Q3 2023 Net Revenue Increased 175% to $5.8
million
Number of Vehicles Sold Increased by 326% to
298 Vehicles
Gross Profit Margin Increased 4,260 bps to
12.4% from a loss of -30.3%
Average Selling Price Increased by 15.7% to
Approximately $19.2 Thousand
Cenntro Electric Group Limited (NASDAQ: CENN) (“Cenntro”, “we”,
“our”, “us”, or the “Company”), a leading electric vehicle
technology company with advanced, market-validated electric
commercial vehicles (“ECVs”), today announced its financial results
for the third quarter ended September 30, 2023.
Third Quarter 2023 Financial and Operating Highlights
- Net revenue of $5.8 million increased 175% year over year;
- Sales volume increased by 326% year over year and 27%
sequentially quarter over quarter to 298 vehicles;
- Average selling price (“ASP”) increased 15.7% year over year to
approximately $19,200; and
- Adjusted EBITDA for the quarter is a loss of $12.1 million
compared to a loss of $12.0 million for Q3 2022.
Peter Z. Wang, Chief Executive Officer explained, “Our sales
momentum in the third quarter continued to ramp up as distribution
expanded from the second quarter of 2023. Consequentially, we have
sold 298 vehicles in Q3 2023 compared to 235 vehicles in Q2 2023
and 70 in Q3 2022. More importantly, to date the demand for some of
our newly launched vehicle models in Europe such as the LS260® has
outpaced our estimates. We have also experienced positive sales
momentum for our iChassis, having sold 103 units in Q3, though
these 103 units are not inclusive of the number of vehicles sold
because iChassis is not considered a complete vehicle. We continue
to build our sales momentum in 2023 from quarter to quarter to
improve the effectiveness of our sales process, including having
streamlined our North American sales team structure during Q3
2023.
“We built on our second quarter results by expanding our vehicle
lineup to include Avantier and Antric, as well as our assembly
capabilities in the United States, benefitting from our
qualification for government incentives in both the United States
and the European Union. Based on these developments, we are
optimistic that our sales growth momentum will continue even amidst
the current uncertain economic and global political
environment.
“Cenntro’s most recent US assembly and manufacturing facility in
Ontario, California is preparing to scale production in Q4 2023.
The facility has the capability to assemble and distribute the
TeeMak, Metro and Logistar series models with a focus on the
Logistar 400® and future models. We believe Ontario will also
support strategic growth and sales on the west coast and the entire
western region of the United States. California remains a strong
market for EV sales and infrastructure development, as such we
believe dealer and distributor partnerships will strengthen sales
and aftermarket support. In addition, from a supply chain
standpoint, we believe California will serve as a very
cost-effective point of entry for our products from China to serve
our customers on the West Coast.
“Cenntro’s LS400 was also approved for the Commercial Clean
Vehicle Credit, allowing purchasers to apply for a Federal Tax
Credit under IRC 45W. Further, in conjunction with the June 2023
California Air Resources Board (“CARB”) certification for the Metro
and LS400, these models have recently been approved for
Zero-Emission Powertrain Certification (“ZEP”), which moves us
forward in the process for Hybrid and Zero-Emission Truck and Bus
Voucher Inventive Program (“HVIP”) approval. The HVIP program
allows end purchasers to apply for the HVIP vouchers offsetting
their purchase price. Under the standard HVIP approval, customers
may qualify for up to $60,000 of the purchase of the LS400. The
final HVIP approval is anticipated in Q4 2023.
“Our footprint in the European market continues to build in
scale with our EVC customer base looking for competitive products
to complete their local commerce needs and allowing them to
participate in Zero Emission initiatives. We have also determined
that providing a compatible charging solution to our customers that
is available for sale along with our product line is vital. We have
begun to develop relationships that will allow us to provide a
charging solution as part of the sales transaction.
“Looking ahead, we continue to position Cenntro to capture
market share with our diverse and innovative lineup of all-electric
vehicles and an expanded geographic footprint for production,
distribution, and service infrastructure. Combined with our hybrid
EV Center and distribution partner sales model, we continue to gain
traction with customers,” concluded Wang.
