SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 6-K
____________________
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Dated November 8, 2022
Commission File Number: 001-40286
____________________
Arrival
(Exact Name of Registrant as Specified in Its Charter)
____________________
Grand Duchy of Luxembourg
(Jurisdiction of Incorporation or Organization)
60a, rue des Bruyeres, L-1274 Howald,
Grand Duchy of Luxembourg
(Address of Principal Executive Offices)
____________________
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
☐
Note:
Regulation S-T Rule 101(b)(1) only permits the submission in paper
of a Form 6-K if submitted solely to provide an attached annual
report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
☐
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY
REFERENCE IN EACH OF THE REGISTRATION STATEMENT ON FORM F-3 (FILE
NO. 333-254885) AND THE REGISTRATION STATEMENT ON FORM S-8 (FILE
NO. 333-259673) OF ARRIVAL AND TO BE A PART THEREOF FROM THE DATE
ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY
DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
On November 8, 2022, Arrival (the “Company”) issued a press release
announcing its Third Quarter 2022 Business Update. A copy of the
press release is furnished as Exhibit 99.1 to this report on Form
6-K.
Exhibit Index
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Exhibit Number |
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Exhibit
Title |
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99.1 |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
ARRIVAL
By
/s/ Denis Sverdlov
Name: Denis Sverdlov
Title: Chief Executive Officer
Dated: November 8, 2022
Exhibit 99.1
Arrival’s Third Quarter 2022 Business Update
Previously announced restructuring focuses on the US
market
Accomplished Key Milestones, forming foundation for US
launch
Reported $330M cash on hand at the end of Q3
Luxembourg, November 8, 2022
- Arrival (NASDAQ: ARVL),
inventor of a unique new method of design and production of
electric vehicles (EVs) by local Microfactories, today reported
financial results and a business update for the third quarter ended
September 30, 2022.
“2022 has been a challenging year for Arrival as well as the entire
sector but we are agile in responding to these challenges. Our
valuable IP developed through an impressive stack of in-house
technologies gives us a unique advantage in developing electric
vehicles and adapting to new market conditions quickly. We will
continue to build a small number of Vans in Bicester (UK) while
advancing our composite materials, components, vehicle software,
autonomous mobile robotics and Microfactory to bring our products
to the US market, which has become the most attractive opportunity
for Arrival in the mid to long term after the tax credits offered
under the IRA became effective. We will use cash on hand of $330
million and look to secure new funds to achieve our goals in the
US,” said Denis Sverdlov, Arrival founder and CEO.
Recent Business Updates
Given a combination of challenging economic events and US market
opportunities improved by tax credits for commercial electric
vehicles introduced by the Inflation Reduction Act, the Company
will focus on these activities over the next few
quarters:
•Extend
the runway of $330 million cash on hand by restructuring the
business to reduce costs
•Continue
to advance their unique technologies including composites parts,
components and software, autonomous mobile robotics and
Microfactory processes which are common to all vehicles that will
be developed for the US
•Produce
a small number of Vans in Bicester to optimize Microfactory
assembly processes
•Perform
durability testing on their vehicles and continue
trials
•Secure
new funds to bring a family of products to the US
What Has Changed
•The
Company cannot make margin on the current L Van product given the
high cost of parts associated with being on low-volume (or “soft”)
tooling, and lack of funds to finance hard tooling
•Due
to the current market cap and average daily trading volumes, the
$300 million ATM platform established in Q2 has not allowed the
Company to raise the expected capital this year to invest in hard
tooling
•The
US market, with the recent introduction of the Inflation Reduction
Act tax credits offering up to $40,000 for commercial electric
vehicles, the large market size, plus the anticipated higher
margins for commercial vehicles, has now become the most attractive
market for Arrival
•As
a result, the Company announced plans to focus its unique
technologies on a family of products for the US market using cash
on hand while seeking further funding to complete development of US
products and enter production
•Arrival
plans to further right-size the organization including cutting cash
intensive activities primarily related to third-party spend and
costs related to ramping up production of the L Van in Bicester in
order to extend the cash runway. The result of these proposals is
expected to have a sizable impact on their workforce, predominantly
in the UK
Third Quarter 2022 Financial Results
•Loss
for the period of $310.3 million, compared to a loss for the period
of $30.6 million in the third quarter of 2021. This loss in Q3 2022
includes non-cash impairment charges and write-offs of
$232
million
•Adjusted
EBITDA loss for the period of $73.3 million, compared to an
adjusted EBITDA loss of $45.9 million in the third quarter of
2021
•Administrative
expenses of
$79.6
million and non-capitalized R&D expenses of
$27.7
million, compared to administrative expenses of
$52.2 million and non-capitalized R&D expenses of $2.9
million in the third quarter of 2021
•Capital
expenditure for the period, including tangible and intangible
purchases, of $80.4 million, compared to $67.6 million in the third
quarter of 2021
•In
Q3, the cash balance reduced approximately $180M. Primary uses of
cash were related to capitalized R&D and factory spend, salary
expenses, working capital spend, research and consultancy spend,
and other operational expenses
•Cash
and cash equivalents of approximately $330
million
as of September 30, 2022
•Shares
outstanding totaled 638,344,885 and weighted average shares
outstanding in Q3 totaled 634,246,242 as of September 30,
2022
Outlook
•Arrival
expects to end the year with
between $160M and $200M of cash. Expectations for ending cash
includes approximately $35M in Q4 for severance and retention
related costs, and approximately $40M for other restructuring
costs
•The
company expects cash on hand to fund the business into Q3 of
2023
•Limited
resources and the attractive opportunities of the US market makes
developing US products the best use of capital, but this means
revenues and margins will come later; not in 2023
Going Concern
In August, the Company announced plans to use existing cash on hand
of then $513 million plus funds available through a $300 million At
the Market (ATM) Platform to deliver the first vehicles to UK
customers this year, invest in hard tooling and launch the
Charlotte microfactory next year.
