Livewire group, inc. reports first quarter financial results
Milwaukee--(business wire)--livewire group, inc. (“livewire”) (nyse: lvwr) today reported first quarter results. “livewire continues to invest in advancing our core technologies and expanding our product portfolio. the del mar is rapidly moving towards production with the first deliveries in the u.s. targeted for q3 2023. we’re excited to bring the brand to europe with two outstanding products, first the livewire one® and then the del mar™,” said ryan morrissey, president, livewire. first quarter 2023 business highlights sold 63 livewire one electric motorcycles compared to 72 livewire one electric motorcycles in the prior year. continued development of the del mar platform during the quarter to ready del mar for production ramp-up with first deliveries targeted for q3 2023. on track to expand european distribution with retail partners in 4 priority markets with sales of livewire one expected to begin mid-may followed by del mar introduction. livewire group, inc. – unit results $ in millions, except units 1st quarter 2023 2022 change livewire one (units) 63 72 (13%) harley-davidson livewire (units) -- 25 nm electric motorcycle shipments (units) 63 97 (35%) nm – not meaningful first quarter 2023 results livewire group, inc. – consolidated results $ in millions, except units 1st quarter 2023 2022 change consolidated revenue $7.8 $10.4 (25%) electric motorcycles $1.5 $2.3 (36%) stacyc $6.3 $8.1 (22%) consolidated operating income (loss) ($24.9 ) ($15.7 ) 59% electric motorcycles ($24.8 ) ($16.7 ) 48% stacyc ($0.1 ) $1.0 nm net loss ($21.1 ) ($16.0 ) 32% nm – not meaningful livewire group, inc. is comprised of two business segments: electric motorcycles – a business segment focused on the sale of electric motorcycles and related products stacyc – a business segment focused on the sale of electric balance bikes for kids and related products electric motorcycles livewire one units sold in the first quarter were 63 units, versus 72 units in the prior year, or down 13%. electric motorcycles revenue was down 36% in the first quarter, due to lower unit sales of livewire one units and the inclusion of harley-davidson livewire units in q1 2022 prior to the accounting carve-out. in line with expectations, increased operating losses versus the first quarter of 2022 were the result of the planned increase in product development investments to advance the electric vehicle systems and deliver the del mar. operating losses also incorporate the added planned costs of standing up a new organization, including growing headcount. stacyc stacyc revenue was down 22% in the first quarter, due to our channel partners for electric balance bikes taking a more conservative approach to inventory in response to the macro environment as compared to the first quarter of 2022. stacyc operating loss for the first quarter was negative $0.1 million versus operating income of $1.0 million a year ago, driven by lower volumes. 2023 financial outlook for the full year 2023, the company reaffirms its initial guidance and continues to expect: electric motorcycle unit sales of 750 to 2,000 livewire group operating loss of $115 to $125 million liquidity to support future ongoing operations, the company has the following available liquidity: cash and cash equivalents as of the end of q1 2023 of $236 million a non-binding $200 million term sheet with majority shareholder webcast the public is invited to attend an audio webcast from 8-9 a.m. ct. livewire president, ryan morrissey, will be joining the harley-davidson, inc. audio webcast to discuss our results, developments in the business, and updates to the company’s outlook. the webcast login can be accessed at https://investor.livewire.com/news-events-1/events/default.aspx. the audio replay will be available by approximately 10:00 a.m. ct. about livewire livewire has a dedicated focus on the electric motorcycle sector. livewire’s majority shareholder is harley-davidson, inc. livewire comes from the lineage of harley-davidson and is capitalizing on a decade of its learnings in the ev sector. with a dedicated focus on ev, livewire plans to develop the technology of the future and to invest in the capabilities needed to lead the transformation of motorcycling. www.livewire.com cautionary note regarding forward-looking statements the company intends that certain matters discussed in this press release are “forward-looking statements” intended to qualify for the safe harbor from liability established by the private securities litigation reform act of 1995. all statements other than statements of historical facts contained in this press release, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. these statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will” and “would,” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. the forward-looking statements in this press release are only predictions. we have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. these forward-looking statements speak only as of the date of this press release and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described in prior public filings titled “risk factors.” these forward-looking statements are subject to numerous risks, including, without limitation, the following: our history of losses and expectation to incur significant expenses and continuing losses for the foreseeable future; our limited operating history, the rollout of our business and the timing of expected business milestones, including our ability to develop and manufacture electric vehicles of sufficient quality and appeal to customers on schedule and on a large scale; our financial and business performance, including financial projections and business metrics and any underlying assumptions thereunder; changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; our ability to attract and retain a large number of customers; our future capital requirements and sources and uses of cash; our ability to obtain funding for our operations and manage costs; challenges we face as a pioneer into the highly-competitive and rapidly evolving electric vehicle industry; our operational and financial risks if we fail to effectively and appropriately separate the livewire business from the h-d business; h-d making decisions for its overall benefit that could negatively impact our overall business; our relationship with h-d and its impact on our other business relationships; our ability to leverage contract manufacturers, including h-d and kwang yang motor co., ltd., a taiwanese company (“kymco”), to contract manufacture our electric vehicles; retail