Should You Buy EH?

 

EHang Holdings Limited (Nasdaq: EH), the world’s leading autonomous aerial vehicle (“AAV”) technology platform company, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial and Operational Highlights
— Total revenues were RMB54.6 million (US$8.4 million), on par with RMB54.7
million in the fourth quarter of 2019. Revenues from air mobility
solutions were RMB33.4 million (US$5.1 million), reflecting a 10.1%
decrease year over year mainly due to the resurgence of the COVID-19
pandemic in China in the fourth quarter and its impact on tourism
industry customers.

— Gross margin was 59.4%, a decrease of 1.3 percentage points year over
year. The decrease was mainly due to the increase in share-based
compensation expenses charged to costs of revenues.

— Adjusted gross margin1 (non-GAAP) was 63.8%, an increase of 3.1
percentage points year over year and a record quarterly adjusted gross
margin in the Company’s history.

— Operating loss was RMB49.2 million (US$7.5 million), compared with
operating profit of RMB2.1 million in the fourth quarter of 2019. The
change in operating loss was mainly due to the increase in share-based
compensation expenses charged to costs of revenues and operating
expenses.

— Adjusted operating loss2 (non-GAAP) was RMB10.6 million (US$1.6 million),
compared with adjusted operating profit of RMB3.8 million in the fourth
quarter of 2019.

— Net loss was RMB50.8 million (US$7.8 million), compared with net loss of
RMB0.2 million in the fourth quarter of 2019.

— Adjusted net loss3 (non-GAAP) was RMB12.3 million (US$1.9 million),
compared with adjusted net income of RMB2.9 million in the fourth quarter
of 2019.

— Sales of the EHang 216, our flagship passenger-grade AAV product, were 22
units, compared with 26 units in the fourth quarter of 2019.
Full Year 2020 Financial and Operational Highlights
— Total revenues were RMB180.1 million (US$27.6 million), an increase of
47.8% from RMB121.8 million in 2019. Revenues from air mobility solutions
were RMB106.0 million (US$16.2 million), an increase of 23.3% from
RMB85.9 million in 2019. Revenues from aerial media solutions were
RMB65.7 million (US$10.1 million), increased by 113.5% from RMB30.7
million in 2019.

— Gross margin was 59.0%, an increase of 0.5 percentage points from 58.5%
in 2019.

— Adjusted gross margin was 60.3%, an increase of 1.5 percentage points
from 58.8% in 2019 and the highest annual adjusted gross margin in the
Company’s history.

— Operating loss was RMB91.3 million (US$14.0 million), an increase of
97.0% from RMB46.3 million in 2019. The increase in operating loss was
mainly due to the increase in share-based compensation expenses charged
to costs of revenues and operating expenses.

— Adjusted operating loss (non-GAAP) was RMB36.4 million (US$5.6 million),
an increase of 15.3% from RMB31.6 million in 2019.

— Net loss was RMB92.0 million (US$14.1 million), an increase of 91.8% from
RMB48.0 million in 2019.

— Adjusted net loss (non-GAAP) was RMB37.2 million (US$5.7 million), an
increase of 16.7% from RMB31.9 million in 2019.

— Sales of the passenger-grade AAVs reached 70 units in 2020, compared with
61 units in 2019.
Business Highlights for the Fourth Quarter and Full Year 2020
— Autonomous Trial Flights in Korea of EH216 with Special Certificate of
Airworthiness
In November 2020, the Ministry of Land, Infrastructure and Transport (“MOLIT”) of Korea issued a Special Certificate of Airworthiness (“SAC”) for the EH216, the first SAC for passenger-grade AAVs in Korea. With the SAC, the EH216 completed autonomous trial flights in three Korean locations: Seoul, Daegu and Jeju Island. The flights demonstrated a variety of Urban Air Mobility (“UAM”) application scenarios including urban transportation, emergency medical services and aerial sightseeing.
— Long-term Trial Flight Permit for EH216 Across Austrian National Airspace
In December 2020, the Civil Aviation Authority of Austria issued a trial flight permit for the EH216 that allows trial operation of unmanned flights in Austrian national airspace. This permit was obtained through the joint efforts of the Civil Aviation Authority of Austria, the EHang European team, and local partners. Thereafter, test flights of the EH216 were conducted in St. Martin im Innkreis, Austria after completing a Specific Operational Risk Assessment (“SORA”) procedure under the supervision of the Civil Aviation Authority of Austria.
— Strategic Partnership with Greenland Hong Kong for Aerial Tourism
Programs
In December 2020, EHang entered a strategic partnership with a PRC subsidiary of Greenland Hong Kong Holdings Limited (SEHK: 00337) (“Greenland”), an HKEX-listed real estate company, to roll out air mobility services, such as aerial sightseeing and aerial media show services, in Greenland’s tourism real estate projects in China. The collaboration began with trial aerial sightseeing flights in Greenland’s Forest Lake project in Zhaoqing city, Guangdong.
— Participation in Formulating China’s First National Standard for Express
Delivery Services via Unmanned Aircraft
EHang collaborated with industry-leading players, such as JD.com (Nasdaq: JD) and ZTO Express (NYSE: ZTO), to participate in the formulation of the Specification for Express Delivery Service by Unmanned Aircraft, which was issued by the State Post Bureau of PRC and became effective in China on January 1, 2021.
— EH216 Trial Flights and Locations Across the Globe
As a pioneer in the global Urban Air Mobility (“UAM”) industry, by year-end 2020 EHang 216 had safely carried out approximately 10,000 autonomous trial flights (including passenger-carrying flights). The flights showcased a variety of UAM application scenarios in 40 cities of 8 countries across Asia, Europe and North America.

