FREEHOLD, N.J.- Cenntro Inc. (NASDAQ: CENN) ('Cenntro' or 'the Company'), a leading electric vehicle technology company with advanced, market-validated electric commercial vehicles, has reported its financial and operational results for the fourth quarter and full year ended December 31, 2023.
* Q4 2023 Net Revenue Increased 376% to $8.6 million
* Q4 Number of Vehicles Sold Increased by 148% to 1,135 Vehicles
* Q4 Gross Profit Margin Increased 2,500 bps to 2.3% from a loss of -22.7%
Fourth Quarter 2023 Financial and Operating Highlights
Fourth Quarter 2023 Net revenue of $8.6 million increased 376% year over year.
Sales volume increased by 827% year over year and 58.7% sequentially quarter over quarter to 473 vehicles.
Adjusted EBITDA for the quarter is a loss of $13.7 million compared to a loss of $18.3 million for Q4 2022.
Full Year 2023 Net revenue of $22.1 million increased 147% year over year.
Sales volume increased by 148% year over year to 1,135 vehicles.
Adjusted EBITDA for the full year 2023 is a loss of $47.6 million compared to a loss of $43.2 million for 2022.
Delivered more than 250 autonomous delivery vehicles in China to Zelos (Suzhou) Technology Co., Ltd, which sells and operates autonomous driving vehicles for urban delivery throughout various cities in China.
LS400 received approval from the California Air Resources Board ('CARB') to participate in California's Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project ('HVIP') in the state of California, providing a $60,000 point-of-sale voucher for the Company's customers.
Received a Certificate of Compliance for Cybersecurity Management System (UN Regulation number: R155) and a Certificate of Compliance for Software Update Management System (UN Regulation number: R156). Both certifications are required for vehicle sales in the European Union beginning in the second quarter of 2024.
In February 2024, Cenntro redomiciled from Australia to the United States of America to provide more opportunities to pursue future corporate development and strategic growth initiatives.
Peter Z. Wang, Chief Executive Officer explained, 'The fourth quarter of 2023 was highlighted by a continuation of the year's sales momentum and distribution expansion. In the fourth quarter we sold 473 vehicles compared to 298 vehicles in Q3 2023 and 51 in Q4 2022. We experienced positive sales momentum for our iChassis, having sold 199 units in Q4, though these 199 units are not inclusive of the number of vehicles sold because iChassis is not considered a complete vehicle. During the quarter we delivered more than 250 autonomous delivery vehicles in China to Zelos (Suzhou) Technology Co. powered by iChassis and utilizing autonomous driving software developed by Zelos. More importantly, to date the demand for some of our newly launched vehicle models in Europe such as the LS260 continued to outpace our estimates. Sales momentum in 2023 continued to build quarter to quarter with the effectiveness of our sales process.'
'Throughout the quarter we continued to benefit from government incentives in both the United States and the European Union for our vehicles. In California, we received approval to participate in the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project ('HVIP'), providing a $60,000 point-of-sale voucher for our LS400 customers. HVIP approval not only accelerates our commercialization of the LS400, but makes the model more affordable and attractive to our customers by offering point-of-sale vouchers. In the EU, we received a Certificate of Compliance for Cybersecurity Management and a Certificate of Compliance for Software Update Management System. Both certifications are required for vehicle sales in the European Union beginning in the second quarter of 2024, stemming from the growing technological complexity and interconnectedness of today's vehicles.'
'In California, with the LS400's approval now for the HVIP, Commercial Clean Vehicle Credit, California Air Resources Board ('CARB') certification, and Zero-Emission Powertrain Certification ('ZEP'), we remain highly focused on scaling production at our U.S. assembly and manufacturing facility in Ontario, California. The facility has the capability to assemble and distribute the TeeMak, Metro and Logistar series models with a focus on the Logistar 400 and future models. We believe Ontario will also support strategic growth and sales on the west coast and the entire western region of the United States. California remains a strong market for EV sales and infrastructure development, as such we believe Cenntro's dealer and distributor partnerships will strengthen sales and aftermarket support. In addition, from a supply chain standpoint, we believe California will serve as a very cost-effective point of entry for our products from China to serve our customers on the West Coast.'
'Our footprint in the European market continues to build in scale with our EVC customer base looking for competitive products to complete their local commerce needs and allowing them to participate in Zero Emission initiatives. We have also determined that providing a compatible charging solution to our customers that is available for sale along with our product line is vital. We have begun to develop relationships that will allow us to provide a charging solution as part of the sales transaction.'
