Q3 2021 Lion Electric Co Earnings Call
Good morning, ladies and gentlemen, welcome to Lions Electric's third quarter 2021 results conference call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded I would now like to turn the call over to Isabel that dry Vice President Investor Relations and sustainable development. Please go ahead Mr dry.
Thank you and good morning, everyone.
When it comes to Lyons third quarter 2021 results conference call.
Do you have when you're in a coffee all city furniture. So whenever you definitely see pleasant commenced do they need to meet the Santander deal.
While today's call will take place in English, we would of course be delighted to answer any questions in French during the Q&A session.
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With me today are Mark <unk>, our CTO funder and Nicola.
Our executive Vice President and Chief Financial Officer.
Before we begin I would like to mention that during the call. We will make certain forward looking statements regarding our future business expectations, which involve risks and uncertainties.
Forward looking statements are predictions projections and other statements about future events that are based on current expectations.
And certain material factors and assumptions and as a result, they are subject to risks and certainties.
Many factors could cause actual fits pretty events to differ materially from the forward looking statements on this call.
For more information about factors that may cause actual results to materially differ from forward looking statements.
Please refer to our filings and the risk factors contained in our non offering prospectus dated may five 2021, five with although he did you I'm not sure if you don't see.
And to reserve registration statement on form F. One filed with the Securities and Exchange Commission and declared effective on June 14 2021.
You can also contact with the documents publicly filed with the aim of <unk> N V C.
Forward looking statements on this peak as I've said that they are made.
You are cautioned not to put undue reliance on forward looking statements and we undertake no duty to update this information unless.
As required by law.
Finally.
Please note that we report in U S dollars and under Ifr at this.
How much today.
They refer to certain non <unk> financial measures such as adjusted EBITDA.
And certain performance metrics, such as the companies or the book, which are defined fully described and in certain cases as reconciled in our earnings release and MD&A issued yesterday evening.
With that I would now and the call over to market with that.
Mark.
Thank you Bill good morning, everyone and thank you for joining us this morning.
I am pleased to be here with you today to discuss our Q3 performance and provide an update on our business. A lot has happened since we last spoke and more than ever before we can feel that the switch to electrification is accelerating as shown by the growth in our order book as a reminder.
Lion manufacturers, 100% electric medium and heavy duty trucks and.
Buses are vehicles, which have been on the road. Since 2016 are purpose built for electric we do not do any vehicles retrofitting. We are the leader in electric school buses in North America. We are the only OEM to manufacturer purpose built electric school buses in North America and.
One of the very few Oems to manufacturer purpose built electric trucks also we are exclusively focused on electric.
We do not do I bridge, nor any other powertrain systems than electric.
And we have more than 450, all electric vehicles on the road with more than 8 million miles driven.
In addition to the vehicles that we manufactured today. We are currently lapping eight new models, which we expect to launch in 2022.
Our product development efforts leverage more than 10 years of focused R&D in the EV space, we firmly believe that concurrently manufacturing.
And distributing vehicles, while developing new platforms.
Uniquely positions lion to leverage its first mover advantage and continue consolidating its leadership in the EV space as the future clearly is electric.
Here are the three elements I would like to discuss on today's call before passing it on to Nicholas who will discuss our Q3 financial performance.
First we continued to see strong momentum in the shift to electrification in medium and heavy duty vehicles as evidenced by our rapidly growing order book driven by large multi year orders and increasing pace of repeat orders from existing customers and continued very strong on <unk>.
It entered support from policymakers.
Second.
The global supply chain challenges have impacted our ability to manufacture complete units and deliver complete vehicles in Q3.
While we expect this external pressure to remain well into 2022.
Yes, and continue to undertake measures to mitigate the impact on our production and performance.
We will explain why these measures are and why we believe they are the correct ones.
Third we continue to execute on our strategic plan, including our two flagship projects the development of new vehicle platforms and the continued build out of the alliance ecosystem and alliance team.
Let me start by elaborating on point number one the strong momentum in fleet electrification.
We see a clear movement towards fleet electrification.
Driven by strong societal and corporate will to eliminate emissions and reach carbon neutrality.
This is further evidenced by all discussions happening at the Cop 26 summit.
As an increasing number of stakeholders.
<unk> to reach net zero emissions.
And to implement initiated to Decarbonize, the transportation sector, citing electric vehicles as one of the main tools already available to policymakers companies and countries to fight the global climate crisis.
This is reinforced by attractive policies and programs supporting fleet electrification as well as by the potential find that attractive total cost of ownership due to significantly lower fuel and maintenance cost.
Lyons impact on the zero emission industry in the United States and Canada is unmistakable.
We continue to be a driving voice and policy adoption and education on the realities of zero emission transportation.
Ryan that's pushed this market by delivering vehicles and removing arguments against this inevitable in history, making evolution and transportation.
Whether it is our deployment and commitment to EV or the pressure we have put on the market to develop EV platforms.
The U S and Canadian governments will not be talking about the electric school buses with our plumbing and creating this market in the U S and Canada over five years ago. All of these combined show a positive outlook for line, specifically and for the global lead the industry in general.
This movement towards fleet electrification as led to an acceleration of customer dialogue and ultimately he rapidly growing order book for Lion.
As of today.
Our order book consists of 2024 vehicles more than doubling since our release up Q2 results. It.
It represents a combined total order value of approximately $500 million.
Proximately App of these orders are deliverable between now and the end of 2022.
Our order book includes 1000 vehicles related to the conditional purchase order from student transportation of Canada for.
For which our funding application has been submitted on their infrastructure, Canada zero emission trends at the Sun program or Z E. T. F. At $2 75 billion dollar program supporting fleet electrification in Canada.
These 1000 electric school buses will be delivered over approximately five years.
As we continue to engage with customers around the E T F.
We expect to see more of these multi year orders supporting large scale fleet electrification of course the E. T. F is only one example of policies and programs supporting fleet electrification in.
In the U S policymakers at all levels of government are reiterating their commitment to electrification.
For example, the infrastructure investment and jobs Act, which was passed by the house of Representatives last week, and there's a waiting prisoners bite and signature will unlock sizable funding support towards fleet electrification across the United States as it earmarked billions of dollars for electric vehicles and clean energy.
Specifically this program includes a.
The funding of $5 billion for the purchase of zero emission and clean fuel school buses through fiscal years 2022 to 2026 Alpha.
As of this funding is exclusively reserved for electric school buses.