Recent Developments
— US$40 Million Investment from Carmignac
In January 2021, Carmignac, a leading European asset management firm, invested US$40 million on behalf of its funds in EHang through a private placement of newly issued Class A ordinary shares of the Company.
— Trial Flights to Initiate a UAM Plan in the Hengqin New Area in Southeast
China
In January 2021, EHang announced strategic partnerships with local partners to jointly initiate trial air mobility operations in the Hengqin New Area (“Hengqin”), the largest of the islands surrounding Zhuhai city in the Guangdong-Hong Kong-Macao Greater Bay Area of China. A total of 36 passengers experienced trial autonomous flights conducted by our local partners for aerial sightseeing in Hengqin on the announcement date. In February 2021, our local partner further carried out the first autonomous trial flights of the EH216 over the sea of southern China from Hengqin to Dong’ao Island, a tourist destination island, showcasing its potential application in air mobility use cases such as aerial sightseeing.
— Participation in a Series of UAM Projects Initiated by the European Union
In January and February 2021, as a pioneer of cutting-edge AAV products and technological solutions, EHang was selected to participate in a series of UAM projects initiated and supported by the European Union to demonstrate ways to achieve safe, sustainable, socially acceptable, and effective UAM. These projects include: 1) the Air Mobility Urban – Large Experimental Demonstration (AMU-LED) project in Spain, the United Kingdom and the Netherlands; 2) the Re-Invent Air Mobility initiative in France; 3) the Safe and Flexible Integration of Advanced U-Space Services for Medical Air Mobility (SAFIR-Med) project in Belgium, Germany, the Netherlands, Greece and Czech Republic; and 4) the GOF 2.0 Integrated Urban Airspace VLD very large demonstration project.
— Partnership with Giancarlo Zema Design Group to Build an Eco-sustainable
Vertiport in Italy
In March 2021, EHang entered a partnership with Giancarlo Zema Design Group (“GZDG”), a leading Italian architecture firm. GZDG has designed and intends to build an eco-sustainable vertiport in Italy using EHang’s passenger-grade AAV technologies and air mobility solutions. The vertiport will use green design and construction materials and can generate energy to recharge the EH216 passenger-grade AAVs.
— Partnership with Dongfeng USharing to Co-develop a Solution for
Seamlessly-Connected Mobility Services Leveraging AAV Technologies
In March 2021, EHang entered a partnership with Dongfeng USharing Technology Co., Ltd., a subsidiary of Dongfeng Motor Corporation, a Fortune Global 500 company and one of the largest auto makers in China, to co-develop a solution for Seamlessly Connected Mobility Services for logistics using EHang’s AAV technologies.

CEO Remarks

2021-04-16 11:05:00 GMT EHang Reports Fourth Quarter and Full Year 2020 -2-

Mr. Huazhi Hu, EHang’s Founder, Chairman and Chief Executive Officer, commented, “In the unusual year of 2020, we achieved revenue growth of nearly 50% despite the challenges and uncertainties caused by COVID-19 globally. Our gross margin increased again in 2020 and specifically, the adjusted gross margin reached a new high of 63.8% in the fourth quarter and 60.3% for the year, reflecting our competitive strengths. Our record of more than 10,000 safe trial flights of the EH216, including passenger-carrying flights, in 40 cities of 8 countries across Asia, Europe and North America to date and in various extreme environments demonstrates the robustness of our integrated technologies for autonomous flying, full redundancy and cluster management. Our technologies laid a solid foundation for obtaining a series of approvals or permits for trial flights issued by regulators in China, the U.S., Canada, Austria, Norway and Korea in 2020.”

