Rivian Automotive, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Unaudited results; filed August 11, 2022. Rivian was transitioning from development and pre-production to commercial production and vehicle sales.
Financial and operating performance
| Metric | Q2 2022 | Six months 2022 | Comparable 2021 |
|---|---|---|---|
| Revenue | $364 million | $459 million | No revenue reported |
| Gross loss | $704 million | $1.206 billion | No revenue or gross loss reported |
| Gross margin | Approximately -193% | Approximately -263% | Not meaningful |
| Operating expenses | $1.004 billion | $2.081 billion | $580 million and $990 million, respectively |
| Net loss | $1.712 billion | $3.305 billion | $580 million and $994 million, respectively |
| Operating cash used | Not separately stated for the quarter | $2.238 billion | $851 million |
| Capital expenditures | Not separately stated for the quarter | $777 million | $871 million |
Q2 deliveries were 4,467 vehicles and production was 4,401. For the first six months, Rivian produced 6,954 vehicles and delivered 5,694. Q2 net loss per share was $1.89; six-month loss per share was $3.66.
At June 30, cash and cash equivalents were $14.923 billion, down from $18.133 billion at December 31, 2021. Including $540 million of restricted cash, cash, cash equivalents and restricted cash totaled $15.463 billion. Rivian reported $503 million available under its asset-based revolving credit facility (ABL), yielding stated total liquidity of approximately $15.4 billion. The filing says existing cash and ABL availability should cover operating expenses, working capital and capital expenditures for at least 12 months.
Total debt principal was $1.25 billion, comprising floating-rate secured notes due 2026; the ABL had no borrowings, with $244 million of letters of credit outstanding. Rivian reported compliance with debt covenants. Inventory was $655 million, compared with $274 million at year-end 2021; the accumulated deficit grew to $9.679 billion.
Changes versus the prior comparable period
- Revenue began to be reported as vehicle deliveries commenced; the prior-year quarter and first half had no revenue. The 2022 results therefore reflect a shift into early commercial production and sales.
- Q2 net loss widened from $580 million to $1.712 billion; six-month net loss rose from $994 million to $3.305 billion. Operating expenses increased, including higher payroll, headcount and stock-based compensation.
- Six-month operating cash use increased to $2.238 billion from $851 million, largely reflecting the scale-up of production and operations and inventory build. Investing cash use was $777 million, versus $871 million in the prior-year period.
- Six-month financing cash provided fell to $56 million from $2.568 billion; the 2021 comparison included preferred-stock proceeds.
Outlook, commentary, risks and unusual items
- Rivian expects continued losses and significant spending as it scales production, expands infrastructure and invests in products, technology, service and charging. Management expects low-volume labor and overhead costs to pressure near-term gross profit, with per-vehicle economics potentially improving as volumes rise. The filing does not provide a clear production or delivery target in the supplied text.
- A $301 million charge for inventory valuation and losses on firm purchase commitments was recorded in cost of revenues. Management said this and other near-term pressures would continue to weigh on results. Supply constraints, semiconductor shortages, inflation, higher materials costs and expedited freight were identified as production and margin risks.
- Amazon’s initial order for 100,000 electric delivery vans is subject to modification and has no minimum purchase requirement; Amazon may choose quantities and delivery timing and may buy vehicles from other manufacturers. Rivian cited dependence on this customer as a material risk.
- Rivian disclosed a voluntary recall of approximately 500 R1T vehicles related to front-passenger-seat occupant classification calibration. It expected no material expense or adverse business effect.
- After quarter-end, the company disclosed a workforce reduction and expected approximately $40 million in restructuring charges in Q3 2022. It also reported cost-reduction efforts. These are forward-looking or subsequent-period items, not Q2 results.
- Disclosure controls were not effective at June 30 because previously reported material weaknesses in segregation-of-duties controls and IT general controls remained unremediated. The company said the deficiencies had not caused a material misstatement of the financial statements.
- Legal matters include consolidated IPO-related securities class actions, shareholder derivative suits, Tesla’s trade-secret litigation, and a challenge related to the planned Georgia manufacturing facility’s tax agreement. Rivian said it intended to defend the claims; outcomes remain uncertain. Recorded liabilities for unsettled legal obligations were $10 million at June 30.
Most important facts for investors to verify
- Whether production and deliveries are scaling fast enough to reduce substantial negative gross margins and cash burn.
- How much of the $301 million inventory and purchase-commitment charge is nonrecurring, and whether further inventory or supplier-related charges arise.
- Cash runway and future funding needs against planned factory, service, charging and technology investments; the company anticipates potential future debt or equity financing.
- Actual Amazon EDV purchases and delivery timing, given the absence of minimum purchase commitments and the customer concentration risk.
- Progress remediating internal-control material weaknesses, and developments in the disclosed litigation and recall.
- The effect of the announced workforce reduction and expected Q3 restructuring charges on costs, execution and production capacity.