Microvast (MVST) 8 Aug 24 2024 Q2 Earnings call transcript

Microvast Holdings, a leading technology company specializing in advanced battery solutions for commercial vehicles, recently held its second quarter 2024 earnings call. The call highlighted the company's strong financial performance and strategic partnerships, while acknowledging challenges faced in the European market.

Record Revenue and Expansion in EMEA

Yaser Ali, the Chief Financial Officer, began the call by reporting a record second quarter revenue of $83.7 million, marking a 12% increase from the previous year. This growth was primarily driven by sales increases in the European, Middle Eastern, and African (EMEA) region, with a significant triple-digit percentage growth of 401% for EMEA. This expansion is a testament to Microvast's strategic focus on these markets and its ability to cater to the growing demand for advanced battery solutions in the commercial vehicle sector.

Strategic Partnerships and Market Expansion

Yang Wu, Founder, Chairman, and CEO, outlined several strategic partnerships that have been instrumental in Microvast's growth. One such partnership is with Evoy, a Norwegian pioneer in electric boat motor systems, which signals Microvast's foray into the marine industry. Additionally, a $40 million order from a Korean e-Bus customer underscores the company's entry into the Korean market, further expanding its global footprint.

Operational Efficiencies and Challenges

Despite these successes, Microvast faced challenges in the second quarter, with a delay in customer deliveries and the rollout of light commercial vehicle platforms in the European market. Despite these setbacks, the company continues to strive for operational efficiencies, as evidenced by a significant improvement in adjusted gross margin to 34.3%, a 17 percentage point increase year-over-year.

Outlook for the Third Quarter and Beyond

Looking ahead, Microvast expects revenue to be in the range of $85 million to $90 million for the third quarter, representing a 9% increase from the previous year. This growth is attributed to increased deliveries to APAC and EMEA commercial vehicle customers. The company also announced the launch of its new 565 amp hour LFP cell, which is expected to cater to the needs of renewable energy customers with enhanced reliability and a longer lifespan.

Investor Confidence and Future Prospects

The earnings call provided insight into the investor sentiment towards Microvast Holdings. Key shareholders and investors questioned the company's marketing strategy for its new product and expressed concerns about potential competition. These interactions underscore the market's interest in Microvast's growth prospects and its ability to differentiate itself in the competitive battery solutions market.

In conclusion, Microvast Holdings' second quarter 2024 earnings call highlighted the company's financial strength, strategic partnerships, and operational efficiencies. Despite facing challenges, the company remains optimistic about its future prospects, particularly in the APAC and EMEA regions. As Microvast continues to innovate and expand its battery solutions, it is poised to capitalize on the growing demand for advanced battery technology in the commercial vehicle sector.