Embark Technology Reports Financial Results for Fourth Quarter and Full Year 2021

March 17, 2022

– Embark Successfully Completed Public Listing in November –

– Embark Secures 14,200 Truck Reservations Under Partner Development Program –

– Embark to Enable First Autonomous Trucks for Knight-Swift in 2022 as Part of Industry-First Truck Transfer Program –

SAN FRANCISCO, March 17, 2022 (GLOBE NEWSWIRE) -- Embark Technology, Inc. (Nasdaq: EMBK, “Embark” or the “Company”), a leading developer of autonomous technology for the trucking industry, today announced financial results for its fourth quarter ended December 31, 2021.

“The past year has been momentous for Embark as we continued executing on our mission to create a safer, more efficient, and more sustainable trucking industry,” said Alex Rodrigues, CEO of Embark. “As the industry’s longest-running autonomous truck program, we continued to achieve a number of industry-firsts on our path to commercialization, including announcing our Truck Transfer Program with Knight-Swift. This program aims to unlock the next level of integration with fleets, following the 14,200 reservations placed within Embark’s Partner Development Program, and marks the first time a carrier will own an autonomous truck, maintain and deploy the truck, and place their own driver behind the wheel.”

Mr. Rodrigues added, “Since announcing our business combination with Northern Genesis last June, we further strengthened our partnerships with Tier 1 suppliers and technology providers, including Cummins, NVIDIA, ZF, and Luminar to accelerate integration of our Embark Universal Interface into OEM vehicle platforms. The partnerships in the trucking ecosystem enable Embark’s asset-light, SaaS business model, which lets us focus on building the best technology while scaling the business in a capital-efficient way. In the year ahead, we expect to achieve additional commercialization milestones, including growing our Partner Development Program with new partnerships with leading carriers and shippers, working on integration of Embark technology with existing manufacturing partners, and expanding the Embark Coverage Map through new real estate partnerships like the one we recently announced with Alterra. I am incredibly proud of what Embark has accomplished to date and see tremendous opportunity ahead.”

Key Company Highlights

Results for Fourth Quarter and Full Year 2021
Cash and cash equivalents were approximately $265 million as of December 31, 2021.

Net loss was $76.4 million for the fourth quarter and was $124.2 million for the full year 2021. Adjusted EBITDA loss was $20.3 million for the fourth quarter compared to adjusted EBITDA loss of $6.1 million in the prior-year period. Full year 2021 adjusted EBITDA loss was $53.5 million.

Stock-based compensation was $44.2 million for the fourth quarter. Full year 2021 stock-based compensation was $47.6 million. For 2022, the Company expects stock-based compensation in the range of $70 million to $75 million, which includes approximately $10.6 million of stock-based compensation related to the Company’s Founders performance stock unit grant. This grant does not begin to vest until Embark’s share price is at least $20.00, with a vesting schedule comprised of six price-based increments up to $100 per share, aligning our founders’ interests with long-term investors.

Net cash used in operating activities was $33.2 million for the fourth quarter and was $66.0 million for the full year 2021. Free cash flow spend was $34.2 million for the fourth quarter, and for the full year 2021 free cash flow spend was $68.8 million. The fourth quarter free cash flow spend includes approximately $12.5 million of prepaid expenses and other working capital adjustments. Fourth quarter free cash flow spend excluding prepaid expenses and other working capital impacts was $21.7 million. For 2022, the Company expects free cash flow spend in the range of $125 million to $140 million.

Class A and B Shares outstanding as of March 7, 2022, equaled a combined 450 million shares.

For a reconciliation of a non-GAAP figure to the applicable GAAP figure please see the table captioned ‘Reconciliation of GAAP and Non-GAAP Results' set forth at the end of this press release. These expectations do not consider, or give effect to, among other things, unforeseen events, including changes in global economic conditions.

Webcast and Conference Call Information
Company management will host a webcast and conference call on March 17, 2021, at 4:30 p.m. Eastern Time, to discuss the Company's financial results.

Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://investors.embarktrucks.com/.

The conference call can be accessed live over the phone by dialing 1-877-407-9208 (domestic) or + 1-201-493-6784 (international). A telephonic replay will be available approximately two hours after the call by phone by dialing 1-844-512-2921 (domestic) or + 1-412-317-6671 (international). The conference ID for the live call and pin number for the replay is 13726555. The replay will be available until 11:59 p.m. Eastern Time on March 31, 2022.

