Q1 2022 Lightning eMotors Inc Earnings Call

Greetings and welcome to Lightning E Motors first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Greetings and welcome to the Lightning eMotors first quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad.

He would like to ask a question. Please press star one on your telephone keypad, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Brian Smith, Vice President of Investor Relations. Thank you. Please go ahead.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brian Smith, Vice President of Investor Relations. Thank you, please go ahead.

Thank you, Operator, and thanks for joining us today, hosting the call today are Lightning's co-founder and CEO , Kim Reeser, Chief Revenue Officer, Cash Steppy, and CFO , Teresa Covington. Ahead of this call, Lightning issued its first quarter 2022 earnings press release and presentation, which we will reference today. These can be found on the Investor Relations section of our website.

Thank you operator, and thanks for joining us today hosting the call today are lightening co founder and CEO , Jim Research Chief revenue Officer cash Debbie and CFO Teresa Covington ahead of this call lightening issued its first quarter 2022 earnings press release and presentation, which we will reference.

Today. These can be found on the Investor Relations section of our website.

On this call, management will be making statements based on current expectations and assumptions which are subject to risks and uncertainties. Actual results could differ materially from these forward-looking statements due to risk factors that are listed in today's earnings release and in our filings with the SEC, which can also be found on our website. We do not assume the duty to update any forward-looking statements.

On this call management will be making statements based on current expectations and assumptions, which are subject to risks and uncertainties actual results could differ materially from these forward looking statements due to risk factors that are listed in today's earnings release and in our filings with the SEC, which can also be found on our website.

We do not assume the duty to update any forward looking statements.

Today's presentation also includes non- GAAP financial measures. Please refer to the information contained in today's earnings press release for definitional information and reconciliation of non- GAAP measures to the comparable GAAP measures . With that, let me turn it over to Tim.

Today's presentation also includes non-GAAP financial measures. Please refer to the information contained in today's earnings press release for definitional information and reconciliations of non-GAAP measures to the comparable GAAP measures with that let me turn it over to Jim.

Yeah.

Thank you, Brian and thanks to everyone for joining us today.

On today's call, we will be referring to the slides that were posted to the Investor Relations section of our website earlier today.

On today's call, we will be referring to the slides that were posted to the investor relations section of our website earlier today. I'll start off on slides.

I'll start off on slide four with today's agenda.

I will begin with an overview of Lightning and a supply chain update. Cash will then provide an update on products and markets and sales and business development initiatives and Theresa will wrap up with a financial overview.

I'll begin with an overview of lightning and our supply chain update basketball, then provide an update on products and markets and sales and business development initiatives and Teresa will wrap up with a financial overview.

Moving to slide six we believe whitening and motors continues to be the only full range manufacturer class three through seven battery electric and fuel cell electric vehicles in the market <unk>.

Moving to slide six, we believe Lightning Motors continues to be the only full range manufacturer of class three through seven battery electric and fuel cell electric vehicles in the market.

including ambulances, shuttle buses, utility trucks, school buses, and motorcoach.

Including ambulances shuttle buses utility trucks school buses and motor coaches, where.

We're the only company currently shipping products in all of these classes today.

We are the only company currently shipping products in all of these classes today we started in 2008 with a commercial vehicle hybrid solutions that have now shipped and have now shipped over 280 zero mission vehicles with over 1.6 million miles zero mission miles driven by our customers.

We started in 2008, where the commercial vehicle hybrid solutions that have now shipped.

Now shipped over 280 zero emission vehicles with over 1.6 million miles of zero emission miles driven by our customers with every vehicle we ship every mile our customers drive our lead grows.

With every vehicle we ship and every mile our customers drive, our lead grows.

Moving to slide seven, we have built a modular software and hardware architecture that allows us to serve a highly segmented and customized market with a cost-effective solution.

Moving to slide seven we.

We have built a modular software and hardware architecture that allows us to serve a highly segmented and customize market with a cost effective solution.

Our high level of software and hardware customization that is required for commercial electric vehicles is something that legacy OEMs have not historically performed and are not well suited for. Companies like Ford and GM are building light duty commercial trucks and vans and high volumes and do not have a business model that supports manufacturing electric vehicles for the medium duty segment.

Our high level of software and hardware customization that is required for commercial electric vehicles is something that legacy Oems have not historically performed and are not well suited for companies.

Companies like Ford and GM are building light duty commercial trucks and vans in high volumes.

Out of a business model that supports manufacturing electric vehicles for the medium duty segment.

Moving to slide eight.

Moving to slide eight. Earlier this week Bluebird unveiled its new class five through six commercial electric truck chassis that will be sold into the step ban market for applications such as parcel and delivery Lenin and uniform and bakery fleets and also into the motor home.

Earlier this week Bluebird unveiled its new class five through six commercial electric truck chassis that will be sold into the step van market for applications, such as parcel and delivery learning and uniform and bakery fleets and also into the motor home market.

We are proud that they have chosen Lightning to be their electric powertrain provider for this platform. This new chassis expands the market.

We are proud that they have chosen lightning to be their electric powertrain provider for this platform.

This new chassis expands the market for both Bluebird and lightning.

Bluebird has a long history of making school buses and this is their first truck chassis. And because the chassis does not originate as an ICE chassis, the chip shortage will not impact their availability.

Bluebird has a long history of making school buses and this is their first truck chassis.

And because the chassis does not originators and ice chassis, the chip shortage will not impact their availability.

Moving to slide nine.

We also announced earlier this week that we are partnering with perone robotics to offer their autonomous driving technology as an integrated feature option package for all of our commercial zero emission vehicles.

We also announced earlier this week that we are partnering with Perone Robotics to offer their autonomous driving technology as an integrated feature option package for all of our commercial zero emission vehicles.

Our autonomy solution is available today as a vehicle option package for commercial vehicle customers looking for added safety features such as LiDAR and radar based front collision avoidance, as well as level four, which is driver optional autonomy for campus and terminal fixed route.

Our autonomy solutions available today as a vehicle option package for commercial vehicle customers looking for added safety features such as Lidar and radar based front collision avoidance as well as level four which is driver optional autonomy for campus and terminal fixed routes.

Lightning strategy is to continue to innovate with autonomous technology partners to provide commercial fleets with solutions. They can leverage today to improve their efficiency and safety.

Lightning's strategy is to continue to innovate with autonomous technology partners to provide commercial fleets with solutions they can leverage today to improve their efficiency and safety. Moving to slide 10,

Moving to slide 10, let's discuss the supply chain landscape.

Customer demand remains robust, but supply disruptions continue to limit our ability to service the demand as we stated previously batteries, which worst supply limited last year are in much better shape due to a new battery partnership agreements and we have inventory on hand today.

Customer demand remains robust, but supply disruptions continue to limit our ability to service the demand. As we stated previously, batteries, which were supply limited last year, are in much better shape due to new battery partnership agreements, and we have inventory on hand today.

However, major chassis OEMs have continued to struggle with a new round of publicly announced lengthy factory shutdowns of their commercial vehicle chassis plan.

However, major chassis Oems have continued to struggle with a new round of publicly announced lengthy factory shutdowns of their commercial vehicle chassis plants.

Because of these shutdowns, we expect these chassis availability constraints will continue for the next few quarters.

Because of these shutdowns we expect these chassis availability constraints will continue for the next few quarters.

Our sales, engineering, manufacturing, and supply chain teams have been taking measures to adapt to these circumstances with announcements in the last quarter of certified re-power products, as well as new platform options with Bluebird and GM, and continued progress on our previously announced Class 4 Lightning HS.

Our sales engineering manufacturing and supply chain teams have been taking measures to adapt to the circumstances with announcements in the last quarter of certified Repower products.

