A “disappointing” 2023 for Ebusco. Now focus on assembly strategy (with 3.0 built in China) and positive EBITDA expected in 2024

Ebusco achieved €102.4 million revenue in 2023, recording EBITDA loss of €95.7 million, compared to €34.8 million negative a year earlier, and net loss for the year of €120.1 million (vs €32.2 million in 2022).

Ebusco’s net cash position was €27.9 million as per 31 December 2023 down from €95.2 million as per 31 December 2022.

At the same time, the electric bus maker‘s order book grew from 1,474 to 1,719 buses at year-end. At the moment, the company has over 125 buses set for delivery, including more than 80 Ebusco 3.0 buses.

In 2024 the Dutch company expects revenue in excess of €325 million and positive EBITDA “weighted towards the second half of the year”. Now the company switched to a new business model focusing to contract manufacturing. As a consequence of this, the Ebusco 3.0 is now built in China.

In recent months, a new leadership team was installed at the helm of Ebusco in order to accelerate and implement the adapted assembly strategy. With the arrival of experienced CFO Jurjen Jongma, interim-co CEO Frank Meurs, and our newly announced COO Roald Dogge, the management board has gained valuable experience that will drive the required performance improvements.

Ebusco: the focus on assembly strategy

Ebusco has recently changed its business model towards a “adapted assembly strategy to scale up our production with the support of third-party assembly partners. Our partners have a long track record in bus assembly, providing them good access to skilled labor and allowing Ebusco to leverage on their existing supply chain and suppliers”, Ebusco says. The name of the assembly partner has not been mentioned so far, but co-CEO Peter Bijvelds stated during webcast of 2023 results that the Ebusco 3.0 is now built in China.

The first results of this strategy, Ebusco states, “are already visible and include a structurally increased output, improvement to our delivery reliability, and a more flexible cost base that, over time, will result in better unit economics. The adjusted assembly strategy was effectively implemented in the second half of 2023 with the first batch of 3.0 buses transported back to the Netherlands within six months. This shorter lead time allows us to achieve a faster time to money, and better customer performance in the future compared to previous 3.0 orders”.

2023, financial review of Ebusco’s performance

In 2023, Ebusco delivered a total of 178 buses. Full-year 2023 revenue arrived at €102.4 million.

Ebusco stresses that “our 2023 revenue guidance was impacted by a lower than anticipated progress in completion of buses and a shift in certification of Mobile Energy Containers. In the final results, there was an additional impact of € 5.0 million related to penalties and future performance obligations and an additional shift in revenue which will now be recognised in 2024. We reiterate that all buses that were forecasted for revenue in 2023 are on production lines in Deurne or at our partners and will contribute to 2024 revenue”.

Ebusco reports received orders (fixed contracts, call-off and options) for 615 buses in 2023 of which 359 3.0 buses resulting in an order book of 1,719 buses at year-end 2023 compared to 1,474 buses at year-end 2022.

In recent quarters, Ebusco states it switched to a more selective approach to tenders, with the company more carefully evaluating delivery times and other conditions before submitting an offer.

“Gross profit as percentage of revenue decreased from 14.0% positive in 2022 to 6.7% negative in 2023, primarily due to penalties related to late delivery. These penalties are recognised through lower reported revenues and higher expenses incurred in COGS”, Ebusco’s press note says.

Ebusco is implementing cost and working capital reduction

As a consequences of the new assembly strategy, Ebusco states the company has reduced its workforce. The decision was also made to reduce commercial activities outside of Europe (then halting projects in Australia and USA). The results of these actions should start to become visible in the operational results as of the second quarter with the full impact in the second half of 2024.

“The management board acknowledges the urgency of short-term liquidity and conversion of inventories and contract assets into cash is a priority. We currently have over 280 Ebusco 3.0 buses and over 100 Ebusco 2.2’s in various stages of completeness on production lines of which 125 are set for imminent delivery. Seeing through completion of these buses is key”, still in Ebusco’s words.

“2023 was a disappoing year”, in the CEO’s words

Peter Bijvelds, founder and co-CEO Ebusco, states: “Last year was a challenging, but above all, disappointing year. Neither did we deliver what we intended, nor did we deliver what we promised. Our guidance for a substantial improvement in our second half 2023 EBITDA was based on a full year revenue amount of approximately €145 million which we did not achieve. Management has taken key actions to structurally improve the financial and operational performance of the company and increase predictability in 2024 and beyond. Lower production and delivery output impacted our liquidity and subsequently resulted in significant amounts of inventories (€106.5 million) and contract assets (€67.6 million). The actions we have taken will result in a higher, more predictable production pace and delivery in 2024. At the moment, over 125 buses are set for delivery, including more than 80 Ebusco 3.0 buses.
The appointment of Frank Meurs as ad interim co-CEO in January 2024 allows me to fully focus on the corporate strategy as well as product and commercial development. Next to the addition of Frank to the team, I am also glad to welcome Roald Dogge who has been nominated to become our new COO. His expertise and extensive experience in the automotive and OEM industry perfectly suits the role of the COO in our new assembly setup. I would like to thank Bob Fleuren for the invaluable contribution he has made to Ebusco.
Despite the challenges we faced in 2023, the main highlight remains the operational performance of the Ebusco 3.0. Our customers tell us that the 0.65 kWh per kilometre energy consumption of the Ebusco 3.0 is unrivalled. We have several innovations that we are working on to further improve the Ebusco 3.0 and remain at the forefront of the market. Lighter, more efficient, one step better every time. We have to do better, we can do better and we have taken the necessary management actions. We owe this to our employees, customers, suppliers, shareholders, and other stakeholders and I am grateful for their continued trust and patience over the past year.”