Q4 2021 GreenPower Motor Company Inc Earnings Call

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Good morning, and welcome to the Green Power Motor Company fiscal 2021 earnings call.

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After todays presentation, there will be and opportunity to ask questions to ask a question you May Press Star then 1 and your telephone keypad.

Your question. Please press Star then 2.

Please note this event is being recorded.

I'd now like to turn the conference over to Michael Sheaffer. Please go ahead.

Thank you. This is Michael secret, the Chief Financial Officer of Green Power and Motor company, we'd like to welcome everyone to our call today to discuss Green power as financial results for the year ended March 31.2021.

And I'm here today, with our Chief Executive Officer, Frazer Atkinson, and our President and Brendan Riley.

During today's call, we may make comments or statements about our future expectations plans and prospects, which may constitute forward looking statements for the purpose of the safe Harbor provision under the private Securities Litigation Reform Act of 1995.

Applicable Canadian Securities laws.

Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed and our quarterly and terms statements and the MD&A filed on SEDAR and Edgar.

In addition, these forward looking statements relate to the date on which they're made.

We anticipate that subsequent events and developments may cause the company's views to change green power disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise.

Also during the course of today's call we may refer to certain non I F. R. S financial measures reconciliation of these non <unk> measures can be found in our MD&A filed on SEDAR and Edgar and is also located on our website at Www Dot Green power motor Dot com.

I'll now pass the call over to Green power CEO Tracy Atkinson.

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Thank you Michael and thank you for joining us today.

Before Michael and Brendan and weigh in on our financial results and company operations, respectively. I wanted to take them, all and Montana, where do you some of the mandates and financial programs, serving as growth drivers per our company.

Well Green power and now has many sales opportunities that do not require any and Santos.

We continue to pursue every opportunity for those which due to leverage our sales potential.

First let's look at several mandates.

Not number 1 at the federal level, the new clean buses for kids program plans to electrify 20 per cent of the country's 500000 yellow school bus fleet.

Last year, we increased our production to 5 school buses per month, which we increased to 10 per month and this fourth quarter.

Secondly car.

Corporations with significant fleets of passenger and delivery vehicles are setting and electrification targets now we.

We entered into an agreement with Forest River to supply R. E V. Starr cabin chassis. So they can manufacture and all electric cutaway to address a number of these opportunities.

Sure.

Leading airports such as L. A ex have announced its shuttles or buses operating on their property must be zero emission vehicles before 2030.

This quarter, we delivered 5 E 250, 30 foot all electric buses for shuttle operations at ally ex Airport.

And then there are the financial programs.

VW mitigation try and funds our entire supporting the purchase of all electric school and transit buses along with numerous state programs.

And powers vehicles are listed among others on the New York, New Jersey, British Columbia, and Canada, and California H per programs.

On June 8 and California 8 per program opened up its voucher program and and less than 3 hours $84 million and vouchers had been fully allocated for over 900 vehicles.

Which the results have not been officially announced and.

And the meantime, according to the California Air Resource Board.

That oversees the HBV program prior to the last allocation Green power has the second highest amount of vouchers per current Oems and has the highest ratio of deliveries out of the top 3 Oh, yes.

In conclusion, we've seen significant sales activity across these programs and we expect that trend to continue as new programs and new mandates at various stages of implementation and come to fruition.

I'll now pass the call to Michael Sheaffer Green power CFO to go into further detail on our quarterly financial results Michael.

Thank you Fraser.

For the quarter ended March 31, 'twenty 'twenty, 1 green power reported revenues of $4.4 million and cost of revenues of $3.2 million generating a gross profit of over $1.2 million or 26, 7%.

Revenue increased 76 per cent compared to the fourth quarter of the prior year and was generated from the delivery of 5 E V..2 <unk>, which are being deployed for passenger shuttle service at LD ex airport and for which Green power provided lease financing and from the sales 30 E. V stars that were previously on lease with another customer and as well as from a sales.

Parts and from interest income on financial leases.

For the year ended March 31, 'twenty 'twenty, 1 and Green power recorded revenues of $11.9 million and cost of revenues from approximately $8.3 million generating a gross profit of $3.6 million or 31% of revenues.

Revenue was generated from sales of 33 V stars and the lease of 35 you'd be stars and 5 you need 2 fifties from sales of Chargers and parts and from interest income from leasing.

We finished the quarter with finished goods inventory of approximately $2.4 million, which was comprised of 70 D Star trains at plus 7 and leave you start cabin chassis to EV stars and then you'd be $3.50, as well as charging stations.