Well as new platform options with Bluebird and G M and continued progress on our previously announced class for lightning each chassis.

While these new chassis and platform investments generally require a long development cycles. Several of our investments are already maturing as we expect to be in production with our G. M offerings still this year and our Bluebird powertrain and lightning each assay in 2020 three.

While these new chassis and platform investments generally require long development cycles, several of our investments are already maturing as we expect to be in production with our GM offerings still this year and our Bluebird powertrain and lightning chassis in 2023.

Our recently announced factory-certified repower offerings are staying strong customer interest in the market with few alternatives, and although it is early in the sales cycle, we already have orders from five fleets and a growing pipeline.

Our recently announced factory certified Repower offerings are seeing strong customer interest in the market with few alternatives and although it is early in the sales cycle, we already have orders from five fleets and a growing pipeline.

Finally, we continue to grow our lightning energy business, which is not chassis dependent and as a healthy sales pipeline for our proprietary charging and energy solutions that are tightly integrated with our vehicles.

Finally, we continue to grow our lightning energy business, which is not chassis dependent and has a healthy sales pipeline for our proprietary charging and energy solutions that are tightly integrated with our vehicle.

Over the last year, Lightning has made significant investments to diversify our supply chain through engineering and validation of new suppliers and components. And we've improved their supply chain management through additional team members and MRP systems, and we've worked to bring some component production capabilities and how

Over the last year Lightning has made significant investments to diversify our supply chain through engineering and validation of new suppliers and components and we've improved our supply chain management through additional team members and MRP systems, and we've worked to bring some component production capabilities in house.

Despite these investments, though risk remains in the supply chain such as unexpectedly long lead items for supply of components like wire harnesses electric power steering components in thermal management parts.

Despite these investments, though, risk remains in the supply chain, such as unexpectedly long lead items for supply of components like wire harnesses, electric power steering components, and thermal management parts.

Despite these limitations, though we sold a record number of vehicles in Q1.

Despite these limitations though, we sold a record number of vehicles in Q1.

It is important to note that we have not had any orders canceled due to the supply chain delays, rather revenue was being pushed to future quarters.

It is important to note that we have not had any orders canceled due to the supply chain delays, rather revenue is being pushed to future quarters.

And now I'll turn it to cash to provide an overview of the order backlog and sales pipeline and key partnerships.

And now we'll turn it to Cash to provide an overview of the order backlog, sales pipeline, and key partnerships.

[laughter].

Thanks, Tim I will begin on slide 12 to provide an update on our product partnerships pipeline and backlog our core market verticals all of that trigger zero emission cargo vans delivery trucks passenger Vance shuttle buses school buses continue to drive the business forward.

Thanks, Tim. I will begin on slide 12 to provide an update on products, partnerships, pipeline, and back.

Our core market verticals, all-electric, zero-emission cargo vans, delivery trucks, passenger vans, shuttle buses, and school buses continue to drive the business forward. Our strategic partnerships with market-leading OEMs and specialty vehicle builders like Forest River and Collins have enabled us to engage with a wide range of customers by leveraging our partners' brand reputation and extensive nationwide dealer networks.

Strategic partnerships with market, leading Oems and specialty vehicle builders like Forrester and Collins have enabled us to engage with a wide range of customers by leveraging our partners brands reputation and extensive nationwide dealer network. As a result, we continue to receive repeat orders and demand for these products are strong.

As a result, we continue to receive repeat orders and demands for these products are strong. Our sales pipeline as of April 29, 2022, was $1.5 billion, and backlog was $167.8 million.

Our sales pipeline as of April 29th 2022 was $1.5 billion and backlog was $167 $8 million.

Our order backlog includes all electric commercial vehicles, all electric powertrain systems, and charging.

Our order backlog includes all electric commercial vehicles, all electric powertrain systems and charging systems backlog generally comprises nonbinding agreements and purchase orders from customers.

backlog generally comprises non-binding agreements and purchase orders from customers.

Sales pipeline consists of sales opportunities in various stages of our sales cycle prior to the receipt of a purchase order. Today, our sales pipeline consists of over 400 individual sales opportunities, representing how quickly our relatively new sales team has been able to engage with a large number of fleets through a mix of direct engagement and leveraging dealer partnerships.

Sales pipeline consists of sales opportunities in various stages of a sales cycle prior to the receipt of a purchase order today. Our sales pipeline consists of over 400 individuals sales opportunities representing how quickly our relatively new sales team has been able to engage with a large number of fleets through a mix of direct mail.

It gives you went and leveraging theater partners.

On slide 13, we show some additional vehicle applications and partnerships ambulances transit bus and motor coach we powers Rvs and of course, the very recently announced partnership with Bluebird dwell for class five and six step vans for last mile parcel delivery bakery and lit and customers.

On slide 13, we show some additional vehicle applications and partnerships, ambulances, transit, bus and motor coach repowers, RVs, and of course, the very recently announced partnership with Bluebird to offer class 5 and 6 step vans for last mile parcel delivery, bakely and linen.

We expect to see strong growth in these market segments over the next 12 to 18 months. We continue to explore additional vehicle opportunities and look forward to sharing those details in the near future.

We expect to see strong growth in these market segments over the next 12 to 18 months.

We continue to explore additional vehicle opportunities and look forward to sharing those details in the near future.

Now I'd like to turn to slide 14 to discuss the forces that continue to drive adoption of zero emission commercial vehicles.

Now I'd like to turn to slide 14 to discuss the forces that continue to drive adoption of zero emission commercial vehicles government regulations and mandates grant funding programs and fleet sustainability targets Cal.

Government regulations and mandates, grant funding programs, and fleet sustainability.

California's Act regulation, transit rule, airport federal rule, and a 15 state MOU on zero emission vehicles are all delivering a strong message to the market.

California's Act regulation transit rule airports shuttled rule and a 15th state Mou on zero emission vehicles are all delivers a strong message to the market the future is electric.

Beyond the mandates state and federal governments are now providing even more funding to accelerate the adoption of zero emission vehicles programs like the federal transit authorities low or no emission vehicle program in California, as HP program are providing significantly more money this year than they ever have.

Beyond the mandates, state and federal governments are now providing even more funding to accelerate the adoption of zero emission vehicles.

Programs like the Federal Transit Authority's Low or No Emission Vehicle Program and California's HVIP program are providing significantly more money this year than they ever have.

New mechanisms like the Epa's Clean School bus program are benefiting from the infrastructure investment and jobs Act right now active.

New mechanisms like the EPA's Clean School Bus Program are benefiting from the Infrastructure Investment and Jobs Act and are now active.

Lastly, many fleets continue their march towards electrification due to corporate sustainability goals. The recent increase in gas prices has accelerated the interest of many corporations looking to go electric, seeking a lower total cost for it.

Lastly, many fleets continue their march towards electrification due to corporate sustainability goals. The recent increase in gas prices has accelerated the interests of many corporations looking to go electric seeking a lower total cost of ownership.

And with that, I'll turn it over to Teresa to provide an update on Lightning's financial results, and I'll.

And with that I'll turn it over to Teresa to provide an update on <unk> financial results and outlook.

Okay.

Thank you Kash I will now provide some commentary on our first quarter results.

Thank you, Cash. I will now provide some commentary on our first quarter results, followed by our second quarter outlook. Beginning on slide 16, for the first quarter, we generated revenues of $5.4 million, which increased 18% from the year-ago period. During the first quarter, Lightning sold 68 vehicles compared to 32 vehicles and powertrains in the prior year period.

Led by our second quarter outlook, beginning on slide 16 for the first quarter, we generated revenues of $5 $4 million, which increased 18% from the year ago period. During the first quarter Lightning sold 68 vehicles compared to 32 vehicles and powertrain and the prior year period.

