Rivian Automotive, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Rivian designs, develops, and manufactures electric vehicles and related products and services for consumer and commercial markets. The quarter marked an early production and sales phase; Rivian produced 2,553 vehicles and delivered 1,227. The comparable 2021 quarter was primarily research, development, and pre-production.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $95 million | $0 |
| Cost of revenue | $597 million | $0 |
| Gross profit (loss) | $(502) million | $0 |
| Research and development | $547 million | $289 million |
| Selling, general, and administrative | $530 million | $121 million |
| Operating loss | $(1.579) billion | $(410) million |
| Net loss | $(1.593) billion | $(414) million |
| Net loss per share, basic and diluted | $(1.77) | $(4.10) |
| Cash used in operating activities | $(1.034) billion | $(362) million |
| Capital expenditures | $418 million | $440 million |
Q1 2022 gross margin was approximately negative 528%, reflecting low production volumes, labor and overhead costs, and a $188 million inventory valuation and firm purchase commitment charge. Cost of revenue also included $80 million of depreciation and amortization and $10 million of stock-based compensation. Stock-based compensation totaled $317 million across the income statement.
At March 31, 2022, cash and cash equivalents were $16.432 billion, versus $18.133 billion at December 31, 2021; restricted cash was an additional $539 million. Reported total liquidity was $16.9 billion, including $533 million of availability under the ABL facility. The company had $1.25 billion principal amount of 2026 senior secured floating-rate notes outstanding, with no ABL borrowings. Total liabilities were $3.037 billion and accumulated deficit was $7.967 billion.
Changes, outlook, and risks
- Revenue began with vehicle deliveries, but losses and operating cash use increased substantially as Rivian moved from pre-production into manufacturing and commercial operations. Operating expenses rose with increased staffing and investment; stock-based compensation was a significant year-over-year factor following the November 2021 IPO.
- Management said low-volume production will continue to pressure gross profit in the near term, while expecting per-vehicle economics to improve as production scales. The filing gives no specific production or financial guidance for the rest of 2022.
- Management expects significant ongoing investment in manufacturing, vehicle and software development, service and charging infrastructure, and expansion. It believes cash and ABL availability are sufficient for operating expenses, working capital, and capital expenditures for at least the next 12 months, but anticipates future losses and says additional debt and/or equity financing may be needed.
- Supply constraints, including semiconductors and other components, higher commodity and logistics costs, inflation, COVID-related disruption, and geopolitical uncertainty could limit production and pressure costs. Rivian said supply factors were expected to constrain the Normal Factory ramp in the near term. It also disclosed dependence on suppliers, many of which are single-source providers.
- After quarter-end, Rivian entered a Georgia economic development agreement: a manufacturing plant with a minimum investment of approximately $5 billion, minimum payments totaling approximately $300 million through 2047, and expected state and local incentives and tax credits of approximately $1.5 billion.
- On May 10, 2022, Rivian voluntarily recalled approximately 500 R1T vehicles over a supplier-related front passenger seat occupant-classification calibration issue. The company planned free seat replacement and did not expect a material expense or adverse business effect.
- Disclosure controls were not effective as of March 31, 2022 because previously identified material weaknesses in segregation of duties and IT general controls remained. Management said remediation was ongoing; it reported that the deficiencies had not caused a material financial statement misstatement.
- Contingencies include Tesla trade-secret litigation, securities class actions and a derivative action. Rivian said it intended to defend the claims and did not expect pending matters to have a material adverse effect, while acknowledging litigation can be costly and divert management attention. It recorded a $20 million estimated liability for unsettled legal obligations.
Important facts for investors to verify
- Whether production and deliveries can scale, and how quickly gross losses per vehicle improve.
- Whether supply availability, commodity prices, and expedited freight costs support the expected production ramp.
- Cash burn, planned capital investment, and the timing and terms of any additional financing.
- Progress on Georgia plant commitments, incentive realization, and the required investment and payments.
- Remediation of internal-control material weaknesses and developments in litigation and the vehicle recall.