Edmond Cheng, Chief Financial Officer added, “Sales volume in
the third quarter of 2023 of our electric commercial vehicles
increased 326% year-over-year to 298 from 70 in the same period of
2022. At the same time, we achieved an increase of net revenue of
175% to approximately $5.8 million for the third quarter of 2023
compared to $2.1 million in the same period of 2022. The increase
in net revenue is mainly attributable to an approximately $3.6
million increase in vehicle revenue. More importantly, we continue
to experience quarter-to-quarter revenue growth in 2023 as third
quarter grew 36% from the second quarter of 2023 to $5.8 million
and second quarter 2023 revenue grew 22% from the first quarter of
2023. We are cautiously optimistic that the growth momentum will
continue in the fourth quarter, reflecting our investment in
expanding our product offerings and strengthening our global
distribution capabilities.
“Our average sales price was approximately $19.2 thousand in the
third quarter of 2023, up 15.7% from approximately $16.6 thousand
in the third quarter of 2022. We continue to benefit from the
transition to an in-country direct sales model and our launch of
new models, particularly the LS260 as mentioned by Peter. Also, our
overall vehicles gross margin for the nine months ended September
30, 2023 and 2022 was approximately 16.3% and -3.6%, respectively.
The increase in our overall gross profit was the result of less
impairment of inventory recognized in the nine months ended
September 30, 2023 compared with the same period in 2022.
“As of September 30, 2023, we had approximately $44.6 million in
cash and cash equivalents on our balance sheet. We also had $4.6
million in accounts receivable, $43.1 million in inventory which
consisted of approximately $28.4 million in finished goods
inventory, and approximately $28.6 million in investments in equity
securities as of September 30, 2023,” concluded Cheng.
Third Quarter 2023 Financial Results
Net Revenue
Net revenue was $5.8 million for the three months ended
September 30, 2023, an increase of 175% from $2.1 million in the
same period of 2022. The increase was primarily due to an increase
in vehicle sales, spare parts sales, including 103 units of the
iChassis, and an improvement in the average selling price.
Gross Profit
Gross Profit for the three months ended September 30, 2023 was
approximately $0.7 million, an increase of approximately $1.4
million from approximately $0.6 million of gross loss for the three
months ended September 30, 2022. For the three months ended
September 30, 2023 and 2022, our overall gross margin was
approximately 12.4% and -30.3%, respectively. Our gross margin of
vehicle sales for the three months ended September 30, 2023 and
2022 was 15.8% and -34.8%, respectively. The increase of our
overall gross profit was caused by less impairment of inventory
recognized in the three months ended September 30, 2023 compared
with the same period in 2022.
Operating Expenses
Total operating expenses were approximately $13.3 million in the
third quarter of 2023, compared with $9.6 million in the third
quarter of 2022.
Selling and marketing expenses for the three months ended
September 30, 2023 were approximately $2.6 million, an increase of
approximately $1.0 million or approximately 60.8% from
approximately $1.6 million for the three months ended September 30,
2022. The increase in selling and marketing expenses in 2023 was
primarily attributed to the increase in salary expenses and
marketing related professional fee of approximately $0.2 million
and $0.8 million, respectively.
General and administrative expenses for the three months ended
September 30, 2023 were approximately $9.1 million, an increase of
approximately $2.9 million or approximately 45.8% from
approximately $6.2 million for the three months ended September 30,
2022. The increase in general and administrative expenses in 2023
was primarily attributed to an increase in salary and social
insurance and legal, share-based compensation and ROU amortization
$1.2 million, $0.8 million and $0.7 million, respectively.
Research and development expenses for the three months ended
September 30, 2023 were approximately $1.6 million, a decrease of
approximately $0.2 million or approximately 9.0% from approximately
$1.8 million for the three months ended September 30, 2022. The
decrease in research and development expenses in 2023 was primarily
attributed to the decrease in design and development expenditures
of approximately $0.5 million, offset by the increase in salary
expense of approximately $0.2 million.
Net Loss
Net loss was approximately $16.1 million in the third quarter of
2023, compared with net loss of $15.1 million in the third quarter
of 2022.
