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NIO Inc. Reports Unaudited Second Quarter 2020 Financial Results

August 11, 2020 4:10 AM

Quarterly Total Revenues reached RMB3,718.9 million (US$526.4 million) iQuarterly Deliveries of the ES8 and the ES6 were 10,331 vehiclesQuarterly Vehicle Margin reached 9.7%Quarterly Gross Margin reached 8.4%

SHANGHAI, China, Aug. 11, 2020 (GLOBE NEWSWIRE) -- NIO Inc. (“NIO” or the “Company”) (NYSE: NIO), a pioneer in China’s premium smart electric vehicle market, today announced its unaudited financial results for the second quarter ended June 30, 2020.

Operating Highlights for the Second Quarter of 2020

Key Operating Results

2020 Q22020 Q12019 Q42019 Q3
Deliveries10,3313,8388,2244,799
2019 Q22019 Q12018 Q42018 Q3
Deliveries3,5533,9897,9803,268

Financial Highlights for the Second Quarter of 2020

Key Financial Results (in RMB million, except for per ordinary share data and percentage)
2020 Q22020 Q1 2019 Q2 % Changeiv
QoQ YoY
Vehicle Sales3,486.1 1,255.6 1,414.5 177.6%146.5%
Vehicle Margin9.7%-7.4%-24.1%1,710bp 3,380bp
Total Revenues3,718.9 1,372.0 1,508.6 171.1%146.5%
Gross Profit/(Loss)313.1 (167.5)(504.2)N/A N/A
Gross Margin8.4%-12.2%-33.4%2,060bp 4,180bp
Loss from Operations(1,160.0)(1,570.3)(3,226.1)-26.1%-64.0%
Adjusted Loss from Operations (non-GAAP)(1,114.7)(1,537.9)(3,133.9)-27.5%-64.4%
Net Loss(1,176.7)(1,691.8)(3,285.8)-30.4%-64.2%
Adjusted Net Loss (non-GAAP)(1,131.4)(1,659.4)(3,193.6)-31.8%-64.6%
Net Loss Attributable to Ordinary Shareholders(1,207.8)(1,722.8)(3,313.7)-29.9%-63.6%
Net Loss per Ordinary Share-Basic and Diluted(1.15)(1.66)(3.23)-30.7%-64.4%
Adjusted Net Loss per Ordinary Share-Basic and Diluted (non-GAAP)(1.08)(1.60)(3.11)-32.5%-65.3%

Recent Developments

Deliveries in July 2020

EC6

Substantial Completion of Cash Injections into NIO China

Completion of Offering of American Depositary Shares

CEO and CFO Comments

“We achieved a record-high quarterly deliveries of 10,331 ES8 and ES6 vehicles in total in the second quarter of 2020 and expect to deliver 11,000 to 11,500 vehicles in the third quarter as the momentum continues,” said William Bin Li, founder, chairman and chief executive officer of NIO. “The current constraints on the productions will be lifted in the near future and we are confident that our production capacity can meet the accelerated demand of our models.”

“Beyond the strong order growth, we are proud to reach a milestone quarter with respect to the key financial metrics of the Company, highlighted with the historically high vehicle gross margin of 9.7%, lowest-ever operating losses and more importantly, a positive cash flow from operations for the first time in our history. We will continue to focus on improving operating efficiency across the company. Meanwhile, we stay committed to investing in the technologies and services to provide our users with the best products and experience in the future and to strengthening our leadership in the smart EV sector,” concluded Mr. Li.

“With the strong deliveries in the second quarter 2020, our vehicle margin significantly exceeded our target of over 5%, attributed to the increasing scale, higher average revenue per vehicle, reduced material costs and improved manufacturing efficiency,” added Wei Feng, NIO’s chief financial officer. “Additionally, we have demonstrated our capabilities to generate positive cash flow from operations, through the continuous improvement of our operational efficiency and our significantly optimized cash flow management. We will continue to enhance our efficiencies across the company in the rest of 2020 and beyond.”

