2022
Van
- Final prototype
Van build complete with vehicle testing commencing on public
roads
- Over 70% of Van certification tests
already passed including all crash testing
- Continue to
expect Van Start of production (SOP) in Bicester in Q3 2022 and
Charlotte in Q4 2022
Production Process
- All robotic technology required for
vehicle assembly has been installed in Bicester
- Using the technology cells in
Bicester, Arrival has robotically assembled the entire van
structure onto the skateboard including the cabin and cargo
area
- In Charlotte will begin equipment
installation in late summer, on track for Q4 2022 SOP
Commercial
- Demand for products grew with
non-binding LOIs and Orders increasing to c.143k1 vehicles
- Attended South by Southwest (SXSW) in Austin, TX with the Van
on display for attending media
Given recent developments the Company has
updated its target milestones for 2022 as follows:
Van milestones |
Expected Timing |
Bus milestones |
Expected Timing |
1. Final prototype Van build |
Achieved |
1. Trial Bus production |
Achieved |
2. Van Certification |
Q2 2022 |
2. Proving ground trials |
Achieved |
3. Bicester equipment installation |
Q2 2022 |
3. Bus Certification |
Achieved |
4. Public road trials |
Q2 2022 |
4. Phased trials with First Bus |
Commenced |
5. Bicester/Charlotte Van SOP |
Q3/Q4 2022 |
5. UK production of saleable Buses |
H2 2022 |
First Quarter 2022 Financial
Results
Effective the first quarter of 2022 the Company
is changing its reporting currency from Euro to USD. Financial
information reflects preliminary analysis of the change in
reporting currency.
- Loss for the period of $10.4
million, compared to a loss for the period of $1,151.0 million in
the first quarter of 2021 (including a $1.2 billion non-cash charge
associated with the merger of Arrival and CIIG)
- Adjusted EBITDA loss for the period
of $66.9 million, compared to an adjusted EBITDA loss of $31.1
million in the first quarter of 2021
- Administrative expenses were $54.2
million and non-capitalised R&D expenses were $27.7 million,
compared to administrative expenses of $43.4 million and
non-capitalised R&D expenses of $11.5 million in the first
quarter of 2021
- Capital expenditure for the period,
including tangible and intangible purchases, of $99.1 million,
compared to $49.8 million in the first quarter of 2021
- Cash and cash equivalents of $735
million as of March 31st, 2022
- Shares outstanding totalled
636,678,408 and weighted average shares outstanding in Q1 totalled
633,249,940 as of March 31, 2022
2022 Outlook
Arrival continues to expect a full year Adjusted
EBITDA loss of $185-225 million and full year Capex of $380-420
million. This assumes start of production in Bicester in Q3 and in
Charlotte in Q4, and total production of 400-600 Vans plus low
volume production of Buses in the UK starting in the second half.
Arrival expects to end the year with between $150 million and $250
million of cash.
Webcast Information
Arrival will host a Zoom webinar at 8:00 A.M.
Eastern Time today, May 10, 2022, to discuss its first quarter 2022
financial results. The live webcast will be accessible on the
Company’s website at investors.arrival.com. A webcast replay
will be available approximately two hours after the conclusion of
the live event.
Non-IFRS Financial Measures
This press release includes Adjusted EBITDA
which Arrival utilizes to assess the financial performance of its
business that is not a measure recognized under IFRS. This non-IFRS
measure should not be considered an alternative to performance
measures determined in accordance with IFRS and may not be
comparable to similar measures presented by other issuers.
“Adjusted EBITDA” represents earnings before interest, tax,
depreciation and amortization, adjusted for impairment of
intangible assets and financial assets, share option expenses,
listing expenses, fair value adjustments on Warrants, reversal of
difference between fair value and nominal value of loans that got
settled during the period, fair value movement of embedded
derivative, realised and unrealised foreign exchange gains/losses
and transaction bonuses. For a reconciliation of Adjusted EBITDA to
Operating loss, see the reconciliation table included later in this
press release.
About Arrival
Arrival was founded in 2015 with a mission to
make air clean by replacing all vehicles with affordable electric
solutions - produced by local Microfactories. Six years and over
2,000 people later, we are driving the transition to EVs globally
by creating products that are zero-emission, more desirable, more
sustainable and more equitable than ever before. Our in-house
technologies enable our unique new method of design and production
using rapidly-scalable, local Microfactories around the world. This
method facilitates cities and governments in achieving their
sustainability goals whilst also supercharging their communities.
We are a technology company, a product company, a supply chain
company, an automotive company, a mobility company, a fintech
company and a service company - all rolled into one with a shared
goal of true sustainability. This vertically integrated business
model is how we can have the radical impact our world needs today.
Arrival (NASDAQ: ARVL) is a joint stock company governed by
Luxembourg law.