Balance Sheet
Cash and cash equivalents were approximately $44.6 million as of
September 30, 2023, compared with $154.0 million as of December 31,
2022.
Adjusted EBITDA
Adjusted EBITDA was approximately $(12.1) million in the third
quarter of 2023, compared with Adjusted EBITDA of $(12.0) million
in the third quarter of 2022.
We define Adjusted EBITDA as net income (or net loss) before net
interest expense, income tax expense, depreciation and amortization
as further adjusted to exclude the impact of stock-based
compensation expense and other non-recurring expenses including
expenses related to TME Acquisition, expenses related to one-off
payment inherited from the original Naked Brand Group, impairment
of goodwill, convertible bond issuance fee, loss on redemption of
convertible promissory notes, loss on exercise of warrants, and
change in fair value of convertible promissory notes and derivative
liability. We present Adjusted EBITDA because we consider it to be
an important supplemental measure of our performance and believe it
is frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in our industry.
Our management believes that investors’ understanding of our
performance is enhanced by including this non-GAAP financial
measure as a reasonable basis for comparing our ongoing results of
operations.
US-GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA
RECONCILIATION
Three Months ended
September 30,
Nine Months ended September
30,
2023
2022
2023
2022
(Expressed in U.S. Dollars)
(Unaudited)
(Unaudited)
Net loss
$
(16,103,199
)
$
(15,088,738
)
$
(41,294,342
)
$
(38,143,026
)
Interest expense, net
84,573
110,659
137,726
(176,214
)
Income tax expense
(384
)
(43,366
)
25,084
(92,228
)
Depreciation and amortization
425,218
431,290
1,213,489
916,227
Share-based compensation expense
2,154,710
1,314,446
4,565,001
2,624,302
Loss on redemption of convertible
promissory notes
(966
)
-
(865
)
-
Loss on exercise of warrants
1,134
-
228,749
Convertible bond issuance fee
-
5,589,336
-
5,589,336
Change in fair value of convertible
promissory notes and derivative liability
(15,143
)
(4,280,538
)
(88,568
)
(4,280,538
)
Loss from acquisition of Antric
1,316,772
-
1,316,772
-
Expenses related to TME Acquisition
-
-
--
348,987
Expenses related to one-off payment
inherited from the original Naked Brand Group
-
-
-
8,299,178
Adjusted EBITDA
$
(12,135,425
)
$
(11,966,911
)
$
(33,896,954
)
$
(24,913,976
)
Represents a non-GAAP financial measure.
About Cenntro Electric Group Ltd.
Cenntro Electric Group Ltd. (or "Cenntro") (NASDAQ: CENN) is a
leading designer and manufacturer of electric commercial vehicles.
Cenntro's purpose-built ECVs are designed to serve a variety of
organizations in support of city services, last-mile delivery, and
other commercial applications. Cenntro plans to lead the
transformation in the automotive industry through scalable,
decentralized production, and smart driving solutions empowered by
the Cenntro iChassis. For more information, please visit Cenntro's
website at: www.cenntroauto.com.
Forward-Looking Statements
This communication contains "forward-looking statements" within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include all statements that are not historical facts.
Such statements may be, but need not be, identified by words such
as "may,'' "believe,'' "anticipate,'' "could,'' "should,''
"intend,'' "plan,'' "will,'' "aim(s),'' "can,'' "would,''
"expect(s),'' "estimate(s),'' "project(s),'' "forecast(s)'',
"positioned,'' "approximately,'' "potential,'' "goal,''
"strategy,'' "outlook'' and similar expressions. Examples of
forward-looking statements include, among other things, statements
regarding assembly and distribution capabilities, decentralized
production, and fully digitalized autonomous driving solutions. All
such forward-looking statements are based on management's current
beliefs, expectations, and assumptions, and are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from the results expressed or implied in this
communication. For additional risks and uncertainties that could
impact Cenntro's forward-looking statements, please see disclosures
contained in Cenntro's public filings with the Securities and
Exchange Commission (the “SEC”), including the "Risk Factors" in
Cenntro's Annual Report on Form 10-K filed with the SEC on June 30,
2023 and which may be viewed at www.sec.gov.