partners being unwilling to participate in our go-to-market business model or their inability to establish or maintain relationships with customers for our electric vehicles; potential delays in the design, manufacture, financing, regulatory approval, launch and delivery of our electric vehicles; building out our supply chain, including our dependency on our existing suppliers and our ability to source suppliers, in each case many of which are single-sourced or limited-source suppliers, for our critical components such as batteries and semiconductor chips; our ability to rely on third-party and public charging networks; our ability to attract and retain key personnel; our business, expansion plans and opportunities, including our ability to scale our operations and manage our future growth effectively; the effects on our future business of competition, the pace and depth of electric vehicle adoption generally and our ability to achieve planned competitive advantages with respect to our electric vehicles and products, including with respect to reliability, safety and efficiency; our business and h-d’s business overlapping and being perceived as competitors; our inability to maintain a strong relationship with h-d or to resolve favorably any disputes that may arise between us and h-d; our dependency on h-d for a number of services, including services relating to quality and safety testing. if those service arrangements terminate, it may require significant investment for us to build our own safety and testing facilities, or we may be required to obtain such services from another third-party at increased costs; any decision by us to electrify h-d products, or the products of any other company; our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others; potential harm caused by misappropriation of our data and compromises in cybersecurity; changes in laws, regulatory requirements, governmental incentives and fuel and energy prices; the impact of health epidemics, including the covid-19 pandemic, on our business, the other risks we face and the actions we may take in response thereto; litigation, regulatory proceedings, complaints, product liability claims and/or adverse publicity; and the possibility that we may be adversely affected by other economic, business and/or competitive factors. because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. the events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. moreover, we operate in an evolving environment. some of these risks and uncertainties may in the future be amplified by new risk factors and uncertainties that may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. as a result of these factors, we cannot assure you that the forward-looking statements in this press release will prove to be accurate. except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances, or otherwise. you should read this earnings release completely and with the understanding that our actual future results may be materially different from what we expect. we qualify all of our forward-looking statements by these cautionary statements. livewire group, inc. consolidated statements of operations (in thousands, except per share amounts) (unaudited) three months ended march 31, 2023 march 27, 2022 revenue, net $ 7,762 $ 10,401 costs and expenses: cost of goods sold 6,498 10,348 selling, administrative and engineering expense 26,171 15,752 total costs and expenses 32,669 26,100 operating loss (24,907 ) (15,699 ) other income, net — 69 interest expense related party — (277 ) interest income (expense) 2,692 (4 ) change in fair value of warrant liabilities 1,068 — loss before income taxes (21,147 ) (15,911 ) income tax provision — 68 net loss $ (21,147 ) $ (15,979 ) net loss per share, basic and diluted $ (0.10 ) $ (0.10 ) weighted-average shares, basic and diluted 202,404 161,000 livewire group, inc. consolidated balance sheets (in thousands) (unaudited) march 31, 2023 december 31, 2022 assets current assets: cash and cash equivalents $ 236,042 $ 265,240 accounts receivable, net 930 2,325 accounts receivable from related party 841 525 inventories, net 31,102 29,215 other current assets 3,895 4,625 total current assets 272,810 301,930 property, plant and equipment, net 33,220 31,567 goodwill 8,327 8,327 lease assets 2,878 3,128 intangible assets, net 1,694 1,809 other long-term assets 6,829 5,044 total assets $ 325,758 $ 351,805 liabilities and shareholders’ equity current liabilities: accounts payable $ 4,759 $ 7,055 accounts payable to related party 7,625 5,733 accrued liabilities 15,302 20,343 current portion of lease liabilities 1,392 1,312 total current liabilities 29,078 34,443 long-term portion of lease liabilities 1,580 1,913 deferred tax liabilities 15 15 warrant liabilities 7,320 8,388 other long-term liabilities 288 246 total liabilities 38,281 45,005 shareholders' equity: preferred stock — — common stock 20 20 additional paid-in-capital 331,042 329,218 accumulated deficit (43,585 ) (22,438 ) total shareholders' equity 287,477 306,800 total liabilities and shareholders' equity $ 325,758 $ 351,805 livewire group, inc. consolidated statements of cash flows (in thousands) (unaudited) three months ended march 31, 2023 march 27, 2022 cash flows from operating activities: net loss $ (21,147 ) $ (15,979 ) adjustments to reconcile net loss to net cash used in operating activities depreciation and amortization 667 1,456 change in fair value of warrant liabilities (1,068 ) — stock compensation expense 1,824 (171 ) provision (benefit) for doubtful accounts 39 (1 ) deferred income taxes — (17 ) inventory write-downs 673 299 cloud computing arrangements development costs (967 ) — other, net (779 ) 365 changes in current assets and liabilities: accounts receivable, net 1,356 (1,748 ) accounts receivable from related party (317 ) (286 ) inventories (2,560 ) (1,845 ) other current assets 731 557 accounts payable and accrued liabilities (4,894 ) (1,658 ) accounts payable to related party 1,892 — net cash used by operating activities (24,550 ) (19,028 ) cash flows from investing activities: capital expenditures (4,648 ) (2,492 ) net cash used by investing activities (4,648 ) (2,492 ) cash flows from financing activities: borrowings on notes payable to related party — 12,000 transfers from h-d — 18,723 net cash provided by financing activities — 30,723 net (decrease) increase in cash and cash equivalents $ (29,198 ) $ 9,203 cash and cash equivalents: cash and cash equivalents—beginning of period $ 265,240 $ 2,668 net (decrease) increase in cash and cash equivalents (29,198 ) 9,203 cash and cash equivalents—end of period $ 236,042 $ 11,871