The Act also includes $7.5 billion of funding for the deployment of charging infrastructure for electric vehicles.
Okay.
Although this is only the beginning.
This represents the largest federal investment in EV in United States history during prisoner violence resent address to the nation, you specifically called out replacing all diesel school buses with battery electric and there is more on the October 28, and new funding round of HVAC for an additional.
$62 million opened two applications, reflecting the enthusiasm of both public and private sector customers.
On October 7th the New York City Council confirmed its commitment to electrify all school buses by September one 2035. This applies to approximately 9500 school buses and these are just a few examples among many others.
If we specifically look at the Quebec market there.
<unk> M TQ subsidy program, which we discussed last quarter also had a very positive impact.
Under this program customers benefit from our subsidy among thing from 100000 to $150000 per vehicle.
Additionally, since November one 2021 every new school bus registered in the province of Quebec must be an all electric school bus to date orders for close to 400 Electric school buses benefiting from this program have already been confirmed as part of our order book.
Additionally.
The Quebec government announced drink Cup twenty-six last week that its entire fleet, including heavy duty vehicles will be entirely zero emission by 2040, which represents a significant number of vehicles and implies that the province will not be buying other vehicles and electric vehicles starting in.
2030.
As a reminder.
The Lion Grand team is ideally positioned to help our customers navigate and sicker funding in this complex environment as it is eileen knowledgeable of existing programs and subsidies available on both sides of the border.
Last.
A word on our Alliant energy team, which also plays a crucial role for our customers selecting and installing charging infrastructure is a critical step in the customer's journey to electrify their fleet.
Brian being an agnostic reseller and having security I inventory of charging equipment, we are able to offer a wide variety of charging equipment options to our customers installed in a timely manner, even in the current environment of global supply chain challenges that is also impacting the charging infrastructure.
Manufacturers.
As of today.
Our order book of 187 charging stations and related services represents a total order value of approximately $2.5 million more than double the value disclosed last August.
Both the Lion energy and land grant teams are pillars of the alliance ecosystem, which aims to handle all critical aspects of our successful transition to EV.
To offer the best service to our clients, we continue to expand our direct service network and expect to have a total of 14 experience centers and the operation throughout North America by the end of this year.
We also recently announced the first lien other rice service matter that will complement lines experience centers for repair and maintenance in regions, where a significant number of land vehicles are on the road last in line with this approach we launched a pilot with Dickinson fleet in mobile service company to <unk>.
Increase our service coverage in the Bay area of California, where we have a large pool of customers.
Lets now address the impact of global supply chain challenges on our two three manufacturing operations in deliveries like.
Like many other companies across industries and across the globe global supply chain challenges impacted our operations and those of our suppliers and ultimately hindered our ability to manufacturer complete units and deliver complete vehicles.
Despite our approach to overstock critical leave you components, such as batteries and motors.
Our ability to manufacturer complete vehicles became increasingly challenged as we advanced through the third quarter. As a result, we delivered 40 vehicles during Q3.
And finished the quarter with 50 vehicles that were substantially completed as part of our work in progress inventory.
To be clear.
Although our deliveries for Q3 were a significant increase compared to the 10 vehicles. We delivered in the same period last year. This number was significantly below our objective.
Let me spend a minute on our supply chain challenges.
Yes.
As mentioned last quarter.
We were pleased to have secured the inventory for critical components, such as batteries motors and other more critical components, we weren't therefore not impacted by shortage for any of these parts.
Looking specifically of batteries. We currently have more than 1500 battery packs on N and approximately 600 in transit.
The main supply chain challenges, we encountered were mostly due to shortage of typically less critical components.
As metals Assembly plastic components at these is in wire harnesses. In addition to extended lead times for delivery of many parts and raw materials.
All of these parts regardless of their size are necessary for us to finalize and deliver our vehicles that include approximately 2000 parts on each of them.
And several other cases, our suppliers, we're the ones affected by raw material sourcing challenges and production slowdowns caused by labor shortages.
The good news is that our teams at some solutions to address the challenges, we encountered and I would like to thank them for their agility in doing so.
Let me take a minute to discuss some of the initiatives we have undertaken.
First we have accelerated the multi sourcing strategy, we already had in place in parallel the supplier relationships, we have built over the past years.
That allowed us to quickly react to this uncertain environment and avoid total disruption in our supply chain.
Not only did we remain in constant dialogue with our suppliers, but we multiplied and accelerated discussions to onboard new suppliers and increased supplier redundancy for specific parts.
Our objective is twofold navigate through the current environment, while at the same time garner long term partnerships for a ramp up in production today.
Today, we are sourcing from approximately 500 suppliers.
As compared to 430 at the end of the last quarter.
We have also increased reliance on local sourcing.
Which we will continue to do both in Canada and in the United States.
Our objective is to keep the lapping of supply chain that will be as close as possible to our manufacturing plants.
In addition to supplier redundancy. We also undertook several initiative to unclog, the supply chain, including sourcing raw materials directly on behalf of some of our component suppliers.
As an example, we acquired large quantities of specific coiled steel used in the fabrication of our vehicles buddies and chassis directly from global suppliers and then distribute this material to our supply base. This.
This creative strategy increased our short term visibility and ultimately reduce our suppliers' lead time.
We also increased in house fabrication and even redesigned.
Certain sub assemblies to circumvent parts most affected by supply chain challenges such as connectors used in the fabrication of our alumina I voltage wiring harnesses.
Our engineering and vehicle integration teams worked in unison to create qualifying and integrate new and innovative luann I voltage wiring arnez designs and control systems using readily available standard automotive components.
In a nutshell.
Oh the initiatives I, just described enabled us to mitigate the negative impacts of the global supply therefore, keeping our manufacturing operations running even if we had to delay some of our customer deliveries due to missing components. Many other Oems cannot do so and had to shut down their operations.
The last point I would like to comment on in this section is the impact on the bill of materials.
Although we have not been materially impacted this quarter, we expect to see some further pricing pressure going forward until the global supply chain situation goes back to normal.
While we are confident in our ability to navigate through this challenging environment. We believe that this global supply chain crisis may persist well into 2022 like.
Like anybody else it is difficult for us to predict the exact moment things will go back to normal.
But we will continue to take tangible actions to mitigate the impact of this crisis on our production levels.
To conclude on this topic.
Focus and agility are integral parts of our DNA.