Mr. Hu continued, “Leveraging our world-leading integrated technology platform, we have been developing and diversifying our product portfolio under our long-term development roadmap to meet a wider range of market
needs. In addition to our current flagship EH216 AAV series, we plan to roll out another series of eVTOL (e-Vertical-Take-Off-and-Landing) models, namely the VT series, which includes the major large-sized passenger-grade VT30 as well as smaller-sized non-passenger-grade ones. This vehicle series adopts a new hybrid configuration that integrates multi-rotor and fixed-wing configurations and enables both vertical take-off/landing capability and long-range horizontal flights. Combining the EH216 series with this new VT series, we will be able to offer a more well-rounded suite of AAV solutions to better satisfy more UAM application needs, covering both short-haul intra-city and long-range inter-city uses.”
“Looking ahead, we intend to launch a ‘100 Air Mobility Routes Initiative’ in China as part of our UAM platform operator strategy. This initiative will be underpinned by our reliable integrated technologies, comprehensive product offerings, intelligent systems, growing customer base, infrastructure designs and expanding production facilities. The initiative is expected to be implemented in next 24 months with an initial focus on the Guangdong-Hong Kong-Macao Greater Bay Area of China. To support this important strategic initiative and also fulfill customer orders in 2021, we are aiming to produce approximately 250 units of the EH216 in the year which will be a new record of the Company once achieved,” Mr. Hu concluded.

Fourth Quarter 2020 Financial Results

Revenues

Total revenues were RMB54.6 million (US$8.4 million), on par with RMB54.7 million in the fourth quarter of 2019. Revenues from air mobility solutions were RMB33.4 million (US$5.1 million), down 10.1% year over year. The decrease was mainly due to the resurgence of the COVID-19 pandemic in China in the fourth quarter and its impact on our customers in the tourism industry.

Costs of revenues

Costs of revenues were RMB22.1 million (US$3.4 million), up 3.1% year over year, primarily due to the change in the sales volume mix of AAV products and solutions.

Gross profit

Gross profit was RMB32.5 million (US$5.0 million), down 2.2% from RMB33.2 million in the fourth quarter of 2019.

Gross margin was 59.4%, down 1.3 percentage points from 60.7% in the fourth quarter of 2019. The decrease was primarily due to the increase in share-based compensation expenses charged to cost of revenues.

Adjusted gross profit

Adjusted gross profit was RMB34.8 million (US$5.3 million), up 4.9% from RMB33.2 million in the fourth quarter of 2019.

Adjusted gross margin was 63.8%, up 3.1 percentage points from 60.7% in the fourth quarter of 2019. The adjusted gross margin increased due to a favorable revenue mix, as the Company derived a greater proportion of revenues from sales of higher-margin models of EHang 216 AAVs.

Operating expenses

Total operating expenses were RMB83.4 million (US$12.8 million), up 152.8% from RMB33.0 million in the fourth quarter of 2019. Operating expense as a percentage of total revenues was 152.8%, compared with 60.3% in the fourth quarter of 2019. The increase in operating expenses was primarily due to an increase of RMB34.6 million (US$5.3 million) in share-based compensation expenses charged to operating expenses.
— Sales and marketing expenses were RMB13.8 million (US$2.1 million), up
69.8% from RMB8.2 million in the fourth quarter of 2019. The increase was
mainly due to an increase of RMB5.6 million in share-based compensation
expenses.

— General and administration expenses were RMB18.6 million (US$2.9 million),
up 98.8% from RMB9.4 million in the fourth quarter of 2019. The increase
was mainly due to an increase of RMB4.2 million in share-based
compensation expenses, additional expenses related to being a publicly
traded company, and prudent provisions related to the COVID-19 impacts.