Financial Results for the Second Quarter of 2020

Revenues

Cost of Sales and Gross Margin

Operating Expenses

Loss from Operations

Share-based Compensation Expenses

Net Loss and Earnings Per Share

Balance Sheets

Business Outlook

For the third quarter of 2020, the Company expects:

This business outlook reflects the Company’s current and preliminary view on the business situation and market condition, which is subject to change.

Conference Call

The Company’s management will host an earnings conference call at 8:00 AM U.S. Eastern Time on August 11, 2020 (8:00 PM Beijing/Hong Kong Time on August 11, 2020) to discuss financial results and answer questions from investors and analysts. Listeners may register in advance of the conference using the link provided below and dial in 10 minutes prior to the call, using participant dial-in numbers, Direct Event passcode and unique registrant ID which would be provided upon registering.

http://apac.directeventreg.com/registration/event/8596325

Additionally, a live and archived webcast of the conference call will be available on the Company’s investor relations website at http://ir.nio.com.

A replay of the conference call will be accessible by phone approximately two hours after the conclusion of the live call at the following numbers, until August 19, 2020 09:59 AM ET:

United States:+1-646-254-3697
International:+61-2-8199-0299
Hong Kong:+852-3051-2780
Conference ID:8596325

About NIO Inc.

NIO Inc. is a pioneer in China’s premium smart electric vehicle market. Founded in November 2014, NIO’s mission is to shape a joyful lifestyle by offering premium smart electric vehicles and being the best user enterprise. NIO designs, jointly manufactures, and sells smart and connected premium electric vehicles, driving innovations in next generation technologies in connectivity, autonomous driving and artificial intelligence. Redefining the user experience, NIO provides users with comprehensive, convenient and innovative charging solutions and other user-centric services. NIO began deliveries of the ES8, a 7-seater flagship premium electric SUV in China in June 2018, and its variant, the 6-seater ES8, in March 2019. NIO officially launched the ES6, a 5-seater high-performance premium electric SUV, in December 2018 and began the first deliveries of the ES6 in June 2019. NIO officially launched the EC6, a 5-seater premium smart electric coupe SUV, in December 2019 and plans to commence deliveries in 2020.

Safe Harbor Statement

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to” and similar statements. Among other things, quotations from management in this announcement, as well as NIO’s strategic and operational plans, contain forward-looking statements. NIO may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about NIO’s beliefs, plans and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: NIO’s strategies; NIO’s future business development, financial condition and results of operations; NIO’s ability to develop and manufacture a car of sufficient quality and appeal to customers on schedule and on a large scale; its ability to grow manufacturing in collaboration with partners; its ability to provide convenient charging solutions to its customers; its ability to satisfy the mandated safety standards relating to motor vehicles; its ability to secure supply of raw materials or other components used in its vehicles; its ability to secure sufficient reservations and sales of the ES8 and ES6; its ability to control costs associated with its operations; its ability to build the NIO brand; general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in NIO’s filings with the SEC. All information provided in this press release is as of the date of this press release, and NIO does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Non-GAAP Disclosure

The Company uses non-GAAP measures, such as adjusted cost of sales (non-GAAP), adjusted research and development expenses (non-GAAP), adjusted selling, general and administrative expenses (non-GAAP), adjusted loss from operations (non-GAAP), adjusted net loss (non-GAAP), adjusted net loss attributable to ordinary shareholders (non-GAAP), adjusted basic and diluted net loss per share (non-GAAP) and adjusted basic and diluted net loss per ADS (non-GAAP), in evaluating its operating results and for financial and operational decision-making purposes. By excluding the impact of share-based compensation expenses and accretion on redeemable non-controlling interests to redemption value, the Company believes that the non-GAAP financial measures help identify underlying trends in its business and enhance the overall understanding of the Company’s past performance and future prospects. The Company also believes that the non-GAAP financial measures allow for greater visibility with respect to key metrics used by the Company’s management in its financial and operational decision-making.