CENNTRO ELECTRIC GROUP
LIMITED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
September 30,
2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
44,645,341
$
153,966,777
Restricted cash
198,041
130,024
Accounts receivable, net
4,645,738
565,398
Inventories
43,081,772
31,843,371
Prepayment and other current assets
17,360,617
16,138,330
Deferred cost -current
14,281
-
Amounts due from a related party
210,335
366,936
Total current assets
110,156,125
203,010,836
Non-current assets:
long-term investment, net
3,557,697
5,325,741
Investment in equity securities
28,593,070
29,759,195
Property, plant and equipment, net
20,132,381
14,962,591
Intangible assets, net
6,384,532
4,563,792
Right-of-use assets
20,679,376
8,187,149
Deferred cost - non-current
206,700
-
Other non-current assets, net
2,152,968
2,039,012
Total non-current assets
81,706,724
64,837,480
Total Assets
$
191,862,849
$
267,848,316
LIABILITIES AND EQUITY
LIABILITIES
Current liabilities:
Accounts payable
$
4,842,645
$
3,383,021
Accrued expenses and other current
liabilities
3,663,756
5,048,641
Contractual liabilities
3,084,737
2,388,480
Operating lease liabilities, current
4,548,226
1,313,334
Convertible promissory notes
9,953,562
57,372,827
Deferred government grant, current
52,721
26,533
Amounts due to related parties
37,951
716,372
Total current liabilities
26,183,598
70,249,208
Non-current liabilities:
Deferred government grant, non-current
948,971
497,484
Derivative liability - investor
warrant
12,191,457
14,334,104
Derivative liability - placement agent
warrant
3,455,328
3,456,404
Operating lease liabilities,
non-current
17,074,145
7,421,582
Total non-current liabilities
33,669,901
25,709,574
Total Liabilities
$
59,853,499
$
95,958,782
Commitments and contingencies
EQUITY
Ordinary shares (No par value; 304,449,091
and 300,841,995 shares issued and outstanding as of September 30,
2023 and December 31, 2022, respectively)
-
-
Additional paid in capital
401,672,121
397,497,817
Accumulated deficit
(260,959,274
)
(219,824,176
)
Accumulated other comprehensive loss
(8,701,442
)
(5,306,972
)
Total equity attributable to
shareholders
132,011,405
172,366,669
Non-controlling interests
(2,055
)
(477,135
)
Total Equity
$
132,009,350
$
171,889,534
Total Liabilities and Equity
$
191,862,849
$
267,848,316
CENNTRO ELECTRIC GROUP
LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2023
2022
2023
2022
Net revenues
$
5,762,831
$
2,096,590
$
13,470,895
$
7,131,912
Cost of goods sold
(5,045,364
)
(2,730,920
)
(11,411,439
)
(7,234,760
)
Gross profit
717,467
(634,330
)
2,059,456
(102,848
)
OPERATING EXPENSES:
Selling and marketing expenses
(2,626,829
)
(1,633,340
)
(7,238,563
)
(4,259,908
)
General and administrative expenses
(9,071,910
)
(6,220,227
)
(25,715,387
)
(26,446,511
)
Research and development expenses
(1,634,796
)
(1,796,268
)
(5,347,785
)
(3,610,780
)
Total operating expenses
(13,333,535
)
(9,649,835
)
(38,301,735
)
(34,317,199
)
Loss from operations
(12,616,068
)
(10,284,165
)
(36,242,279
)
(34,420,047
)
OTHER EXPENSE:
Interest (expense) income, net
(84,573
)
(110,659
)
(137,726
)
176,214
(Loss) Income from long-term
investment
(107,069
)
36,441
(236,672
)
47,319
Loss from acquisition of Antric Gmbh
(1,316,772
)
-
(1,316,772
)
-
Impairment of long-term investment
(2,668
)
-
(1,157,334
)
-
Gain on redemption of convertible
promissory notes
966
-
865
-
Loss on exercise of warrants
(1,134
)
-
(228,749
)
-
Change in fair value of convertible
promissory notes and derivative liability
15,143
4,280,538
88,568
4,280,538
Convertible bond issuance cost
