MONTREAL - The Lion Electric Company (NYSE: LEV) (TSX: LEV), a manufacturer of all-electric urban vehicles, revealed measures today to reduce its workforce by approximately 120 employees, primarily affecting Canada-based staff in overhead and product development roles. This move is part of a broader initiative to decrease operating expenses in response to the current market conditions.
The company stated that the layoffs, along with other internal cost-reduction strategies, should not impact its production capabilities. Following these cuts, Lion Electric will maintain a workforce of around 1,150 employees, with over 600 in manufacturing positions. The cost-cutting measures include reductions in third-party inventory logistics, lease expenses, consulting, product development, and professional fees.
These actions build on previous cost-saving measures announced in November 2023 and February 2024, with the company projecting annualized savings of about $40 million.
Marc Bedard, CEO-Founder of Lion, cited delays in Canada's Zero-Emission Transit Fund as a factor adversely affecting school bus deliveries, necessitating these workforce adjustments. Despite the layoffs, Bedard expressed confidence in the company's long-term growth and its commitment to profitability and execution of its business plan.
Lion Electric is known for its zero-emission commercial trucks and electric school buses, and it plays a significant role in the North American electric transportation sector. The company designs and manufactures key vehicle components, including chassis, battery packs, truck cabins, and bus bodies.
The information for this article is based on a press release statement from The Lion Electric Company.
InvestingPro Insights
In light of Lion Electric's recent announcement to streamline operations, InvestingPro data sheds light on the financial health and market performance of the company. With a market capitalization of $236.8 million, the company has been navigating a challenging financial landscape, as evidenced by a negative price-to-earnings (P/E) ratio of -2.25 and an even lower adjusted P/E ratio for the last twelve months as of Q4 2023, at -3.29. These figures highlight the company's lack of profitability in the recent period.
Despite these challenges, Lion Electric has experienced substantial revenue growth, with an impressive increase of 81.18% over the last twelve months as of Q4 2023. However, this has not translated into profit margins, as the company reported a gross profit margin of -2.18%, indicating that it is selling its products at a loss. The recent cost-cutting measures, including workforce reductions, may be a strategic move to improve these margins.
InvestingPro Tips suggest that Lion Electric operates with a significant debt burden and may have trouble making interest payments on its debt, which is critical information for investors considering the company's financial stability. Analysts anticipate sales growth in the current year, which could be a positive sign for the company's future performance. However, the stock has taken a significant hit over the last week, with a one-week price total return of -14.75%, reflecting market reactions to the company's strategic decisions and overall market conditions.
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It's worth noting that while the company is facing immediate challenges, the InvestingPro Tips also include positive signals such as upward earnings revisions by analysts for the upcoming period. This indicates that some market watchers see potential for Lion Electric's financial situation to improve. To gain deeper insights into Lion Electric's performance and potential, investors can access a comprehensive list of 19 InvestingPro Tips available on the platform.
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