These are some of the elements that have helped us build our company over the last 13 years and position Lion as a first mover in the electric vehicle industry. We are confident that this mindset coupled to the initiative I just discussed will both enable us to maintain production and improve the long term strength of.
Our supply chain, that's making us a stronger company.
Let me now discuss other elements of our strategic plan, including progress on the art flagship projects vehicle development and alliance team.
First.
John F S L G I.
I am pleased to report that the construction of our Illinois plant the largest factory for medium and heavy duty electric vehicles in the United States and Canada is going very well with 90% of the shell building now completed we expect to take possession of the building next month.
During the quarter. We also completed the detailed manufacturing layout and selected suppliers for critical equipment to be installed in the first half of 2022 with.
Each will trigger important capital expenditures so far.
Expenditures towards the project have mostly been insured by the landlord as building related investments.
We continue to expect vehicle to roll off the assembly line in the second half of 2022.
Now turning to the battery facility, an innovation center, which we referred to as the Lion campus.
Two we are very pleased with Q3 progress.
During the quarter.
We completed the detailed manufacturing layout and the technical programming of the battery facility and are now focusing on doing the same for the innovation Center. We continue to expect the first batteries to roll off the Assembly line in the second half of 2022.
In conclusion for both of these projects.
We are working with our suppliers and vendors to make sure ordering and installation timelines are aligned with our planned start of operations. We will continue to update you through our quarterly calls.
On the new vehicle front.
Our team is making steady progress in the development of eight new platforms expected to be launched in 2022.
Which will mean that with 15, all electric models available for sale, we will have the largest purpose built product lineup in the industry.
A few weeks ago.
We were pleased to infill the E. FX ambulance developed in partnership with <unk>, a leading north American manufacturer of ambulance vehicles.
This electric ambulance, which will be the first all electric and purpose built ambulance will be mounted on the alliance five chassis.
It is the result.
Five years of work between the Maryland Lion.
Under our agreement chassis will be manufactured by Lion and then sold to the mirrors the merits will be responsible for the medical compartment final assembly and for selling the final product to the end user.
The agreement with the Merc contemplate the deployment of a minimum of 1500, all electric ambulance is over the next five years.
We believe that this type of agreement.
<unk> with our channel sales model.
As a potential for significant volume leverage.
Our sales strategy is to partner with I quality equipment manufacturers and up Fitters and target market segments that service our customers.
Making use of the channel partner network can rapidly accelerates cells by leveraging established distribution networks and very specific verticals and.
In parallel <unk> will continue to use it as direct sales team, which will create a pushball sells model to increase brand awareness and drive volume in target markets.
As with other platforms, we expect the line five to be available by the end of 2022.
Let me now provide a brief update on the alliance team.
As of today, we have approximately 950 employees.
As previously discussed we currently have two thirds of their required labor to manufacturer 2500 vehicles per year.
During the quarter, the cadence of our recruitment efforts as being aligned with our production levels as we manage through supply chain challenges.
As far as recruitment for the Joliet plant is concerned we.
We are finalizing the analysis of requirements and ramp up based on our business plan and strategic dates we expect hiring to accelerate in the first half of 2022.
We are working with a similar timeline for the battery plant.
For which critical positions and priorities have been identified there again, we expect an acceleration of the hiring process in the first half of 2022.
In conclusion as you can see.
We continue to make significant progress even if supply chain challenges are currently creating temporary headwinds.
We are optimistic that by focusing on building a solid order book straightening, our long term relationships with our suppliers being agile in our manufacturing process and executing on our strategic projects, we are solidly and coring the foundations of sustainable long term growth.
With that.
Let me now turn the call over to Nicholas.
Who will comment on our financial performance.
Thanks Mark.
Mark mentioned, although more affected by global supply chain challenges that we and our suppliers had expected our teams continued to focus on the manufacturing and delivery front.
During the quarter, we delivered 40 vehicles, including 28 school buses and 12 trucks.
28 of these deliveries took place in Canada and 12 in the U S.
Payors that 10 school bus deliveries in Q3 2020.
As a result, Q3 2021 revenue was $11 9 million up $9 3 million as compared to $2 $6 million last year.
Our gross profit amounted to negative $1 $2 million down 0.7 million as compared to negative zero point $5 million a year.
This quarter the decrease in gross profit was mostly due to an increase in fixed manufacturing costs related to the ramp up of production capacity, namely salary benefits and other overhead costs.
Continuing with the administrative expenses.
Mount it to $10 million, including $4 5 million and noncash share based compensation, a decrease of $16 7 million as compared to $26 $7 million in Q3 2012.
This was mainly the result of a significant decrease in noncash share based compensation of $20 $8 million.
Actually offset by an increase in expense and expenses, reflecting our transition to being a public company and the expansion of our head office capabilities in anticipation of an expected increase.
Selling expenses amounted to $5 2 million, including $1 $5 million in noncash share based compensation.
A decrease of $3 9 million as compared to $9 $1 million in Q3 2012.
The decrease in noncash share based compensation of $6 million was partially offset by the impact of the expansion of line sales force as well as an increase in expenses associated with experience centers in.
In Q3, we posted net earnings of $123 million. This was mainly as a result of the decrease in the fair value of share warrant obligations related to the lower lion's share price at the end of the quarter.
Adjusted EBITDA was negative $8 8 million for Q3 compared to negative $2 $8 million in 2012.
Adjusted EBITDA includes adjustments for certain noncash and nonrecurring items, namely change in fair value of share warrant obligations.
Share based compensation and other nonrecurring expenses.
I'll discuss cash flow cash.
Cash flow from operations for Q3 were negative $37 million inclusive of $22 $8 million of changes in working capital as we continued to scale the business and overstock critical components that mitigate global supply chain challenge.
During the quarter acquisition of intangible assets, which mainly consist of R&D activities amounted to $9 5 million up $5 1 million as compared to $4 $4 million last year.
Capex increased to $5 million as compared to zero point $7 million last year.
We expect Capex to increase significantly after we take possession of the Joliet, Illinois building in the fourth quarter and start installation of critical equipment as well as continue to build our battery innovation Center.
Last but not Lee our balance sheet remains solid we ended the quarter with $318 million in cash and access to a committed revolving credit facility in the maximum principal amount of $100 million as well as support by the Canadian Federal and Quebec government.
Of up to 100 million Canadian dollars in connection with the planned construction of our battery manufacturing plan and innovation.
Which we referred to as the lie in Canada.