Continued to invest and production of EV, Starz and B school buses and ended the quarter with approximately $10 million and work in process inventory, which.

Which was primarily comprised of our various models would be stars as well as beef type day school buses, which we expect to begin to deliver this summer.

We have ample liquidity to continue on the current rate of production with $30.8 million and working capital $15.2 million and cash and Undrawn line of credit as.

And as well as a strong balance sheet with total assets of $39.6 million and total liabilities and less and the 3 and a half million.

We continued to scale up our business for the increased sales activity that we anticipate.

We have hired several seasoned professionals and operations and going forward, we will continue to hire additional staff and areas, including sales and service engineering QA QC operations Finance production planning and project management and procurement.

We continue to manage costs carefully while we scale up the business our cash cost for the quarter were just over $2 million compared to approximately $1.9 million and prior quarter.

We continued to build out our infrastructure and resources to continue on their growth trajectory. We anticipate the cash costs will continue into 2 increase overtime.

I'll now pass it over to Brendan and for some operational highlights.

Thanks, Michael and good morning, everybody.

This is Brendan Riley President and the Green power Motor Company.

Recently, we made considerable progress towards our goal of integrating E V Starr platform and.

And more specifically and you can start cab and chassis.

And the major final stage manufacturers as we delivered our first 5 units divorce River.

Forest River and some of you may know is the market leader and the cutaway.

Market.

And market leader and.

And the RV market with over 10000 traditional and.

Internal combustion units sold annually and.

And 2 a 15000 unit total addressable market for their Starcraft model alone.

And the Starcraft model remains our initial focus and integration is ongoing today.

Later in the summer, we anticipate the start of Altoona testing, which will cover this unit.

And this will further open access.

And federal funding, our transit properties and Altoona testing as a requirement.

For those of you who aren't familiar green power.

Our product and E V Starr.

And as Pascal tuna, just prior to the pandemic and March of 'twenty, and 'twenty with the highest score and altura and a history.

Any.

Medium or heavy duty vehicle, the second highest of any vehicle of any type.

We are continuously assessing.

Our sales pipeline and an effort to align our production capabilities with future demand and.

And doing so just this month.

Further increased our production rate of these dollars with additional increases expected and the very near future.

Our production ramp began in the fall of 2020 and those units right now just starting to roll off bar line.

Green power and ideal position.

Economy Reopens and.

Customer demand for heating solutions rapidly solidifies.

Part of that increase late last fall and early this year was to expand the production of our beef.

That's our type D. All electric school bus.

And just school bus per preceding capacity.

Produced today.

And I'm pleased to say that we expect our first units to roll off the production line.

Summer next month actually.

For immediate delivery to customers before the end of the summer.

Based on market feedback additional protect production increases are again.

Other likely in the near future.

Collectively the combination of HFF window opening back up on the DNA of this year.

Having expanded level of inventory available for customers, making their first material deliveries and the B School bus this summer and ongoing relationship with Forest River are all pointing to a very strong second half of the year.

Here at Green power.

With that I'd like to hand, it up and excuse me I'd like to hand, it over to Chad our operator to open up the Q&A. Thank you.

Thank you Sir we will now begin the question and answer session to ask a question you May Press Star then 1 on your telephone keypad.

And if youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then 2 at.

At this time, we will pause momentarily to assemble our roster.

And the first question will come from Chris Souther with B Riley. Please go ahead.

Hey, guys. Thanks for taking my question here.

So.

And in the corner.

You mentioned and the release 30 vehicles sold the game.

I assume those were previously leased a green commuter are those guys still taking deliveries on their order backlog and how much how many orders do you have left and the backlog with them and maybe you could just talk a little bit broader.

And the overall backlog understanding there's some it sounds like theres some uncertainty with how many.

And orders, you'll be able to get through that each fit program.

Yeah.

So well do.

Do you want to address the hurt the sort of the leasing arrangements.

Arrangements right in terms of our financial and then I can sort of talk about where the H B a program is and.

And then Brendan can address the sort of the customer relationship side of that question. There's a lot of a lot of elements to your question there Chris.

Yeah, no absolutely so Chris Green and commuter remains.

A great partner for us.

As you know they operate a basically a shuttle service within the greater L. A area, where they'll lease out to other companies. Both on the you know for primarily things like employee shuttle services and the like.

During the pandemic like most businesses.

The volume of business went down however, we do anticipate those things are starting to open up now but that volume is going to continue to increase so these.

Nichols, we're sold I would say really you know Opportunistically you know, we have a customer who needed them.

