Q3 2021 Microvast Holdings Inc Earnings Call
Thank you for standing by this is the conference operator.
Welcome to the Microsoft <unk> third quarter 2021 earnings call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask a question.
To join the question queue.
When you press the Star then one on your telephone keypad.
Should you need assistance during the conference call you may signal, an operator by pressing star and zero.
I would now turn the conference over to Sarah Alexander Microbus General Counsel.
Please go ahead.
Thank you Shari and thank you everyone for joining us today hosting the call with me are Mr. Yang President and Chief Executive Officer, and Liang, Zhang Chief Financial Officer, Jane Smith, Our Chief operating Officer is also on the line to help out Q&A.
How did this call Microsoft issued its third quarter press release, which can be found on the Investor Relations section of our website at IR Microburst Dot com.
Please note that on this call we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representing about views as of any subsequent date and we undertake no obligation to.
By or publicly release the results of any revision to these forward looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
For further discussion of the material risks and other important factors that could affect our financial results. Please refer to our filings with the SEC, including the quarterly report on Form 10-Q filed this afternoon.
In addition, during today's call we may discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Microsoft's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.
A webcast replay of this call will also be available on the Investor Relations section of our company website with that I'd like to turn the call over to Mr. Li.
Okay.
Thank you Sandra and good afternoon, everyone.
I would like to start out by our employees.
And then contributions to them.
Thanks.
I would also like to say our shareholder.
<unk> for their commitment and our <unk>.
Customers for their support.
The third quarter of 2021, even fall.
We successfully completed our business combination, whereas paas Dan Hogan in July.
It's actually a rate $708 million in net cash proceeds.
Gross initiate Hughes.
Including our ongoing capacity expansion in Clarksville, Tennessee, who don't China.
In addition.
We went and looked at each of our new R&D facility in Orlando, Florida.
We are pleased with the progress how did these three of those sites.
It seems a difficult time for construction projects.
Labor shortages.
And the other challenges.
We've got another post it.
Collapsing our social media.
<unk> showing the progress of the construction of buprenorphine.
The buildings on our campus Udo.
It will be referred to.
Three once completed.
Our future approximately 700000 square feet manufacturers' space designed for all gigawatt hour per year production capacity in total.
So two gigawatt hour per.
For year fully automated production line is under construction and are planning to be completed in 2020 to the first quarter of 2023.
I am proud that was it.
As they have made in just a few months since the transaction closed.
In Clarksville.
The purchase.
This game video.
Yeah.
It's the renovation is to make the buildings and the utility is ready for our manufacturing are underway.
I know you are NGO senior employees.
Moving into the new facility and are actively recruiting to expand our R&D team.
We continue to invest in R&D to ensure.
Our battery technologies remain on the fourth round and now we expect it to allow us.
New products in the first quarter of 2022.
We will have more information about those developments.
And our next earnings call.
Before turning the call over to Leon to review.
Our financial results.
To highlight a few key takeaways.
Microbiome.
We are now.
Two the public markets.
And we have been in business since 2006.
Our established battery manufacture and major.
We achieved net revenue growth over 20% during the quarter and a 43 year to date.
43% year to date.
Each as compared to the same period in 2020.
That's gross.
Steve.
In the face.
Many macroeconomic should have more challenges, including global supply chain disruptions.
Thanks Colin.
Raw material prices inflation and ongoing COVID-19 pandemic.
Historically, our business was concentrated in the Asia Pacific However.
We are focused and gaining momentum with our customer base in Europe and in North America.
This momentum.
Evidenced by 53% growth in our forecasted contract revenue.
<unk> grew from $1 5 billion in February 2021.
Does it merger.
<unk>.
Two 3 billion at the end of September.
Well what referred to.
The contract revenue.
We are describing backlog class management estimates for revenue, we expect to realize certainly existing contractual relationships with customers.
Give me included.
We also signed a contract in place.
If you're already in the form of framework.
Our supply agreements in condition.
Tom had advanced discussion with.
Some are about the future volume requirements.
The particular projects.
Clinical model.
These contracts also include the pricing and other terms and conditions. However.
Agricola include volume commitments.
We expect to realize chartering forecast say the contract revenue you towards.
2021.
1031.
We also saw backlog growth of 65% to 53 million from $32 million in September 2020 'twenty.
