Nikola Corp. added $107 million in unrestricted cash to its balance sheet from asset and stock sales in the second quarter. But its year-over-year loss grew as production of hydrogen-powered fuel cell trucks began.
The electric truck and hydrogen distribution startup reported revenue of $15.36 million compared to $18.13 million in the year-ago quarter. The net loss of $217.8 million compared to $173 million a year ago. The per-share loss of 20 cents beat analysts’ estimates by 2 cents. Revenue was $500,000 higher than forecast.
In his last quarterly conference call as CEO, Michael Lohscheller said Nikola has made significant progress toward ramping up fuel cell truck production and in partnerships to develop green hydrogen to fuel the trucks.
Lohscheller is stepping down to attend to a family health matter at home in Europe. He will remain an adviser through September. Chairman Steve Girsky takes over as the company’s third CEO in less than a year. Lohscheller will resign his board seat at the end of August. Board member Steve Shindler will succeed Girsky as board chair.
“Nikola has turned the corner and is well on the way to executing our business plan and achieving profitability,” Lohscheller said in a news release. “We have nearly doubled our unrestricted cash position while also substantially reducing our spending.”
CFO Stasy Pasterick detailed moves that reduced Nikola’s cash burn in the quarter to $148 million from the estimated $150 million.
“We closed down battery production operations of Romeo, reduced head count in Phoenix and Coolidge by more than 20%, completed the sale of European JV to Iveco and went through a company-wide cost rationalization effort to ensure that every dollar spent is in line with the company’s priorities,” she said on the company’s earnings call with analysts.
Nikola brought in:
$96 million from the follow-on stock offering completed in April
$49 million from the sale and leaseback of its 400 acres in Coolidge, Arizona
$58 million from stock sales in an at-the-market program with Citi and a convertible note
$26.5 million net proceeds from divesting its joint venture with Iveco.
“As of the beginning of July, we maintained total access to capital of approximately $743 million and believe we have adequate cash on the balance sheet to sustain us into 2024,” Pasterick said.
Inventory overhang
The Phoenix-based company wholesaled 45 battery-powered Class 8 trucks in the quarter and sold 66 at retail. That brought in gross truck revenue of $14.9 million, which resulted in a net of and net truck revenue of $12 million after $2.9 million of dealer rebates and incentives. Nikola still had an overhang of 139 battery-electric vehicles (BEVs) with 92 unsold trucks at dealers. The average retail price was $324,000, consistent with Q1.
One of those BEVs caught fire in late June and spread to four other trucks, Lohscheller said. The same truck reignited on July 24. Nikola is still trying to determine the cause of the fire after initially suggesting foul play.
“We have two investigations ongoing, one with our technical and safety staff and one being conducted by a third party and we will share more when we know more,” he said.
The assembly line at Nikola’s plant in Coolidge, Arizona, can now build any mix of BEV and fuel cell electric vehicles (FCEVs). It will focus on FCEVs for the rest of the year and resume BEV production on a build-to-order basis in 2024. The first delivery of a series production FCEV is expected by the end of September.
Nikola has 202 FCEV orders from 18 customers. The plant is capable of producing 2,400 trucks a year on three shifts. A fuel cell power module assembly line is expected to be completed in Q4. Until then, fuel cell power modules will be built and shipped to Coolidge by supplier Robert Bosch.
The company expects to deliver 60 to 90 trucks in Q3 for net truck revenue of $18 million to $28 million. Full-year deliveries of 300 to 400 trucks should bring in total revenue of $100 million to $130 million, generating a gross margin of negative 110% to negative 85%.
$600 million in new capital needed
Nikola needs to raise $600 million in capital to reach full production, Pasterick said. At least some of that is likely to come from sales of new shares authorized on Thursday by existing shareholders. As new shares are registered and sold, current shareholders could see the value of their holdings diluted.
Sale of 1,000 trucks could allow Nikola to be neutral on an earnings before interest, taxes, depreciation and amortization basis by 2025. The fuel cell trucks will sell for $400,000, Pasterick said. That would be net of state and federal incentives, which in California could amount to as much as $328,000.
“In 2025, we would need [to sell] somewhere between 1,500 trucks to 2,000 trucks to get to EBITDA positive enough to cover the CapEx [capital expense],” Pasterick said.
Nikola shares (NASDAQ: NKLA) closed Friday at $2.50, down more than 26% and 90 cents below Thursday’s close. The earnings report, concern about dilution from new shares and the executive transition all could have been factors. But shares have been on an upward tear the past two months, rising from a low of 55 cents.
Not all of the money Nikola needs to raise will necessarily be dilutive to current shareholders, Girsky said.
“We have resources. We have shares if we need them [and] we have other resources,” he said on a call with reporters on Friday. “Let’s be honest. This is about selling trucks. Selling the trucks creates validation around the business model and the hydrogen model which would bring in capital on its own. It also helps lower costs.”
However, Nikola on Friday increased the number of shares that CitiGroup Global Markets Inc. can sell in an at-the-market arrangement to raise $600 million from $400 million. Nikola pays CitiGroup 2.5% on the gross value of shares sold. Under the current arrangement, Nikola has collected $241.8 million from the sale of 91.3 million shares. The increased allotment would allow it to pull in an additional $358.2 million.
Editor’s note: Updates with revised at-the-market agreement with CitiGroup.
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