The non-GAAP financial measures are not presented in accordance with U.S. GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The non-GAAP financial measures have limitations as analytical tools and when assessing the Company’s operating performance, investors should not consider them in isolation, or as a substitute for net loss or other consolidated statements of comprehensive loss data prepared in accordance with U.S. GAAP. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating the Company’s performance.

For more information on the non-GAAP financial measures, please see the table captioned “Unaudited Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.

Exchange Rate

This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from Renminbi to U.S. dollars were made at the rate of RMB7.0651 to US$1.00, the noon buying rate in effect on June 30, 2020 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the Renminbi or U.S. dollars amounts referred could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

Statement Regarding Preliminary Unaudited Financial Information

The unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited financial information.

For more information, please visit: http://ir.nio.com.

Contacts:

NIO Inc.Investor RelationsTel: +86-21-6908-2018Email: [email protected]

Source: NIO

NIO INC.

Unaudited Consolidated Balance Sheets

Amounts expressed in Renminbi (“RMB”), unless otherwise stated
(in thousands, except for share and per share data)

December 31, 2019 June 30, 2020 June 30, 2020
(audited) (unaudited) (unaudited)
(US$)
ASSETS
Current assets:
Cash and cash equivalents862,839 10,494,509 1,485,401
Restricted cash82,507 441,413 62,478
Short-term investment111,000 231,590 32,779
Trade receivable1,352,093 1,377,230 194,934
Amounts due from related parties50,783 50,635 7,167
Inventory889,528 1,023,986 144,936
Prepayments and other current assets1,579,258 1,469,523 207,997
Total current assets4,928,008 15,088,886 2,135,692
Non-current assets:
Long-term restricted cash44,523 45,084 6,381
Property, plant and equipment, net5,533,064 5,178,352 732,948
Intangible assets, net1,522 1,104 156
Land use rights, net208,815 206,392 29,213
Long-term investments115,325 155,225 21,971
Right-of-use assets - operating lease1,997,672 1,500,764 212,419
Other non-current assets1,753,100 974,869 137,984
Total non-current assets9,654,021 8,061,790 1,141,072
Total assets14,582,029 23,150,676 3,276,764
LIABILITIES
Current liabilities:
Short-term borrowings885,620 3,955,613 559,881
Trade payable3,111,699 3,917,525 554,489
Amounts due to related parties309,729 485,994 68,788
Taxes payable43,986 76,913 10,886
Current portion of operating lease liabilities608,747 658,918 93,263
Current portion of long-term borrowings322,436 420,038 59,453
Accruals and other liabilities4,216,641 3,534,072 500,215
Total current liabilities 9,498,858 13,049,073 1,846,975
Non-current liabilities:
Long-term borrowings7,154,798 7,052,650 998,238
Non-current operating lease liabilities1,598,372 1,134,327 160,553
Other non-current liabilities1,151,813 1,391,651 196,975
Total non-current liabilities9,904,983 9,578,628 1,355,766
Total liabilities19,403,841 22,627,701 3,202,741

NIO INC.

Unaudited Consolidated Balance Sheets

Amounts expressed in Renminbi (“RMB”), unless otherwise stated
(in thousands, except for share and per share data)

December 31, 2019 June 30, 2020 June 30, 2020
(audited) (unaudited) (unaudited)
(US$)
MEZZANINE EQUITY
Redeemable non-controlling interests1,455,787 6,311,668 893,359
Total mezzanine equity1,455,787 6,311,668 893,359
SHAREHOLDERS’ DEFICIT
Ordinary shares1,827 1,992 282
Additional paid in capital40,227,856 43,726,092 6,189,026
Accumulated other comprehensive loss(203,048) (306,113) (43,327)
Accumulated deficit(46,326,321) (49,216,851) (6,966,193)
Total NIO Inc. shareholders’ deficit(6,299,686) (5,794,880) (820,212)
Non-controlling interests22,087 6,187 876
Total shareholders’ deficit(6,277,599) (5,788,693) (819,336)
Total liabilities, mezzanine equity and shareholders’ deficit14,582,029 23,150,676 3,276,764

NIO INC.