Costs to goods sold in the first quarter was $7.7 million, compared to $5.3 million during the prior year period, primarily due to an increase in revenues. The gross margin percentage was minus 43% in the first quarter, compared to minus 16% during the prior year period, primarily due to higher factory overhead and higher depreciation expenses related to recent investments in factory scale and productivity.

Cost of goods sold in the first quarter was $7 $7 million compared to $5 $3 million during the prior year period, primarily due to an increase in revenues and gross margin percentage was minus 43% in the first quarter compared to minus 16% during the prior year period, primarily due to higher factory overhead and higher depreciation.

<unk> expenses related to recent investments in factory scale and productivity.

We experienced small increases in material and logistics costs in the first quarter, but are seeing broader inflationary impacts across materials and logistics starting in the second quarter of this year. Costs are increasing on many parts, especially batteries and steel, driven by increases in raw commodity costs and labor costs.

We experienced small increases in material and logistics costs in the first quarter, but are seeing broader inflationary impacts across materials and logistics starting in the second quarter of this year.

Costs are increasing on many parts, especially batteries and steel driven by increases in raw commodity cost and labor cost.

We are working closely with our existing suppliers identifying qualifying new suppliers.

We are working closely with our existing suppliers, identifying qualifying new suppliers, and driving our own product cost reduction efforts to partially offset inflationary increases.

And driving our own product cost reduction efforts to partially offset inflationary increases.

We increased our prices over the last few months on new quotes, and we'll be continually evaluating our pricing going forward based upon cost inflation and pricing that we believe will drive EV adoption.

We increased our prices over the last few months on new quotes and we'll be continually evaluating our pricing going forward based upon cost inflation and pricing that we believe will drive EV adoption.

We remain focused on driving towards a positive gross margin through fixed cost leverage on labor and overhead volume purchases and cost reduction and operational efficiency as we ramp production and our revenue grows.

We remain focused on driving towards a positive gross margin through fixed cost leverage on labor and overhead, volume purchases and cost reduction, and operational efficiency as we ramp production and our revenue growth.

SG&A in the first quarter was $11 $6 million compared to $3 $9 million in the prior year period, primarily due to higher administrative expenses related to being a public company reset.

SGN, the first quarter, was $11.6 million, compared to $3.9 million in the prior year period, primarily due to higher administrative expenses related to being a public company.

Research and development expense, the first quarter was $1 $9 million compared to $648000 in the prior year period, primarily due to higher engineering head count to advance the development and design of new vehicle platforms, refine and improve our production processes for foreign product testing and enhance our in house engineering capability.

Research and development expense, the first quarter, was $1.9 million, compared to $648,000 in the prior year period, primarily due to higher engineering headcount to advance the development and design of new vehicle platforms, refine and improve our production processes, perform product testing, and enhance our in-house engineering capability.

Yeah.

Total operating expenses in the first quarter were $13.5 million compared to $4.6 million in the prior year period.

Total operating expenses in the first quarter were $13 $5 million compared to $4 $6 million in the prior year period.

Operating loss for the first quarter was $15.9 million compared to $5.3 million in the prior year period. Net loss for the first quarter was $10.8 million compared to a net loss of $27.4 million during the prior year period.

The operating loss for the first quarter was $15 $9 million compared to $5 $3 million in the prior year period.

Net loss for the first quarter was $10 $8 million compared to a net loss of $27.4 million during the prior year period.

The first quarter of last year was impacted by a $20 million non-cash loss from the change of the fair value of warrant liabilities ahead of our going public in May 2021.

The first quarter of last year was impacted by a $20 million noncash loss on the change in the fair value of warrant liabilities ahead of our going public in May 2021, yeah.

The adjusted EBIT loss for the first quarter was $14.5 million compared to a $5.1 million loss in the prior year period. The change is primarily related to higher operating expenses in the current period.

The adjusted EBIT loss for the first quarter was $14 $5 million compared to a $5 $1 million loss in the prior year period.

Change is primarily related to higher operating expenses in the current period.

A reconciliation of the net loss to the adjusted EBITDA can be found on slide 18.

A reconciliation of net loss to the adjusted EBITDA can be found on slide 18.

Turning to our balance sheet, Lightning ended the first quarter with $150.4 million in cash and cash equivalents.

Turning to our balance sheet Lightning ended the first quarter with $154 million in cash and cash equivalents.

Turning to slide 17, our outlook for the second quarter.

Turning to slide 17, our outlook for the second quarter, while our battery supply chain challenges have mostly been mitigated in the near term, we continue to experience supply chain challenges with chassis and other components.

Our battery supply chain challenges have mostly been mitigated in the near term, we continue to experience supply chain challenges with chassis and other components.

and lays associated with any of these components may impact the timing of revenue. Based upon current business conditions, we expect for the quarter ending June 30, 2022, vehicle and powertrain system sales to be in the range of 50 to 75 units, revenues to be in the range of $6 million to $8 million, adjusted EBITDA loss to be in the range of $18 million to $20 million.

Ladies associated with any of these components may impact the timing of revenue based upon.

Current business conditions, we expect for the quarter ending June 32022 vehicles and powertrain system sales to be in the range of 50 to 75 units revenues to be in the range of 6 million to $8 million adjusted EBITDA loss to be in the range of 18 million to $20 million.

We continue to project full year 2022 capital spending to be in the range of $10 million to $15 million. Now I turn it back over to Tim for closing remarks.

We continue to project full year 2022 capital spending to be in the range of 10 million to $15 million now I turn it back over to Tim for closing remark.

Thank you Theresa.

Thank you, Teresa, in closing, while in the near term lightning is experiencing the same supply chain headwinds as other companies in our space, we feel very confident in our longer term out.

In closing while in the near term lightning is experiencing the same supply chain headwinds as other companies in our space, we feel very confident in our longer term outlook.

as evidenced by our strong backlog pipeline and the OEM relationships we have announced.

As evidenced by our strong backlog pipeline and the OEM relationships, we have announced.

In fact, we see the current industry disruptions, focus shifts, and market transformations as bullish for our business in the medium and long term, as we are well positioned with products, customers, and experience.

In fact, we see the current industry disruptions focus shifts and market transformations as bullish for our business in the medium and long term as we are well positioned with products customers and experience.

And our view lightning stands out to our customers because of our ability to produce and deliver a full suite of unique vehicles and infrastructure solutions they require to run their fleets today.

In our view, lightning stands out to our customers because of our ability to produce and deliver a full suite of unique vehicles and infrastructure solutions they require to run their fleets today.

Further, we believe the opportunity for lightning in the EV industry remains robust with multiple drivers of ZEV adoption, including new sustainability and air quality mandates, and billions of dollars in new federal and state funding that will be available to fleets over the next year. With less than 0.1 percent of the commercial vehicle market having adopted zero emission vehicles, we look forward to many years of strong growth ahead.

Further we believe the opportunity for lightning and the EV industry remains robust with multiple drivers of Z Z E V adoption, including new sustainability and air quality mandates and billions of dollars of new federal and state funding that will be available to fleets over the next year.

With less than 1% of the commercial vehicle market market, having adopted zero emission vehicles, we look forward to many years of strong growth ahead.

I would like to finish by thanking all of our customers for their confidence in lightning our partners for their contributions to our company's success and our shareholders for their support I, especially want to thank our employees, who are executing at a high level through a challenging operating environment.

I would like to finish by thanking all of our customers for their confidence and lightning, our partners for their contributions to our company's success, and our shareholders for their support. I especially want to thank our employees who are executing at a high level through a challenging operating environment.

And with that thank you everyone and I appreciate your time today.

And with that, thank you, everyone, and I appreciate your time today. Operator, we are now ready to open the line for questions.

