Electric vehicle manufacturer Canoo, while admitting it still has ongoing concerns about its future and whether it will survive and produce cars at its Oklahoma City manufacturing plant, made it official, recently announcing that it is moving its headquarters from Torrance, California to north Texas.
The move comes as Canoo struggles financially and admitted in a recent quarterly filing with the Securities and Exchange Commission “The Company has incurred losses and negative cash flows from operating activities since inception and has a working capital deficit. The Company had negative cash flows from operating activities of $83.4 million for the six months ended June 30, 2024. The Company expects to continue to incur net losses and negative cash flows from operating activities in accordance with its operating plan and expects that expenditures will increase significantly in connection with its ongoing activities. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.”
Further, Canoo’s SEC filing made it clear, “The Company believes substantial doubt exists about the Company’s ability to continue as a going concern for twelve months from the date of issuance of the Company’s Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.”
Word of the move came in Canoo’s second quarter financial report where the firm declared it was “Relocating headquarters from California to Texas and continued migration to our Oklahoma City and Pryor, OK facilities.” The new headquarters will be in Justin, Texas about 40 miles northwest of Dallas. The company’s leadership team has been located there since 2021.
Canoo indicated that in regards to the headquarters move, it will offer relocation to about 137 employees out of the 194 based in California.
Despite the admission that the company leadership has “ongoing” concerns about the firm’s ability to continue, Tony Aquila, Investor, Executive Chairman and CEO said the quarter represented good progress with US and international customers.
“We are focused on left-hand drive and right-hand drive large fleet customers and finalizing their configurations. This demonstrates our platform’s versatility and stability, a result of more than 34,000 recent real world, industrial use customer miles.”
For the second quarter, Canoo reported:
- Quarterly revenue record of $605K
- Quarterly Adjusted EBITDA was $(38.6) million, an improvement of 38% versus Q2 2023, and an improvement of 20% versus Q1 2024
- Adjusted Net Loss Per Share was $(0.61), a 46% improvement from $(1.13) per share in Q1 2024
- 33% or $20.7 million reduction in Operating Expenses versus Q1 2024
- Reduced total quarterly cash outflow by $39 million or 49% in Q2 2024 versus Q2 2023
- Relocating headquarters from California to Texas and continued migration to our Oklahoma City and Pryor, OK facilities
- Successfully concluded Red Sea Global pilot in extreme terrains and climatic conditions
Second Quarter and Recent Business Updates:
- Deliveries to US Postal Service of right-hand drive LDV 190s; on the road delivering mail
- Successful Supplier Engagement Days with approximately half of bill of materials represented in Oklahoma City
- Announced entering of Saudi Arabia market with commercial vehicle sales to Jazeera Paints
- 23% of capital raised in Q2 2024 from non-dilutive sources
- Completed initial milestone of Phase 3 of the contract with Defense Innovation Unit, a division of the U.S. Department of Defense supporting the government’s advanced energy systems research needs
Second Quarter Financial Highlights:
- As of June 30, 2024, we had cash, cash equivalents and restricted cash of $19.1 million. After giving effect to net proceeds from the July 2024 PPA totaling $14.1 million, our cash, cash equivalents and restricted cash balance would have been $33.2 million on June 30, 2024.
- GAAP net loss and comprehensive loss of $(5.0) million and $(115.6) million for the three and six months ended June 30, 2024, compared to a GAAP net loss and comprehensive loss of $(70.9) million and $(161.6) million for the three and six months ended June 30, 2023. The GAAP net loss and comprehensive loss for the three and six months ended June 30, 2024 included a gain of $48.3 million and gain of $38.8 million on the fair value change of the warrant and derivative liability, respectively, a loss on fair value change of convertible debt of $(8.5) million and $(67.1) million, respectively, and a loss on extinguishment of debt of $0.0 million and gain on extinguishment of debt of $24.5 million respectively.
- Adjusted EBITDA of $(38.6) million and $(86.9) million for the three and six months ended June 30, 2024, compared to $(62.3) million and $(129.4) million for the three and six months ended June 30, 2023.
- Adjusted Net Loss of $(42.7) million and $(100.0) million for the three and six months ended June 30, 2024, compared to $(69.1) million and $(141.1) million for the three and six months ended June 30, 2023.
- Adjusted EPS per share of $(0.61) and $(1.66) for the three and six months ended June 30, 2024, compared to $(3.14) and $(7.02) for the three and six months ended June 30, 2023.
- Net cash used in operating activities totaled $83.4 million for the six months ended June 30, 2024, compared to $129.5 million for the six months ended June 30, 2023.
- Net cash used in investing activities was $6.9 million during the six months ended June 30, 2024, compared to $33.9 million during the six months ended June 30, 2023.
- Net cash provided by financing activities was $88.5 million during the six months ended June 30, 2024, compared to $132.2 million during the six months ended June 30, 2023.
2024 Business Outlook
Based on our current projections, Canoo reaffirms its prior cash flow guidance. Additionally, due to the pacing of capital and supply chain harmonization, Canoo expects its Adjusted EBITDA to be between $(120) million to $(140) million for the second half of 2024.