In conclusion, although Q3 deliveries were below our objectives, we will continue to take tangible action that mitigate the impact of global supply chain challenges will have on our production and we will continue to focus on purchase orders production and delivery.
Our active.
Thanks Nicholas.
Before we open the lines for questions.
Let me conclude by reiterating that agility and flexibility are what has helped us during the last 13 years to build a strong company we are today.
Although currently impacted by elements outside of our control our focus as enabled us to be a leader in the commercial leave industry and one of the only companies with 100% electric vehicles on the road as we speak.
I can assure you that as a team.
We will continue to focus on what we control, namely executing our strategic plan and on putting in place all the elements for long term sustainable profitable growth.
As the 2021 United Nations Climate change conference comes to an end. It is crucial that we collectively continue and accelerate the decarbonization of transportation.
That positive trend to electrification.
Which is an underlying condition that successful shift clearly is happening now as we speak.
And we will continue to support this forward momentum.
Operator, let's go ahead with the general efficiencies.
If you would like to ask a question. Please press Star then the number one on your telephone keypad again that is star then the number one.
And your first question comes from Kevin Chiang with CIBC.
Yeah.
Hi, Good morning, everybody. Thank you. Thank you for taking my question here.
Maybe if I could just ask on on the supply chain disruptions and it looks like Youre doing a good job managing through them, but just wondering how that potentially impacts I guess the profitability of your of your backlog or book of business to the extent that the supply chain adjustments youre, making arent.
Relation Larry to your cost structures is that something you can you can recoup or or or is that just a margin hit you got to take as you kind of work through the backlog.
Yes. Good morning, Good morning, Kevin This is mark.
Yeah very good questions very good question.
First I should say that you know the good thing is that our customers are ready to take those units. So even if the deliveries I mean, we're not at the levels. We were expecting we do those customers I mean waiting for those those units which is.
Which is which is great and thanks for your kind words on the on the management of the supply chain.
Nick do you want to go through the year.
Yes, yes, Kevin I'd say that the measures that we're taking are not inflationary in nature, but we are.
Inflationary environment, we haven't seen this in our bill of material in Q3.
But we do see this in the in the supply of the dialogue.
There are two sort of different things working at the same time number one is that inflationary environment and number two is the cost out program on which we're working.
In the short term the supply chain the global supply chain issue caused inflationary pressure.
Yes.
Does.
Including on transportation costs, but in the.
In the longer term, we're certainly confident in the cost out program.
Ability to reduce development.
Okay that makes sense.
Maybe just my second question here.
The third quarter, you had a number of.
Successful commercial agreements.
Announced one of them was the all electric ambulance Oh this partnership.
And I'm just wondering.
It looks like you're contemplating at least 1500 units is there a way for us to frame the milestones that you need to hit.
In order for that 1500 to.
Officially until your your vehicle order book and I guess, if I were to maybe.
Maybe just on semantics, I guess you'd say at least does that suggest that that if you hit these milestones at a minimum 500 units and then and then you've obviously build off of that.
Yeah. Kevin This is what we have in the agreement. This is a minimum of 1500 units, obviously just to be clear I mean, those units or it's not a purchase order yet it's a commercial agreement. So we do not have those units in our order book right now and we will be including them as.
As you know we.
We will get the orders from the marathon <unk> from.
From their customers.
Starting at the date that we will commercialize the electric ambulance, which is in the second half.
Of next year, Yeah, absolutely, we expect a minimum of 1500 units over the next day or the following five years under the commercial agreement with them.
Okay. So just just to quickly the milestone is probably primarily time I guess, if theres no like technology milestones you need to hit them.
In order to to to secure that and got backlog just just given you're using an existing an existing platform for this vehicle.
Yeah, No you're right I mean, and then you know the lion's five.
<unk> will be launched at the same time, so it's basically alliance five.
That we will be we will be using so it's a great. It's like killing two birds with.
It's once known basically yes, we're launching the electric ambulance on the line side chassis and the Merc also is putting a state of the art body on this electric ambulance. So so we wanted to make sure you know it will be a purpose built.
Electric ambulance, including.
The body as well, but no in terms of technology and all of that no we will be getting.
To the to the test.
Our phase very shortly so no no major milestone in this regard.
Okay, and maybe just last one for me and I know youre not going to like the question but.
I suspect you're thinking that you may not even try to answer it but you got the 50 units and with you.
You've got about 1000 units do you think you'll deliver by end of 2022 is there a way to help us shape the cadence of deliveries over the next four five quarters or or is.
Is that something that you know, we'll just have to wait and see as you report.
Yeah well.
Let's see let me start Kevin by saying that you know obviously, we are still impacted.
By what's happening by what's happening right now and I mean, even if we are working night and days on fixing those supply chain issues and let me say also that the fix that we are.
Doing right now are long term fixed so it's not like a temporary.
Fixing that we are doing it as a long term fix and when youre doing those kind of fix obviously you know having you know many many suppliers redundancy of suppliers now we have over 500 suppliers.
This is looking very good for the long term and also you know this is looking very good in terms of cost out.
For the future so Q4 of 2021.
We'll will obviously be impacted by.
By what we're doing now.
Okay, Okay, I'll leave it there and good job building the backlog in the quarter.
Okay.
Yeah.
Your next question is from Brian Johnson with Barclays.
Yes, I wanted to talk about a couple of things. So first can you give us a sense.
The pipeline on the truck side of the business, how the truck order landscape is progressing and.
The thing about where or.
The trucks delivered so far to Amazon and where those might be going in service and kind of where the discussions with Amazon might be as part of the truckload okay.
Yeah, Hey, Brian It's Mike Let me, let me take that one first.
We think of the order book in Q3 and that movement.
First and foremost it was a great order book order for the order book, we picked up our.
Great momentum in the school bus station.
Unit order from from SCA, which which solidifies our commanding leadership in the school bus space and that the reason that we believe we're able to.
To get these orders that one and many others.
We can sell in school buses for for a while many years.
Also importantly, we have hundreds of school buses.
Hey.
So in the truck space.
Tennis orders for Q3 was not was well below what we want of course.
Some way the supply chain issues, preventing us from delivering trucks and having them on the road is not healthy.
But at the same time word a few in the industry that are manufacturing firms today that are delivering them and ultimately we feel good that we can replicate the success we've had in <unk>.
Cool, let's say in the truck space.
Need a bit of time of course.
The product is new so that's sort of.
Feel good about the client dialogue.
