LiveWire Group, Inc. Reports Second Quarter Financial Results

MILWAUKEE--(BUSINESS WIRE)--LiveWire Group, Inc. (“LiveWire”) (NYSE: LVWR) today reported second quarter results.

“Throughout Q2, we saw high anticipation for Del Mar™, the first bike on the S2 platform, from both riders and our retail partners. With the first bikes rolling off the line in the third quarter, we’re looking forward to getting Del Mar to more and more riders throughout the back half of 2023. During the quarter, we also saw keen interest in the LiveWire brand in the European market in response to our launch events in Berlin, Paris, London and Amsterdam,” said Karim Donnez, CEO, LiveWire.

Second Quarter 2023 Business Highlights

• Continued activities in final supply chain, regulatory and manufacturing for expected start of production of Del Mar in third quarter
• Continued product development efforts on third motorcycle in LiveWire family (second on new S2 platform)
• Activated a network of 35 retail partners in France, the UK, Germany and the Netherlands in support of our hybrid go-to-market model
• LiveWire ONE® became available in the European market in late June, while preparing to ship the Del Mar Launch Edition later this year

LiveWire Group, Inc. – Unit Results

$ in millions, except units	2nd quarter
	2023	2022	Change
LiveWire ONE (units)	33	204	(84%)
Harley-Davidson LiveWire (units)	—	21	(100%)
Electric Motorcycle Shipments (units)	33	225	(85%)

Second Quarter 2023 Results

LiveWire Group, Inc. – Consolidated Results

$ in millions, except units *	2nd quarter
	2023	2022	Change
Consolidated Revenue	$7.0	$12.5	(44%)
Electric Motorcycles	$0.8	$5.1	(85%)
STACYC	$6.3	$7.4	(15%)
Consolidated Operating Income (Loss)	($32.0)	($19.4)	65%
Electric Motorcycles	($31.9)	($20.2)	58%
STACYC	($0.1)	$0.8	(110%)
Net Loss	($40.7)	($19.6)	108%
*Amounts may not add up due to rounding

LiveWire Group, Inc. consolidated net loss was $40.7 million for the second quarter as compared to $19.6 million in the same period prior year driven by the below segment results, planned product development investment, as well as a $11.4 million non-operating mark-to-market expense related to the increase in fair value of the outstanding warrants as of the end of the quarter.

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 second quarter of 2022 were the result of the planned product development investments to advance the electric vehicle systems and activities associated with launch preparation of the Del Mar and the development of LiveWire’s third motorcycle. Increased operating losses also incorporate the added planned costs of standing up a new organization as compared to the same quarter in the prior year.

STACYC

STACYC revenue was down in the second quarter due to our retail partners for electric balance bikes taking a more conservative approach to inventory in response to the macro-economic environment as compared to the second quarter of 2022. STACYC operating loss for the second quarter was $0.1 million versus operating income of $0.8 million a year ago, largely due to gross margin driven by lower volumes.

2023 Financial Outlook

For the full year 2023, the Company is revising its unit sales guidance and now expects:

• Electric Motorcycle unit sales of 600 to 1,000

For the full year 2023, the Company reaffirms its initial guidance and continues to expect:

• LiveWire Group Operating Loss of $115 to $125 million

Liquidity

To support future ongoing operations, the Company has the following available liquidity:

• Cash and cash equivalents as of the end of Q2 2023 of $216 million
• A non-binding $200 million term sheet with majority shareholder

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 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.

 

LiveWire Group, Inc. Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)
	Three months ended						Six months ended
	June 30, 2023			June 26, 2022			June 30, 2023			June 26, 2022
Revenue, net	$	7,026		$	12,506		$	14,788		$	22,907
Costs and expenses:
Cost of goods sold		9,966			12,896			16,464			23,244
Selling, administrative and engineering expense		29,044			18,966			55,215			34,718
Total costs and expenses		39,010			31,862			71,679			57,962
Operating loss		(31,984	)		(19,356	)		(56,891	)		(35,055	)
Other income, net		—			87			—			156
Interest expense related party		—			(198	)		—			(475	)
Interest income (expense)		2,754			(16	)		5,446			(20	)
Change in fair value of warrant liabilities		(11,438	)		—			(10,370	)		—
Loss before income taxes		(40,668	)		(19,483	)		(61,815	)		(35,394	)
Income tax provision		64			95			64			163
Net loss	$	(40,732	)	$	(19,578	)	$	(61,879	)	$	(35,557	)
Net loss per share, basic and diluted	$	(0.20	)	$	(0.12	)	$	(0.31	)	$	(0.22	)
Weighted-average shares, basic and diluted		202,409			161,000			202,407			161,000

 

LiveWire Group, Inc. Consolidated Balance Sheets (In thousands)
	(Unaudited)
	June 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	215,872		$	265,240
Accounts receivable, net		4,677			2,325
Accounts receivable from related party		407			525
Inventories, net		32,174			29,215
Other current assets		2,720			4,625
Total current assets		255,850			301,930
Property, plant and equipment, net		35,678			31,567
Goodwill		8,327			8,327
Lease assets		2,538			3,128
Intangible assets, net		1,578			1,809
Other long-term assets		6,490			5,044
Total assets	$	310,461		$	351,805
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,072		$	7,055
Accounts payable to related party		16,324			5,733
Accrued liabilities		17,047			20,343
Current portion of lease liabilities		1,385			1,312
Total current liabilities		40,828			34,443
Long-term portion of lease liabilities		1,244			1,913
Deferred tax liabilities		78			15
Warrant liabilities		18,757			8,388
Other long-term liabilities		425			246
Total liabilities		61,332			45,005
Shareholders' equity:
Preferred Stock		—			—
Common Stock		20			20
Additional paid-in-capital		333,426			329,218
Accumulated deficit		(84,317	)		(22,438	)
Total shareholders' equity		249,129			306,800
Total liabilities and shareholders' equity	$	310,461		$	351,805

 

LiveWire Group, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)
	Six months ended
	June 30, 2023			June 26, 2022
Cash flows from operating activities:
Net loss	$	(61,879	)	$	(35,557	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		1,372			2,806
Payment of contingent consideration in excess of acquisition date fair value		—			(413	)
Change in fair value of warrant liabilities		10,370			—
Stock compensation expense		4,202			(171	)
Provision for doubtful accounts		55			27
Deferred income taxes		63			82
Inventory write-downs		1,626			597
Cloud computing arrangements development costs		(640	)		(1,158	)
Other, net		(629	)		(511	)
Changes in current assets and liabilities:
Accounts receivable, net		(2,407	)		3,064
Accounts receivable from related party		118			(1,124	)
Inventories		(4,585	)		(11,321	)
Other current assets		1,905			1,892
Accounts payable and accrued liabilities		(1,357	)		4,143
Accounts payable to related party		10,591			—
Net cash used by operating activities		(41,195	)		(37,644	)
Cash flows from investing activities:
Capital expenditures		(8,175	)		(5,722	)
Net cash used by investing activities		(8,175	)		(5,722	)
Cash flows from financing activities:
Proceeds received from exercise of warrants		2			—
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		—			32,497
Net cash provided by financing activities		2			46,063
Net (decrease) increase in cash and cash equivalents	$	(49,368	)	$	2,697
Cash and cash equivalents:
Cash and cash equivalents—beginning of period	$	265,240		$	2,668
Net (decrease) increase in cash and cash equivalents		(49,368	)		2,697
Cash and cash equivalents—end of period	$	215,872		$	5,365