Rivian Automotive guides for modest gross profit in Q4

Rivian Automotive (NASDAQ:RIVN) traded lower on Tuesday after reporting Q2 results and updating on its 2024 outlook. Revenue rose in Q2 to $1.16 billion, but gross profit losses increased year-over-year primarily due in part to a reduction in average selling prices, accelerated depreciation, and less efficient absorption of labor, overhead, and depreciation associated with lower volume as a result of direct downtime from the plant retooling upgrade partially. Those factors were offset by increased vehicle deliveries and reductions in materials costs.

The company announced that it produced 9,612 vehicles at its manufacturing facility in Normal, Illinois during Q2 and delivered 13,790 vehicles during the period. The electric vehicle maker noted that production and delivery results during the quarter were in line with the company’s own expectations.

Total operating expenses in the quarter increased to $924 million from $873 million a year ago. Adjusted EBITDA in Q2 was -$860 million vs. -$892 million consensus and -$861 million a year ago. Gross profit per unit delivered improved sequentially to -$32,705. Capital expenditures were $283 million, compared to $255 million a year ago.

On the balance sheet, Rivian Automotive (RIVN) had a cash position of $7.87 billion at the end of the quarter. The cash position includes $1 billion of an unsecured convertible note issued to Volkswagen International America in association with the announcement of the planned joint venture with Volkswagen Group. The remaining $4 billion of potential incremental investment from Volkswagen is subject to the completion of the definitive agreements, the achievement of certain milestones, and the receipt of regulatory approvals. Including the capacity under RIVN’s asset-based revolving-credit facility, the company ended the quarter with $9.18 billion of total liquidity.

“We made significant progress driving greater cost efficiency, enhancing our products, further strengthening our balance sheet, validating the differentiated nature of our technology stack, and establishing new business opportunities. We believe the introduction of the second generation R1 and expected partnership with Volkswagen Group1 will fundamentally improve Rivian’s long-term profit trajectory and growth profile. The technical workstream to prepare the integration of Rivian electrical architecture and software technology stack into Volkswagen Group products is moving along very well.”

Looking ahead, Rivian (RIVN) noted that it took significant steps towards its profitability targets through some of the changes the company made to the R1 platform. Rivian (RIVN) expects to start seeing the impact of those changes in the second half of the year and expects to reach a modest gross profit in Q4 of this year. For the full year 2024, Rivian (RIVN) management reaffirmed guidance for annual production of 57,000 total vehicles. RIVN also anticipates full-year adjusted EBITDA of -$2.7 billion and capital expenditures of $1.2 billion.

Shares of RIVN fell 3.75% in the postmarket session after gaining 1.30% during the regular session. Short interest on RIVN stands at 12.8% of the total float. Rivian Automotive (RIVN) will hold an earnings conference call at 5:00 p.m. Elsewhere in the EV sector, Tesla (TSLA) was up 0.9% on Tuesday, while Lucid Group (LCID) moved 3.0% higher.