After the market close on Tuesday, Rivian Automotive, Inc. (NASDAQ: RIVN) reported disappointing fourth quarter 2022 results and, more importantly, underwhelming 2023 vehicle production and cash flow guidance.
The company reported 4Q 2022 adjusted EBITDA and free cash flow of negative US$1.45 billion and negative US$1.74 billion, respectively. Free cash flow is defined as operating cash flow less capital expenditures. For the full year 2022, Rivian reported astounding adjusted EBITDA and free cash flow deficits of US$5.2 billion and US$6.4 billion, respectively.
In January 2023, Rivian announced full-year 2022 vehicle production and delivery volumes of 24,337 and 20,332, respectively. For 2023, Rivian expects the number of units manufactured to approximately double to 50,000, but analysts which cover the electric vehicle maker had projected 2023 production volumes of more than 60,000 vehicles.
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Linked to this manufacturing forecast, Rivian anticipates its 2023 adjusted EBITDA will be around negative US$4.3 billion and that 2023 capital sending will be in the vicinity of US$2.0 billion, implying almost the same level of cash burn in 2023 as 2022 (US$6.3 billion estimated in 2023 versus US$6.4 billion in 2022).
RIVIAN AUTOMOTIVE, INC.
| (in millions of US dollars) | 2023 Guidance | Full-Year 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 |
| Revenue | $1,658 | $663 | $536 | $364 | |
| Operating Income | ($6,856) | ($1,795) | ($1,724) | ($1,708) | |
| Operating Cash Flow | ($5,052) | ($1,446) | ($1,368) | ($1,204) | |
| Adjusted EBITDA | ($4,300) | ($5,217) | ($1,461) | ($1,307) | ($1,305) |
| Capital Expenditures | ($2,000) | ($1,369) | ($294) | ($298) | ($359) |
| Cash – Period End | $11,568 | $11,568 | $13,272 | $14,923 | |
| Debt and Convertible Preferred – Period End | $1,812 | $1,812 | $1,761 | $1,655 | |
| Shares Outstanding (millions) – Period End | 926 | 926 | 921 | 916 | |
| Number of Vehicles Produced | 50,000 | 24,337 | 10,020 | 7,363 | 4,401 |
| Number of Vehicles Delivered | 20,332 | 8,054 | 6,584 | 4,467 |
Rivian’s forecast that its adjusted EBITDA shortfall will come in only modestly lower than the US$5.2 billion recorded in 2022 is troubling, given that unit production is set to double. An offsetting longer term positive is that the company expects its gross profit to turn positive in 2024, although it will still be negative in 2023. Rivian’s gross profit (revenue less cost of sales) was negative US$3.1 billion in 2022.
Rivian still has an impressive balance sheet thanks to the extraordinary success of its November 2021 IPO, but its cash balance and net cash (cash net of debt) eroded to US$11.6 billion and US$9.8 billion, respectively, as of December 31, 2022. A year ago, the comparable figures were US$18.1 billion and US$16.6 billion. With the giant cash burn set to continue in 2023, an equity offering cannot be ruled out sometime this year.
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In its earnings release, Rivian did not disclose the number of refundable reservations it has for its critically acclaimed electric pickup trucks and SUVs. These “soft orders” totaled about 114,000 as of November 7, 2022 and 98,000 on June 30, 2022. Last fall, Rivian said it would discontinue releasing this data.
Separately, on February 28, Rivian announced a recall of 12,700 vehicles, its third such action since November 2021. A potentially faulty sensor in the front passenger seat-belt system is the reason for this recall. The company expects that only a small fraction of those vehicles will require the part to be replaced.
While Rivian is down 80+% from its all-time highs, its valuation remains perplexing. Factoring in its giant cash holdings, the company’s enterprise value is about US$5 billion. That is difficult to square with a projected negative US$4.3 billion adjusted EBITDA in 2023.
Rivian Automotive, Inc. last traded at US$16.92 on the NASDAQ.
Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