Unaudited Consolidated Statements of Comprehensive Loss

Amounts expressed in Renminbi (“RMB”), unless otherwise stated
(in thousands, except for share and per share data)

Three Months Ended
June 30, 2019 March 31, 2020 June 30, 2020 June 30, 2020
(unaudited) (unaudited) (unaudited) (unaudited)
(US$)
Revenues:
Vehicle sales1,414,533 1,255,597 3,486,089 493,424
Other sales94,037 116,355 232,841 32,957
Total revenues1,508,570 1,371,952 3,718,930 526,381
Cost of sales:
Vehicle sales(1,755,017) (1,348,749) (3,148,621) (445,658)
Other sales(257,737) (190,682) (257,168) (36,400)
Total cost of sales(2,012,754) (1,539,431) (3,405,789) (482,058)
Gross (loss)/profit(504,184) (167,479) 313,141 44,323
Operating expenses:
Research and development(1,300,531) (522,359) (545,185) (77,166)
Selling, general and administrative(1,421,392) (848,346) (936,788) (132,594)
Other operating (loss)/income, net— (32,084) 8,829 1,250
Total operating expenses(2,721,923) (1,402,789) (1,473,144) (208,510)
Loss from operations(3,226,107) (1,570,268) (1,160,003) (164,187)
Interest income46,519 17,649 20,584 2,913
Interest expenses(96,884) (110,496) (112,917) (15,982)
Share of losses of equity investees, net of tax(28,214) (14,015) (4,408) (624)
Other income/(loss), net22,600 (13,204) 82,107 11,621
Loss before income tax expense(3,282,086) (1,690,334) (1,174,637) (166,259)
Income tax expense(3,679) (1,474) (2,017) (285)
Net loss(3,285,765) (1,691,808) (1,176,654) (166,544)
Accretion on redeemable non-controlling interests to redemption value(31,561) (31,561) (31,561) (4,467)
Net loss attributable to non-controlling interests3,670 532 368 52
Net loss attributable to ordinary shareholders of NIO Inc.(3,313,656) (1,722,837) (1,207,847) (170,959)
Net loss(3,285,765) (1,691,808) (1,176,654) (166,544)
Other comprehensive (loss)/income
Foreign currency translation adjustment, net of nil tax(70,139) (109,542) 6,477 917
Total other comprehensive (loss)/income(70,139) (109,542) 6,477 917
Total comprehensive loss(3,355,904) (1,801,350) (1,170,177) (165,627)

Accretion on redeemable non-controlling interests to redemption value (31,561) (31,561) (31,561) (4,467)
Net loss attributable to non-controlling interests 3,670 532 368 52
Comprehensive loss attributable to ordinary shareholders of NIO Inc.(3,383,795) (1,832,379) (1,201,370) (170,042)

Weighted average number of ordinary shares used in computing net loss per share
Basic and diluted1,026,505,444 1,037,488,350 1,054,638,822 1,054,638,822
Net loss per share attributable to ordinary shareholders
Basic and diluted(3.23)(1.66)(1.15)(0.16)
Weighted average number of ADS used in computing net loss per share
Basic and diluted1,026,505,444 1,037,488,350 1,054,638,822 1,054,638,822
Net loss per ADS attributable to ordinary shareholders
Basic and diluted(3.23)(1.66)(1.15)(0.16)

NIO INC.

Unaudited Reconciliation of GAAP and Non-GAAP Results

Amounts expressed in Renminbi (“RMB”), unless otherwise stated
(in thousands, except for share and per share data)