— Research and development expenses were RMB50.9 million (US$7.8 million),
up 229.4% from RMB15.5 million in the fourth quarter of 2019. The
increase was mainly due to an increase of RMB24.7 million in share-based
compensation expenses and expanded expenditure in development of new
models, which covers both passenger-grade and non-passenger-grade AAV
models, and related operating systems with enhanced functionalities.
Adjusted operating expenses(4) (non-GAAP)

Adjusted operating expenses were RMB47.2 million (US$7.2 million), representing an increase of 50.5% from RMB31.4 million in the fourth quarter of 2019. Adjusted operating expenses as a percentage of total revenues was 86.5%, compared with 57.3% in the fourth quarter of 2019.

Operating loss

Operating loss was RMB49.2 million (US$7.5 million), compared with operating profit of RMB2.1 million in the fourth quarter of 2019. Operating loss as a percentage of total revenues was negative 90.1%, compared with an operating margin of 3.9% in the fourth quarter of 2019.

Adjusted operating loss (non-GAAP)

Adjusted operating loss was RMB10.6 million (US$1.6 million), compared with adjusted operating profit of RMB3.8 million in the fourth quarter of 2019. Adjusted operating loss as a percentage of total revenues was negative 19.5%, compared to adjusted operating margin of 6.9% in the fourth quarter of 2019.

Net loss

Net loss was RMB50.8 million (US$7.8 million), compared with net loss of RMB0.2 million in the fourth quarter of 2019.

Adjusted net loss (non-GAAP)

Adjusted net loss was RMB12.3 million (US$1.9 million), compared with adjusted net income of RMB2.9 million in the fourth quarter of 2019.

Adjusted net loss attributable to EHang’s ordinary shareholders was RMB10.6 million (US$1.6 million).

Loss per share and per ADS

Basic and diluted net loss per ordinary share were both RMB0.45 (US$0.07). Adjusted basic and diluted net loss per ordinary share(5) (non-GAAP) were both RMB0.10 (US$0.01).

Basic and diluted net loss per ADS were both RMB0.90 (US$0.14). Adjusted basic and diluted net loss per ADS(6) (non-GAAP) were both RMB0.20 (US$0.02).

Balance Sheet and Cash Flow

The cash, cash equivalents, restricted cash and short-term investments balances were RMB189.4 million (US$29.0 million) as of December 31, 2020. Further, the accounts receivable balance of RMB179.4 million (US$27.5 million) as of December 31, 2020 have been reduced to RMB103.1 million (US$15.8 million) with subsequent collections of RMB76.3 million (US$11.7 million) as of March 31, 2021, representing 42.5% of the above balance having been collected. Together with the private investment of US$40 million in late January 2021, it is expected that the Company has adequate funding to support the operations in the next 12 to 24 months at least.

Full Year 2020 Financial Results

Revenues

Total revenues were RMB180.1 million (US$27.6 million), up 47.8% from RMB121.8 million in 2019, primarily driven by the increase in revenues generated from air mobility solutions and aerial media solutions. Sales of the EHang 216, the Company’s flagship passenger-grade AAVs, reached 70 units in 2020 compared to 61 units in 2019.

Costs of revenues

Costs of revenues were RMB73.9 million (US$11.3 million), representing an increase of 46.1% from RMB50.6 million in 2019, which was in line with the growth of revenues.

Gross profit

Gross profit was RMB106.2 million (US$16.3 million), up 49.1% from RMB71.2 million in 2019. Gross margin was 59.0%, an increase of 0.5% from 58.5% in 2019. The increase in gross profit was driven by our revenue growth.

Adjusted gross profit

Adjusted gross profit was RMB108.6 million (US$16.6 million), up 51.7% from RMB71.6 million in 2019. Adjusted gross margin was 60.3%, up 1.5 percentage points from 58.8% in 2019. The increase was mainly due to a favorable revenue mix with a greater proportion of revenues from sales of higher-margin models of EHang 216 AAVs.

Operating expenses

Total operating expenses were RMB204.1 million (US$31.3 million), up 68.7% from RMB121.0 million in 2019. Operating expense as a percentage of total revenues was 113.3%, compared with 99.3% in 2019. The increase in operating expenses was primarily due to the increase of RMB38.0 million (US$5.8 million) in share-based compensation expenses charged to operating expenses.
— Sales and marketing expenses were RMB37.2 million (USD$5.7 million), up
38.5% from RMB26.9 million in 2019. The increase was primarily due to an
increase of RMB10.1 million in share-based compensation expenses.

— General and administration expenses were RMB61.6 million (US$9.4 million),
up 66.8% from RMB36.9 million in 2019. The increase was mainly due to
additional expenses related to being a public company, prudent provisions
related to COVID-19 impacts, and an increase of RMB5.9 million in
share-based compensation expenses.

