Yahoo Finance Electric snowmobile maker Taiga's future uncertain as it struggles to keep up with orders
Taiga Motors Corp., the first company in the world to ship an electric snowmobile, told investors that it might not survive if its leaders fail to round up new funding.
“Management is committed to secure additional sources of funds for the company working capital needs,” Taiga said while reporting its most recent quarterly results on March 30.
The press release added: “While the company has been successful in securing financing in the past and believes it will be able to obtain sufficient funds in the future and ultimately achieve profitability and positive cash flows from operations, raising additional funds is dependent on a number of factors outside the company’s control, as such there is no assurance that it will be able to do so in the future.”
Taiga’s stock price has plunged almost 90 per cent since its debuted on the Toronto Stock Exchange in 2021 amid the technology boom that followed the pandemic.
The Montreal-based company grabbed the attention of investors and politicians, as it looked like it could be a winner in the shift away from gasoline-powered vehicles. However, the supply chain snarls that came with the pandemic put Taiga behind schedule and the upstart has struggled to get solid footing.
Earlier this month, the Montreal-based company secured a private placement of $40.15 million from Northern Private Capital and Investissement Québec, which put up $25.15 million and $15 million respectively. Taiga revealed with its earning report that its two newest investors also will effectively take over the board of directors, as they’ve installed four directors of their choosing, forcing out four existing members.
Taiga’s stock increased about one per cent, a little better than the S&P/TSX composite index, ending the day at $1.71 per share.
`Revenue will follow’
Taiga said in the March 30 press release that pre-orders were stable at 3,222 in the fourth quarter. The company said it was “cautiously reducing” its outlook for deliveries in 2023 to 1,700 to 1,900 vehicles. Sales reached $1.4 million in the fourth quarter, a slight improvement over the previous quarter.
Taiga reported an operating loss of $23.8 million, worse than the $11.3-million loss of the year-ago quarter, as the company struggled to ramp up production and address a backlog of several thousand orders.
“As production ramps up, revenue will follow,” Eric Bussieres, chief financial officer, said on a call with analysts.
Sam Bruneau, the chief executive said: “We’ve started to build some big inventories as you can see across the year.”
Taiga reported that it has $21-million worth of inventory on hand, and has prepaid for, but not received, roughly $2 million’s worth. “We’re seeing some significant progress being made in the ramp up,” said Bruneau. “The big shift for us has been bringing on a lot of these high-volume production suppliers.”
The company’s workforce has grown 17 per cent to 269 full-time employees to support the production ramp-up.
Still, Taiga is on the hunt for financing, as it has nearly burnt through the $125.5 million it had around the time of its IPO. The lifeline from Northern Private Capital and Investissement Québec would normally require shareholder approval, but Taiga applied to the Toronto Stock Exchange for an exemption, saying there wasn’t time. The company was in “serious financial difficulty” and needed the funding “immediately,” reported the Globe and Mail.
While the $40 million “(satisfied) Taiga’s immediate cash needs,” National Bank Financial wrote in a note, Taiga’s cash burn of $7 to $8 million a month means that it will require yet more funding before the end of 2023.
The company is still delivering dozens, rather than thousands of vehicles, because “the supply chain remains difficult and the company is facing challenges in ramping production.” As a result, National Bank revised down its delivery and share price forecasts for the company.
Taiga also announced that it had overhauled its board of directors as a result of the private placement. In are Andrew Lapham and Michael Fizzell from Northern Private Capital; Marc Fortin from Investissement Québec; and Francis Séguin, as an independent director designated by Northern Private Capital brings over 30 years of experience in automotive manufacturing.
Kent Farrell, Nadia Martel, François Roy and Gabriel Bernatchez resigned from the board.
• Email: mcoulton@postmedia.com | Twitter: marisacoulton
