XL Fleet Highlights New Risk Factors Amid Charging Unit Expansion

XL Fleet (XL) offers vehicle electrification solutions for commercial and municipal fleets. Its customers include Coca-Cola (KO), Verizon (VZ), and the City of Boston. Its plug-in hybrid electric drive system was named one of TIME magazine’s best inventions of 2019. (See Insiders’ Hot Stocks on TipRanks)

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Let’s take a look at the company’s latest financial performance, corporate updates, and newly added risk factors.

Q2 Financial Results

XL Fleet generated revenue of $3.7 million in Q2 2021. That increased from $1.9 million in the same quarter last year but fell short of the consensus estimate of $4.4 million. Revenue consisted of $1.3 million from drive systems sales and $2.4 million from charging solutions. XL Fleet acquired World Energy in May to bolster its XL Grid charging solutions business.

The company posted a loss per share of $0.08. Although that improved from a loss per share of $0.16 in the same quarter last year, it missed the consensus estimate of a loss per share of $0.05.

XL Fleet ended Q2 with $384.1 million in cash and $0.6 million in debt. (See XL Fleet stock charts on TipRanks).

Corporate Updates

XL Fleet has invested $3 million in eNow and secured a supply agreement. It will supply batteries and other components for eNow’s electric refrigerated trailers. XL Fleet has the option to acquire the remainder of eNow in the future at a preset valuation.

XL Fleet has secured a deal with bus manufacture ARBOC Specialty Vehicles to supply hybrid drive systems for its wheelchair-accessible buses.

Stellantis (STLA) has tapped XL Fleet to supply hybrid drive systems for its Ram commercial pickup trucks. With the addition of Ram, XL Fleet now offers electrification solutions to four of the top-selling pickup brands in the U.S. These include Ford’s F-series, GMC’s Sierra, and Chevrolet’s Silverado trucks.

Risk Factors

A total of 80 risk factors have been identified for XL Fleet, according to the new TipRanks Risk Factors tool. Since Q4 2020, the company has updated its risk profile with four new risk factors.

XL Fleet tells investors that its vehicle charging solutions unit, XL Grid, is subject to numerous regulations related to health and safety. It cautions that complying with the complex regulations could increase its expenses and adversely impact its business and financial condition. It goes on to warn that failing to comply with the regulations could result in fines or orders to stop certain projects.

The company hires subcontractors to work on certain XL Grid projects. It warns that if the subcontractors are unable to deliver on their commitments, there could be project delays. It goes on to say that delays in project delivery could damage its reputation, strain the relationships with customers, and derail its growth.

The majority of XL Fleet’s risk factors fall under the Finance and Corporate category, with 35% of the total risks. That is below the sector average of 53%. XL Fleet’s stock price has declined about 76% since the beginning of 2021.

Analysts’ Take

In August, Canaccord analyst Jonathan Dorsheimer downgraded XL Fleet stock to a Hold from a Buy with a $6 price target. Dorsheimer’s price target suggests 6.38% upside potential.