Lightning eMotors explores sale amid supply-chain, cash-flow crunch

LOVELAND — Leaders with Lightning eMotors Inc., the Loveland manufacturer of light electrically powered trucks and buses, told investors this week that they are exploring the possibility of selling the company amid ongoing supply-chain and cash-flow challenges.

“We have actively been working with advisors, including an investment bank, to approach parties interested in helping us scale the business via additional financing, recapitalization and/or strategic partnerships, and also to explore the sale of the company,” Lightning chief financial officer David Agatston said on a conference call held after the firm released its second quarter earnings report. “… We hope to have a positive outcome to the process by year end.”

An inconsistent supply chain has hurt Lightning’s ability to meet demand and manage inventory, executives said. 

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“I’m certain that I’m as tired about talking about the supply chain as our investors are in hearing about it,” Lightning CEO Tim Reeser said.

The situation could be further complicated by this week’s Chapter 11 bankruptcy filing by California-based Proterra Inc. (Nasdaq: PTRA), one of Lightning eMotors major suppliers.

“We are in discussions with Proterra and expect to be able to buy batteries from them as needed though 2024,” Reeser said.

In a Bloomberg report on the Proterra bankruptcy, analysts suggested that high upfront investment and low initial sales are creating cash-flow woes throughout the EV industry.

“Rest assured, there will be more bankruptcies — including some public companies — in the EV industry,” Raymond James & Associates analyst Pavel Molchanov told Bloomberg.“It’s only a matter of time.”

Lightning, which employs about 190 people, was entangled in a legal spat this year with supplier Romeo Systems Inc. (NYSE: RMO). Lightning sued Romeo in March, claiming that it failed to meet delivery schedules for batteries that it was committed by contract to deliver, and that Nikola Motor Co. (Nasdaq: NKL), which bought Romeo in August 2022, interfered in the contract.

The company finds itself on the other side of the legal ledger in a separate case that accuses Lightning eMotors’ leadership of misleading investors and regulators. 

The company implemented a reverse stock split this spring in an effort to boost its stock price and maintain its listing on the New York Stock Exchange.

Lightning eMotors executives said that they’re optimistic about the company’s ability to tap into additional private-equity funding pools. They’re also heartened by the prospect for new demand as a result of new federal tax credits for EV purchases and the upcoming start of new EV requirements for fleet operators in California.

Lightning posted sales of $7.9 million in the second quarter of 2023, up from $3.5 million in the same period last year. 

The company cut its losses from $35.7 million during the second quarter of last year to $21.4 million in the most recent period.

Looking ahead, Lightning expects full-year 2023 sales to range from $35 million to $45 million.