Forward-looking statements
This press release contains certain
forward-looking statements within the meaning of the federal
securities laws, including statements regarding the products
offered by Arrival and the markets in which it operates and
Arrival’s projected future results. These forward-looking
statements generally are identified by the words “believe,”
“project,” “expect,” “anticipate,” “estimate,” “intend,”
“positioned,” “strategy,” “outlook,” “future,” “opportunity,”
“plan,” “potential,” “predict,” “may,” “should,” “could,” “will,”
“would,” “will be,” “will continue,” “will likely result,” and
similar expressions and include, among other things, our 2022
outlook. Such statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995
and are based on management’s belief or interpretation of
information currently available. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. Many factors could
cause actual future results and events to differ materially from
the results expressed in the forward-looking statements in this
document. Among the key factors that could cause actual results to
differ materially from those projected in the forward-looking
statements include, but are not limited to: (i) the impact of
COVID-19 on Arrival’s business; (ii) economic disruptions from war
and other geopolitical tensions (such as the ongoing military
conflict between Russia and Ukraine); (iii) the risk of downturns
and the possibility of rapid change in the highly competitive
industry in which Arrival operates, (iv) the risk that Arrival and
its current and future collaborators are unable to successfully
develop and commercialize Arrival’s products or services, or
experience significant delays in doing so; (v) the risk that
Arrival may never achieve or sustain profitability; (vi) the risk
that Arrival experiences difficulties in managing its growth and
expanding operations, (vii) the risk that third-parties suppliers
and manufacturers are not able to fully and timely meet their
obligations; (viii) the risk that the utilization of Microfactories
will not provide the expected benefits due to, among other things,
the inability to locate appropriate buildings to use as
Microfactories, Microfactories needing a larger than anticipated
factory footprint, and the inability of Arrival to deploy
Microfactories in the anticipated time frame; (ix) the risk that
the orders that have been placed for vehicles, including the order
from UPS, are cancelled or modified; (x) the risk of product
liability or regulatory lawsuits or proceedings relating to
Arrival’s products and services; and (xi) the risk that Arrival
will need to raise additional capital to execute its business plan,
which may not be available on acceptable terms or at all; and (xii)
the risk that Arrival is unable to secure or protect its
intellectual property.
The foregoing list of factors is not exhaustive.
You should carefully consider the foregoing factors and the other
risks and uncertainties described in the “Risk Factors” section of
Arrival’s annual report on Form 20-F filed with the U.S. Securities
and Exchange Commission (the “SEC”) on April 27, 2022, and other
documents filed by Arrival with the SEC from time to time. In
addition, forecasts about future costs and other financial metrics
and our expectations as to our ability to execute on our current
business plan in the near term and the longer term are based on a
number of assumptions we make, including the following assumptions
that Arrival’s management believed to be material:
- Operational
assumptions, including, the development and commercialization of
Arrival’s vehicles, the roll out of Arrival’s Microfactory
manufacturing locations, the production capacity of Arrival’s
Microfactories, the selection of Arrival’s products by customers in
the commercial Van and Bus industry, growth in the various markets
Arrival is targeting, average selling prices and resulting sales of
vehicles.
- The mix of products produced and
sold in combination with corresponding costs, including material
and component costs, assembly costs, manufacturing costs, and costs
related to product warranties. Many of these costs are forecasted
to vary significantly as Arrival commences production in its
Microfactories.
- Our ability to raise capital
necessary to execute on our current business plan and production
timeline, including the roll-out of our Microfactories, as well as
to maintain our ongoing operations, continue research, development
and design efforts and improve infrastructure
- Capital
expenditure is based on a number of assumptions regarding the
expenditure required to build Arrival’s Microfactories, including
the cost of initial set up of factory facilities and the cost of
manufacturing and assembly equipment.
In making the foregoing assumptions, Arrival’s
management relied on a number of factors, including: its experience
in the automotive industry, its experience in the period since the
inception of the company and current pricing estimates for
prototype vehicles and vehicle components as well as the projected
costs for first factory locations that are already in development;
its best estimates of the timing for the development and
commercialization of its vehicles and overall vehicle development
process; its best estimates of current and future customers
purchasing Arrival’s vehicles; and third-party forecasts for
industry growth. Forecasts of future financial metrics are
inherently uncertain, and actual results may differ significantly
from forecasts based on our assumptions underlying those forecasts
at this time.
Readers are cautioned not to put undue reliance
on forward-looking statements as they are subject to numerous
uncertainties and factors relating to Arrival’s operations and
business environment, all of which are difficult to predict and
many of which are beyond Arrival’s control. Except as required by
applicable law, Arrival assumes no obligation to and does not
intend to update or revise these forward-looking statements after
the date of this press release, whether as a result of new
information, future events, or otherwise. In light of these risks
and uncertainties, you should keep in mind that any event described
in a forward-looking statement made in this press release or
elsewhere might not occur. Arrival does not give any assurance that
Arrival will achieve its expectations.