Due to the current market cap and average daily trading volumes,
Arrival has opted not to access the ATM to achieve these
targets.
As of September 30, 2022, the Company had existing cash and cash
equivalents of approximately $330 million. This balance is not
sufficient to cover twelve months of operations.
As a result, on October 20th, the Company announced a plan to
restructure its business significantly to extend their cash runway
and to focus resources on a family of products for the US market as
well as its enabling technologies.
Further funding remains required to execute this revised business
plan, which requires lower capital investments and is anticipated
to produce higher margins upon production.
The Board considered that the company does not currently have cash
on hand to fund operations for the coming twelve months and that
material uncertainties about going concern remain after
consideration of these mitigating actions.
The Board further considered that the company is exploring all
funding and strategic opportunities to obtain this necessary
funding.
Therefore, notwithstanding the material uncertainties noted, the
Board determined that the company's unaudited financial information
presented within is appropriately prepared on a going concern basis
and does not currently see any adjustments that would result in the
basis of preparation being inappropriate.
Webcast Information
Arrival will host a Zoom webinar at 8:00 A.M. Eastern Time today,
November 8, 2022, to discuss its third quarter 2022 financial
results and business update. 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, realized and unrealized 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’s mission is to master a radically more efficient New
Method to design, produce, sell and service best-ever electric
vehicles, to support a world where cities are free from fossil fuel
vehicles. Arrival’s in-house technologies enable a unique approach
to producing vehicles using rapidly-scalable, local Microfactories.
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, their 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
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA in USD
(Thousands)
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In thousands of US$
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9 months to September 30
Q3 2022
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9 months to September 30
Q3 2021
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(Loss) for the period
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(410,276)
|
(1,237,862)
|
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Interest expense/(income), net
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15,331
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(4,403)
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Tax expense
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3,831
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8,589
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Depreciation and amortization
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33,443
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16,714
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EBITDA
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(357,671)
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(1,216,962)
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Impairment losses and write-offs(1)
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279,524
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2,444
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Share option expense
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10,225
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3,617
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Listing expense(2)
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-
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1,188,335
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Change in fair value of warrants(3)
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(3,382)
|
(116,607)
|
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Reversal of difference between fair value and nominal value of
loans that got repaid(4)
|
(295)
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-
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Fair value movements on employee loans including changes in
estimates re repayment dates(5)
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5,996
|
6,043
|
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Fair value movement of embedded derivative(6)
|
(113,800)
|
-
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Foreign exchange (gain)/loss, net
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(37,034)
|
(1,110)
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Transactional bonuses (7)
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-
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16,062
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Adjusted EBITDA
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(216,437)
|
(118,178)
|
Note: The above table reflects approximate USD values in thousands,
with prior period numbers being restated to USD
(thousands).
1.Impairment
losses and write-offs include impairment of Arrival Internally
developed intangible assets which were written down to fair market
value in the reporting period, following a decrease in company
market capitalization and related share price decline. Impairments
also include adjustments for lease locations no longer utilized by
the Group.
2.During
the prior period ended September 30, 2021, 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, and in
exchange, the Company received the identifiable net assets held by
CIIG. 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, 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 USD $19.8 million of other related
transaction expenses.
3.Warrants
are fair valued as of the balance sheet date. The change in value
is recorded in the consolidated statement of profit or
loss.
4.Employee
loans initially recognised at their fair value are amortized over
the period which they are expected to be repaid. Employee loans,
which get repaid/settled at an earlier date than what was initially
anticipated results in gain in the consolidated statement of profit
or loss.
5.The
Group has re-financed some loans given to employees in April 2022.
As per IFRS 9 the the difference between the fair value of the new
loans and the carrying amount has been recognised in the
consolidated statement of profit or loss
6.An
embedded derivative is a component of a hybrid contract that also
includes a non-derivative host. The Company has recognised the
embedded derivative as part of the convertible notes issued in
November 2021 which is fair valued as at balance sheet date. There
was no such movement in the prior period of
nine months to September 30,2021.
7.Following
the successful merger with CIIG certain executive officers of the
Group received a one time bonus. This is included in administrative
expenses in the consolidated statement of profit or loss in the
prior period of six months to June 30,2021.
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In thousands of US$
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3 months to September 30
Q3 2022
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3 months to September 30
Q3 2021
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(Loss) for the period
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(310,325)
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(30,605)
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Interest expense/(income), net
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6,723
|
(1,549)
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Tax expense/(Income)
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(321)
|
1,019
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Depreciation and amortization
|
14,961
|
5,717
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EBITDA
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(288,962)
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(25,418)
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Impairment losses and write-offs (1)
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232,334
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39
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Share option expense
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355
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2,054
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Change in fair value of warrants(3)
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(105)
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(19,586)
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Reversal of difference between fair value and nominal value of
loans that got repaid(4)
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-
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1,742
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Fair value movements on employee loans including changes in
estimates re repayment dates(5)
|
2,459
|
6,043
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Fair value movement of embedded derivative(6)
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(8,869)
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-
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Foreign exchange (gain)/loss, net
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(10,543)
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(10,741)
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Adjusted EBITDA
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(73,331)
|
(45,867)
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