Polestar publishes selected results for the third quarter and updates FY 2024 guidance

Polestar today presents selected preliminary unaudited results for the third quarter and first nine months of 2024.

Key financial highlights

(in millions of U.S. dollars)

1. ”Restated” refers to the restated 2023 financial information contained within the Annual Report on Form 20-F, filed with the SEC on August 14, 2024. In connection with the disclosure made below by Polestar that it has identified misstatements in certain 2022 and 2023 balance sheet and cash flow statements that it intends to correct by a subsequent restatement of certain full and half-year financial statements relating to those years, small adjustments to the 2023 income statements are also expected to be made that will affect some of the figures published above in the table. While the adjustments that would impact certain of the figures in above table are not expected to be material, you are hereby advised not to place undue reliance on these figures. As more fully described in the Company’s Current Report on Form 6-K filed with the U.S. Securities and Exchange Commission today, the Company expects to restate and re-issue certain historical financial information including its audited financial statements for full year 2023 and its interim financial information for the six-month period ended June 30, 2023.

For the nine months ended September 30, 2024

• Revenue decreased by USD 389.8 million or 21%, mainly due to lower global vehicle sales of Polestar 2, higher discounts in a competitive market and a delay in sales ramp up of new carlines.
• Gross margin decreased by 3.4 pts to a gross loss of 2.4% with increased discounts for Polestar 2 and negative impact from IP related to the Polestar 2 previously depreciated into Research and Development and now capitalised into inventory and released into cost of sales upon inventory sales.
• Adjusted EBITDA increased by USD 74.5 million or 11% reflecting continuous management actions reducing selling, administrative and general expenses, as well as impact of reclassification of IP depreciation related to Polestar 2 (see above) offset by lower gross margin.
• Cash balance reduced by USD 450 million to USD 501 million, impacted by a negative operating cashflow and cashflow from investing activities.

For the three months ended September 30, 2024

• Revenue decreased by USD 57.9 million or 10% mainly due to lower global vehicle sales of Polestar 2, higher discounts in a competitive market and a delay in sales ramp up of new carlines.
• Gross margin decreased by 0.8 pt to a gross loss of 1.4% with increased discounts for Polestar 2 and IP impact related to the Polestar 2 (see above), slightly offset by the start of new carline sales at the end of the quarter, improving margins.
• Adjusted EBITDA increased by USD 71.8 million reflecting continuous management actions reducing selling, administrative and general expenses in addition to positive margin impact of new car lines sales.

Key Loan facilities / funding highlights

Given market conditions and the Company’s anticipated performance in 2024, the Company, alongside Geely, has engaged in constructive dialogue with its USD 950 million club loan lenders, who remain supportive. The club-loan lenders have agreed to amend the revenue covenant for 2024 to ensure its compliance and have also agreed to waive testing of the year end 2024 and Q1 2025 debt ratio covenant. The Company expects to continue having a constructive dialogue with lenders regarding its future club loan obligations.

In December, the Company secured over USD 800 million in 12-month term facilities, provided by several banks. The Company is working on securing an additional 12-month loan facility of over USD 400 million. This proposed new facility is approved by the lender’s credit committee and is expected to be available to the Company later this month.

Approximately one fourth of proceeds from the new secured facilities are expected to be used to repay other loans, with remaining proceeds being available to support the Company’s working capital needs going forward. The Company is still at a comfortable debt level in relation to its loan covenants.

Non-Reliance on 2022 and 2023 previously issued financial statements

The Company has announced on a Form 6-K filed with the SEC today that it intends to restate its audited financial statements for the years ended 2022 and 2023 as well as its unaudited interim financial results for the six-month periods ended June 30, 2023 and June 30, 2024.

As noted in the Form 6-K filed earlier today, the primary reason for this restatement decision relates to balance sheet errors concerning the Company’s unique tooling, which have resulted in an underreporting of assets and accrued liabilities in matching amounts for the periods referenced above.

The correction of these balance sheet errors will have no impact on previously reported revenue, operating loss, net loss, adjusted EBITDA or net assets, nor do these corrections affect the Company’s underlying business operations, cash position, or liquidity.

A reclassification of cash flows between operating and investing activities and other smaller errors that have been identified will also be corrected as part of this restatement process. Please see the Form 6-K for further details.

Financial guidance

As a result of continued adverse market conditions, Polestar is today updating its guidance for 2024 and the fourth quarter. Prior expectations were for revenue in the year to be similar to that in 2023, and for a positive gross profit margin in the fourth quarter. For full year 2024 the Company now expects a mid-teens percentage decline in revenue and a negative gross margin around the same level as full year 2023, as the fourth quarter product mix was negatively impacted by fewer than expected Polestar 3 and Polestar 4 sales. Other one-time events also contributed to a difficult Q4, including a market value adjustment of inventory as well as continuing market pressure from discounting. A solid order intake for new models in late Q4 signals an encouraging start to 2025.

To better position the Company for future fundraising and lower transaction costs, Polestar is exploring the possibility of conducting a change of the ratio of its American Depositary Shares to its ordinary shares, which is currently 1:1.

Key recent developments

• Michael Lohscheller appointed President and CEO, effective from October 2024
• Jean-François Mady appointed as Chief Financial Officer, effective from October 2024
• Jonas Engström appointed as Chief Operating Officer, effective from December 2024
• Board strengthened through appointment of two new independent directors, Christine Gorjanc (who also serves as chair of the audit committee) and Xiaojie (Laura) Shen, as well as another director, Francesca Gamboni, who also serves as Volvo Cars’ Chief Manufacturing & Supply Chain Officer

Key business and operational highlights

• Polestar 3 long-range single motor starts production in USA, with a certified WLTP range of 706 km
• Polestar drivers in North America now have access to Tesla Superchargers
• Plug and Charge capability announced for Polestar 3
• New retail partners and active selling model implemented across major markets

Preliminary key operational highlights6

The below table summarises key preliminary operational highlights as of and for the nine and three months ended September 30, 2024:

1. Retail Sales figures, which Polestar publishes quarterly from now on, are sales to end customers. Retail Sales include new cars handed over via all sales channels and all sale types, including but not restricted to internal, fleet, retail, rental and leaseholders’ channels across all markets irrespective of their market model and setup and may or may not generate directly revenue for Polestar.
2. Internal sales are units that are intended to be used by Polestar, Polestar Spaces, Polestar Destinations, Polestar Test Drive Centers, for the purpose of demonstration, press cars, company vehicles, courtesy cars, and such like.
3. Represents the markets in which Polestar operates.
4. Represents Polestar Spaces, Polestar Destinations, and Polestar Test Drive Centers.
5. Represents Volvo Cars service centers to provide access to customer service points worldwide in support of Polestar’s international expansion.
6. These are preliminary estimates and are subject to revision as part of the annual audit process

Unaudited Reconciliation of GAAP and Non-GAAP Results

In December 2024, the Company changed the calculation for Adjusted EBITDA. Refer to the Non-GAAP financial measures section of the press release for more details. Adjusted EBITDA for the comparative period is recast for the new calculation and presented alongside the historical calculation for comparability.

Adjusted EBITDA

Adjusted EBITDA (Company’s historical calculation)

SOURCE: Polestar