It does take time to convert that into into an order book, but it's something that accelerates time as we're seeing in the.
Lastly, as it relates to <unk>.
Livery.
Okay.
I can't comment on the.
The Amazon trucks.
Consistent with what we've done in the past.
Yeah.
But we delivered plus trucks as you've seen in our results and.
It's just the beginning.
Okay, and then on the second question.
Hmm.
If we had more of a dark spreads out from here.
No sorry, those are that was it.
Okay, a second question.
If we look at the.
Asps per box if we.
Two questions two sub questions. One if we just take the revenue divided by units to get close to 290 U S. Dollar.
<unk> per vehicle is there other revenue that we should be thinking about that would be in that that's not really big.
The bus or the people who've taken deliberate pay for their vehicles.
Yes, there was.
In there we have our wind energy sales.
So those are not material, but they are in there.
And so.
They're not alone.
Scale, where you can disclose.
All of them separately.
Okay. So if we think about the goal of cost reduction and reducing the gap.
The upfront costs to diesel buses and trucks.
Where are you on that.
Journey into.
How do all these supply chain constraints slow down that or are they affecting.
Some of it.
Traditional brokered bus Oems equally I can imagine it would on things like steel, but maybe things like wiring connectors and battery costs are unique to the electric side.
Yeah, and look I alluded to this in answering some of kevin's questions, but in the in the very short term supply chain issues are causing some some inflation pressure.
On transportation on some of that any additional voluntary cost, but our suppliers are occur at the same time, we are progressing on the cost that would be part of this will be having their own.
Battery platform, which we're working.
Expected to start producing.
Overall.
Brian.
The unit economics are very good.
But at the scale of the model works.
For profitability.
On top of having your own battery.
Supply and having.
The benefits of scale, we're working to do.
For our cost out.
On the supply chain.
Or what was it.
Suppliers broadly and this will include loss, making commitments to some longer term commitments to suppliers and having the big multi year orders like I guess.
<unk> allows us to do exactly that so it's something on which works we're progressing.
As the supply chain is.
A little bump in the road there.
Very good about the longer term.
Okay and Mexico.
Okay. Thank you. Thank you.
Your next question is from.
Sure.
Jordan <unk> capital management.
Yes, thank you very much and good morning, everyone.
With respect.
Global supply chain could you provide some thoughts.
The market dynamics for the sourcing of non EV components.
Would it be fair to say that the lower level of production.
Currently he's putting U S. There's advantage versus large legacy players.
Those are non EV components.
Yes, good morning.
Been a while.
No. We don't think we don't think so even with the.
What we call the less critical components I mean.
The those components I mean at some point need to be adjusted.
For electric vehicles anyway, So we don't.
We don't we don't think so what's really happened is that the overstocking strategy that we have I mean was mostly for the critical components and.
I mean, it came to a lot of our suppliers is a surprise also that those less critical components were also impacted for some other reasons like labor.
Shortage in raw material shortage.
But in a nutshell no. We don't we don't think that we're at a disadvantage against the other Oems.
Okay and by the way students are an important order received throughout the quarter, but.
If we remove that it seems that the booking was weaker than the previous two quarters. So I'm just wondering how does the global supply chain issues.
Are impacting your ability to significantly increase your booking and if you could provide some color about your bidding pipeline and maybe a comment around potential vehicle sales.
Right now in the pipeline.
Yeah, and the order book.
Thank you.
We're quite pleased with the overall increase again to a point that you can carve out of our biggest order.
At the same time, we did expect.
Q3 to be driven more by the larger orders it is.
Start of that.
Really difficult to start of the school year period, which.
Which is always a challenge for operators, but this year, even tougher than than ever with the.
The measures around Covid and the driver shortage situation in the school bus business. So no surprise that it's driven by large orders rather than than the smaller ones for Q3.
As it relates to dialog look the right programs in place right now in the school bus space.
We are very encouraged by the dialogue, we're having with all sorts of operators around deploying on these programs. We feel that the school buses is a product where that is among certainly among the most advanced and fleet electrification and feel very good about this so the dialogue is continuing I talked about the truck dialog as well.
So we're pleased with the current dialogue with God.
Okay any thoughts on whether the global supply chain issues could also impact your ability to ramp up your new production plant in the U S. But also equipment needed for your battery plant.
Yes.
Yes, it's a good thing but in ways that we've been working on this for four years now and we will be issuing the orders. So we're in constant dialogue with the.
The equipment suppliers so.
No with all the delivery dates.
That's our plan right now and confirmed by many suppliers as well we don't see delays. The good. The good news is that in those kind of projects I mean, there's always cushions.
In there and we have you know we had cushions.
In the in there so.
So so so it's great. So no we don't see we don't see delays I mean dates are being confirmed.
Bye.
The by the suppliers some of the the new suppliers also that we got on board are also.
With respect to the <unk> operation.
Those two to the plant we will have in the United States. So basically those suppliers are also supplying I mean, we can take supplier in Canada and also supplier in the United States I mean to supply them in both manufacturing facility, which is.
Which is great and this is something we've been doing as well. So at the same time, we're securing the orders for the equipment, we are starting to.
Onboard people in and John yet and we are planning to start up the manufacturing operations for the second half of next year.
Okay and last one for me.
What about capex expectation or cash outflow, we might expect for Q4 and maybe 2022.
Yeah, and they look I'd say, we remain on track for the project. So we've talked about 130 million for for Juliet and CAD $185 million, but let's say 150 for the lie on campus, which is the battery plant.
<unk> sensor here in Mirabel.
This we do expect this to be spared from now to the end of next year, we are at a point.
Mark made in his early remarks that we're gonna, we'd expect to take possession of the building and Juliet.
Before the end of the year, we expect to place the first orders for larger equipment very soon.
Q4, Q1 don't know yet.
But we expect the.
The capex to increase in the coming months.
Okay. Thank you very much more at a time.
Thank you Ben Thank you Barbara.
Your next question comes from Rupert <unk> with National Bank.
Yeah.
Good morning, everyone.
You mentioned, you've got a thousand orders in the backlog, which could be delivered before the end of 2022 or are any of those orders time sensitive do you have flexibility on the delivery schedule and is there any chance you could lose some orders or paid penalties with late delivery.
Well there as well.
The.
The answer is that those orders are to be delivered in 2022, we are in our Nevada.
Yes. So there is no late penalties in any of our orders I'll start by saying this.
