Microvast Holdings, Inc. — Q3 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenues were $45.8 million, a 62.8% decrease from $123.3 million in Q3 2025, driven by a 62.2% reduction in sales volume from 501.7 MWh to 189.6 MWh.
• Nine months ended September 30, 2026 revenues were $193.7 million, a 41.5% decrease from $331.1 million in the same period in 2025.
• Q3 2026 gross margin decreased to 5.2% from 37.6% in Q3 2025; a $9.3 million write-down for obsolete inventories negatively impacted gross margin by 20.4 percentage points.
• Nine months ended September 30, 2026 gross margin decreased to 24.4% from 36.6% in 2025; an $11.1 million write-down for obsolete inventories negatively impacted gross margin by 5.7 percentage points.
• Q3 2026 operating expenses increased to $69.0 million from $31.6 million in Q3 2025, primarily due to $35.7 million in non-cash impairment charges of long-lived assets.
• Nine months ended September 30, 2026 operating expenses increased to $123.6 million from $84.4 million in 2025, driven by $35.8 million in non-cash impairment charges.
• Q3 2026 net loss was $76.8 million compared to a net loss of $1.5 million in Q3 2025.
• Nine months ended September 30, 2026 net loss was $40.6 million compared to a net loss of $45.8 million in 2025, primarily due to a $58.0 million non-cash gain from the change in fair value of warrant liability and convertible loan.
• Q3 2026 non-GAAP adjusted net loss was $76.0 million compared to a non-GAAP adjusted net profit of $11.9 million in Q3 2025.
• Nine months ended September 30, 2026 non-GAAP adjusted net loss was $96.0 million compared to a non-GAAP adjusted net profit of $47.5 million in 2025.
• Q3 2026 non-GAAP adjusted EBITDA was negative $60.8 million compared to $21.9 million in Q3 2025.
• Nine months ended September 30, 2026 non-GAAP adjusted EBITDA was negative $62.7 million compared to $76.3 million in 2025.
• Cash, cash equivalents, and restricted cash totaled $124.4 million as of September 30, 2026, down from $169.2 million as of December 31, 2025.
• Net cash used in operating activities was $65.4 million for the nine months ended September 30, 2026, compared to $59.5 million generated in the same period in 2025.
• Total debt was $177.0 million as of September 30, 2026, consisting of $135.3 million in bank borrowings and $41.7 million in convertible bonds.
• Working capital deficit was $3.1 million as of September 30, 2026.

Guidance and Future Outlook:

• Management expects available cash to be insufficient to meet obligations as they come due over the next twelve months absent additional financing, debt refinancing, extension, restructuring, or further cost reductions.
• Substantial doubt about the company's ability to continue as a going concern has not been alleviated.
• The company is implementing operating cost reduction initiatives, reducing or deferring discretionary capital expenditures, and implementing targeted workforce reductions.
• Production ramp-up at the Huzhou Phase 3.2 facility is dependent on customer demand, production yields, product qualification, operating efficiency, and working capital availability.
• Resumption of full-scale construction at the Clarksville facility remains contingent upon securing additional financing or strategic partnerships.
• The company has limited visibility into revenue for the next several quarters and into cash collections in the near term.

Business Segments and Product Lines:

• Installation and commissioning of Huzhou Phase 3.2 production equipment have been completed.
• The pack assembly line at the Clarksville facility is substantially completed.
• Sales volume declines were driven by weaker demand for heavy-duty trucks, port equipment, and heavy mining equipment in Europe and APAC.
• U.S. sales decreased due to a largest customer bringing product into 2025 due to tariff uncertainty.
• Demand in India and Korea was adversely affected by evolving commercial vehicle regulatory and geopolitical dynamics and a shift toward lower-cost products.

Market and Competitive Landscape:

• The company faces ongoing industry pricing pressures in the lithium battery industry.
• Revenues are materially concentrated with a small number of customers, creating uncertainty regarding future orders from significant customers.
• One significant European customer was recently acquired by a third party, creating additional uncertainty regarding future purchases.
• The company faces risks related to raw material price fluctuations and supplier concentration.

Risks and Challenges:

• The company faces substantial doubt regarding its ability to continue as a going concern.
• Near-term debt obligations include $41.7 million in convertible bonds due by January 31, 2027, $84.0 million in short-term bank loans maturing within twelve months, and various working capital loans due between December 2026 and September 2027.
• Failure to make debt payments will result in an event of default, acceleration of borrowings, and enforcement of security over MPS assets and equity interest.
• Cash held by Chinese and European subsidiaries ($30.4 million and $14.4 million respectively) cannot be repatriated to fund U.S. operations due to foreign regulatory restrictions and adverse tax consequences.
• Risks include the potential insolvency of MPS (principal operating subsidiary in China), inability to refinance debt, and risks related to litigation and legal settlements.
• Risks include the impact of tariffs, potential delisting from Nasdaq, and geopolitical events affecting international operations.

Management Commentary and Tone:

• CEO Yang Wu described the third quarter as a "highly challenging operating environment" with a "material decline in sales, gross margin and operating performance."
• Management stated that the decline in performance has "significantly constrained our liquidity."
• The CEO noted that the outcome of current efforts is "uncertain and depends on factors outside our control, including lender decisions and customer demand."
• Management indicated a focus on actions within their control: reducing costs, preserving liquidity, and negotiating with lenders to refinance, extend, or restructure near-term debt.

Other Key Points:

• As of October 31, 2026, total usable cash across all entities was approximately $71.3 million.
• The company received $4.4 million in IEEPA tariff refunds during the nine months ended September 30, 2026, of which $2.7 million was issued to a customer and recorded as a reduction to revenue.
• Subsequent to September 30, 2026, the company repaid the remaining $22.4 million balance of a loan facility, which was fully retired.
• During the nine months ended September 30, 2026, the company secured $95.8 million of bank borrowings, including $59.8 million in refinanced debt, and refinanced an additional $8.9 million of short-term bank borrowings since September 30, 2026.
• A $58.0 million non-cash gain from the change in fair value of warrant liability and convertible loan contributed to the reduced net loss for the nine months ended September 30, 2026.
• The company recorded a $15.4 million foreign exchange loss for the nine months ended September 30, 2026, compared to a $9.0 million gain in 2025.
• Capital expenditures were $2.3 million in Q3 2026 and $17.9 million for the nine months ended September 30, 2026.