-
(5,589,336
)
-
(5,589,336
)
Change in fair value of equity
securities
(1,879,593
)
19,052
(1,166,125
)
19,052
Other expense, net
(111,815
)
(3,483,975
)
(873,034
)
(2,748,994
)
Loss before income taxes
(16,103,583
)
(15,132,104
)
(41,269,258
)
(38,235,254
)
Income tax benefit (expense)
384
43,366
(25,084
)
92,228
Net loss
(16,103,199
)
(15,088,738
)
(41,294,342
)
(38,143,026
)
Less: net loss attributable to
non-controlling interests
(534
)
(668,512
)
(159,244
)
(1,339,153
)
Net loss attributable to the Company’s
shareholders
$
(16,102,665
)
$
(14,420,226
)
$
(41,135,098
)
$
(36,803,873
)
OTHER COMPREHENSIVE LOSS
Foreign currency translation
adjustment
(931,345
)
(3,686,137
)
(3,419,038
)
(7,511,222
)
Total comprehensive loss
(17,034,544
)
(18,774,875
)
(44,713,380
)
(45,654,248
)
Less: total comprehensive loss
attributable to non-controlling interests
(534
)
(454,156
)
(183,812
)
(994,960
)
Total comprehensive loss to the
Company’s shareholders
$
(17,034,010
)
$
(18,320,719
)
$
(44,529,568
)
$
(44,659,288
)
CENNTRO ELECTRIC GROUP
LIMITED
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended
September 30,
2023
2022
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net cash used in operating
activities
$
(45,588,906
)
$
(47,671,865
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equity investment
(680,932
)
(3,616,188
)
Purchase of equity securities
-
(5,000,000
)
Purchase of plant and equipment
(7,329,509
)
(1,479,712
)
Purchase of land use right and
property
(2,183,430
)
(16,764,322
)
Purchase of other intangible assets
(7,502
)
-
Acquisition of CAE’s equity interests
(1,924,557
)
(3,612,717
)
Cash acquired from acquisition of CAE
-
1,118,700
Acquisition of Antric Gmbh’s equity
interests
(1
)
-
Cash acquired from acquisition of Antric
Gmbh
1,376
-
Payment of expense for Acquisition of
CAE’s equity interests
-
(348,987
)
Proceeds from disposal of property, plant
and equipment
842
314
Loans provided to third parties
(790,000
)
(1,276,617
)
Repayment of loans from related
parties
-
281,436
Net cash used in investing
activities
(12,913,713
)
(30,698,093
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayment of loans to related parties
-
(1,734,016
)
Repayment of loans to third parties
-
(1,128,070
)
Repayment of bank loans
(602,477
)
-
Purchase of CAE’s loan
-
(13,228,101
)
Reduction of capital
-
(13,930,000
)
Proceed from issuance of convertible
promissory notes
-
54,069,000
Redemption of convertible promissory
notes
(47,534,119
)
-
Proceed from exercise of share-based
awards
-
14,386
Payment of expense for the reverse
recapitalization
-
(904,843
)
Net cash (used in) provided by
financing activities
(48,136,596
)
23,158,356
Effect of exchange rate changes on
cash
(2,614,204
)
(5,456,870
)
Net decrease in cash, cash equivalents and
restricted cash
(109,253,419
)
(60,668,472
)
Cash, cash equivalents and restricted cash
at beginning of period
154,096,801
261,664,962
Cash, cash equivalents and restricted cash
at end of period
$
44,843,382
$
200,996,490
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid
$
1,200,673
$
371,999
Income tax paid
$
4,829
$
-
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Convention from debt to equity interest of
HW Electro Co., Ltd.
$
1,000,000
$
-
Cashless exercise of warrants
$
2,168,185
$
-
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114757150/en/
Investor Relations Contact: MZ North America
CENN@mzgroup.us 949-491-8235
Company Contact: PR@cenntroauto.com
IR@cenntroauto.com
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