We are pleased that you see the global trend towards electrification continue.
States with the rest of the passage of the infrastructure investment and the jobs Act.
The Bill provides solid support for electrification efforts.
The United States.
When should we expect to increase our addressable market and accelerate our progress and over 20% in North America.
I'll now turn it over to Leon to discuss second quarter financial results.
Thank you you will get to the wall.
Five of the many industry wide headwinds we have faced we grew revenue for the fifth sequential quarter.
When you grow 20% this quarter.
It's up 43% year to date.
Compared to the same period last year.
Gross loss was $35 9 million comp.
<unk> to gross profit of three upon this segment made it in Q3 type of you attended.
Chin with velocity to deal with it well 30.
35, six maybe product warranty expense accrual.
And with $6 six needed you've inherited wipe it off.
They should increase the pace of the raw material cost.
And to the.
Two point of submitting it and ship it to come and visit the accrued.
Paulo, we ended up basically become violated also negatively impacted our Q3 gross profit.
Before we move to operating expenses I would like to provide more context, all the warranty accrual.
Most of what was legal accrual in this quarter was related to a legacy product saw that to a certain customer in China.
You're already in 2017 and 2018.
This legacy product peers performance, which doesn't meet our standards lead the loss to perform but we could with root cause analysis.
Following the completion of the root cause analysis in early October 2010, what we determined the cost of components sourced from third party supplier.
We believe it's more likely than not we would need to be produced at the legacy product.
And the menu warranty period under the term of the contract.
So accordingly.
We have accrued 34 partner web immediate one time warranty expense the deeper that two of these legacy products in this third quarter.
Components with now that you incorporate into any of our other products.
If we exclude the one time a warranty expense accrual. So you havent heard lots of adult.
And the share based compensation expense.
Companies, but the gross profit would have been $7 million instead of negative three point up by three qualifier not immediate loss.
The harder this Saturday.
Adjusted gross margin of 19%.
Operating expense was 78 million compared to a 12 part of seven minute in the prior year period.
Operating expenses was primarily due to a 56 million share based compensation expense accrual that follow that they think it's a combination as well as you increase the headcount to support the company's planned growth initiative.
And the other expenses related to the operating property company.
Finally, net loss was $116 4 million compared to a net loss.
Paula wasn't needed in the same quarter of last year.
<unk> was primarily due to the reduction in gross profit.
The higher operating expenses as the weakest scout described above.
Turning to our balance sheet. So it's a combination with Tuscany July.
Both our catch the publicity.
Modular West I didn't do the third quarter with approximately 612 5 million in cash cash equivalents and debt.
Okay.
Finally, let me talk about our backlog and the Capex spend here at all.
For some time about 32000 type of what we had a backlog of 52 upon the settlement.
The increase of 65% from 31 7 million in the same quarter of last year.
We are currently ramping up our products in April to perform a majority of this backlog in Q4, this year, which gave us a coveted.
Affirm our 2021 revenue guidance. However, we are closer to a multi terabyte you know.
Especially the bottleneck.
International shipping.
Moving to Capex.
Please ask that you keep them in the labor at a timeline and the schedule you during the upcoming harvest season. The company expect some previously planned capital expenditure for 2021 to take place in early 2022.
Total capital expenditure for 2000 and kind of what are now expected to be in the red 110 immediate to 150 minutes.
With that I'll return it back to Mr Ward to discuss our business outlook.
Thank you Leon.
As Leon mentioned, we have closed the monetary challenges.
On shipping.
But based on the current market condition backlog business trends and other factors, we are re affirming our previous outlook.
And continue to expect our full year 2021 revenues to be in the range of $145 million and $255 million.
Additionally, as temporary supply chain headwinds dissipate, we believe we are well positioned to capitalize in 2022 and beyond.
We are in the middle of our budget cycle and expect to be able to provide additional clarity on 2022.
Our next earnings call.
Thank you for your time today.
I will turn it back over to the operator.
I'll open up to nine for questions.
Thank you we will now begin the question answer session.
To join the question queue. You May Press Star then one on your telephone keypad, you won't hear a tone acknowledging a request. If you are using a speakerphone. Please pick up your handset before pressing M C.
<unk>. Your question. Please press Star then two.