2021-04-16 11:05:00 GMT EHang Reports Fourth Quarter and Full Year 2020 -3-
— Research and development expenses were RMB105.3 million (US$16.1 million),
up 84.1% from RMB57.2 million in 2019. The increase was mainly due to
continuously growing expenditure for the development of new AAV models,
which covered both passenger-grade and non-passenger-grade AAVs, such as
EHang 216F and EHang 216L and the new VT series, and related operating
systems with enhanced functionalities. R&D expenses were also impacted by
an increase of RMB22.0 million in share-based compensation expenses.
Adjusted operating expenses (non-GAAP)

Adjusted operating expenses were RMB151.6 million (US$23.2 million), up 42.3% from RMB106.6 million in 2019. Adjusted operating expenses as a percentage of total revenue was 84.2%, compared to 87.5% in 2019.

Operating loss

Operating loss was RMB91.3 million (US$14.0 million), up 97.0% from RMB46.3 million in 2019. Operating loss as a percentage of total revenues was 50.7%, compared to 38.0% in 2019.

Adjusted operating loss (non-GAAP)

Adjusted operating loss was RMB36.4 million (US$5.6 million), up 15.3% from RMB31.6 million in 2019. Adjusted operating loss as a percentage of total revenues was 20.2%, compared to 25.9% in 2019.

Net loss

Net loss was RMB92.0 million (US$14.1 million), up 91.8% from RMB48.0 million in 2019. Net loss as a percentage of total revenues was 51.1%, compared to 39.4% in 2019.

Adjusted net loss (non-GAAP)

Adjusted net loss was RMB37.2 million (US$5.7 million), up 16.7% from RMB31.9 million in 2019. Adjusted net loss as a percentage of total revenues was 20.6%, compared to 26.2% in 2019.

Loss per share and per ADS

Basic and diluted net loss per ordinary share were both RMB0.80 (US$0.12). Adjusted basic and diluted net loss per ordinary share (non-GAAP) were both RMB0.30 (US$0.05).

Basic and diluted net loss per ADS were both RMB1.60 (US$0.24). Adjusted basic and diluted net loss per ADS (non-GAAP) were both RMB0.60 (US$0.10).

Business Outlook

Our business is experiencing a gradual transition into a more operation-driven model. Given our ultimate strategic goal is to build a UAM platform operator company, we view now is the right time to accelerate this process for better commercialization. Specifically, we are planning to launch a “100 Air Mobility Route Initiative” in China from 2021 and onward. We believe the time is opportune as we are getting into the final stages of airworthiness certification of our EH216 AAVs. As result, we expect the annual revenues in 2021 to range between RMB130 million and RMB180 million.

The above outlook is based on information available as of the date of this press release and reflects the Company’s current and preliminary expectations regarding its business situation and market conditions. The outlook is subject to change, especially considering uncertainties and situations related to how the COVID-19 pandemic further develops.

Conference Call

EHang’s management team will host an earnings conference call at 8:00 AM on Friday, April 16, 2021, U.S. Eastern Time (8:00 PM on April 16, 2021, Beijing/Hong Kong Time).

Please register in advance for the conference using the link provided below and dial in 10 minutes before the conference is scheduled to begin. Conference access information will be provided upon registration.

Participant Online Registration: http://apac.directeventreg.com/registration/event/7533345

A replay of the conference call may be accessed by phone at the following numbers until April 24, 2021. To access the replay, please reference the conference ID 7533345.

Phone Number
————— —————
International +61 2 8199 0299
————— —————
United States +1 646 254 3697
————— —————
Hong Kong +852 800963117
————— —————
Mainland China +86 4006322162
+86 8008700205
————— —————

A live and archived webcast of the conference call will be available on the company’s investors relations website at http://ir.ehang.com/.

About EHang

EHang (Nasdaq: EH) is the world’s leading autonomous aerial vehicle (AAV) technology platform company. EHang’s mission is to make safe, autonomous, and eco-friendly air mobility accessible to everyone. EHang provides customers in various industries with AAV products and commercial solutions: urban air mobility (including passenger transportation and logistics), smart city management, and aerial media solutions. As the forerunner of cutting-edge AAV technologies and commercial solutions in the global Urban Air Mobility (UAM) industry, EHang continues to explore the boundaries of the sky to make flying technologies benefit our life in smart cities. For more information, please visit www.ehang.com.


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