'Based on these developments, we are optimistic that our sales momentum will continue to build in 2024 and beyond. With our recent re-domicile to the U.S., we are now well positioned to capture market share with our diverse and innovative lineup of all-electric vehicles that are benefiting from a variety of government incentives in the U.S. and Europe. Our focus in 2024 will be on expanding our geographic footprint for production, distribution, and service infrastructure, we believe this will position us to efficiently scale as we enter the next phase of growth and create additional value for our shareholders,' concluded Mr. Wang.
Edward Ye, Acting Chief Financial Officer, added, 'Sales volume in the fourth quarter of 2023 for our electric commercial vehicles increased 827% year-over-year to 473 from 51 in the same period of 2022. At the same time, we achieved an increase of net revenue of 376% to approximately $8.6 million for the fourth quarter of 2023 compared to $1.8 million in the same period of 2022. For the full year 2023, sales volume of commercial vehicles increased 148% year-over-year to 1,135 from 458 in 2022. 2023 revenue increased 147% to $22.1 million from $8.9 million in the prior year. The increase in net revenue is mainly attributable to an approximate $12.1 million increase in vehicle revenue in 2023. More importantly, we continue to experience quarter-to-quarter revenue growth in 2023 as fourth quarter revenue grew 49% from the third quarter of 2023 to $8.6 million and grew 376% from the prior year's quarter. We are cautiously optimistic that the growth momentum will continue in the first quarter of 2024, reflecting our investment in expanding our product offerings and strengthening our global distribution capabilities.'
'We continue to benefit from the transition to an in-country direct sales model and our launch of new models, particularly the LS260 as mentioned by Peter. Also, our overall vehicles gross margin for the year ended December 31, 2023 and 2022 was approximately 11.7% and -0.27%, respectively. The increase in our overall gross profit was the result of (i) the decrease in inventory write-down of approximately $1.5 million; and (ii) the realized gross margin of Logsitar100 and our newly introduced Logsitar260 was approximately 25.4% and 18.8%, respectively, in 2023 compared with 2022.'
'As of December 31, 2023, we had approximately $29.4 million in cash and cash equivalents on our balance sheet. We also had $6.5 million in accounts receivable, $43.9 million in inventory which consisted of approximately $28.4 million in finished goods inventory, and approximately $26.2 million in investments in equity securities as of December 31, 2023,' concluded Mr. Ye.
Fourth Quarter 2023 Financial Results
Net Revenue
Net revenue was $8.6 million for the three months ended December 31, 2023, an increase of 376% from $1.8 million in the same period of 2022. The increase was primarily due to an increase in vehicle sales, spare parts sales, including 199 units of the iChassis.
Gross Profit
Gross Profit for the three months ended December 31, 2023 was approximately $0.2 million, an increase of approximately $0.6 million from approximately $0.4 million of gross loss for the three months ended December 31, 2022. For the three months ended December 31, 2023 and 2022, overall gross margin was approximately 2.3% and -22.7%, respectively. Gross margin of vehicle sales for the three months ended December 31, 2023 and 2022 was 4.2% and 15.1%, respectively. The increase in our overall gross profit was caused by the decrease in inventory write-down of approximately $0.9 million, offset by the decrease in vehicle revenue and other sales of approximately $0.1 million and $0.1 million.
Operating Expenses
Total operating expenses were approximately $14.2 million in the fourth quarter of 2023, compared with $20.4 million in the fourth quarter of 2022.
Selling and marketing expenses for the three months ended December 31, 2023 were approximately $0.6 million, a decrease of approximately $1.6 million or approximately 72% from approximately $2.3 million for the three months ended December 31, 2022. The decrease in selling and marketing expenses in the fourth quarter of 2023 was primarily attributed to (i) the decrease in salary and social insurance of approximately $0.9 million, and (ii) the decrease in marketing expense of approximately $0.6 million.
General and administrative expenses for the three months ended December 31, 2023 were approximately $10.4 million, an increase of approximately $4.0 million or approximately 63% from approximately $6.4 million for the three months ended December 31, 2022. The increase in general and administrative expenses in the fourth quarter 2023 was primarily attributed to the increase in legal and professional fee, salary and social insurance and ROU amortization of approximately $2.2 million, $1.3 million, and $0.7 million, respectively, offset by the decrease in office expenses of approximately $1.0 million.