We will pause for a moment our colleagues join the queue.
Okay.
Yeah.
Once again, if you have a question.
Please press star.
One.
Yeah.
At this time there are no questions from the phone line.
Okay.
Thank you operator at this time, we're going to move to questions submitted in response to our App Microsoft campaign.
We appreciate all the questions submitted and it's great to have such strong support across our retail investor base.
Given the volume we've received we will focus on the most frequently asked topics that we loved hearing directly from all of you.
Yeah.
With that by far the most frequently asked category of question related to updates on specific customers or contracts.
Now, saying I know, we have non disclosure agreements in place with almost all of our customer, but what what update are we able to share with the investment community at this time.
Thanks, Sara we are sometimes able to negotiate with our customers to make public announcements about specific projects or partnerships.
But not always.
What we can tell you is that our forecasted contracted contracted revenue has grown significantly since we announced the business combination in February 2021.
It's up 53% from $1 5 billion to $2 3 billion.
This is an encouraging metric.
That shows we're continuing to win major multiyear contracts with leading Oems validating the strength of our existing product portfolio.
We do hope to be in a position to provide some additional details about these new and existing customer relationships in the next couple of months.
Okay.
Great. Thanks Shane.
We recently announced the purchase of a new R&D facility in Florida, and we also received a lot of follow up questions on that.
Are you able to elaborate on the plans for this new facility.
Yes Sara.
Every but didnt know it microbus is that Saudi vertically integrated company.
We make materials battery cell battery pack.
Battery system from the top to the bottom.
And our R&D Center will do the same to support our growth.
<unk> Center in Florida, we will explore all specs long of technologies.
Battery material to battery cell battery pack battery management.
And.
Our mission statement, but our research centre is create experiences to powered award.
Okay. Thank you.
There was also a lot of interest in our ongoing capacity expansions Shane are you able to add any color.
Sure our capacity expansions are underway.
And we expect Capex to increase in Q4.
As we implied in the guidance we provided in the press release.
I would like to go through each one of the facilities real quick.
And who Joe as Mr. Woo previously noted we're building a new building on our existing campus, we're ordering enough equipment to support two gigawatt hours of capacity.
But the building is designed to support 12 gigawatt hours.
That we will need to add to the utility infrastructure. So the building is coming along and we're in we're in the process of ordering the equipment right now.
In Clarksville, we purchased an existing building.
We're in the middle of renovations to make the layout of the building suitable for our needs again, the initial capacity will support two gigawatt hour per year.
But the existing building and utilities will be designed for four gigawatt hours. So we can rapidly respond to customer demand.
And Additionally, there is enough space on the existing land two and add an additional four gigawatt at 40 gigawatt hours to support future customer demand, giving us a total.
Potential capacity of eight gigawatt hour on the Clarksville.
Facility.
Our Berlin facility is operational already.
<unk> able to ship to customers today.
So overall plans are progressing nicely. We're looking forward to completing these projects to meet customer demand. We believe we will realize some nice efficiencies with some of the new manufacturing equipment, we order, including a higher level of automation, resulting in less head count.
Awesome, Thanks for that color.
I think we've got time to cover one more question from our retail investors and I believe we have.
A question on the investment professional line as well.
Hmm.
Mr. Woo asked you about a few of our investors have requested additional clarity with respect to Microsoft plans in the passenger vehicle market.
Yes, sorry.
While we are focused on the.
Commercial vehicles for passenger vehicles as we stated before.
We.
Sync all the most of the car.
Car manufacturers, they are going to build a battery.
Manufacturing by themselves.
Michael revised.
Intended to be their material supplier component supplier.
And as well as you know.
We plan to license the technology to them as well if we develop it on their advanced technology, if they like it.
That's all or you know the overview for the passenger vehicle business.
Great. Thank you and I'm wondering.
I think we have one more question from the investment community. So I'll pass it back over to the operator.
Put him on the line.
Thank you.
The next question comes from Jack <unk> with <unk> capital.
Please go ahead.
Okay.
Okay.
Yeah.
Okay.
Chad Kessler, Sir your line is now open.
Hello.
Hey, Jack Hey, Whitney Yeah, Yeah.
Hi, Hi, good to hear you guys, thanks for putting up a great quarter.