Operator, we're now ready to open the line for questions.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that is star 1 to register a question at this time. The first question is coming from Colin Rush of Oppenheimer. Please go ahead.

Thank you the floor is now open for questions.

Ask a question. Please press star one on your telephone keypad at this time.

Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Once again that is star one to register a question at this time.

The first question is coming from Colin Rusch of Oppenheimer. Please go ahead.

Thanks so much, guys. Can we talk a little bit about the autonomy offered that you've got in terms of the L4 program, and what the operating parameters are in terms of closed-loop systems, speed that you guys can navigate, and just kind of the operating parameters, and just get a sense of what that market actually looks like right now?

Thanks, So much guys can we talk a little bit about the economy.

And then you've got in terms of the all four program and what the operating parameters are in terms of closed loop systems.

At the speed that you guys can navigate and just kind of the operating parameters.

To get a sense of what that market actually it looks like right now.

Thank you, Colin, and it's great to hear from you and appreciate all of the very deep analysis you've provided both for investors and the support you provide us.

Thank you Colin and it's great to hear from you and I appreciate all of the very deep analysis, you've provided both for investors and in the support you provide us I'm personally I've spent quite a bit of time with the prone robotics product and and what we're doing in that partnership is something I'm.

I personally have spent quite a bit of time with the Perone Robotics product and what we're doing in that partnership. It's something I'm directly interested in and working on. So far, I've been very, very impressed with that partner, and that's the reason we announced a partnership after spending quite a bit of time with what they've built on our vehicles. From a speed, it supports a pretty wide variety of speeds.

Directly interested in and working on and I. So far I've been very very impressed with that partner and that's the reason we announced our partnership after spending quite a bit of time with with what they've built on our vehicles. The from a speed. It supports a pretty wide variety of speeds, but the Frank truth is in most of the applications.

We see near term that we can monetize together today most of those applications are less than 30 miles an hour. So that the use cases are very safe and very simple in that sense. When you think about for example, a campus kind of shuttle that does employee shuttling around a large factory campus or round out larger.

Logistics terminal or a large university campus you can imagine something that's going 20 to 30 miles an hour may hit a peak speed of 40 miles an hour is the same consistent route every day doesn't have road construction you can navigate a lot of the corner cases that today hold off the monetization of many other commercial cases, but worked great in these cases.

an hour may hit a peak speed of 40 miles an hour as the same consistent route every day doesn't have road construction. You can navigate a lot of the corner cases that today hold off the monetization of many other commercial cases, but work great in these cases. So we from a technology standpoint, the technology works today. I was driving in a writing and we have a joke that we can do a ride and a ride. We don't need to drive it, but it's a an exciting technology. I've personally written in it. I feel very comfortable, but I also see the safety features that it provides is level for this be in order to make level for work. You clearly have to have some very strong.

the monetization of many other commercial cases, but work great in these cases. So we, from a technology standpoint, the technology works today. I was driving in and riding in it, but we have a joke that we can do a ride and a ride. We don't need to drive it, but it's an exciting technology. I've personally ridden in it. I feel very comfortable, but I also see the safety features that it provides as level four. In order to make level four work, you clearly have to have some very strong

So when we from a technology standpoint, the technology works today I was driving in writing and it's the way we have a joke, but we can go right and a right and a right [laughter], we don't need to drive it, but it's a and exciting technology I've personally ridden in it I feel very comfortable but I also see the safety features that it provides us a level for this.

In order to make level for work you clearly have to have some very strong safety features that we're also using even even at a level two for some of the customers who still want to have a driver may not have as much of a closed circuit, but are still interested in lidar and radar based safety systems.

safety features that we're also using, even at a level two, for some of the customers who still want to have a driver, may not have as much of a closed circuit, but are still interested in a LiDAR and radar-based safety system.

Excellent. And then just in terms of what the customer needs are, you know, how they're evolving, obviously, with the pre-dynamic price environment, you know, both on the cost side and on the vehicle price side. But certainly, as the industry gets a lot more real and is able to start delivering vehicles, I'm just wondering if there are adjustments in duty cycles, requirements that are shifting for you guys that may give you a little bit more advantage as you come to the table to negotiate.

Excellent and then just in terms of what the customer needs are.

Yeah, Hi, there there are balls and obviously, it's a pretty dynamic price environment, both on the cost side and on the vehicle price side.

But certainly as a dentist gets a lot more real estate will start delivering vehicles out I'm. Just wondering if there are adjustments and duty cycles requirements that are shifting to you guys.

That may give you a little bit more of an advantage that you come to that helps to negotiate terms.

Yeah, I think obviously it's something we're working on every day, but one of the one of the advantages as we all know from many of the earnings call called that have happened is everybody's in the same boat.

Yeah, I think obviously, it's something we're working on every day, but one of the one of the advantages as we all know for many of the other earnings call calls that have happened is everybody's in the same boat everybody's having to reevaluate both a general cost inflation logistics and so the customers are becoming a custom even even if you look at our non.

Everybody's having to reevaluate both general costs, inflation, logistics.

And so, the customers are becoming accustomed, even if you look at a non-electric environment. So, even in an ice environment, costs have gone up dramatically for commercial vehicles. And so, the customers are now accustomed to this. It is a major change. Historically, the customers had a lot of power in the negotiations. And frankly, today, you know, too much has changed. And so, the customers have become accustomed to everything needing to be rediscussed and reprised.

Electric environment, so even in a nice environment.

Costs have gone up dramatically for commercial vehicles and so the customers are now accustomed to this it is a major change historically the customers had a lot of power in the negotiations and frankly today, you know too much has changed and so the customers have become accustomed to everything needing to be rediscovered and repriced and so it's.

And so it's not a surprise as our every time when our sales and marketing teams enter those negotiations, we find people are reasonable about it. They understand where they're at. And in fact, most of our customers are doing that with their customers. Most of our customers, as we know, have added when you think about a logistics.

Not a surprise as our every time when our sales and marketing teams enter those negotiations are we find people a reasonable about it they understand where they're at and in fact, most of our customers are doing that with their customers. Most of our customers. As we now have added when you think about logistics for last mile customers, they've added surcharges and fuel surcharges to their delivery.

our last mile customers, they've added surchargers and fuel surchargers to their deliveries, etc. So it certainly is a new world in that sense, but we do find that the ecosystem and the world around us and our customers are ready and able to address it and have a reasonable conversation around it.

Etcetera. So it certainly is a a new world in that sense, but we do find that the the ecosystem in the world around us and our customers are ready and able to address it have a reasonable conversation around it.

Appreciate it thanks guys.

Thank you. The next question is coming from Sharith El-Shabasi of Bank of America. Please go ahead.

Thank you. The next question is coming from.

Basi of Bank of America. Please go ahead.

Hi, good morning, everyone.

Good morning. Good morning. So my first question is really just with regards to the sales pipeline.

So my first question is really just with regards to the sales pipe.

With backlogs sort of flat, quarter over quarter, and the sales pipeline as well, I was wondering if you could add some color on the conversion from that pipeline and how it's trended in the last couple of years.

With backlog sort of flat quarter over quarter in the sales pipeline as well I was wondering if you could add some with some color on the conversion from that pipeline and how its trended in the last few quarters.

Yeah. It's a good question, obviously, we keep a close track on various sales metrics pipeline backlog being one of them. Some of the metrics. We track a number of individual opportunities and where customers are in the sales cycle generally.

Yeah, sure. It's a good question. Obviously, we keep a close track on various sales metrics pipeline backlog being one of them. Some of the metrics we track are number of individual opportunities and where customers are on the sales cycle. Generally speaking, we have a lot of new customers that are engaged with us.

Generally speaking we have a lot of new customers that are engaged with us a lot of them are in the early stages with smaller quantities typically our sales cycle is anywhere between three months to 24 months. We're in that process of customer need may need a devil vehicle for a couple of months to test it out they may buy five use.

