Shares of Rivian Automotive (RIVN -3.51%) gained 5.6% in Tuesday's after-hours trading session, following the premium electric vehicle (EV) maker's release of its first-quarter 2023 results.
The stock's rise is attributable to first-quarter revenue and earnings exceeding Wall Street's estimates, along with management reaffirming its 2023 production guidance of 50,000 vehicles. The latter probably provided the strongest tailwind for the stock because it's critical for early-stage EV companies to quickly ramp up production in order to drive down their fixed cost per vehicle.
As background, Rivian makes two all-electric premium vehicles for consumers: the R1T (pickup truck) and R1S (SUV). It also produces an electric delivery vehicle (EDV) for commercial use. Currently, it only manufactures the latter for Amazon, which owns a sizable stake in Rivian.
Below is an overview of Rivian's first quarter and outlook, centered around eight key metrics.
1. Revenue of $661 million
In Q1, Rivian's revenue was $661 million, which surpassed the Wall Street consensus estimate of $652 million. This result was up 596% from the year-ago period and flat with the prior quarter (Q4 2022). Revenue was primarily generated from vehicles delivered in the quarter.
2. Produced 9,395 vehicles
During the quarter, the company produced 9,395 vehicles, down 6% from the 10,020 units it made in the prior quarter. That fourth-quarter 2022 result, in turn, was up 36% from the number of vehicles the company churned out in the third quarter of last year.
In Q1, Rivian delivered 7,946 vehicles, down 1% from the 8,054 units in the prior quarter.
Investors should not be concerned that Rivian produced and delivered slightly fewer vehicles in the first quarter than in the prior quarter. As to deliveries, they can vary quite a bit quarter to quarter due to logistical factors outside of the company's control.
On the production side, a sequential decline is worrisome unless there is a very good reason for it. Indeed, that was the case here. As planned, Rivian's commercial van production line was down for what the company termed a "significant portion of the quarter." This scheduled shutdown was for the company to incorporate its new in-house Enduro motor and lithium-iron-phosphate (LFP) battery packs into the van production process.
The quarter's production and delivery numbers weren't a surprise, as the company released this data on April 3.
3. Continued rollout of Amazon's 100,000 delivery vans
Rivian continues to fulfill Amazon's initial order of 100,000 custom-designed electric delivery vans. The company doesn't break out its production and delivery numbers by vehicle type, so we don't know how many delivery vans are included in the quarter's production and delivery totals.
4. Operating loss of $1.43 billion
Loss from operations was $1.43 billion, which is 9% narrower than the operating loss in the same period last year.
5. Adjusted net loss of $1.17 billion
Reported net loss was $1.35 billion, or $1.45 per share, an 18% improvement from the year-ago quarter.
Adjusted for one-time items, the net loss was $1.17 billion, or $1.25 per share, a 13% narrowing from the loss of $1.43 per share in the year-ago period. This result handily beat the loss of $1.59 per share that Wall Street had projected.
6. Cash used in operations was $1.52 billion
In Q1, Rivian used $1.52 billion in cash running its operations, compared with using $1.03 billion in cash in the year-ago period. The company attributed this rise to the increase in its raw materials and finished goods inventory associated with its ramp-up in production.
Free cash flow was negative $1.8 billion, compared with negative $1.45 billion in the year-ago period.
7. Had $11.8 billion in cash, cash equivalents, and restricted cash at quarter-end
For an early-stage EV company, Rivian's liquidity position is relatively solid. It ended the quarter with $11.8 billion in cash, cash equivalents, and restricted cash, and $2.72 billion in long-term debt on its balance sheet.
At the company's current cash-burn rate of $1.8 billion per quarter, its cash balance would last about 6.6 quarters, or just over one and a half years.
Moreover, soon after the first quarter ended, the company increased its liquidity position by amending its asset-based revolving credit facility, which doubled its available capacity to $1.5 billion.
8. Reaffirmed annual production guidance of 50,000 vehicles
Rivian reaffirmed its 2023 production forecast of 50,000 total vehicles. It also reaffirmed its outlook for negative $4.3 billion in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and $2 billion in capital expenditures.
In 2022, Rivian produced a total of 24,337 vehicles, so its 2023 production guidance represents an expected 105% annual increase.
A better-than-expected quarter
Most investors were probably mainly focused on 2023 production guidance and, thus, were pleased that the company said that it remains on track to meet its goal of manufacturing 50,000 vehicles this year.
That the first quarter's top and bottom lines beat Wall Street's estimates was an added bonus.
Rivian is one of just a couple of pure-play electric vehicle makers that deserves a spot on the watch lists of investors comfortable with high-risk companies that aren't yet profitable. After a bumpy start, the company has been solidly scaling production since early last year. Its vehicles have garnered many accolades for performance, safety, and aesthetics. Recently, both its R1T and R1S received the highest safety rating from the Insurance Institute for Highway Safety, making them each the sole vehicle in their respective class (electric truck and large SUV) to achieve this rating in 2023.
The key metrics investors should watch each quarter include vehicle production numbers and all data associated with liquidity (such as cash flows and cash on the balance sheet).