And we're in the environment that we are right now.
What we're seeing in that in that for instance in the truck space that a lot of orders that are in place today.
2023 that is certainly not the case with us.
And so yes so.
No no no penalty there.
There's nothing.
Specifically time sensitive right now that I can point to obviously, we need to.
Sales and orders in the contemplated timeline.
Okay.
Okay. Thank you and if I could dive into the.
The supply chain issue here I appreciate all the good work you're doing there, but how how easy is it to switch suppliers do you need to read.
<unk> certifying the products with the with the parts that you're changing.
Yeah, well no youre, absolutely right Rupert, it's not easy, especially when.
We're only dealing with.
With great suppliers, most of them being tier one.
Supplier. So most of the time I mean, we're not replacing suppliers.
But we are finding other.
Suppliers, so it's really a redundancy of suppliers.
We're looking for that being said, though when you are looking to when you were going with other suppliers, sometimes you need to change your recipe as well to adapt and you know this is what I was alluding to earlier when I was saying you know it takes time when you're doing the right thing. It takes time, when you're Onboarding, new suppliers and let me give you an example.
You know when I was saying that our people have been very nimble.
On what we'd be doing.
Things, we've been doing we've been changing connectors connectors, we were using there was a major shortage at some point a connector as well when you're changing the connectors I mean, the wiring harnesses.
Need to be adjusted as well so sometimes it's another supplier, but it's also another component that you need to change well you know what I mean.
Those connect those warrant those.
Wire harnesses that fits you know what those new connectors that we started using.
Were redesigned.
During that period of time, so now I mean, we have like two sources of components and redundancy of suppliers in the in that case, which is they are going to use. Another example will be the PCB.
The circuit boards.
Which is another example, as well as some circuit boards that we've designed we've we've decided to redesigned to fit with the technology of some other suppliers. So this is a little bit I mean to show you our Chile I mean, we've been.
Obviously, you cannot do that within a few days it takes it.
It takes months before the time that you get the solution and then the components will be.
It will be delivered and installed on your budget. So it's not easy but this is something we've been doing and think thank god.
You know that we've been doing this for so many years I can only imagine the Oems that are trying to start manufacturing. The challenge is very big So we've been manufacturing buses for for six years now and I think it's really helping us.
Is there any sort of rough.
Quantification you can give us on how far you are through the process of of improving your supply chain for example.
Could you say that the wall of the parts, but you've had issues with that your 50%.
That's a way through the process of identifying alternative solutions as far as identifying a supplier and getting that solution.
Installed or or further further along than that and you have some visibility on how long. It takes before you will have alternatives for all of those pinch points.
Yeah, well the good news Rupert is that the challenges that we had and this is what I said you know in the last half hour as well.
Is.
While the arb behind us behind us in terms of finding the solutions. So the.
You know many many challenges and even you know a lot of challenges that were not expected and honestly that we're not even expected by the street by the supply chain.
Via the supplier themselves. So the good news is that it's behind us.
But you know when I was saying this morning that you know we feel that the supply chain crisis might go well into 2022.
Well I mean this is what we believe I mean, but we're well equipped.
To deal with this but as we speak right now we were able to find solutions for all of the challenges that we have but on a weekly basis on a daily basis as well I mean, some further challenges are coming and will be coming as well. So I mean, I think it's more a matter of all you are able to deal with.
Those that those challenges.
Going forward.
Allow me one more follow up so you.
<unk> here it sounds like you're also going to increase your supplier base to maybe deal with challenges that that could arise how many more suppliers to do you think you might need.
Well, that's well that's a good question I mean, we've added 70 suppliers in the in the in the last quarter and we will have many other suppliers as well for the junior operation. We are in negotiation with many many suppliers regardless of the the supply chain crisis.
That we're going through right now so we think that you know the jone yet facility will really help us with everything thats happening right now and the supply chain crisis, but you know what the number of suppliers that we have right now we're in very good shape that being said, though I mean, we're looking forward at the next year and make sure we have a lot of them.
<unk>.
For all components and a lesson learned.
Even with the less critical components.
Thank you all right that's great color I'll leave it there.
Thank you Robert.
Your next question is from Jonathan Lamers with BMO capital markets.
Yeah.
Good morning.
On the truck market I'd like to ask the truck question a different way. So the order book showed no new truck orders since August can.
Can you tell us that's a comment on the current state of the U S truck market or if that's a comment on <unk> competitive position in some respect I know you.
Have some industry data that you look at it.
Yes sure.
One thing we.
We delivered trucks until that date.
The gross order book did growth. So we did get some more but not much more than we deliver okay. So I'll start by saying that and no I'd address I'd address it the same way.
So I'd point more to the broader market.
The.
The.
Electric truck market and our view is less mature than the electric school bus market.
It's consistent with what instead of in the past, it's a market that is.
Literally 10 times the Pam.
The electric school bus and it's a market that we can in time moves rapidly, but it takes time to get started.
As I mentioned, we're not aware of many players many Oems delivering all electric medium and heavy duty trucks, and we think we're well positioned.
<unk>.
Bye bye being having product being part of the dialogue and we think that the.
Competitive positioning will improve once we have more trucks on the road and once we're able to show.
The trucks to the clients more or the potential clients more broadly.
Thanks, and Mark you mentioned the upcoming U S did competitions, including.
The recently announced additional round for the California, H Pip and in New York.
Were there any learnings about the U S truck market from the early California, each fed programs this year.
And anything you can kind of tell us about.
The outlook for your participation in the upcoming round.
Yeah, well I mean, yes, maybe if I can I can I can take that one look at H b.
Excellent tool to get funding for clients.
To deploy early trucks, we've always been of the view that the subsidies are excellent tools to get the wheel going.
Do not have a business model that relies on subsidies in the long term, but.
Carbon, California, our dedicated fleet electrification and we're leveraging these tools in terms of learnings I wouldn't say Jonathan that they're learning as it relates to the marketing team, we're better and better at leveraging.
Leveraging the <unk> platform.
And getting those those applications in but what we need in the truck spaces. It's time continued dialogue and product on the streets I'm coming back to the same point, but these are really the ones that we think will be the drivers ultimately we're looking to replicate what we've done in the school bus space.
And we've talked about this in the past the concept of getting the first order it's right the first product which is a.
A trial and the repeat order, which is very important and then moving to large orders, where we're talking about multiyear fleet electrification. We are in the process of doing that in the school bus space and <unk> and other tools allow us to get the wheel going in in the truck space, Yeah, Jonathan Let me.