A lot of them are in the early stages with smaller quantities. Typically, our sales cycle is anywhere between three months to 24 months, where in that process, the customer may need a demo vehicle for a couple of months to test it out. They may buy five units.

We've just tested out for another six months or nine months and then after that they moved to commercial orders. So we were engaged with a vast number of customers and a lot of that has not converted to backlog yet it's it's not a linear.

just tested out for another six months or nine months, and then after that they moved to commercial order.

So, we are engaged with a vast number of customers, and a lot of that has not converted to backlog yet. It's not a linear graph that I expect quarter over quarter, but we do have some really exciting deals in the pipeline that will enter the backlog in the coming quarter.

That I expect quarter over quarter, but.

But we do have some really exciting deals in the pipeline that will enter the backlog in the coming quarters.

Got it and then just looking at guidance it implies a.

And then just looking at guidance, it implies a pickup in ASP quarter over quarter. So with that, is that embedding some slightly better visibility on certain chassis product items? And then just longer term, how should we think about ASP once the E chassis becomes available?

Pick up in a S P a quarter over quarter. So with that is that embedding some slightly better visibility on certain chassis product items and then just longer term how should we think about asps once the chassis becomes available.

Yeah.

So sure even it's a very good question and something we see Theres theres too.

So Sharif, it's a very good question and something we see there's there's two.

Variables to play with here in terms of the average sales price, one of them is

Variables to play with here in terms of the average sales price one of them is the size and we've talked about this kind of in the past a bit that the we carry a variety from a class III or class seven product in the class seven products are significantly more expensive than a class III product primarily for the obvious choice.

the size and we've talked about this kind of in the past a bit that we carry a variety from a class three to a class seven product.

And the class seven products are significantly more expensive than a class three product, primarily for the obvious points you have bigger batteries and bigger components and more of them.

The obvious point, you have bigger batteries and bigger components and more of them.

So the from that perspective, we do expect more and more of our business and we're focusing more and more of our businesses into some of the bigger areas, but up till date, especially the last two quarters. The chassis that had been available have been the class III chassis. So.

From that perspective, we do expect more and more of our business, and we're focusing more and more of our businesses into some of the bigger areas.

But up till date, especially the last two quarters, the chassis that have been available have been the class three chassis. So consequently, the ASP has been down over the last several quarters because of just the product mix.

Consequently, the E. S. P has been down over the last several quarters because of just the product mix. The fact that we've been able to get these the smaller chassis is more in the bigger chassis, but in the medium and long term, we expect that the growth to be in the bigger part of the growth to be in our larger larger chassis range. So consequently, a higher ASP for those.

the fact that we've been able to get the smaller chassis more than the bigger chassis, but in the medium and long term, we expect that the growth to be in the bigger part of the growth to be in our larger chassis range, so consequently a higher ASP for those products even if we're just selling a powertrain.

Even if we're just selling a powertrain.

But to your point as we go forward with so many more of the chassis as being something that are on a part of our our invoice as opposed to the day. When many cases, it's just the powertrain, we do expect to pick up revenue from the chassis side moving forward more of that so so two parts, we certainly expect the powertrain business to move to.

as we go forward with so many more of the chassis being something that are on part of our invoice, as opposed to today, when in many cases it's just the powertrain, we do expect to pick up revenue from the chassis side moving forward, more of that. So two parts. We certainly expect the powertrain business to move towards the more expensive powertrains and the larger vehicles, but we also expect to pick up obviously some more of the chassis-based business as we move into the e-chassis and products into 2023.

The more expensive powertrains in the larger vehicles, but also we also expect.

To pick up obviously, some more of the chassis based business as we move into the chassis and products into 2023.

Understood. Thank you I'll get into queue.

Thank you. I'll get into it.

Yes.

Thank you. The next question is coming from Mike Zaremski of D. A Davidson. Please go ahead.

Thank you. The next question is coming from Mike Schlisky of DA Davidson. Please go ahead.

Yeah.

Yes, Hey, guys good morning.

Yes, hey guys, good morning. Um, can you, uh, at ACT-Expo this week, I was curious if you or Cash or anybody could give us some broad takeaways as to how it, uh, how it went and the level of, uh, you know, fleet interest.

So you're right. The act Expo. This week I was curious if you are or cash or any way you could give us.

Some broad takeaways as to how it heartland and the level of interest.

Yeah, I mean so I've been going to this is cash I've been going to that expo for five years and that show has completely transformed from a show where you had one Booth showing a zero emission technology and every other booth showing propane or natural gas to now completely flip It's all zero emission. It's all battery electric. There's a lot of new hydrogen around Pretty much every OEM is talking about

Yeah I mean.

So I've been going through this is cash I've been going to that school for five years and that show is completely transformed from a show where you had one booth showing a zero emission technology in every other booths, showing propane or natural gas to now completely flipped. Its all zero emission is all battery electric there's a lot of new hydrogen around pretty much.

Every OEM is talking about evs.

Um, a lot of it is forward looking and it's all kinds of vehicle applications in the transportation industry. Um, we had a great show. We had three vehicles in our booth. We had a school bus.

A lot of it is forward looking and it's all kinds of vehicle applications in the transportation industry.

We had a great show, we had a three vehicles in our Booth, we had a school bus we had a passenger van and we had the first G M Lightning electric truck.

We had a passenger van, and we had the first GM lightning electric.

Additionally, the Bluebird boots is where they revealed their E-Chassis with our power train, with our logos all over it. So we have presence in two different boots and four vehicles. Additionally, we had a vehicle in the ride and ride because contrary to many other competitors or OEMs doing other vehicle applications at the booth with a really flashy, flashy booth and marketing presence, but the vehicle doesn't run. Our vehicles run, so we were able to engage with a lot of the equipment.

Additionally, the Bluebird boots is where they revealed the E chassis with a powertrain without logos all over it. So we have a presence in two different booths and four vehicles. Additionally, we had of equal in the ride and drive because contrary to many other competitors or Oems doing other vehicle applications at the booth was really flashy.

Plus your boots, and marketing presence, but the vehicle doesn't run our vehicles run. So we were able to engage with a lot of vehicles are hundreds of leads hundreds of ride and drives overall the show had three X. The attendance I believe versus last last time. It happened. So a very successful show for US is we really are able to address with the various questions.

hundreds of leads, hundreds of write and drives. Overall, the show had three X attendance, I believe, versus the last time it happened. So a very successful show for us. We really are able to address with the various customer types, government agencies looking for trucks.

What types of government agencies are looking for trucks school bus customers looking for school buses airports travel agency looking for shuttle buses and passenger van So a really positive thing.

customers looking for school buses, airport, transit agency looking for shuttle buses and passenger van. So really positive.

Oh, great Okay.

Great. I'll just turn quickly to the balance sheet. Just a sense, guys, whether you think you'll

Looking to the balance sheet could you just a sense guys, whether you think you'll.

Yeah, increasing the cash burn from here, stable decreasing, and just any kind of thoughts as to what point you think you might be able to at least turn positive from a gross margin standpoint would be really helpful.

We are increasing the cash burn from here stable decreasing.

And just any kind of thoughts as to what point, you think you might be able to do at least turned positive from a gross margin standpoint, we are really helpful.

Oh, Hey, Mike Teresa here.

We believe our cash and cash equivalents balance of $150 4 million at the end of Q1 is sufficient to execute our business strategy over the next 12 months, we do believe that we're going to need to raise additional capital in the future to execute the strategy and we continue to evaluate.

We believe our cash and cash equivalence balance of $150.4 million at the end of Q1 is sufficient to execute our business strategy over the next 12 months.

