Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Microvast Holdings Inc (MVST, Financial) posted a record second quarter revenue of $83.7 million, marking a 12% growth year over year.
- The company achieved a gross margin of 32.5%, a significant improvement of 17.2 percentage points year over year.
- EMEA business saw a remarkable 401% growth year over year, contributing significantly to the overall revenue.
- Microvast Holdings Inc (MVST) secured a $40 million order from a Korean e-bus customer, expanding its market reach.
- The company introduced new battery technology, the 565 amp-hour LFP cell, which is expected to qualify for IRA Section 45X, enhancing its economic attractiveness.
Negative Points
- Operating expenses increased significantly to $103.6 million in Q2 2024 from $39 million in Q2 2023, mainly due to impairment losses.
- GAAP net loss widened to $78.4 million in Q2 2024 compared to a net loss of $26.1 million in Q2 2023.
- Adjusted net loss was $64.7 million in Q2 2024, a substantial increase from an adjusted net loss of $8.3 million in Q2 2023.
- The company experienced delays in commercial vehicle customer deliveries, pushing some deliveries into the second half of the year.
- There was a strategic shift towards LFP technology in the US, resulting in the cessation of use of certain buildings and facilities, contributing to the impairment losses.
Q & A Highlights
Q: Can you provide more details on the strategic partnership with Evoy?
A: Yang Wu, CEO: We have entered into a strategic partnership with Evoy, a Norwegian pioneer in electric boat motor systems. This partnership allows us to expand our commercial vehicle footprint into the marine sector, leveraging our battery technology to power electric boats. This is a significant step in diversifying our market presence and tapping into new growth opportunities.
Q: What drove the significant increase in EMEA revenue?
A: Yaser Ali, CFO: The EMEA region saw a 401% year-over-year increase in revenue, primarily driven by strong sales demand for commercial vehicles. OEMs in the region have been rapidly adopting our technologies, contributing to this substantial growth.
Q: Can you explain the factors behind the improved gross margin?
A: Yaser Ali, CFO: Our gross margin improved to 32.5% in Q2 2024 from 15.3% in Q2 2023. This improvement was due to better economies of scale, a more favorable product mix, and lower raw material prices. Adjusted gross margin increased to 34.3%, reflecting these efficiencies.
Q: What led to the significant increase in operating expenses?
A: Yaser Ali, CFO: Operating expenses increased by 166% year-over-year to $103.6 million, mainly due to an impairment loss of $64.9 million related to long-lived assets in the US. This was part of our strategic shift towards LFP technology. Without this impairment, operating expenses would have been $38.7 million.
Q: What is the outlook for Q3 2024?
A: Yang Wu, CEO: For Q3 2024, we expect revenue to be in the range of $85 million to $90 million, up 9% year-over-year at the midpoint. Growth is anticipated from increased deliveries to our APAC and EMEA commercial vehicle customers. We are also targeting a gross margin of 25% and continuing our R&D efforts on new products.
Q: Can you provide more details on the new 565 amp-hour LFP cell?
A: Yang Wu, CEO: The 565 amp-hour LFP cell is our latest product, designed to meet the needs of renewable energy customers. It offers lower cost, enhanced reliability, and a longer lifespan. This product is expected to qualify for IRA Section 45X, making it economically attractive for both Microvast and our customers.
Q: What are the key features of the new LFP-based ME6 energy storage solution?
A: Yang Wu, CEO: The ME6 energy storage solution boasts a 30-year lifespan, high-energy density, and a compact design. It offers six megawatt hours in a 21-foot container, high efficiency, and optimized total cost of ownership. This product is a significant addition to our battery portfolio.
Q: How is Microvast addressing the delays in CV customer deliveries in Europe?
A: Yang Wu, CEO: We experienced some delays in CV customer deliveries in Europe, which have been pushed into the second half of the year. We are working closely with our customers to ensure timely deliveries and are confident that these delays will not significantly impact our overall growth trajectory.
Q: What are the future growth prospects for Microvast in the APAC region?
A: Yang Wu, CEO: In the APAC region, we are focusing on delivering 21 amp-hour cells from our wholesale facility and targeting growth in Southeast Asia. We are also continuing our R&D efforts to develop new products that meet the specific needs of this market.
Q: How is Microvast planning to expand its market presence in the Americas?
A: Yang Wu, CEO: In the Americas, we are exploring new commercial vehicle markets and focusing on providing financing solutions to companies. We are also looking to expand our product offerings and partnerships to drive growth in this region.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