About Embark

Embark Trucks, Inc., a wholly owned subsidiary of Nasdaq-listed Embark Technology, Inc. (Nasdaq: EMBK), is an autonomous vehicle company building the software powering autonomous trucks, focused on improving the safety, efficiency, and sustainability of the nearly $730 billion a year trucking market. Headquartered in San Francisco, CA since its founding in 2016, Embark is America’s longest-running self-driving truck program. The company partners with some of the largest shippers and carriers in the nation, collectively representing over 38,000 trucks.

Embark’s mission is to realize a world where consumers pay less for the things they need, drivers stay close to the homes they cherish, and roads are safer for the people we love. To learn more about Embark, visit embarktrucks.com.

Contacts
For Embark:

Investor Relations: investorrelations@embarktrucks.com
Media: press@embarktrucks.com

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Embark’s actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, Embark’s expectations with respect to future performance. These forward-looking statements also involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Factors that may cause such differences include, but are not limited to: (1) ability to expand into new markets; (2) changes in the applicable laws or regulations; (3) the possibility that Embark may be adversely affected by other economic, business, and/or competitive factors; (4) the impact of the global COVID-19 pandemic; and (5) other risks and uncertainties separately provided to you and indicated from time to time described in filings and potential filings by Embark with the U.S. Securities and Exchange Commission (the “SEC”), including those discussed in the registration statement on Form S-1 filed November 24, 2021 and other documents filed with the SEC from time to time. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Embark cautions that the foregoing list of factors is not exhaustive and not to place undue reliance upon any forward-looking statements, including projections, which speak only as of the date made. Embark undertakes no obligation to and accepts no obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.


Embark Technology, Inc.
Balance Sheets
(in thousands, except share and per share data)

 December 31,
2021
 December 31,
2020
Assets  
Current assets:  
Cash and cash equivalents $264,615  $11,055 
Restricted cash, short-term  130   65 
Short-term investments     53,553 
Prepaid expenses and other current assets  12,746   1,367 
Total current assets  277,491   66,040 
Restricted cash, long-term  275   340 
Property, equipment and software, net  9,637   6,526 
Other assets  3,596   78 
Total assets $290,999  $72,984 
Liabilities and stockholders’ equity  
Current liabilities:  
Accounts payable $2,497  $399 
Accrued expenses and other current liabilities  3,142   892 
Short-term notes payable  358   246 
Total current liabilities  5,997   1,537 
Long-term notes payable  722   512 
Warrant liabilities  49,419    
Other long-term liability  50    
Long-term deferred rent  177   130 
Total liabilities  56,365   2,179 
Commitments and contingencies (Note 11)  
Stockholders’ equity:  
Preferred stock, $0.0001 par value; 10,000,000 shares authorized, none issued and outstanding as of December 31, 2021; 260,582,311 shares authorized, issued and outstanding as of December 31, 2020     1 
Founders preferred stock, $0.00001 par value; None authorized, issued and outstanding as of December 31, 2021; 3,355,453 shares authorized 484,912 shares issued and outstanding as of December 31, 2020    *
Class A common stock, $0.0001 par value; 4,000,000,000 shares authorized, 362,832,986 shares issued and outstanding as of December 31, 2021; 150,000,000 shares authorized, 141,216,455 shares issued and outstanding as of December 31, 2020  36  *
Class B common stock, $0.0001 par value; 100,000,000 shares authorized, 87,078,781 shares issued and outstanding as of December 31, 2021; None authorized, issued and outstanding as of December 31,2020  9    
Additional paid-in capital  417,492   129,449 
Accumulated other comprehensive income     45 
Accumulated deficit  (182,903)  (58,690)
Total stockholders’ equity  234,634   70,805 
Total liabilities and stockholders’ equity $290,999  $72,984 

_________________
*Insignificant amounts are rounded to zero (“— ”) for disclosure


Embark Trucks, Inc.
Consolidated Statement of Operations
(in thousands, except share and per share data)

  Three Months Ended
December 31,
 Years Ended
December 31,
  2021  2020  2021   2020 
             