A lot of US are here in the states have been a little bit disappointed in the lack of communication we'd.
We'd like to see more clarity and I understand you have to do the nda's. So the number of your clients, but we would really appreciate any update you can give us on any granularity and clarity going forward.
As you progress we think microburst is an exciting company and we're behind your 100% you've got a big retail base.
Along with the institutional investors and we'd like to see that grow you know maybe get some analyst coverage et cetera. So anything that you can do to help us out would be greatly appreciated in terms of communication.
And you know clearly letting us know a new slide deck today would have been great.
<unk> been using the one since February and if you can get that updated that would be great too.
Yeah.
Yeah.
Well, Jack all really good points and I think you are.
I hear a lot about Microsoft's going forward.
Actually a lot to talk about we are.
As a newly public company.
There was a there was a lot of things we have to.
Had to get in place that we believe those are in place and.
And we did want to start giving some visibility in what we're seeing with new customers. That's why we're highlighting $800 million in new contract wins.
But that's a pretty significant mark sometimes being able to as I spoke earlier being able to name what those customers are that that can be tough, but hey, we're working on those are getting their permission to get those press releases out and sometimes we're gonna be successful doing that sometimes were not but I think we're heading in the right direction.
You can expect to hear.
More announcements from us in.
Uh huh.
As we knock down those achievements and make the progress towards our goals.
Okay.
Yeah.
That's great.
Looking forward to that can you give us any color on the U S postal service contract with Oshkosh.
I really wish I could Oshkosh is a.
Great strategic Investor and a great partner, it's again one of those subjects that I know you can get frustrated with when you can't say anything about it and.
It's just.
We're really fortunate to have Oshkosh is a partner.
Understand understand thank you very much for your time today and please keep us up on all.
All the developments going on at micro, but it sounds like it's an exciting time.
Sure well, thanks, a lot yet.
At this time there are no additional questions in the queue.
We'll turn it back over to Mr. Lu for closing remarks.
Yeah. Thank you all he knows that this afternoon to join our conference.
And I wish you that everybody have a good grain tonight.
Okay concludes the conference call you may disconnect your lines. Thank you.
You for participating and have a partner.
Thank God.
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Thank you for standing by this is the conference operator, welcome to the Michael robust third quarter of 2021 earnings call.
As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, there will be an opportunity to ask questions.
Join the question queue.
You May press Star then one on your telephone keypad.
Should you need assistance during the conference call you may signal, an operator by pressing star zero.
I would now like to turn the conference over to Sarah Alexander Microbot General Counsel.
Please go ahead.
Thank you Shari and thank you everyone for joining us today hosting the call with me are Mr. Yang Liu President and Chief Executive Officer, and Liang, Zhang Chief Financial Officer, James Smith, Our Chief operating Officer is also on the line to help out Q&A.
Ahead of this call Microburst issued its third quarter press release, which can be found on the Investor Relations section of our website at IR Microburst Dot com.
Please note that on this call we will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today and should not be relied upon as representing about views as of any subsequent date and we undertake no obligation to.
Revised or publicly release the results of any revision to these forward looking statements in light of new information or future events.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.
For further discussion of the material risks and other important factors that could affect our financial results.
Please refer to our filings with the SEC, including our quarterly report on Form 10-Q filed this afternoon.
In addition, during today's call we may discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Microsoft's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results a.
A webcast replay of this call will also be available on the Investor Relations section of our company website with that I'd like to turn the call over to Mr. Li.
Hum.
Thank you Sandra and good afternoon, everyone.
I would like to start out by thanking our employees.
And <unk> contributions to them.
Yes.
I would also like to thank our shareholders.
<unk> for their commitment to our customers for their support.
The third quarter of 2021, what even fall.
We successfully completed our business combination, whereas Paas holdings in July.
Transaction rate 708 million in net cash proceeds.
Gross initiate views.
Including our ongoing capacity expansion in Clarksville, Tennessee.
Nancy <unk>, who do China.
In addition, we have.
And looked at each of our new R&D facility in Orlando, Florida.
We are pleased with the progress how does the three of those sites.
It seems a difficult time for construction projects given the labor shortages.
And the other challenges.
Post that bankruptcy to our social media.
Our <unk> showing the progress of the construction of a few buildings.
The buildings on our campus in Guizhou.