Research and development expenses for the three months ended December 31, 2023 were approximately $3.1 million, an increase of approximately $0.4 million or approximately 13% from approximately $2.8 million for the three months ended December 31, 2022. The increase in research and development expenses in the fourth quarter of 2023 was primarily attributed to the increase in design and development expenses and salary and social expensed of approximately $0.6 million and $0.4 million, respectively, offset by the decrease in quality improvement measurement of approximately $0.5 million.
Net Loss
Net loss was approximately $13.0 million in the fourth quarter of 2023, compared with net loss of $73.3 million in the fourth quarter of 2022.
Adjusted EBITDA
Adjusted EBITDA was approximately $(13.7) million in the fourth quarter of 2023, compared with Adjusted EBITDA of $(18.3) million in the fourth quarter of 2022.
Full Year 2023 Financial Results
Net Revenue
Net revenue was $22.1 million for the year ended December 31, 2023, an increase of 147% from $8.9 million in 2022. The increase was primarily due to an increase in vehicle sales and spare parts sales.
Gross Profit
Gross profit for the year ended December 31, 2023 was approximately $2.3 million, an increase of approximately $2.8 million from approximately $0.5 million of gross loss for the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, overall gross margin was approximately 10.2% and -5.7%, respectively. Gross margin of vehicle sales for years ended December 31, 2023 and 2022 was 11.7% and -0.27%, respectively. The increase in overall gross profit was caused by the decrease in inventory write-down of approximately $1.5 million and realized gross margin of Logsitar100 and newly introduced Logsitar260 of approximately 25.4% and 18.8%, respectively. Both models began sales in 2023.
Operating Expenses
Total operating expenses were approximately $52.5 million in full year 2023, compared with $54.7 million in 2022.
Selling and marketing expenses for the year ended December 31, 2023, were approximately $7.9 million, an increase of approximately $1.3 million or approximately 20.6% from approximately $6.5 million for the year ended December 31, 2022. The increase in selling and marketing expenses in 2023 was primarily attributed to the increase in service fees related to European market and distribution channel research and salary and social insurance of approximately $1.6 million and $0.7 million, respectively, offset by a decrease in marketing expense of approximately $1.1 million.
General and administrative expenses for the year ended December 31, 2023 were approximately $35.7 million, an increase of approximately $2.8 million or approximately 8.7% from approximately $32.8 million for the year ended December 31, 2022. The increase in general and administrative expenses in 2023 was primarily attributed to an increase in share-based compensation, of approximately $1.4 million, (ii) an increase in ROU amortization of approximately $2.1 million, (iii) an increase in ROU interest expense of approximately $1.0 million, offset by the decrease in salary and social care expense and FOH stripping fee of approximately $2.8 million and $1.8 million, respectively.
Research and development expenses for the year ended December 31, 2023 were approximately $8.5 million, an increase of approximately $2.1 million or approximately 33.1% from approximately $6.4 million for the year ended December 31, 2022. The increase in research and development expenses in 2023 was primarily attributed to the increase in design and development expenditures and salary expense of approximately $1.0 million and $1.4 million, respectively, offset by a decrease in development fee related to enhancing quality of approximately $0.5 million.
Net Loss
Net loss was approximately $54.2 million in the year ended December 31, 2023, compared with net loss of $110.1 million in 2022.
Balance Sheet
Cash and cash equivalents were approximately $29.4 million as of December 31, 2023, compared with $154.0 million as of December 31, 2022.
Adjusted EBITDA
Adjusted EBITDA was approximately $(47.6) million in the year ended December 31, 2023, compared with Adjusted EBITDA of $(43.2) million in the year ended December 31, 2022.
We define Adjusted EBITDA as net income (or net loss) before net interest expense, income tax expense, depreciation and amortization as further adjusted to exclude the impact of stock-based compensation expense and other non-recurring expenses including expenses related to TME Acquisition, expenses related to one-off payment inherited from the original Naked Brand Group, impairment of goodwill, convertible bond issuance fee, loss on redemption of convertible promissory notes, loss on exercise of warrants, and change in fair value of convertible promissory notes and derivative liability. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations.
US-GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA RECONCILIATION
https://ir.cenntroauto.com/news-releases/news-release-details/cenntro-inc-announces-fourth-quarter-and-full-year-2023
Investor Relations Contact:
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949-491-8235
Company Contact:
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Source: Cenntro Inc
CENNTRO INC. 