Operating expenses:            
Research and development $28,453  $5,596  $55,276  $18,831 
General and administrative  36,802   1,086   48,387   3,595 
Total operating expenses  65,255   6,682   103,663   22,426 
Loss from operations  (65,255)  (6,682)  (103,663)  (22,426)
Other income (expense):            
Other income (expense)  (6,720)  14   (12,485)  107 
Interest income  15   76   98   788 
Interest income (expense)  (4,428)  48   (8,163)   
Loss before provision for income taxes  (76,388)  (6,544)  (124,213)  (21,531)
Provision for income taxes            
Net loss $(76,388) $(6,544) $(124,213) $(21,531)
Net loss attributable to common stockholders, basic and diluted $(76,388) $(6,544) $(124,213) $(21,531)
Net loss per share attributable to Class A common stockholders: $(0.24) $(0.05) $(0.67) $(0.16)
Net loss per share attributable to Class B common stockholders: $(0.24) $  $(0.67) $ 
Weighted-average shares used in computing net loss per share attributable to Class A common stockholders:  265,804,385   140,888,909   173,156,944   138,886,157 
Weighted-average shares used in computing net loss per share attributable to Class B common stockholders:  47,325,533      12,167,200    
             


Embark Technology, Inc.
Statements of Cash Flows
(in thousands)

Years Ended
December 31,
 2021   2020 
Cash flows from operating activities
Net loss$(124,213) $(21,531)
Adjustments to reconcile net loss to net cash used in operating activities: 
Depreciation and amortization 1,074   822 
Stock-based compensation, net of amounts capitalized 47,607   842 
Change in fair value of warrants 8,206    
Net amortization of premiums and accretion of discounts on investments 270   226 
Amortization of debt discount 8,163    
Change in fair value of derivative liability 4,323    
Changes in operating assets and liabilities: 
Prepaid expenses and other current assets (11,230)  (150)
Other assets (3,518)  (3)
Accounts payable 1,957   151 
Other long-term liabilities 50    
Accrued expenses and other current liabilities 1,262   513 
Net cash used in operating activities (66,049)  (19,130)
Cash flows from investing activities 
Purchase of investments    (52,421)
Maturities of investments 53,239   74,250 
Purchase of property, equipment and software (3,353)  (2,181)
Deposit for purchase of trucks (440)  (10)
Refund of deposit for trucks 87   778 
Net cash provided by investing activities 49,533   20,416 
Cash flows from financing activities 
Cash proceeds received from convertible note payable 25,000    
Proceeds from NGA recapitalization 314,146    
Transaction costs related to merger with NGA (69,049)   
Payment towards notes payable (210)  (275)
Proceeds from exercise of stock options 189   121 
Net cash provided by (used in) financing activities 270,076   (154)
Net increase (decrease) in cash, cash equivalents and restricted cash 253,560   1,132 
Cash, cash equivalents and restricted cash at beginning of period 11,460   10,328 
Cash, cash equivalents and restricted cash at end of period$265,020  $11,460 
        


Reconciliation of GAAP and Non-GAAP Results

Embark Trucks, Inc.
Reconciliation of Adjusted EBITDA
(in thousands, except share and per share data)

 Three Months Ended
December 31,
 Years Ended
December 31,
 2021  2020  2021   2020 
            
Net loss $(76,388) $(6,544) $(124,213) $(21,531)
Interest income and expense, net 4,413   (124)  8,065   (788)
Depreciation and amortization 318   262   1,074   822 
EBITDA (71,657)  (6,406)  (115,074)  (21,497)
Stock-based compensation expense(1) 44,171   272   47,607   842 
Change in fair value of warrant liabilities(2) 8,206      8,206    
Change in fair value of derivative liability(3) (1,460)     4,323    
One time transaction related cost(4) 413      1,413    
Adjusted EBITDA$(20,327) $(6,134) $(53,525) $(20,655)
            
            
(1) Reflects, for the years ended December 31, 2021 and 2020, stock-based compensation expense related to the issuance of equity awards to certain Embark employees, the issuance of our Class B shares to the Embark Founders, and issuance of equity awards for non-employee services.
(2) Reflects the increase in the fair values of the Company's private, public, FPA and working capital warrants.
(3) Reflects the change in the fair value of the embedded conversion and redemption features, which are presented as a derivative liability, related to the convertible note payable.
(4) Represents one time transaction related costs, which are not expected to recur in the future.
     


Embark Trucks, Inc.
Free Cash Flow
(in thousands, except share and per share data)

 Three Months Ended
December 31,
 Years Ended
December 31,
 2021  2020  2021  2020 
            
Net cash used in operating activities (GAAP)$(33,191) $(6,826) $(66,049) $(19,130)
Capital expenditures (973)  (722)  (3,353)  (2,181)
Truck deposits, net of returns    (10)  (353)  768 
One time transaction related cost(1)       1,000    
Free cash flow (Non GAAP)$(34,164) $(7,558) $(68,755) $(20,543)
            
(1) Represents one time transaction related costs, which are not expected to recur in the future.