Nikola Corp faces inflationary challenges and supply chain disruptions as the company emerges from a tumultuous past.
The electric truck maker, which went public in June 2020, said Thursday it was working to reduce supply chain disruption as the electric vehicle industry grappled with a widespread supply backlog. Inflation is also one of the company’s bigger challenges, according to Chief Financial Officer Kim Brady, who joined Nikola in late 2017.
Kim Brady, CFO at Nikolai
Photo: Nikola Corp.
Battery cell prices are up about 30% over the past six months, Brady said, adding it’s unclear when prices will normalize and how much of the price increase can be passed on to commercial customers.
“Our customers are more sensitive to price increases,” Brady said. “We’re talking about a price increase of $35,000 to $40,000 due to inflation. It’s not a big change.”
Inflation and supply chain shocks are having other implications for the Phoenix-based startup, which in a week has posted profits that beat expectations, announced a deal to buy a battery technology company, and garnered fresh votes to secure needed shareholder votes. Middle.
Nikola on Thursday reported second-quarter revenue of $18.1 million, compared to analysts’ expectations of $16.5 million, according to Refinitiv data. Nikola reported truck delivery revenue for the first time after the company generated approximately $1.9 million in revenue from mobile loading trailer sales in the first quarter. Net loss for the second quarter increased about 21% to $173 million.
Nikola produced 50 trucks in the second quarter, of which 48 were delivered to dealers before the end of the quarter, at the low end of its guidance of 50 to 60 deliveries.
Rising metal prices in electric vehicle batteries have hit automakers from Tesla Inc. to Ford Motor Co. and General Motors Co., some of which have passed the cost on to customers. But the impact could be more pronounced for Nikola, said Jeffrey Osborne, managing director and senior research analyst at finance firm Cowen Inc.
Subscribe to Newsletter
WSJ | CFO Journal
Morning Ledger provides daily corporate finance news and insights from the team at CFO Journal.
Nikola selling a truck or two to a customer means the company can price aggressively to offset inflation, Osborne said. When customers start buying in bulk, the challenge of raising prices can be greater, he said.
“But at some point I think it’s going to be a bigger hurdle for the company, maybe towards the end of next year when people start buying in bulk,” Osborne said.
Also on Thursday, Nikola announced the locations of three hydrogen fueling stations in California, expected to be completed next year, for upcoming fuel cell-powered trucks.
Earlier this week, the company secured shareholder approval to issue new shares after months of failing to get the support it needed. At the company’s three-postponed annual meeting, shareholders approved the board’s proposal to increase the number of common shares from 200 million to 800 million shares. The company has announced that the robbery has passed to a shareholder.
One of Nikola’s largest sole owners is founder and former CEO Trevor Milton, who left the company in 2020 after short seller Hindenburg Research LLC exaggerated its progress on him and some of Nikola’s key technologies. claims what he denies.
Nikola last year agreed to pay $125 million to resolve Securities and Exchange Commission allegations that they defrauded investors without admitting or denying wrongdoing.
Mr Milton was charged with two counts of securities fraud and one count of wire fraud last year. A fourth fraud allegation was added in June, court filings show. Mr Milton has pleaded not guilty. His lawyers declined to comment. His criminal trial is scheduled to begin on September 12.
Nicola has been overtaken by Mr Milton’s ongoing legal woes and short seller claims, Mr Brady said. Although the company is currently paying for the founder’s legal fees – which totaled $13 million in the second quarter of the year – he is not involved in the deal, Mr. Brady said.
Meanwhile, analysts are focused on supply chain challenges and inflation concerns. Mr Brady said maintaining consistent access to the battery module has been a challenge. The company is moving closer to a steady bid with Monday’s announcement that Nikola would buy battery technology company Romeo Power Inc. in an all-stock deal worth about $144 million, he said.
Nikola is also working to reduce shipping costs. Inbound shipping costs totaled $13.7 million, the company said this week, nearly three-quarters of which came from freight costs, mostly to expedite air freight. Mr Brady said Nikola chose to use air freight, despite the cost, to ensure parts were available when construction preparations began.
Analysts also pay close attention to the company’s capital. Nikola’s cash, cash equivalents and restricted cash decreased to $529 million in the second quarter from approximately $632 million in the year-ago period. Nikola has approximately $312 million in available liquidity from two lines of equity at investment firm Tumim Stone Capital LLC.
Mr Brady said the company burns about $55 million a month but has enough cash to continue operating for at least another year.
“It’s not ideal for any company to be in a cash burn situation every month,” said Michael Schlisky, managing director and senior equity research analyst at investment bank DA Davidson & Co. Above is more than a year’s worth of liquidity, so it looks good. ,
write to jennifer williams-alvarez [email protected] . Feather
Copyright © 2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
source