Media Contacts For Arrival
Media pr@arrival.com Investors
ir@arrival.com
1Company estimates as of May 2022: Total
includes 10k order and 10k option from UPS. All LOIs and orders are
non-binding and subject to cancellation and/or modification at any
time.
Reconciliation of Net Loss to EBITDA and Adjusted
EBITDA
In thousands of USD |
Q1 2022 |
Q1 2021 |
(Loss) for the period |
(10,380 |
) |
(1,151,049 |
) |
Interest expense/(income), net |
6,553 |
|
(1,547 |
) |
Tax expense/(Income) |
6,081 |
|
(31 |
) |
Depreciation and amortization |
8,890 |
|
5,019 |
|
EBITDA |
11,144 |
|
(1,147,608 |
) |
Impairment losses and write-offs |
3,512 |
|
- |
|
Share option expense |
5,130 |
|
1,438 |
|
Listing expense* |
- |
|
1,188,335 |
|
Change in fair value of warrants** |
(2,368 |
) |
(88,576 |
) |
Reversal of difference between fair value and nominal value of
loans that got repaid*** |
- |
|
(1,732 |
) |
Fair value movement of embedded derivative**** |
(73,200 |
) |
- |
|
Foreign exchange (gain)/loss, net |
(11,143 |
) |
955 |
|
Transaction bonuses***** |
- |
|
16,062 |
|
Adjusted EBITDA |
(66,925 |
) |
(31,126 |
) |
Note: First Quarter Financial information
reflects preliminary analysis of change in functional currency.
Prior year figures include immaterial reclassification
adjustments.*As a result of the conclusion of the merger with CIIG,
Arrival issued shares and warrants to CIIG shareholders, comprised
of the fair value of the Company’s shares that were issued to CIIG
shareholders of $ 1,591.0 million as well as the fair value of the
Company’s warrants of $208.6 million. In exchange, the Company
received the identifiable net assets held by CIIG, which had a fair
value upon closing of $631.1 million. The excess of the fair value
of the equity instruments issued over the fair value of the
identified net assets received, represents a non-cash expense in
accordance with IFRS 2. This one-time expense as a result of the
transaction, in the amount of $1,168.5 million, is recognised as a
share listing expense presented as part of the operating results
within the consolidated statement of profit or loss. Listing
expense also includes $19.8 million of other related transaction
expenses.**Warrants are fair valued as of the balance sheet date.
The change in value is recorded in the consolidated statement of
profit or loss.***Employee loans initially recognised at their fair
value are amortized over the period which they are expected to be
repaid. Employee loans, which get repaid/settled at an earlier date
than what was initially anticipated results in gain in the
consolidated statement of profit or loss.****An embedded derivative
is a component of a hybrid contract that also includes a
non-derivative host. The Company has recognised the embedded
derivative as part of the convertible notes issued in November 2021
which is fair valued as at balance sheet date.*****Following the
successful merger with CIIG certain executive officers of the Group
received a one time bonus. This is included in administrative
expenses in the consolidated statement of profit or loss.
Reconciliation of Net Loss to EBITDA and
Adjusted EBITDA in Euro
In thousands of EUR |
Q1 2022 |
Q1 2021 |
(Loss) for the period |
(9,253 |
) |
(974,296 |
) |
Interest expense/(income), net |
5,841 |
|
(1,293 |
) |
Tax expense/(Income) |
5,421 |
|
(20 |
) |
Depreciation and amortization |
7,924 |
|
4,184 |
|
EBITDA |
9,933 |
|
(971,425 |
) |
Impairment losses and write-offs |
3,131 |
|
- |
|
Share option expense |
4,573 |
|
1,199 |
|
Listing expense |
- |
|
1,005,711 |
|
Change in fair value of warrants |
(2,111 |
) |
(75,535 |
) |
Reversal of difference between fair value and nominal value of
loans that got repaid |
- |
|
(1,454 |
) |
Fair value movement of embedded derivative |
(65,249 |
) |
- |
|
Foreign exchange (gain)/loss, net |
(9,933 |
) |
2,118 |
|
Transaction bonuses |
- |
|
13,392 |
|
Adjusted EBITDA |
(59,656 |
) |
(25,994 |
) |
The above table reflects approximate Euro values
for illustrative purposes. The Q1 2022 USD amounts have been
translated based on the average rate of USD/EUR of 1.1218493 from
January 1, 2022 to March 31, 2022. The Q1 2021 figures are actual
EUR amounts. Prior year figures include immaterial reclassification
adjustments.
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