Three Months Ended June 30, 2020
GAAPResult% of TotalNon-GAAPAdjustment % ofTotalNon-GAAPResult% of Total
Revenues Revenues Revenues
Share-based compensation included in cost of sales and operating expenses is as follows:
Cost of sales(3,405,789) -91.6% 1,296 0.0% (3,404,493) -91.6%
Research and development expenses(545,185) -14.7% 11,659 0.3% (533,526) -14.4%
Selling, general and administrative expenses(936,788) -25.2% 32,333 0.9% (904,455) -24.3%
Total(4,887,762) -131.5% 45,288 1.2% (4,842,474) -130.3%
Loss from operations(1,160,003) -31.2% 45,288 1.2% (1,114,715) -30.0%
Net loss(1,176,654) -31.6% 45,288 1.2% (1,131,366) -30.4%
Accretion on redeemable non-controlling interests to redemption value(31,561) -0.8% 31,561 0.8% — 0.0%
Net loss attributable to ordinary shareholders of NIO Inc.(1,207,847) -32.5% 76,849 2.1% (1,130,998) -30.4%
Net loss per share attributable to ordinary shareholders, basic and diluted (RMB)(1.15) 0.07 (1.08)
Net loss per ADS attributable to ordinary shareholders, basic and diluted (RMB)(1.15) 0.07 (1.08)
Net loss per ADS attributable to ordinary shareholders, basic and diluted (USD)(0.16) 0.01 (0.15)

Three Months Ended March 31, 2020
GAAPResult% of TotalNon-GAAPAdjustment % ofTotalNon-GAAPResult% of Total
Revenues Revenues Revenues
Share-based compensation included in cost of sales and operating expenses is as follows:
Cost of sales(1,539,431) -112.2% 908 0.1% (1,538,523) -112.1%
Research and development expenses(522,359) -38.1% 7,939 0.6% (514,420) -37.5%
Selling, general and administrative expenses(848,346) -61.8% 23,520 1.7% (824,826) -60.1%
Total(2,910,136) -212.1% 32,367 2.4% (2,877,769) -209.7%
Loss from operations(1,570,268) -114.5% 32,367 2.4% (1,537,901) -112.1%
Net loss(1,691,808) -123.4% 32,367 2.4% (1,659,441) -121.0%
Accretion on redeemable non-controlling interests to redemption value(31,561) -2.3% 31,561 2.3% — 0.0%
Net loss attributable to ordinary shareholders of NIO Inc.(1,722,837) -125.6% 63,928 4.7% (1,658,909) -120.9%
Net loss per share attributable to ordinary shareholders, basic and diluted (RMB)(1.66) 0.06 (1.60)
Net loss per ADS attributable to ordinary shareholders, basic and diluted (RMB)(1.66) 0.06 (1.60)

Three Months Ended June 30, 2019
GAAPResult% of TotalNon-GAAPAdjustment % ofTotalNon-GAAPResult% of Total
Revenues Revenues Revenues
Share-based compensation included in cost of sales and operating expenses is as follows:
Cost of sales(2,012,754) -133.4% 3,362 0.2% (2,009,392) -133.2%
Research and development expenses(1,300,531) -86.2% 18,784 1.2% (1,281,747) -85.0%
Selling, general and administrative expenses(1,421,392) -94.2% 70,064 4.6% (1,351,328) -89.6%
Total(4,734,677) -313.8% 92,210 6.0% (4,642,467) -307.8%
Loss from operations(3,226,107) -213.8% 92,210 6.0% (3,133,897) -207.8%
Net loss(3,285,765) -217.8% 92,210 6.0% (3,193,555) -211.8%
Accretion on redeemable non-controlling interests to redemption value(31,561) -2.1% 31,561 2.1% — 0.0%
Net loss attributable to ordinary shareholders of NIO Inc.(3,313,656) -219.7% 123,771 8.2% (3,189,885) -211.5%
Net loss per share attributable to ordinary shareholders, basic and diluted (RMB)(3.23) 0.12 (3.11)
Net loss per ADS attributable to ordinary shareholders, basic and diluted (RMB)(3.23) 0.12 (3.11)

i All translations from RMB to USD for the Second quarter of 2020 were made at the rate of RMB7.0651 to US$1.00, the noon buying rate in effect on June 30, 2020 in the H.10 statistical release of the Federal Reserve Board.

ii Vehicle margin is the margin of vehicle sales, which is calculated based on revenues and cost of sales derived from vehicle sales only.

iii Each ADS represents one ordinary share.

iv Except for gross margin and vehicle margin, where absolute changes instead of percentage changes are calculated.

Source: NIO

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