FOR IMMEDIATE RELEASE
LiveWire Group, Inc. Reports Third Quarter Financial Results
MILWAUKEE, WI (October 26, 2023) – LiveWire Group, Inc. (“LiveWire” or the “Company”) (NYSE: LVWR) today reported third quarter results.
“LiveWire took the next step in its journey in the third quarter of 2023 by delivering on a major milestone. With the shipment of the Del Mar, the first bike on the Company's S2 platform, with its in-house developed battery pack, power electronics, motor, telematics, and associated software, enthusiasts can now join the LiveWire community at a price point nearly 35% below the prior model. The EV systems on the S2 platform demonstrate the Company's commitment to delivering innovative products with the premium feel riders have come to expect from LiveWire. During the fourth quarter the Company will remain focused on the continued delivery of Del Mar and conversion of active reservations in the North American market while launching European reservations,” said Karim Donnez, CEO, LiveWire.
Third Quarter 2023 Business Update:
•Production commenced on Del Mar, the first bike on the Company’s S2 platform
•Continued investment in building retail network infrastructure to support Del Mar and future bikes, ending the quarter with 126 retail partners globally
•Continued product development of new models on the S2 platform
LiveWire Group, Inc. – Unit Results
| $ in millions, except units | 3rd quarter | ||||||||||
| 2023 | 2022 | Change | |||||||||
| Electric Motorcycle (units) | 50 | 206 | (76 | %) | |||||||
Third Quarter 2023 Results
LiveWire Group, Inc. – Consolidated Results
$ in millions, except units * | 3rd quarter | ||||||||||
2023 | 2022 | Change | |||||||||
| Consolidated Revenue | $8.1 | $14.7 | (45 | %) | |||||||
| Electric Motorcycles | $1.3 | $4.9 | (73 | %) | |||||||
| STACYC | $6.8 | $9.8 | (30 | %) | |||||||
| Consolidated Operating Income (Loss) | ($25.3) | ($21.0) | 21 | % | |||||||
| Electric Motorcycles | ($25.7) | ($22.5) | 14 | % | |||||||
| STACYC | $0.4 | $1.5 | (74 | %) | |||||||
| Net Loss | ($14.6) | ($20.9) | (30 | %) | |||||||
*Amounts may not add up due to rounding
LiveWire Group, Inc. consolidated net loss was $14.6 million for the third quarter as compared to $20.9 million in the same period prior year driven by the segment results noted below, an $8.0 million of non-operating mark-to-market income related to the decrease in fair value of the outstanding warrants as of the end of the quarter and $2.7 million in interest income.
LiveWire Group, Inc. is comprised of two business segments:
•Electric Motorcycles – focused on the sale of electric motorcycles and related products
•STACYC – focused on the sale of electric balance bikes for kids and related products
Electric Motorcycles
Electric Motorcycle revenue was down compared to the same quarter in the prior year due to lower unit sales of LiveWire ONE. In line with expectations, increased operating losses versus the third quarter of 2022 were the result of costs related to the electric vehicle systems, activities associated with preparation for delivery of the Del Mar and planned costs of standing up a new organization, compared to the same quarter in the prior year.
STACYC
STACYC revenue was down in the third quarter due to lower sales of electric balance bikes to independent distributors compared to the third quarter of 2022. STACYC operating income for the third quarter decreased from prior year largely due to a reduction in gross margin driven by lower volumes and increased selling, administrative and engineering expense relating to personnel costs, and increased marketing initiatives.
2023 Financial Outlook
For the full year 2023, the Company affirms its guidance as follows:
•Electric Motorcycle unit sales of 600 to 1,000
•LiveWire Group operating loss of $115 to $125 million
Webcast
The public is invited to attend an audio webcast from 8-9 a.m. CT. LiveWire leadership 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
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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.
Media Contact: Jenni Coats (414) 343-7902
Financial Contact: Shawn Collins (414) 343-8002
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LiveWire Group, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, 2023 | September 25, 2022 | September 30, 2023 | September 25, 2022 | ||||||||||||||||||||
| Revenue, net | $ | 8,144 | $ | 14,708 | $ | 22,932 | $ | 37,615 | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of goods sold | 7,052 | 13,743 | 23,516 | 36,987 | |||||||||||||||||||
| Selling, administrative and engineering expense | 26,435 | 21,988 | 81,650 | 56,706 | |||||||||||||||||||
| Total costs and expenses | 33,487 | 35,731 | 105,166 | 93,693 | |||||||||||||||||||
| Operating loss | (25,343) | (21,023) | (82,234) | (56,078) | |||||||||||||||||||
| Other income, net | — | 79 | — | 235 | |||||||||||||||||||
| Interest expense related party | — | — | — | (475) | |||||||||||||||||||
| Interest income (expense) | 2,726 | (3) | 8,172 | (23) | |||||||||||||||||||
| Change in fair value of warrant liabilities | 8,038 | — | (2,332) | — | |||||||||||||||||||
| Loss before income taxes | (14,579) | (20,947) | (76,394) | (56,341) | |||||||||||||||||||
| Income tax (benefit) provision | (1) | (4) | 63 | 159 | |||||||||||||||||||
| Net loss | $ | (14,578) | $ | (20,943) | $ | (76,457) | $ | (56,500) | |||||||||||||||
| Net loss per share, basic and diluted | $ | (0.07) | $ | (0.13) | $ | (0.38) | $ | (0.35) | |||||||||||||||
| Weighted-average shares, basic and diluted | 202,529 | 161,000 | 202,448 | 161,000 | |||||||||||||||||||
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LiveWire Group, Inc.