I'll also say that in the truck space I mean, the total cost of ownership is so good that the discussions were having right now with our customers is for a very very large orders, let's put it. This way. So you are right that it's been a little bit slow in the in the last few months, but the dialogue with the customers.
Good, though when we're talking to customers, who have very big fleets and.
Some of them are really looking at electrifying the old fleet you know over a.
He pre end of year, so I will see the subsidy on those programs, especially in the truck market is not the first priority. It's really the business model I was going to work the operation.
The total cost of ownership the charging infrastructure, which we do very well with the Lion energy T. But that takes time, though that takes months to go through all of that so the sales cycle I mean with those people. Let me say maybe is a little bit longer but they are very sophisticated and they're serious about getting into electric so yeah, absolutely I mean, we will.
Keep you know filing applications for Hbf and all the other <unk>.
<unk>, there, which is great because this is helping the operators the operators.
Those people are not relying on subsidies to electrify their fleet.
Thank you and Mark just to pull on that a little bit more.
You mentioned that.
The conversations were around very large orders.
Yeah.
What do you put one of those very large orders and to Sasha realm.
You know over the next six months, let's say given all the supply chain challenges or are those really for <unk>.
<unk>.
This production ramp.
Yes.
Jonathan it's really a mix.
It's really a mix obviously you know in the exchange of Rome, I mean, we are manufacturing trucks right now and this is what the customers like I mean, you can do right and then drive they can triangle.
The the trucks and buses so they can feel you know the ads.
Vantage up you know our purpose built trucks. So yeah, we can build those trucks and the same as your AUM right now we do.
<unk> six <unk> and eight as a as you know, but starting in the second half.
Next year that could be built in Joliet as well so the idea for us is really to get the best truck possible for the customer from the from the best fleet and saving on freight cost as well as much as possible. So right now we have one option from centrally wrong, but we got to have both options before now.
Thanks last topic on production Mark on the last call you said that sounds Jerome had enough labor.
To achieve two thirds run rate capacity.
Q3 Lion produced about 30, sorry, 90 vehicles, including the ones in web.
I understand the component shortage issue my questions could you update us on.
Daily production rates or labor capacity.
Today now that the supply chain solutions have been implemented.
Well, just one thing don't Wanna, Jonathan let me start by saying that.
When we were talking about the 50 units we were talking about the units that we're almost finished.
Finished goods.
So obviously you know we're manufacturing more and more than that like in the whips and all of that I mean, you know getting the labor and we saw that with the supply chain crisis right. Now is always a challenge for everyone. So we were able to onboard.
Those are those people in and we're proud that we.
We did that so we have to tell you know enough people, but as I said you know earlier this morning, though I mean, we we.
We slowed down the recruitment because.
What's happening obviously, we don't want to get to the full.
Full capacity and as we said you know in the last quarter, Jonathan I mean, when you have the right number of people. It takes some time to ramp up.
The capacity so we do as the equipment we do.
The people and we're making a start a smart usage of those people now to your question I don't know if we can get more more ddos.
I'll leave it at that.
Thanks for your comments.
Thank you Jonathan for Jonathan.
Your next question is from Noah <unk> with Louisiana.
Hey, good morning, everyone.
Good morning.
So just going back to the truck side of your business I'm. Just wondering if you could give us more color on how the sales team has built up and if I remember on the Investor Day, you guys had mentioned that you're trying to reduce the conversion cycle from first point to meet our client and the eventual sales happened. So I'm just wondering if that is sort of.
Reduced or if there is something happening there and maybe just to add on there are you guys, adding seven new experience centers or eight new by the end of this year.
Okay.
Yeah, so with respect to the experience centers I mean, we do have seven right now and we will be opening.
Kevin additional experience centers.
Before the <unk>.
At the end of the year. So we will have a total of 14 experienced centers by the <unk>.
At the end of the year.
With respect to look at that and I hate to be repetitive.
With respect to truck sales.
Same thing I said before we're in the customer dialogue of course, we're looking to reduce that.
The time between initial meeting and order, but you have to keep in mind that you know.
In some cases youre, having the the fleet electrification discussion at the C suite and others. It's at procurement level and so there are different sales cycles are different.
Types of organization I think.
The Master agreement is also a good example of how we can expand the model because it doesn't really have a.
When in the context of the channel sales model that we talked about if we can leverage channel partners to sell more chassis then.
Especially in a model and so simple or just sell a chassis and they update it in the sale of <unk>.
We sell it to.
The channel partner.
It's a good model for us so it's continuing.
And the progress we're looking to reduce.
Lead time, but even in the bus space to date, some clients are much longer lead time, others, because they've been part of that part of the repeat order cycle that could move the dial very fast.
You know what.
Because we've been in a relationship with that for a number of years. So.
Hopefully I'm addressing your question, but thats sort of the <unk>.
Same.
Sure.
So sort of statement the questions that were asked before on the truck side.
Okay, No that's fair and just maybe I may have missed it but do you break.
The trucks in class like what was a class six trucks that you sold or the class eight trucks this quarter.
We don't break it no, but but right now what we're delivering is.
Some classics and sunglasses.
Okay, that's great and just maybe one last one with all these supply chain issues and the problems that you've highlighted do you think it's still the right time to sort of launched these new.
He goes that you plan to do in 2022 or do you think that may get delayed because of these challenges.
Yes.
The question will that will the R&D pipeline delays is that was that the question yes.
Yes, yes with respect to the new model.
Yes, you're of course enrolment was about the new models right.
Yes, so essentially.
By 2020 do you have to your lunch like six or seven new way it goes right.
Yes no.
Yeah, and it's now it's looking good I mean, you know the the R&D is going full throttle.
With those.
Those new those new models as you know I mean, theres a lot of coming out between our.
Between our platforms and this is why we're able to do all of that we've been working on this for years.
Doesn't mean that we don't have to deal with the supply chain challenges, but really its supply chain is more affecting us.
Right now with respect to to our current deliveries then with respect to the development of the.
The other product that being said you know absolutely.
It only adds to the challenge for Lyme, but also you know for everyone.
Right now in the in the industry, but I mean, all of the data that we're looking at with.
The forecasted data commercialization now.
We're still getting you know before the end of 2022.
Okay, that's great and maybe just one last one.
I see you mentioned it.
Slide as well, but for the Illinois facility once you get it like what are some of the.
