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Canoo Narrows Q2 Loss, Announces New Delivery Vehicle

3 min read

Electric vehicle maker Canoo Inc. of Torrance, California, on Monday announced a $70.9 million net loss, an improvement over the loss it reported in the same quarter last year. The company also announced a new variant of its electric delivery vehicle.

The company reported a $70.9 million net loss, or 14 cents per share, an improvement from the $164.4 million net loss, or 68 cents per share, it reported last year. It also posted quarterly adjusted earnings before interest, taxes, depreciation and amortization of -$62.3 million compared to -$149.8 million in the same quarter last year.

During the quarter, the company cut research and development costs by 66%, to $38.6 million.

The company, which has announced plans to move its headquarters to northwest Arkansas and conduct light manufacturing there, has contracts with Walmart Inc. of Bentonville, NASA and the Department of Defense. But raising the cash to fund the start of its manufacturing operations has been a challenge.

The company said Monday it ended the quarter with cash and cash equivalents of $5 million. It previously warned investors that it might not be able to continue as a going concern, and the Nasdaq has threatened to delist its stock unless it maintains required minimums for trading.

Shares of Canoo (Nasdaq: GOEV) ended the day at 51 cents, down more than 1% from the previous close, but shares rose in after-hours trading, up by more than 2%.

‘Significant Burden’

Executives were upbeat during a conference call, sharing details about two announcements it made earlier on Monday, as well as its Aug. 4 settlement with the U.S. Securities & Exchange Commission over activities by former executives.

Last week, Canoo said it agreed to pay a $1.5 million civil penalty over misleading revenue projections for the past two years. The SEC also temporarily banned former CEO Ulrich Kranz and former CFO Paul Balciunas from holding board positions at publicly traded companies.

Regulators said the company’s revenue projections in 2021 and 2022 were “materially inaccurate,” and that the two executives based those numbers on projects that were no longer active or feasible. Canoo also reported inaccurate executive compensation numbers from September 2020 to April 2021, the SEC said.

During the conference call, CEO Tony Aquila expressed relief that the SEC matter was behind the company, calling it a “significant burden on the company’s time and resources” that also affected shareholder value. Without the specter of an SEC investigation, the company will be able to pursue more deals and non-dilutive capital to fund operations, he said.

Early Monday, the company said it finalized agreements on workforce and economic development incentives from Oklahoma and the Cherokee Nation for the vehicle assembly and battery module plants it is building in Oklahoma City and Pryor.

Canoo put the deals’ combined estimated value at $113 million over 10 years. The agreements require the company to meet employment and capital investment requirements over the next few years.

Canoo has said it will invest more than $320 million in its Oklahoma City assembly facility and Pryor battery module manufacturing plant, creating a combined 1,360 jobs at higher-than-average wages.

Aquila said all manufacturing equipment has arrived at the factories, and that the company has “harmonized” manufacturing capacity with customers orders. He said the company has $500 million in binding contract orders, aiming mostly at commercial fleet needs, and that the company is building only to fill contracted orders. The company aims to be able to produce 20,000 vehicles a year in Oklahoma by the end of 2023.

“We will only build what we have sold,” Aquila said, which sets the company apart from competitors, particularly those focused on the consumer market.

Canoo also announced a new vehicle, the Lifestyle Delivery Vehicle (LDV) 190, which it said expands its lineup into the Class 2 electric cargo van segment. The vehicle, a variant of one of its established vehicle lines, boasts more cargo space, with 95% of the interior usable for cargo, Aquila said.

The company also said it signed an agreement with a Fortune 100 customer’s national fleet. The unnamed company, referred to as an “industrial customer,” is targeting an order of 10,000 units after testing, Aquila said.

In the second half of the year, the company expects adjusted EBITDA of -$120 million to -$140 million and capital expenditures of $70 million to $100 million.

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