And they found them temporarily surplus and their needs.

You still have a significant backlog with green and commuter you know, we anticipate that we will be delivering to them.

And in the coming months and you know going forward and I believe our backlog is still over 100 vehicles with green commuter.

And so I'll pass it over to Frazer, maybe to address some of the other elements.

And I presume.

Yeah on the on the age fifth side. The you know as I noted in my earlier comments. The program. How are reopened on June 8 they were sold out in less than 3 hours by our estimation.

Based on what they were publishing on their website that day.

And they have announced or when they announced that the.

The first tranche of funding that they've made available on June 8 that sold out that that it provided funding for over 900 vehicles, what 1 needs to.

Appreciate is that you know and the past they they got a handful of ultra requests and any given day so to get a request for not just the over 900 vehicles, but presumably even more and a matter of half a day does take some time to sort out.

And which we expect will be the case long before they open up a second tranche, which will be at 10, a M. On Tuesday August tap they make the second tranche of $83 million available. So you know the.

All were in a position to do this at this time state and stay tuned our you know and.

And I will make the announcements at the appropriate time and otherwise you know the day.

The the program.

<unk>.

We've had.

And I had a lot of success and the past and this is certainly a program that we're well familiar with.

And I understand that.

That's helpful. Maybe just with the June quarter closing the week, what was production and deliveries are in and kind of the current quarter. That's finishing up here. If you could provide that I think would be helpful for people and then yeah.

Just maybe just start with that then.

So we haven't we haven't announced.

Announced where we're we're going to be so and you know we've got a few days today and tomorrow to close out the June 30 quarter.

But.

You know what you know what we're trying to focus.

The all our efforts on <unk> as you know they are the deliveries have will be occurring through the summer Ah that will really help ramp up.

The September 30, and the December 30 per quarter, So, we hope to and we'll kind of get out the.

And the numbers as soon as a practical or P. L as possible and otherwise you know, we haven't given guidance or any indication as to what those numbers would be.

Okay. Thanks, guys I'll hop in the queue here.

Once again, if you'd like to ask a question. Please press Star then 1.

The next question will come from Jacob Green with BTG. Please go ahead.

Thank you and good morning, just to touch on on the backlog again with the Forest River of 150 vehicles, where you're able to deliver that I think it was 6 that were originally guided in that quarter and do you have any more clarity on the pacing for the remaining orders.

Hi, This is brendon with green power and thanks for the question.

Jacob.

And we actually delivered 5 units ER to ER for sugar, So far and we announced those are those are currently being integrated with their.

Starcraft body and we are.

Waiting and complete that integration for we really have an idea of what our run rate will be.

And we haven't mentioned what our run rate will be we expect it to start a little slow like these 5 units.

And then go from there but.

I think you can imagine if the product is successfully integrated which we have no doubt given force river's experienced.

That oh, and with the address them addressable market and just with demand and places like California alone.

We expect a significant a number of E star cab chassis and integrated with the Forest River body.

And actually built on a regular run rate and on a regular basis.

Sure absolutely and then you know a couple of months ago.

There was a lot of talk about the new buy America from from this administration, and and and movement and strict and I'm, making the percentage a little more strict I believe it was 50%.

What where this green power fall within that if it were push from 50 to say 70, 80% would you still be eligible can you give any color there.

Certainly so right now the buy America percentage for the transit vehicles is actually already at 70 plus percent.

And we're able to meet that.

Much higher than 70% would be pretty difficult because there are some products and components that are sourced internationally.

Europe Asia Latin America.

And other places to be perfectly honest.

It is a pretty global market.

And especially automotive and speaking.

And are we.

We don't believe that it would be realistic.

And not just for green power, but for any other manufacturer and our space.

To really increase it more than where it is now at 70%.

And no we've not been given any guidance yet from the current administration.

And any changes and the buy America program.

And for any products.

Thanks, guys appreciate the color I'll pass it back.

Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Frazer Atkinson for any closing remarks.

Thank you.

Just in closing we expect to see the first deliveries of the increased production of our EV start starting in the next few weeks and.

And as Brendan noted.

The first of our Beast School buses later, this summer, which will positively impact our September 30th quarter and the full run rate from our current production and our December 31st quarter.

As a as we stated in our press release, we believe that we are on track to achieving our goal of attaining positive quarterly cash flow by the middle of our current fiscal year.

We realized that this call is early today. So if you do have any if you were listening to this on a prerecorded call at a later time or date feel free to follow up with any questions by calling Brendan my car and myself.

Thank you and have a great day.

And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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