It will be referred to as phase III once completed.
Our future approximately 700000 square feet Manufacturers' space design, four four gigawatt hour per year production capacity in total.
So two gigawatt hour.
For year fully automated production line is under construction and are planning to be completed in 2020 to the first quarter of 2023.
I am proud.
As they have made in just a few months since the transaction closed.
In Clarksville.
We purchased <unk>.
Asking video in previous year.
The renovation is to make the building and a utility is ready so our manufacturing are underway.
I know you are endo Occupancies senior employees.
Moving into the Eagle.
Neal facility and actively recruiting.
And our R&D team.
We continue to invest in R&D to ensure.
Our battery technologies remain on the fourth round and now we expect it to allow us Neil.
New products in the first quarter of 2022.
We will have more information about those developments.
Our next earnings call.
Before turning the call over to Leon to review our financial results.
To highlight a few key takeaways.
Microvax.
We are now.
Due to the public markets.
And we have been in business since 2006.
We are established battery manufacture and Baker.
We achieved that revenue grows over 20% during the quarter and a 43 year to date, 43% year to date.
Each as compared to the same period in 2020.
This growth was achieved.
The phase.
Many macroeconomic should have more challenges, including global supply chain disruptions logistic challenges.
Raw material prices nutrition, and ongoing COVID-19 pandemic.
It's frankly, our business was concentrated in the Asia Pacific.
Labor.
We are focused and gaining momentum with our customer base in Europe and in North America.
This momentum.
Evidenced by 53% growth in our forecasted contract revenue.
<unk> grew from $1 5 billion in February 2021.
Is it merger allowance.
<unk> two 3 billion at the end of September.
Well refer to forecast the comp target revenue.
Describing backlog.
Cost management is estimates for revenue, we expect to realize certainly existing contractual relationships with customers.
Give me included.
It talks about has signed a contract in place.
If you're already in the form of framework.
All of our supply agreement in addition.
Tom had advanced discussion.
Customer about future volume requirements.
Tubular project.
Clinical model.
This contract also improved the pricing and other terms and conditions. However.
Agricola include volume commitments.
We expect to realize carrying forecast say the contract revenue.
2021 through 2031.
We also saw backlog growth of 65% to 53 million from $32 million in September 2020 'twenty.
We are pleased that you see the global trend towards electrification continue.
United States is the rest of the passage of the infrastructure investment and the jobs Act repealed provides solid support for electrification efforts.
The United States.
When should we expect to increase our addressable market and accelerate our progress and over 20% in North America.
I'll now turn it over to Leon to discuss third quarter financial results.
Thank you if at all.
Five of the many industry wide headwinds we have faced.
We grew revenue for the fifth sequential quarter revenue grew 12% this quarter.
43% year to date.
Compared to the same period last year.
Gross loss was $35 9 million compared to gross profit of three 7 million in Q3 tied to attend to that.
Chin with velocity to deal with it.
$35, six maybe product warranty expense, so cool and plus.
Six six needed given to wrap it up.
They should increase the price of the raw material cost.
To put the two polyethylene isn't it and ship it to come and visit.
Crew that.
Paulo will end up basically become violated also negatively impacted our Q3 gross profit.
Before we move on to operating expenses I would like to provide more context, all the warranty accrual.
The warranty accrual in this quarter, what would related to a legacy product saw that to a certain customer in China jewelry in 2017 and 2018.
This legacy product peers pro formats, which doesn't meet our standards lead the loss to perform rigorous root cause analysis.
Following the completion of the root cause analysis in early October 2000 in terms of what we determined the cost of components sourced from third party supplier.
We believe it's more likely than not we would need to be pleased with this legacy product.
The menu warranty period under the term of the C with the contract.
Accordingly.
We have accrued 34 partner web immediate one time of warranty expense related to legacy products in this third quarter.
Components with now that you incorporate into any of our other products.
If we exclude the one time a warranty expense accrual so you've heard a lot about.
And the share based compensation expense.
Company, but adjusted gross profit would have been say with median instead of negative. So they are pulling them by three qualifier not immediate loss.
The heart of this.
Yesterday after.
The gross margin of 19%.
Operating expense was 78 million compared to 12 7 million in the prior year period. The change in operating expenses was primarily due to a 56 million share based compensation expense.