We do believe that we're going to need to raise additional capital in the future to execute this strategy and we continue to evaluate the capital needs and the financing options.

The capital needs and the financing options.

As I talked about my prepared remarks, you know, we continue to focus on driving towards a positive gross margin for the business, you know, that the headwinds that we have on the supply chain there is, is, is, um,

I talked about in my prepared remarks that you know, we we continue to focus on driving towards a positive gross margin for.

For the business you know that the headwinds that we have on the supply chain. There is a it is.

kind of push back some of the revenue growth that we're expecting. So as we talked about, you know, the key drivers to the positive gross margin are getting that fixed operating leverage that we think by ramping the production and growing our sales.

Pushed back some of the revenue growth that we're expecting so as we talked about you know the key drivers to the positive gross margin or getting that fixed operating leverage.

That we think by ramping the protection and growing our sales.

Great if I could just throw one more in there on.

Great. I could just throw one more in there on the Bluebird product coming up here. Tim, you had mentioned the idea of putting that chassis into a motor home application. Is that going to be a Bluebird branded motor home, or could that be an existing motor home brand taking the Lightning slash Bluebird chassis with their own branded vehicle on top of that?

The bluebird product coming up here Tim.

Tim You had mentioned the idea of a block of putting a chassis into a like motor home application.

I'll definitely be a.

A blue bird branded motor home or before because that'd be a our existing motorhomes Brian .

Lightning slashed blueberry chassis with their own granted vehicle on top of it.

Yeah, Great Great question, Mike and it is the latter meaning.

The way the markets work today with these kind of chassis is the chassis vendors. So kind of the comparable is many of the motor homes today by a chassis from Freightliner. They buy of chassis from Ford in this case, they will buy a chassis from Bluebird and then they put their motor home on top of it and branded with their motor homes, So that the great motor home manufacturers.

Like the war like Winnebago and Forest River all three of them. Obviously are people, we know well and so consequently, there are some good relationships there to leverage there are also people who know the bluebird brand well and they also are people that recognize the value that bluebird and lightning already have an ecosystem.

people we know well, and so consequently there's some good relationships there to leverage. There are also people who know the Bluebird brand well, and they also are people that recognize the value that Bluebird and Lightning already have, an ecosystem of spare part and service partners and dealers throughout the United States to support the chassis and the powertrain that's already on the ground. So, this is something that the motor home manufacturers know they can integrate quickly, they can move very quickly to leverage this new product, and today there's large constraints from the traditional chassis suppliers in this space due to various supply chains, so we've now got a product that can move quickly and these customers are looking for a new product in the space to solve some of their own supply chain constraints. So we're excited about it and we believe it is very much something that'll plug in and go at a very fast pace with those RV manufacturers.

Some of our spare parts and service partners and dealers throughout the United States to support the chassis in the powertrain that's already on the ground. So.

This is something that the motor home manufacturers no. They can integrate quickly they can move very quickly to leverage this.

New new product and today, there's large constraints from the traditional ER chassis suppliers in this space due to the.

Various supply chain. So we've now got a product that can move quickly and these customers are looking for a new product in the space to solve some of their own supply chain constraints. So we're excited about it and we believe it is very much something that'll plug in and go at a very fast pace with those RV manufacturers.

Outstanding. Thank you so much. I'll pass it along.

Outstanding. Thank you so much I'll pass it along.

Thank you. The next question is coming from Steven Fox with Fox Advisors. Please go ahead.

Thank you. The next question is coming from Steven Fox of the Fox Advisors. Please go ahead.

Hi, good morning. Apologies for the background noise. Two questions, please.

Hi, good morning, apologies for the background noise two questions. Please first of all on the re tower opportunities I guess I'm, a little curious why its not moving more aggressively towards seeing fleets do a lot more repowering given how chassis lead times are long and it looks like they're going to stay long for a while and can you just talk also about you know.

First of all, on the repower opportunities, I guess I'm a little curious why it's not moving more aggressively towards seeing fleets do a lot more repowering given how chassis lead times are long and look like they're going to stay long for a while. And can you just talk also about where the sweet spot is for repower in terms of age of vehicle and type of vehicle? And then I just want to make sure I'm clear, Teresa.

Where the sweet spot is for Repower in terms of age of vehicle and type of vehicle and then I just want to make sure I'm clear Theresa on sort of EBITDA from here. It sounds like you are saying in the second half of the year, we could be looking at.

sort of EBITDA from here. It sounds like you're saying in the second half of the year we could be looking at some higher EBITDA losses, even if revenues were to go up. But I just want to make sure that, directionally, that's what we're talking about.

Some higher EBITDA losses, even if revenues are.

When you go up so I just wanted to make sure that Directionally, that's what we're talking about thanks.

So I'll start and then let Teresa follow with the EBITDA question.

So I'll start and then let Teresa follow with the EBITDA question.

Um, as far as repowers, we've, we've long been, and I've been a long advocate when you look at sustainability and you look at certain commercial vehicle markets where you've got a, a commercial vehicle, a chassis and a body that outlasts the power train consistently. That repowers are the right sustainability solution. They're the right economic solution.

As far as re powers, we've we've long been and I've been a long advocate when you look at sustainability and you look at certain commercial vehicle markets, where you've got a commercial vehicle of chassis in our body that outlasts. The powertrain consistently that re powers of the right sustainability solution. They are the right economic solution.

But as with any change, it takes a little bit to get through these commercial vehicle sales cycles. As Cash mentioned, they can run from three months to 24 months. So the fact that we already have our first five customers, we're already building our first repowered solutions for five major customers today and growing for something that really we just announced with several key partners here just in the last two months.

But as with any change it takes a little bit to get through these commercial vehicles sales cycles as cash mentioned they can run from three months to 24 months. So the fact that we already have our first five customers. We're already building our first repower solutions for our five major customers today and growing.

For something that really we just announced.

Announced with several key partners here just in the last two months I feel is moving at a very fast pace and is indicative of a very fast.

I feel is moving at a very fast pace and is indicative of a very fast take up relative to how quickly this market usually accepts.

Fast take up relative to how quickly this market usually accepts a change of any sort in technology or supply chain. So I'm very bullish.

a change of any sort in technology or supply chain. So I'm very bullish on it and when I look at our pipeline, our sales pipeline, the sales team is quickly seeing great traction. So yes, it takes a little bit and we knew it would take a little bit to pick up just because of how long it takes these customers to look at a new product and evaluate it and make a decision.

On it and when I look at our pipeline our sales pipeline are the sales team has quickly seeing great traction. So yes. It takes a little bit and we knew it would take a little bit to pick up just because of how long. It takes these these customers to look at a new product and evaluated and make a decision but in the in a relative sense of these commercial vehicle customers were.

We're very happy with the uptake and remain very very bullish on it and we see them exactly.

To your point, Steven the they see the need but I think it's also important to note. Many of the commercial vehicle customers didn't haven't really realize the shortage of chassis, even though we've seen it coming for a while many of them are you know it.

while many of them, it hasn't hit them yet until now. So this kind of recognition that, hey, commercial vehicle chassis are going to be constrained for a long time is now really just setting in and allowing them to make a better decision on this front. So, Kash, anything I missed on that that you'd add? Yeah, I think that the question was how, what's the sweet spot in terms of age? I think the sweet spot is five to eight years. A vehicle that's older than that may not have enough mileage but everything in it's really old. And we would hate to start a repower on a vehicle and find out a bunch of issues on the chassis of the body that have nothing to do with the powertrain but it makes the repower less attractive. So, typically when we engage with fleets, we ask for wind numbers, we ask for power.

It hasn't hit them yet until now so this kind of recognition that hey, commercial vehicle chassis are going to be constrained for a long time is now really just setting in and allowing them to make a better decision on this front. So cash anything I missed on that that you'd have yeah. Just I think the question was what's the sweet spot in terms of age I think the sweet spot is five.

