Archer Aviation Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This filing reports full-year results; standalone fourth-quarter figures are not clearly provided in the filing text.
Business context
Archer is a pre-revenue aerospace company developing electric vertical takeoff and landing aircraft. Its planned businesses are an urban air mobility ride-share service and aircraft sales to third parties. Its Midnight aircraft is designed for a pilot and four passengers. The company had not received FAA type certification or delivered aircraft to customers by year-end.
Financial results and liquidity
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $276.4 million | $171.5 million |
| General and administrative expense | $168.4 million | $165.1 million |
| Total operating expenses / operating loss | $446.9 million | $347.4 million |
| Net loss | $457.9 million | $317.3 million |
| Net loss per share, basic and diluted | $1.69 | $1.32 |
| Net cash used in operating activities | $271.6 million | $200.4 million |
| Capital expenditures | $44.3 million | $6.9 million |
Margins are not meaningful because Archer had no revenue. Interest income, net, was $16.4 million, up from $2.3 million. Other expense, net, was $26.9 million, compared with $27.8 million of other income in 2022; warrant fair-value changes were a primary driver.
At year-end, cash and cash equivalents were $464.6 million, restricted cash was $6.9 million, and short-term investments were zero (versus $461.8 million in 2022). Total assets were $554.3 million and stockholders’ equity was $367.1 million. Notes payable were $7.5 million gross, or $7.2 million net of issuance costs; the company had drawn $7.5 million of a Synovus facility of up to $65 million. Management said available cash was expected to fund its current operating plan for at least 12 months from issuance of the financial statements, while noting future capital needs may require additional financing.
Material changes and unusual items
- Net loss increased by $140.6 million year over year. R&D expense rose 61%, mainly from higher professional services, tools and materials, and personnel as development activity and workforce expanded.
- Operating cash use increased by $71.2 million. Investing cash flow was positive $420.7 million, primarily from $465.0 million of investment maturities, offset by capital spending; it should not be read as operating cash generation.
- Financing provided $250.1 million, including $145.0 million gross PIPE proceeds, $95.0 million from Stellantis share issuances, and $20.7 million from an at-the-market offering, partly offset by $10.0 million of debt repayment. These equity financings increased dilution.
- A $70.3 million non-cash charge related to the Boeing/Wisk technology and dispute-resolution agreements included a $26.3 million charge for vested warrants and a $44.0 million charge for a contingent, unvested tranche. The Wisk litigation was resolved under the agreements; the second warrant tranche remained subject to conditions and discussions.
- Warrant fair-value changes generated a $32.9 million loss in 2023, versus a gain in 2022. These remeasurements are non-cash and can make reported results volatile.
- Prior-year founder stock-based compensation was partly reversed following forfeiture of unvested awards; total stock-based compensation fell to $45.2 million from $102.8 million.
Outlook, developments and principal risks
- Archer received an FAA Special Airworthiness Certificate for its first Midnight aircraft in August 2023 and began flight testing in October. The filing says the first production aircraft may not be FAA-certified until late 2025 or later; certification timing remains uncertain.
- The company targeted substantial completion of the first phase of its 350,000-square-foot Covington, Georgia facility in 2024. It is designed to support up to 650 aircraft annually, with a possible expansion intended to support longer-term production above 2,000 per year. These are plans, not achieved production levels.
- The United purchase agreement is conditional: orders for up to $1.0 billion of aircraft, plus an option for another $500 million, depend on FAA certification and agreement on material terms. U.S. Air Force contracts are worth up to $142 million and depend on delivery and acceptance of specified milestones.
- Key risks include certification or regulatory delays, continued losses and capital requirements, uncertain demand for a developing market, manufacturing scale-up and supplier dependence, safety and public acceptance, and the possibility that conditional customer agreements are delayed, modified, or canceled. Further equity issuance could dilute shareholders; debt financing could add obligations and restrictive covenants.
- The company reported compliance with Synovus loan covenants at year-end. Management and the auditor concluded internal control over financial reporting was effective as of December 31, 2023; previously disclosed material weaknesses were reported as remediated.
Investor facts to verify
- Progress against FAA certification milestones and the basis for any revised certification timetable.
- Covington construction spending, facility completion, production readiness, and realistic output and cost assumptions.
- Cash burn, remaining liquidity runway, future capital needs, and the amount and terms of any additional financing.
- Conditions, negotiated terms, deliverables, and payment timing under the United and U.S. Air Force agreements.
- Vesting and final valuation of the contingent Wisk warrant tranche, and the effect of warrant remeasurement and potential share issuance on reported results and dilution.