Or would that follow that they think it's a combination as well as increased headcount to support the company's planned growth initiatives.
And the other expenses.
Two the operating property company.
Finally, net loss was $116 4 million compared to a net loss taking part of the 1 million in the same quarter of last year.
Was it primarily due to the reduction in gross profit.
The higher operating expense is the weakest scout.
About.
Going into our balance sheet.
The combination with touch can you July.
Both our catch the publicity.
Mitral West ended the third quarter with approximately 625 minutes.
Cash cash equivalents and debt.
Test.
Finally, let me talk about our backlog and the Capex spend U S. Gulf of September 32000 type of what we had a backlog of 52 upon the seven minutes.
The increase of 65% from 31 7 million in the same quarter of last year.
We are currently ramping up our products in April to perform a majority of this backlog in Q4, this year, which gave us a coveted.
We are affirming our 2021 revenue guidance. However, we are closer to a multi terabyte, you know desktop, especially bottleneck.
International shipping.
Moving to Capex.
Based on all of the equipment the labor at a timeline and the schedule you during the upcoming harvest season. The company expect some previously planned capital expenditure for 2000 and types of one to take place in early 2022.
Total capital expenditure for 2000 and trying to what are now expected to be in the red 100 tons immediate to 150 minutes.
He said Oh, we return back to Mr Ward to discuss our business outlook.
Thank you Leon.
As Leon mentioned, we have closed the monetary challenges international shipping.
But based on the current market condition.
Backlog business trends and other factors, we are re affirming our previous outlook.
And continue to expect our full year 2021 revenues.
Should we be in the range of $145 million and $255 million.
Additionally, as temporary supply chain headwinds dissipate, we believe we are well positioned to capitalize in 2022 and beyond.
We are in the middle of our budget cycle and expect to be able to provide additional clarity on 2022.
Our next earnings call.
Thank you for your time today.
I will turn it back over to the operator, who will open up the nine for questions.
Thank you.
We'll now begin the question and answer session.
To join the question queue. You May Press Star then one on your telephone keypad, you won't hear a tone acknowledging a request.
If you are using a speakerphone please pick up your handset before pressing NMC.
<unk>. Your question. Please press Star then two.
We will pause for a moment our colleagues join the queue.
Okay.
Once again, if you have a question.
Please press star.
I'm in line.
Yeah.
At this time.
There are no questions from the phone line.
Thank you operator at this time, we're going to move to questions submitted in response to our App Microsoft campaign.
We appreciate all of your questions submitted and it's great to have such strong support across our retail investor base.
Given the volume we've received we will focus on the most frequently asked topics, but we loved hearing directly from all of you.
Yeah.
With that is by far the most frequently asked category of question related to updates on specific customers or contracts.
Now, saying I know, we have non disclosure agreements in place with almost all of our customer, but what what update are we able to share with the investment community at this time.
Thanks, Sara we are sometimes able to negotiate with our customers to make public announcements about specific projects or partnerships.
But not always.
What we can tell you is that our forecasted contracted contracted revenue has grown significantly since we announced the business combination in February 2021.
It's up 53% from $1 5 billion to $2 3 billion.
This is an encouraging metric.
That shows we're continuing to win major multiyear contracts with leading Oems validating the strength of our existing product portfolio. We.
We do hope to be in a position to provide some additional details about these new and existing customer relationships in the next couple of months.
Great. Thanks Shane.
We recently announced the purchase of a new R&D facility in Florida, and we also received a lot of follow up questions on that.
Mr. <unk> are you able to elaborate on the plans for this new facility.
Yes Sara.
As everybody knows microbus is that Saudi vertically integrated company.
We make materials battery cell battery pack.
Various system from the top to the bottom.
And our R&D Center will do the same to support our growth.
Alexandria in Florida, we will explore.
All specs long of technologies from a battery material to battery cell battery pack.
<unk> management.
And.
Our mission statement.
But our research centre is create experiences to powered award.
Okay. Thank you.
There was also a lot of interest in our ongoing capacity expansions Shane are you able to add any color.
Sure our capacity expansions are underway.
And we expect Capex to increase in Q4.
As we implied in the guidance we provided in the press release.
I would like to go through each one of the facilities real quick.