I think a sweet spot is five to eight.

Two eight years of equals at all that's older than that may not have enough mileage, but everything is really old and we would hate to start or we power on a vehicle and find out a bunch of issues on the chassis of the bodies that have nothing to do with the powertrain, but it makes the repower less attractive. So typically we'll be engaged with fleets. We asked for the numbers we asked for photos.

A vehicle that's older than that may not have enough mileage, but everything in it's really old. And we would hate to start a repower on a vehicle and find out a bunch of issues in the chassis of the body that have nothing to do with the powertrain, but it makes the repower less attractive. So typically when we engage with fleets, we ask for wind numbers, we ask for photos, we inspect the vehicles to make sure they are a good repower candidate. And that certainly adds a step in the sales cycle that doesn't exist in new vehicle sales, but it makes sure it's the right solution for the customer.

We expect the vehicles to make sure. They are a good repower candidate and that certainly adds a step in the sales cycle that doesn't exist in new vehicle sales, but it make sure. It's the right solution for the customer so sweet spot five to seven years I think.

So sweet spot five to seven.

And I'll hand the floor over to Theresa here now to talk about UDAL. Yeah. So, Stephen, I think your question was really around the guidance. And, you know, with the supply chain headwinds, what we have, just giving guidance out through Q2, do you have an adjusted UDAL loss of 18 to 20 million?

I'll hand to hand, the floor over to Teresa here now to talk about EBITDA. Yeah. So Stephen I think your question was really around the guidance and you know with the with the supply chain headwinds, what we have just giving guidance out through Q2 I.

Do you have an adjusted EBITDA loss of 18 to 20 million are we are expecting some higher operating expenses starting in Q2, we've made some investment with and newest head count them in the first quarter are key areas that we've made some investments in and new employees has been and our engineering team as well.

We are expecting some higher operating expenses starting in Q2. We've made some investment in new headcount in the first quarter. Key areas that we've made some investments in new employees has been in our engineering team as well as our sales team and also just some higher professional services that we're expecting starting.

Our sales team and also just the higher professional services that were expecting starting starting in Q2, we haven't provided guidance beyond that beyond our capital for the full year in the $10 million to $15 million range.

starting in Q2. We haven't provided guidance beyond that, beyond capital for the full year in the $10 to $15 million range.

Thank you.

Okay.

Thank you. The next question is coming from Michael Ward of Benchmark. Please go ahead.

Thank you. The next question is coming from Michael Ward of Benchmark. Please go ahead.

Thanks, Good morning, everyone. Just a follow up on the Repower. So do you expect any unit deliveries in <unk> or in 2022 or is it more 2023 story.

Thanks. Good morning, everyone. Just to follow up on the repower, so do you expect any unit deliveries in 2Q or in 2022 or is it more a 2023 story?

Oh, absolutely 2022 we're still trying to figure out Q2, or Q3, but definitely the weak Q2 and Q3, we're going to be delivering some repower units. This is and I'm expecting a bunch in Q4.

absolutely 2022 we're still trying to figure out Q2 or Q3 but definitely between Q2 and Q3 we're going to be delivering some repower units this is and I'm expecting a bunch of Q4.

Okay.

Now, I just want to make sure I understand, because from an outsider's perspective, it looks like you're casting a wider net as far as markets that you're focusing on, you know, with the bluebird terms and some of the other vehicles.

I just want to make sure I understand because it just from an outsider's perspective, it looks like youre casting a wider net as far as our markets that you're focusing on with the Bluebird terms and some of the other vehicles.

Or are you, adding any complexity to your manufacturing footprint or is it all within.

Are you adding any complexity to your manufacturing footprint or is it all within the current system? Do you need to accelerate increasing your production capacity? Where do we stand on that? Because it looks like if the supply changes, you could have a ramp up or an acceleration in your production needs pretty quickly.

The current system or do you need to accelerate increasing your production capacity, where do we stand on that because it looks like if the supply changes you could have a ramp up or an acceleration in your production.

Production needs pretty quickly.

Yeah, we see it exactly that way and.

Yeah, we we see it exactly that way and

To your 0.1 of the things. We've said is in a in a tougher market. We want to have more optionality both to manage the supply chain side. So as we've kind of said hey, we want a chassis options that our supply chain constrained from some of the the traditional legacy Oems, but also that we can make more margin and more revenue.

To your point, one of the things we've said is in a tougher market we want to have more optionality, both to manage the supply chain side. So as we've kind of said, hey, we want chassis options that aren't supply chain constrained from some of the traditional legacy OEMs, but also that we can make more margin and more revenue on, but we want other products. So we've talked in the past about our, for example, our mobile battery vehicle charger and our lightning energy, which are not chassis constrained, but are also enabled and enabling our vehicle sales. So obviously there is, as Teresa said, some investment required to manage a broader product portfolio.

But we want other products. So we've talked in the past about our for example, our mobile battery vehicle charging our lightning energy, which are not chassis constrained, but are also enabled and enabling our vehicles sales. So the.

Obviously, there is as Teresa said, some investment required to manage a broader product portfolio.

The but in terms of our product portfolio.

But in terms of our product portfolio, we then have to look out and say what manufacturing and what engineering do we need to support this broader portfolio. And so we have added additional flexibility and automation into the manufacturing line.

We then have to look out and say, what what manufacturing and what engineering do we need to support this broader portfolio and so we have added additional flexibility in automation into the manufacturing line.

We've also added additional engineers to support the broader product line. And then as you can imagine, as Theresa mentioned, field service as well, a broader product line and more vehicles in the field mean additional field service. But again, all of those provide us more optionality around the revenue side.

We've also added additional engineers to support the broader product line and then as you can imagine us and Teresa mentioned field service as well a broader product line and more vehicles in the field mean additional field service, but again all of those provide us more optionality around the revenue side.

Okay, and what did you mean when you I think you said with Bluebird it did not require it.

And what did you mean when you, I think you said with Bluebird, it did not require it wasn't going to be subject to some of the chip shortages? What did you mean by that?

It was it wasn't going to be subject to some of the chip shortages.

What did you mean by that did I catch that right.

You did, you did. Thank you, Michael. And the, the essence of this is today, many of the chassis are constrained because those chassis come today with a transmission control module that's been a major challenge for some of the legacy OEMs and other onboard chips.

You did you did thank you Michael and the the essence of this is today many of the chassis or a constrained because those chassis come today with a transmission control module that's been a major challenge for some of the legacy Oems and other onboard chips.

When we, with both our E chassis and the Bluebird E chassis, we've designed them without those chips purposefully to reduce or eliminate that constraint. So those, in the cases of our E chassis, because they don't start with an IC,

When we with both our each assay and the Bluebird chassis, we design them without those chips purposefully to reduce or eliminate that constraint. So are those in the cases of our each assay because they don't start with an ice.

or a traditional powertrain in any way and because we've been able to design them in such a way that they don't aren't chip constrained we believe we will have far more flexibility and far more availability and much fewer constraints around the chassis availability for both the blue blue birdy chassis as well as our only chassis.

Or a traditional powertrain in anyway, and because we've been able to design them in such a way that they don't arent chip constrained. We believe we will have far more flexibility and far more availability and much fewer constraints around the chassis availability for both the blue Bluebird chassis as well as our own chassis.

Okay, so the chips they use are not chips that are currently in, in, in, in shortage. Correct. Is that what it is? Okay. Yeah. Beautiful. Thank you very much.

Okay. So the chips. They use are not chips that are currently in.

And shortage.

Correct.

Okay, Yeah beautiful thank you very much.

Yeah.

