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Upgrade to Premium Rivian Q3 earnings preview: Will production issue hit sales and Q4 profit forecast? Pras Subramanian · Senior Reporter Thu, Nov 7, 2024, 12:23 PM 3 min read
In This Article:
RIVN
Rivian (RIVN) will give investors a third quarter update on its financials as the pure-play adventure EV maker attempts to streamline its production and move past a supplier issue that led it to cut its full-year delivery forecast.
For the quarter, Rivian is expected to report revenue of $980.26 billion per Bloomberg consensus, a drop from the $1.34 billion it generated a year ago. The company is expected to report an adjusted loss per share of $1.11, with an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $657.5 million.
Rivian’s Q3 results may be impacted by an issue it's facing at its Normal, Ill., factory.
Last month Rivian said it was “experiencing a production disruption” due to a shortage of a shared component on the R1 and RCV (Rivian commercial van) platforms. The company said the supply shortage impact began in Q3 of this year and has become “more acute in recent weeks and continues.”
• USD (RIVN)
As a result of the supply shortage, Rivian lowered its annual production guidance to between 47,000 and 49,000 vehicles, down from the 57,000 it expected previously.
The company did reaffirm its annual delivery outlook of low-single-digit growth as compared to a year ago, which it expects to be in a range of 50,500 to 52,000 vehicles.
“2024 full year deliveries guidance was reiterated at ~50-52K despite the production shortfall, implying unchanged demand, although we note that the softer deliveries in 3Q do not on the surface appear supply-related,” JPMorgan analyst Ryan Brinkman wrote in a note to investors. “The implied softer demand trend suggests at least some risk to the outlook for full year deliveries, to which we move to 49,000 from 54,000.”
Rivian CEO RJ Scaringe tours the inside of electric automaker Rivian’s manufacturing facility in Normal, Ill., June 21, 2024. (REUTERS/Joel Angel Juarez) · REUTERS / Reuters
Last quarter, Rivian reaffirmed its adjusted EBITDA loss forecast of $2.7 billion for 2024, with capital expenditure outlays hitting $1.2 billion, and said it expects "to reach a modest gross profit" in the fourth quarter of this year. The question is whether the production issue it experienced in Q3 will affect Rivian’s profitability forecast for the coming quarter.
Brinkman doesn’t think so.
“[Softer demand] further lowers our [production] estimates, although the biggest income statement effect is on revenue, given we estimate the company is now likely operating close to contribution margin breakeven (and free cash flow should even benefit, on implied inventory drawdown),” Brinkman wrote.
In terms of its cash cushion, Rivian said it ended the second quarter with $7.867 billion in cash and equivalents.
Workers assemble second-generation R1 vehicles at electric automaker Rivian’s manufacturing facility in Normal, Ill., June 21, 2024. (REUTERS/Joel Angel Juarez/File Photo) · REUTERS / Reuters
A big boost to Rivian’s cash position came in Q2 with a joint venture deal with Volkswagen, which announced plans to work with Rivian to create “next generation software-defined vehicle (SDV) architectures” to be used in both companies’ future EVs.
In exchange, Volkswagen will invest an initial $1 billion in Rivian (which is recognized in the current Q2 cash position) through an unsecured convertible note, with up to $4 billion in additional investment staged through 2026 for a total infusion of $5 billion.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on X and on Instagram.
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