What happened
Shares of Tritium DCFC (DCFC), an Australian company that makes charging solutions for electric vehicles (EVs) and charging stations, rallied as high as 47.7% this morning, before settling into a 16.7% gain as of 11:35 a.m. ET.
Tritium issued a press release this morning that contained several positives. These included its preliminary fourth-quarter results, which showed an acceleration in its business momentum, as well as strong backlog and forward guidance for 2023. In addition, Tritium highlighted it had received its largest-ever order from a large and prominent energy company.
So what
This morning, Tritium gave some preliminary numbers for its calendar fourth-quarter and full-year 2022. Full-year revenue will come in between $95 million and $102 million, while total orders received were about double that figure at $195 million. Management also disclosed an existing backlog of $159 million, as well as 2023 full-year guidance for over $200 million in revenue, amounting to more than 100% revenue growth.
In addition to that positive announcement, the company also issued a press release announcing its largest order to date from British oil and gas giant BP.
Richard Bartlett, CEO of BP Pulse, BP's EV charging initiative, said in the release: "As bp's EV charging infrastructure grows worldwide, Tritium is a natural choice for this order. Tritium has a global presence and industry-leading DC fast charging technology -- we're looking forward to putting these chargers to work across three continents."
Although the exact amount wasn't disclosed, the announcement from such a large energy giant with a long history should lend a positive boost of confidence in this beaten-down small-cap company.
Now what
It should be noted that today's gain for Tritium came off of a very low share price. Even after today's move, Tritium's stock is still 83% below its $10 price from the time of its combination with Decarbonization Plus Acquisition Corporation II, a special purpose acquisition company (SPAC), executed at the beginning of 2022.
So while today's announcements are exciting, as are the prospects for the growth in the EV and electrification space, investors should be aware that Tritium is still losing money, and may have to raise more cash at some point to fund continued growth. While this year's revenue growth projections are definitely a positive, Tritium also only projects 10% to 12% gross margin this year. Meanwhile, Tritium's projection for $90 million to $95 million in research and development expenses should put the company's bottom line well in the red in 2023. Tritium also only currently has around $70 million in cash and cash equivalents today.
Therefore, while Tritium had a very positive day today, it remains a speculative play on the growth of EVs, with high risks -- especially if interest rates remain high.
