In his career as a Wall Street analyst, an adviser to the United Auto Workers and a vice chairman of General Motors, Steve Girsky made his bones by unwaveringly telling the unvarnished truth to power.
As the CEO of struggling Nikola Corp., he retains his boldness.
“I think our prospects are great,” Girsky said in a Friday interview with FreightWaves. “I think 2024 is going to be the best year in the history of the company.”
It would not take much to accomplish that. After a litany of setbacks, the company’s cash is still tight. But it is at its highest level in 18 months. Nikola is producing fuel cell trucks at its plant in Coolidge, Arizona, and beginning deliveries to customers.
Nikola is patching together a network of hydrogen fueling stations in California that would allow the trucks it sells there to operate. And it is a leader in generating vouchers worth hundreds of thousands of dollars per zero-emissions electric truck from the California Air Resources Board.
Nikola founder Trevor Milton’s shadow recedes
The shadow of founder Trevor Milton is receding. He was sentenced last week to four years in prison on wire and securities fraud convictions. Nikola wrested $165 million from Milton in arbitration in October. And the company is “pursuing all avenues to recover as much as we can” to cover the tens of millions it paid for Milton’s defense as part of a September 2020 separation, Girsky said.
The challenges remain daunting. Nikola needs to nail down a source — maybe two sources — of batteries to repair 209 battery-powered electric vehicles recalled last August and resume taking orders. It needs certainty that Volvo Group will supply battery packs for the fuel cell trucks after acquiring the battery business of Proterra Inc. out of bankruptcy in November.
“Everything we’ve heard so far says they want to continue to run the business as a stand-alone and scale it,” Girsky said.
Nikola’s stock (NASDAQ: NKLA) languishes around $1 a share — it traded intraday at 87 cents on Tuesday — in part because more than 1 billion of 1.6 billion authorized shares are on the market. Newly activated shares dilute the value of longer-term holders.
Slowing the revolving door of Nikola executives
Then there’s the revolving door of senior executives. Two CEOs, two CFOs, the head of the energy business and others departed in 2023.
“There’s been a lot of turnover. But I think morale at the end of the year is much better than it was when I took over [in August],” Girsky said. “The situation is stabilizing from a personnel perspective. There’s more to come. But I think we’re all starting to row in the same direction.”
Girsky, 61, became Nikola’s fourth CEO in as many years, giving up the role of board chairman to oversee daily operations.
“The board asked, ‘Do you want to do a search?’ I said, ‘No. This company’s had four CEOs in four years. It needs stability.’ I wanted to lead this team.”
CFO search likely to conclude in January
Like most CEOs, Girsky surrounded himself with people he trusts. That started with recruiting Mary Chan, his partner at VectoIQ, as Nikola’s first chief operating officer. He elevated Steve Schindler, VectoIQ’s CFO, from director to chairman to succeed him. All three knew Nikola intimately from taking it public in June 2020 as its special purpose acquisition company sponsor.
“Mary Chan is a very capable, seasoned executive,” Girsky said. “She [spent] 25 years at Lucent. I brought her in to run OnStar [at GM]. She speaks to the engineers in a way that is different from the way I speak to them. Yes, she was part of VectoIQ. I think that helped because she actually knows the company. I went through wars with her.”
The retirement of longtime CFO Kim Brady in April, and his successor, Stasy Pasterick, in November, after only six months in the role, leaves a major function to fill.
“We have candidates that we are chatting with. You’d be surprised at the number of people who are actually interested in this,” Girsky said. “I would expect to get something announced, hopefully, sometime in January.”
Running toward Nikola
The recent addition of turnaround expert Jonathan Pertchik to Nikola’s board demonstrates that, rather than being a pariah, Nikola appeals to exceptional leaders.
“It’s a great example of another very seasoned, very capable executive running towards Nikola. There’s this perception that everybody’s running away from Nikola,” Girsky said.
Pertchik took over as CEO at TravelCenters of America in March 2020, and reorganized the company. BP America acquired TA in February at a premium of 10 times the stock price when Pertchik arrived three years earlier.
The rest of the story
Girsky also said he:
- Expects no additional mass layoffs, following the release of 270 employees in June.
“There may be some adds in some places and subtractions in other places. Energy is a business we’re growing, so there’s going to be resources that are deployed there, especially as we put more dispensing locations out there.”
- Won’t rule out a reverse stock split to raise the price of Nikola shares. A reverse split awards a single share for a multiple of existing shares; Nikola has those because shareholders agreed to double the number of authorized shares to 1.6 billion in August.
“[A reverse split] doesn’t change anything except the share price,” Girsky said. “That doesn’t mean we won’t consider it at some point in the future. I don’t want to close off any options. But when we look at the top five things we’re working on, that’s not one of them.
“The share price will take care of itself. I was an analyst for almost 20 years. Stocks are connected to companies like rubber bands. Sometimes they get ahead, sometimes they get behind. We can only control what we control, which is the performance of the company and satisfying our customer.”
Recalled trucks should begin returning to customer in Q1
- Has little concern about the “notice of going concern” filed as part of the company’s 10-K filing for 2022 in February. A going concern filing says a company may not be in business 12 months from the time it is put into effect.
“We’re not managing to getting rid of a going concern. We’re managing to improve the cash profile of our business, satisfying our customers [and] getting trucks in the field. We’ve taken our burn rate down from where it was in the beginning of last year.”
- Sticks to the projection that customers whose battery-electric trucks were recalled in August will begin getting their trucks back in the first quarter of 2024. He declined to name a battery supplier or suppliers.
“We’ll share the decision at a later date. You should just know we have a plan A and a plan B. The goal is to start to get them back in customer hands in Q1 and then build from there. So, we get the trucks back to customers, we restock the dealers and then we have a handful that we can incrementally sell.”
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