Thank you. The next question is coming from Craig Carlosi of Longfellow. Please go ahead.

Thank you. The next question is coming from Craig Carlotti of Longfellow. Please go ahead.

Yeah, hi. Thanks for the time. So when I think about your business, clearly you have a lot of momentum. You have a strong market presence and obviously technology that I think is quite receptive.

Yeah, Hi, thanks for the time, so when I think about your business clearly you have a lot of momentum you have a strong market presence and obviously technology that that I think is quite receptive.

But when I step back and I look at the cash burn on the business and the what sounds like a continuation, if not acceleration of the cash burn.

When I step back and I look at the cash burn on the business and the what sounds like a continuation if not acceleration of the cash burn to me it looks like your options and I'm glad to hear you.

To me, it looks like your options and I'm glad to hear that you will do recognize that you do need some form of new capital. I guess my question is.

You do recognize that you do need some form of new capital I guess my question is as you're $151 million of cash declines on a quarterly basis. Your options become more limited. So I guess my question is a couple of points one.

As your $151 million of cash declines on a quarterly basis, your options become more limited.

So I guess my question is a couple points. One, how much capital do you think you need for this business model to make it, okay, 36 months?

How much capital do you think you need for this business model to make it let's say 36 months and then two what type of capital are you looking for in your stock used to have an equity market cap of about a $750 million nine months ago or eight months ago and the world has changed and is now 150 million.

And then two, what type of capital are you looking for? I mean, your stock used to have an equity market capital about $750 million, nine months ago or eight months ago, and the world has changed, and it's now $150 million.

And combined with the gross margin simply staying in a negative territory with no real visibility have you considered perhaps some type thing something a bit more strategic where you can leverage off of somebody else's fixed cost structure.

and combined with the gross margin.

simply staying in a negative territory with no real visibility, have you considered perhaps some type of thing, something a bit more strategic where you can leverage off of somebody else's

fixed cost structure, and perhaps the equity can evolve into some type of private JV where the equity doesn't effectively get eliminated or diluted to the extent where the upside really is not recognized by the current ownership. That's all I have.

And perhaps the equity.

Can evolve into some type of private JV.

Wherever the equity doesn't.

Effectively get eliminated were diluted to the extent, where the upside really is not recognized by the crude ownership.

That's all I have.

Thank you. And the answer to your, I'll kind of start with the end of your question is absolutely yes. And we've announced in the past and spent some time in the past talking about our interest in being a consolidator in this market.

Yes.

And the answer I'll kind of start with the end of your question is absolutely, yes, and we've announced in the past and spent some time in the past talking about our interest in being a consolidator in this market.

And I continue to be very active in terms of what the options are. And certainly with everybody's market cap shrinking in the space. And literally everybody's, you know, market cap shrinking in the space with us over the last.

And continuing to be very active in terms of what the options are and certainly with with everybody's market cap shrinking [laughter] hitting this space literally everybody shrinking market kept shrinking their space with us over the last you know dramatically over the last six months, but certainly in most cases, even over the last year for everyone.

You know, dramatically over the last six months, but certainly in most cases, even over the last year for everyone, there's a lot more opportunity for consolidation and attractive consolidation in the space.

There's a lot more opportunity for consolidation in an attractive consolidation in the space. There's also when you look more broadly not just across the space, but the traditional like that whether it's legacy Oems or whether you look at all of the myriad of really solid commercial vehicle Oems are the Rev group's in.

There's also, when you look more broadly, not just across the EV space, but the traditional legacy OEMs or whether you look at all of the myriad of really solid commercial vehicle OEMs, the rev groups and the shift groups and many others like that, we see a lot of opportunity in the market for JVs, for consolidation, for capital efficiency. And we've purposely built what we've built in a modular way so we have a lot of flexibility, can partner with a lot of different people and really extend out in a capital efficient way. So we remain confident in our, as Teresa said, for the next 12 months we look good, but we're also actively looking at how do we invest that capital and what other capital might we gain to invest in a very accretive way that is exciting to the market and transformative in the market. Not just in a way of continuing to get there and obviously, you know, we do, we're very focused on how do we get to growth margin and so I don't get, you know, I kind of humbly disagree with the statement that there's no line in sight for that. We aren't able to be specific on it, but we are very focused on it and we do have a line in sight, but probably to your point to get there quickly, it's all about getting to volumes, all about getting to critical math.

The shift groups and and many others like that we see a lot of opportunity in the market for J DS for consolidation.

For capital efficiency, and we purposely built what we've built in a modular way. So we have a lot of flexibility can partner with a lot of different people and really extend out in a capital efficient way. So what we remain confident in our as Teresa said you know for the next 12 months, we look good but we're also actively.

Looking at how do we invest that capital.

And what other capital might we gain to invest in a a very accretive way that is exciting to the market and transformative in the market not just in a way of continuing to get there and obviously you know we do we're very focused on how do we get to gross margin and so I don't you know I kind of humbly disagree with the statement that there's no line in sight for that are we.

Arent able to be specific on it but we are very focused on it and we do have a line of sight, but probably to your point to get there quickly. It's all about getting to volume is all about getting to critical mass and so the sooner we can get to critical mass and volumes. The sooner our margin goes positive because we need like everybody else to maximize the the Ah <unk>.

And so the sooner we can get to critical mass and volumes, the sooner our margin goes positive because we need, like everybody else to maximize the efficiency and maximize the use and the overhead of our manufacturing facility that's built and ready to ready to go so

<unk> and maximize the use and the overhead of our manufacturing facility, that's built and ready to ready to go so from that perspective exactly to your point a J vs can drive that kind of volume and I think you've seen that you know you can probably read between the lines with some of our very extensive partnership.

from that perspective, exactly to your point, JVs can drive that kind of volume. And I think you've seen that, you know, you can probably read between the lines with some of our very extensive partnerships we've already announced both recently and in the last 12 months.

We've already announced both recently and in the last 12 months that Theres, a lot of very deep relationships and deep activity and discussions going on in the space.

that there's a lot of very deep relationships and deep activity and discussions going on in the space.

And it's mutual in all the cases. Everybody's looking for how do you get to critical mass and we're focused on it. So, and then finally to your last question, what does it look like over 36 months? Because of all of that change, you know, obviously it's very different in certain situations as you look at how the JVs play out and who's, you know, spending the capital and who's not, you have a variety of different scenarios that can play out. So, you know, we aren't being specific today in terms of what we need over 36 months.

And its mutual and all of the cases everybody's looking for how do you get to critical mass and we're focused on it so but and then finally to your last question what does it look like over 36 months because of all of that change you know obviously, it's very different in certain situations. As you look at how the JV is play out and who's who as you know spending the capital and who's not.

You have a variety of different scenarios that can play out.

So we arent being specific today and in terms of what we need over 36 months.

But we remain very focused on exactly to your point, how do we get quickly to gross margin, how do we get quickly to critical mass, and how do we leverage the relationships that we're building and have built with key partners and players in the space, and how do we look broadly at consolidation? So, you know, my personal opinion, consolidation is gonna happen quicker than most people think, and it's gonna be more, much broader in this space than most people think, because there's a lot of very traditional commercial vehicle players in the space that add a lot of value. And so...

But we remain very focused on exactly to your point, how do we get quickly to gross margin how to how do we get quickly to critical mass and how do we leverage the relationships that we're building and have built with key partners and players in the space and how do we look broadly at consolidations. So.

My personal opinion consolidation is going to happen quicker than most people think and it's gonna be more but much broader in the space that most people think because there's there's a lot of very traditional commercial vehicle players in the space without a lot of value and so and a lot of supply chain a lot of vertical integration opportunity.

and a lot of supply chain, a lot of vertical integration opportunities. Okay, great. Thank you.

Okay, great. Thank you.

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