And who Joe as Mr. Woo previously noted we're building a new building on our existing campus, we're ordering enough equipment to support two gigawatt hours of capacity.
But the building is designed to support 12 gigawatt hours.
That we will need to add to the utility infrastructure. So the building is coming along and we're in we're in the process of ordering the equipment right now and <unk>.
Hartsville, we purchased an existing building.
We're in the middle of renovations to make the layout of the building suitable for our needs.
Again, the initial capacity will support two gigawatt hour per year.
But the existing building and utilities will be designed for four gigawatt hours. So we can rapidly respond to customer demand.
And Additionally, there is enough space on the existing land two and add an additional four gigawatt out.
Gigawatt hours to support future customer demand, giving us a total potential.
Capacity of eight gigawatt hour on the Clarksville.
Facility.
Our Berlin facility is operational already.
Able to ship to customers today.
So overall plans are progressing nicely. We're looking forward to completing these projects to meet customer demand. We believe we will realize some nice efficiencies with some of the new manufacturing equipment reorder, including a higher level of automation, resulting in less head count.
Awesome, Thanks for that color.
I think we've got time to cover one more question from our retail investors and I believe we have.
A question on the investment professional line as well.
Mr. Woo asked you about a few of our investors have requested additional clarity with respect microvax plans in the passenger vehicle market.
Yeah, sorry, yeah, while we are focused on the.
Commercial vehicles for passenger vehicles as we stated before.
We think all the most of the car.
Car manufacturers, they're going to build a battery.
Matter of fact, you're a room by themselves.
Michael Ross.
Intended to be their material supplier component supplier.
And as well as you know.
We plan to license the technology to them as well if we develop it their advanced technology, if they like it.
That's all or you know the overview for the passenger vehicle business.
Great. Thank you.
I think we have one more question from the investment community. So I'll pass it back over to the operator.
Put him on the line.
Thank you.
The next question comes from Jack Kester with Green Sky capital.
Please go ahead.
Okay.
Okay.
Yeah.
Okay.
Chad Kessler your line is now open.
Hello.
Hey, Jack Hey, Whitney Yeah, Yeah.
Hi, Hi, good to hear you guys, thanks, who put up a great quarter.
A lot of US are here in the states have been a little bit disappointed in the lack of communication we'd.
We'd like to see more clarity and I understand you have to do the nda's. So the number of your clients, but we would really appreciate any update you can give us on any granularity and clarity going forward.
As you progress we think microburst is an exciting company and we're behind your 100% you've got a big retail base.
Along with the institutional investors and we'd like to see that grow maybe get some analyst coverage et cetera. So anything that you can do to help us out would be greatly appreciated in terms of communication.
And you know clearly letting us know a new slide deck today would have been great.
<unk> been using the one since February and if you can get that updated that would be great too.
Yeah.
Yeah.
Well, Jack all really good points and I think you are.
I hear a lot about Microsoft's going forward.
Actually a lot to talk about we are.
As a newly public company.
There was a there was a lot of things we have to.
Had to get in place that we believe those are in place and.
And we did want to start giving some visibility in what we're seeing with new customers. That's why we're highlighting $800 million in new contract wins.
That's a pretty significant mark sometimes being able to as I spoke earlier being able to name what those customers are that that can be tough, but hey, we're working on those are getting their permission to get those press releases out and sometimes we're gonna be successful doing that sometimes were not but I think we're heading in the right direction.
You can expect to hear.
More announcements from us in.
As we knock down those achievements and make the progress towards our goals.
Okay.
Okay.
That's great. We are we're looking forward to that can you give us any color on the U S postal service contract with Oshkosh.
I really wish I could Oshkosh is a.
Great strategic Investor and a great partner, it's again one of those subjects that I know you can get frustrated with when you can't say anything about it and.
It's just.
We're really fortunate to have Oshkosh is a partner.
Understand understand thank you very much for your time today and please keep us up on all the.
Elements going on at micro, but that sounds like it's an exciting time.
Sure well, thanks, a lot Jack.
At this time there are no additional questions in the queue.
We'll turn it back over to Mr. <unk> for closing remarks.
Yeah. Thank you all this afternoon to join our conference.
And I wish you that everybody have a good grain tonight.
Okay concludes the conference call you may disconnect your lines. Thank you.
You for participating and have a pleasant day.