Microvast (MVST) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 revenue of $83.7 million, up 12% year-over-year, with EMEA revenue surging 401% to $47 million and gross margin improving to 32.5% from 15.3% in Q2 2023.

• Net loss widened to $78.4 million, primarily due to a $64.9 million impairment loss related to the Tennessee facility and increased operating expenses.

• Order backlog reached $279 million, with over 63% attributable to Europe and the U.S., expected to be fulfilled mainly in 2024 and 2025.

• Company is shifting U.S. strategy to LFP battery production for energy storage, pausing Tennessee plant construction, and consolidating operations in Clarksville.

• Substantial doubt exists about the ability to continue as a going concern due to insufficient liquidity and capital needs.

Financial highlights

• Q2 2024 revenue: $83.7 million, up from $75 million in Q2 2023; gross profit: $27.2 million; gross margin: 32.5%.

• Adjusted gross margin rose to 34.3% from 17.3% year-over-year.

• Operating expenses were $103.6 million, up 166% year-over-year, mainly due to a $64.9 million impairment loss.

• GAAP net loss was $78.4 million; adjusted net loss was $64.7 million.

• Cash, cash equivalents, restricted cash, and short-term investments totaled $104.5 million as of June 30, 2024.

Outlook and guidance

• Q3 2024 revenue expected between $85 million and $90 million, representing 6–12% year-over-year growth.

• EMEA Q3 revenue anticipated to grow over 100% year-over-year, with continued ramp-up of deliveries to European OEMs.

• Maintaining target gross margin of 25% for Q3.

• Focus on operational efficiencies, APAC cell deliveries, R&D for new products, and liquidity enhancement.

• Most of the $279 million backlog expected to be fulfilled within 2024 and 2025.