Q3 2021 XL Fleet Corp Earnings Call

[music].

Ladies and gentlemen, thank you for standing by good afternoon, and welcome to the X L Fleet Corp, third quarter 2021 earnings conference call as.

As a reminder, today's call is being recorded at this time all participants are in a listen only mode for opening remarks, and introductions I would like to turn the call over to Jim Berquist General Counsel and Vice President of corporate development for XL Fleet. Please go ahead Sir.

Thank you.

Good afternoon, everyone and welcome to XL fleets earnings conference call to discuss our results for the third quarter of 2021 with me today are taught Heinz our founder and President and Cielo Hernandez, our Chief Financial Officer.

Our call. This afternoon includes statements that speak to the company's expectations outlook or predictions of the future which are considered forward looking statements. These forward looking statements are subject to risks and uncertainties many of which are beyond our control, which may cause our actual results to differ materially from those expressed in or implied by these statements. We undertake no obligation to revise or update any.

Forward looking statements, except as may be required by law, we refer you to XL fleets disclosures regarding risk factors and forward looking statements in today's earnings release, our annual report on Form 10-K, and our other securities and Exchange Commission filings with that I'll turn the call over to topics.

Thanks, Jen and thanks to everyone for joining us on the call. This afternoon.

I'd like to begin with review of third quarter and recent key highlights.

We generated third quarter total company revenue of $3 $2 million.

Out from $6 $3 million last year and.

And $3 $7 million last quarter.

The decline versus last year was primarily driven by ongoing industry wide supply chain issues.

And yet to impact our drivetrain business.

Partially offset by growing contribution from our grid business.

Despite impacts at the revenue line, we generated gross margins of 22% up from 12% in the prior year and compared to approximately 26% last quarter.

This improvement in margins relative to last year was driven by contribution from our XL grid business, which generally carries higher margins versus our drive system business.

We also continued to expand our offering platform.

In August we announced the availability of our hybrid electric system unpopular versions of Ram pickups, including a 20 530 500 heavy duty models.

We were excited to unveil this new vehicle offering at this year's Expo.

Was met with great interest and enthusiasm.

In addition to exciting platform growth. This new addition to our lineup of offerings also represents the first electrification product to be available for rent partial.

Is this the Atlantis lineup commercial pickup trucks.

Also during the quarter, we announced that our hybrid electric drive system is available on the Isuzu N P. R. H D low cab forward vehicle.

This vehicle is widely used in a range of industries, including last mile delivery beverage distribution utility work in foodservice.

In our grid business, we completed our first quarter with full period contribution from our World Energy business acquired in May.

We believe our XL grid business continues to represent a significant growth opportunity for our company and reflects a widening set of electrification solutions for our customers.

From a demand perspective, we continue to see growing interest in fleet electrification.

This includes pent up demand from municipalities and other agencies, whose budgets have been significantly impacted by COVID-19 related slowdowns.

We have seen some positive momentum building in our order pipeline from customers, who are beginning to receive vehicles from their manufacturer orders.

And we will continue to work with customers to help them unlock chassis inventories wherever possible.

As the macro and economic environment continues to improve.

Interest from these parties continue to grow particularly for deliveries in 2022.

We also expect to experience continued growth in demand on the back of the recently passed infrastructure Bill.

As part of the Bill Congress has committed to significant support for the continued growth and build out of vehicle electrification, including up to seven $5 billion of grant funding for electric vehicle charging infrastructure.

We applaud policymakers support of this bill, including the build back better legislation it contemplates even more funding support for the vehicle electrification industry.

Overall, we believe XL fleet is how we differentiate it across three key attributes.

Our flexible platform, our financial stability and our comprehensive offering.

First our flexible platform.

Since our founding over 10 years ago, we intentionally set up exactly and its offering to be highly dynamic and we stayed true to this approach as we scale our business.

By developing technology and systems that work across the spectrum of commercial applications in vehicles, we positioned ourselves to assess a wide range of customer needs and applications.

Today, this flexibility is more apparent and more important than ever.

As we continue to forge new partnerships and agreements to expand our technology on new vehicle platforms. While also expanding the scope of services offered.

Second our financial stability.

Without gold public transaction completed at the end of last year, We believe we're armed with the financial flexibility and resources critical to navigating near term supply chain challenges, while positioning us to remain offensive and further scaling our business, reaching new development partnerships and driving potential organic and inorganic growth.

We exited the third quarter with cash and cash equivalents of $367 million.

And third our comprehensive offering.

Perhaps our most unique attribute is the wide and growing spectrum of offerings that we provide to customers.

I'm a wide array drive system applications to our growing ex upgrades business and eventually our electrification as a service strategy.

It's our focus to provide a one stop shop for the electrification needs of our customers, helping them save money reduce carbon emissions and sustainability goals.

With that I'll turn it over to cielo for a more detailed review of our financial performance.

Thanks Scott.

Revenue for the third quarter, and up 22 $1 million to $2 million compared to $6 $3 million.

Oh, Yeah, yeah yeah.

Key drivers behind it.

<unk> included the impact.

Ongoing supply chain issue, including nightclubs ship shortly.

What's happening now all automakers totally hoo.

Cause production upping your feet chat.

Back to you now.

System business, partially offset by contribution for our acquisition of Ward and Anne.

You know excellent isn't it.

Revenue from the upsell.

Okay.

The first quarter of 2021 totaled approximately okay.

<unk> thousand dollars compared with $6 $3 million and at their choir up 'twenty 'twenty due to a negative impact on ongoing supply chain issues, including like the chip shortage meeting for a lack of Daniel chassis.

Revenue.

What a great innovation towards $6 million, which was driven by first of all what are the continuation of the war energy acquisition.

On May 21.

We generated kudos hospital for the quarter.

And the new $700000 compared to approximately 800000 Boe in Q3 of last year.

Adjusted EBITDA totaled $14 $2 million compared to negative $6 million in the prior year quarter.

Research and development costs totaled $2 $2 million.

It's in a totally type one 7 million.

Up to from cycling $3 million in the prior year quarter and up.

Approximately $8 million in Q2.

Increase was primarily driven by the continued expansion of our film technology and facilities to support us.

Got it.

No new openings nations as a publicly traded company. That's why I added expenses associated with the addition of war.

I said September 30th we had cash cash equivalents of $367 million compared with $284 million last quarter and $230 million at the end of 'twenty 'twenty.

Our balance sheet remains a strong following the capital raise.

Our business combination completed.

'twenty and interfaces are probably why right.

Yeah.

We really don't balance sheet thing well see us with flexibility in a competitive advantage.

We continue to execute on all the girl of his strategy over the next say like a year.

Including the potential for Florida.

M&A.

I will now pass it back to Todd.

Thanks yellow.

Looking ahead, the unprecedented supply chain challenges impacting a number of global industry is expected to continue into the fourth quarter and extend into 2022.

Despite these challenges we remain well positioned to further invest in our business to capture growth opportunities.

And finally I wanted to comment on the recent announcement that the board of directors has appointed Eric Tech as XL fleets, New Chief Executive Officer effective December one.

Eric is an industry veteran who brings nearly 35 years of experience.

I know I speak on behalf of the entire XL fleet team that I'm excited to partner closely with Eric If he joined our company.

And helps US lead the next phase of electrification for our customers.

I also want to thank dmitry because aren't off for his hard work over the last two years to help grow the company.

That concludes our comments for today.

Thank you very much for participating in today's call and for your interest in X L fleet.

Great day.

This concludes today's conference everyone. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.