Consolidated Balance Sheets
(In thousands)
| (Unaudited) | |||||||||||
| September 30, 2023 | December 31, 2022 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 199,948 | $ | 265,240 | |||||||
| Accounts receivable, net | 4,593 | 2,325 | |||||||||
| Accounts receivable from related party | 653 | 525 | |||||||||
| Inventories, net | 32,789 | 29,215 | |||||||||
| Other current assets | 1,946 | 4,625 | |||||||||
| Total current assets | 239,929 | 301,930 | |||||||||
| Property, plant and equipment, net | 37,692 | 31,567 | |||||||||
| Goodwill | 8,327 | 8,327 | |||||||||
| Lease assets | 2,216 | 3,128 | |||||||||
| Intangible assets, net | 1,463 | 1,809 | |||||||||
| Other long-term assets | 6,319 | 5,044 | |||||||||
| Total assets | $ | 295,946 | $ | 351,805 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 4,379 | $ | 7,055 | |||||||
| Accounts payable to related party | 21,127 | 5,733 | |||||||||
| Accrued liabilities | 18,492 | 20,343 | |||||||||
| Current portion of lease liabilities | 1,399 | 1,312 | |||||||||
| Total current liabilities | 45,397 | 34,443 | |||||||||
| Long-term portion of lease liabilities | 905 | 1,913 | |||||||||
| Deferred tax liabilities | 78 | 15 | |||||||||
| Warrant liabilities | 10,631 | 8,388 | |||||||||
| Other long-term liabilities | 397 | 246 | |||||||||
| Total liabilities | 57,408 | 45,005 | |||||||||
| Shareholders' equity: | |||||||||||
| Preferred Stock | — | — | |||||||||
| Common Stock | 20 | 20 | |||||||||
| Additional paid-in-capital | 337,420 | 329,218 | |||||||||
| Accumulated deficit | (98,895) | (22,438) | |||||||||
| Accumulated other comprehensive income | (7) | — | |||||||||
| Total shareholders' equity | 238,538 | 306,800 | |||||||||
| Total liabilities and shareholders' equity | $ | 295,946 | $ | 351,805 | |||||||
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LiveWire Group, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine months ended | |||||||||||
| September 30, 2023 | September 25, 2022 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | (76,457) | $ | (56,500) | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||
| Depreciation and amortization | 2,814 | 3,717 | |||||||||
| Payment of contingent consideration in excess of acquisition date fair value | — | (413) | |||||||||
| Change in fair value of warrant liabilities | 2,332 | — | |||||||||
| Stock compensation expense | 6,566 | (171) | |||||||||
| Provision for doubtful accounts | 45 | 99 | |||||||||
| Deferred income taxes | 63 | 68 | |||||||||
| Inventory write-downs | 1,664 | 702 | |||||||||
| Cloud computing arrangements development costs | (470) | (2,822) | |||||||||
| Other, net | (677) | (209) | |||||||||
| Changes in current assets and liabilities: | |||||||||||
| Accounts receivable, net | (2,313) | 3,465 | |||||||||
| Accounts receivable from related party | (128) | (466) | |||||||||
| Inventories | (5,238) | (17,518) | |||||||||
| Other current assets | 2,679 | 2,615 | |||||||||
| Accounts payable and accrued liabilities | (2,149) | 3,243 | |||||||||
| Accounts payable to related party | 15,393 | — | |||||||||
| Net cash used by operating activities | (55,876) | (64,190) | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (10,970) | (8,927) | |||||||||
| Net cash used by investing activities | (10,970) | (8,927) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Deposit in advance of business combination | 100,000 | ||||||||||
| Proceeds received from exercise of warrants | 1,554 | — | |||||||||
| Borrowings on notes payable to related party | — | 15,333 | |||||||||
| Payment of contingent consideration up to acquisition date fair value | — | (1,767) | |||||||||
| Transfers from H-D | — | 59,051 | |||||||||
| Net cash provided by financing activities | 1,554 | 172,617 | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (65,292) | $ | 99,500 | |||||||
| Cash, cash equivalents and restricted cash: | |||||||||||
| Cash, cash equivalents and restricted cash—beginning of period | $ | 265,240 | $ | 2,668 | |||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (65,292) | 99,500 | |||||||||
| Cash, cash equivalents and restricted cash—end of period | $ | 199,948 | $ | 102,168 | |||||||
| Reconciliation of cash, cash equivalents and restricted cash on the Consolidated balance sheets to the Consolidated statements of cash flows: | |||||||||||
| Cash | $ | 199,948 | $ | 2,168 | |||||||
| Restricted cash | — | 100,000 | |||||||||
| Cash, cash equivalents and restricted cash per the Consolidated statements of cash flows | $ | 199,948 | $ | 102,168 | |||||||
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