XL Fleet Corp. (NYSE:XL) (“XL Fleet” or the “Company”), a leading provider of fleet electrification solutions for commercial vehicles in North America, today announced that, following a statement published by the Staff of the U.S. Securities and Exchange Commission on April 12, 2021 regarding the accounting and reporting of warrants issued by special purpose acquisition companies, the consolidated financial statements as of and for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed on March 31, 2021 should be restated.
The restatement will be isolated to this change in accounting treatment, which the Company believes also applies to a significant number of companies, and has no impact on historical or forward-looking cash flow and operations of the Company. Additionally, the Company believes that the change in the accounting treatment of the warrants will have no effect on XL Fleet’s current and future business operations, competitive position or business strategy.
The restatement pertains to the accounting treatment for both public and private placement warrants that were outstanding at the time of the business combination between a wholly-owned subsidiary of Pivotal Investment Corporation II and XL Hybrids, Inc. that occurred on December 21, 2020.
As a result of the restatement, these warrants which had previously been accounted for as equity, will be accounted for as liabilities. The Company therefore expects to recognize incremental non-cash non-operating expense in its Statement of Operations of approximately $25 million to $45 million for the year ended December 31, 2020. The Company expects that there will be no impact to its historically reported cash, or cash flows from operating, investing or financing activities. These estimates are unaudited, preliminary, and subject to change as management completes the restatement.