Additional or future milestones that we should look at for you guys to eventually ramp up production there like what is that what is it that we should look at it for now.
Well the first thing is the take possession of the building.
So if you look on our website right now I mean, I think you'll be very excited about where we are at 90%.
Kind of complete.
So I'd say it is going very very well.
We are we are starting to order the.
The equipment, but we've been in a long term dialogue.
With those equipment suppliers.
Suppliers and.
Yeah. So at the beginning obviously you know we are we are starting slowly and then we will ramp up so we will start installing some equipment in the first half of next year, we are onboarding.
People and we do have people from saves you round that will be like yet we'll be doing like a knowledge transfer.
Also so we've been working on this as well I mean, the IP team also.
So as being you know everywhere.
On this.
The all the cables that we needed in this factory. This is part of the 90% completed we need we need all of that we will be ordering the GDS.
Very shortly as well.
So now it's it's mostly take possession.
Receiving the equipment, we're on boarding to people and we will be hiring additional people as well.
Okay. That's good color that's it from me thank you.
Thank you.
Your next question is from Michael Glen with Raymond James.
Yeah.
Hey, good morning.
So just a couple for me so Canadian bus market School bus market.
Speak to what your market share is and what's taking place from a competitive perspective, and the Canadian School bus market.
Yes.
Yeah, Yeah. Good morning, Michael I mean, I think you know when.
In Quebec, I mean, we haven't seen really any other buses so far.
On the on the road. So we've been I think we've been doing very very well as as you know the MTT is issued this policy that starting on November one.
Nobody could register and other bus and an electric bus.
Which is.
Which is which is good and there is also a made in Canada cloud I mean, you know for the.
The MTGE. So lion is very well positioned we do have buses.
In Ontario, as well and with the Z.
With the ETF.
The $2 $7 $75 billion investment in electric school buses and electric transit buses as well well you know this is part of this program, where we are with that we filed with the FTA or STC and.
Well that that is going well and let's say you know the dialogue with the customers. So it's mostly you know outside of Quebec.
That case is also going very well. So I think you know the customers what they like about our bus is obviously not only that purpose built but.
It can it's very efficient and the coal.
Also be because we've been dealing with those temperatures I mean for many.
Many years, so deals like the fact that we've been manufacturing those.
Those buses for many many years so they can talk to each other they can talk to other customers as well and this is why we see a lot of repeat orders and they were significant orders now coming in.
And is the the large order from student transportation is that concentrated in Quebec, and Ontario or is it spread throughout the country.
No theres nothing in Quebec.
Nothing in Quebec, So it's outside that came back and it's I think it's mostly in Ontario.
Mostly in Ontario, and.
In terms of the duration of that contract.
Is there pricing embedded.
The cost declines that you're thinking about in terms of your deliveries.
Some anticipated price declines embedded in that contract.
Yes, correct, which is exactly aligned with our strategy to bring pricing down overtime. So thats.
Yes, there are price declines.
Okay.
Thanks for taking the questions.
Thank you Michael Thank you Michael.
Your next question is from Jon Lopez with vertical group.
Yes.
Hi, Thanks, so much sorry, I had three hopefully relatively quick ones.
The first one just following up on that last topic the vehicle ASP in your backlog it looks like it dropped about 15% this quarter versus last.
What's the S T a order the driver there.
Yes, the FDA driver yesterday was a driver of the multi year agreements you have to take that into context of course.
There are other drivers but.
The bulk of our change in the order book for the quarter.
Got you, Okay that helps and secondly, I guess I just wanted to talk conceptually about orders and.
And as you mentioned the discussions around SDN in Canada are pretty highly conditional I think their own press release suggests they haven't really started dialogue with school districts yet.
So I guess my questions are are you, including anything within that program for your 2022 delivery commentary and secondly can you maybe just clarify how you're defining orders. So we can just gauge how that may look versus peers.
Yes.
Yeah, Yeah. So the answer to your first question is yes those orders.
In the <unk>.
The order book, we have SDA and been very transparent that it's a concern.
Additional order.
And we are it's conditional on obtaining that Etfs funding.
We're working with them on that the delivery on that.
Contracts are.
Scheduled to commence in 2022.
We do expect that to be the case, when we think about orders.
We include in there.
Firm purchase orders in hand, and in some cases, we include joint applications.
Sure.
For subsidies like this one where.
The application is obviously mutually exclusive in other words, it's not a application for sort of any OEM.
And where we have a high degree of confidence that it will change into our convert into an order.
I should think of delivery. So yes. So just wanted to make that clear everything that is in the order book and as we stated.
We expect to deliver.
The mark alluded to earlier.
On the mass side, we have an agreement with that company.
Compensates the delivery of 500 units because those are not orders yet we did not that was in the book for that.
Got you understood, Okay that helps and the last topic I wanted to touch on is battery cells.
More and more of your peers are securing long term purchase commitments or agreements for cell supply Tom that generally come with some kind of prepayment.
Last I recall, you guys were not planning to go that route.
Is that still the case M b.
Or do you remain comfortable that you won't.
Find yourself with a supply issue or a cost issue as you start to bring the module factory online.
Yes.
Yeah, well to answer your first question.
John.
Not the case, we're not planning on doing any kind of prepayment and some other companies as you were saying in the EBIT in DB space some of them.
They did that.
We are in negotiation with many many.
<unk> suppliers and well let me just say you know it's it's.
It's going very well and.
It's a matter of price. It's a matter of also availability of the product, it's a matter of chemistry.
Also that the suppliers will be doing for us and for up for ammonia and it's also a matter of being agnostic being agnostic to that chemistry is as much as possible, but being agnostic to the supplier as well. So and this is the reason why we're doing does battery factory by the way, you'll probably remember that rational around it when you were saying we will be.
Going with 21, 700, South we've decided to do that not to be.
The captive to one supplier that will be supplying a module and when they are supplying and module. This is where you are becoming active so by going through the.
At the level of the 21 700 cells.
We are able to do we may make that stick and never had to do those prepayments that some others have been doing.
Yeah.
Understood. Thanks, very much for the thoughts I appreciate it.
Thank you John.
There are no further questions at this.
Time, I will now turn the floor back over.
Yes.
Well, thanks, everyone for joining the call today, we really look forward to continuing the discussion and then feel free to contact me for any follow up question. You May ask I have a nice day. Thank you.
Thank you for joining.
You may now disconnect.
Yes.
Okay.