Q1 2022 Proterra Inc Earnings Call
for relation, Mr. Aaron.
You may begin your conference.
Okay.
Thank you, operator, and thank you all for joining us for Proterra's first quarter 2022 conference call. Joining us today from Proterra are our CEO Gareth Joyce, as well as our CFO Karina Padilla. After the markets closed, we published our quarterly letter on our website and SCC filing, which we encourage everyone to read for details on our financials and insights into our operating results and strategy, industry dynamics, and our financials.
Thank you operator, and thank you all for joining us for <unk> first quarter 2022 conference call joined.
Joining us today from <unk> are our CEO Gareth choice as well as our CFO Karina Padilla. After the markets closed we published our quarterly letter on our website and SEC filings, which we encourage everyone to read for details on our financials and insights into our operating results and our strategy industry dynamics and outlook <unk>.
During this conference call, we will make statements related to our business and industry that are forward-looking statements under federal securities laws. These statements are not guaranteed for future performance. They are subject to a variety of expectations reflected in any forward-looking statement.
During this conference call, we will make statements related to our business and industry that are forward looking statements under federal Securities laws.
These statements are not guarantees of future performance. They are subject to a variety of expectations reflected in any forward looking.
Statements.
For a discussion.
of the material risks and other important factors that could affect our actual results, please cite and buy at the investor relations.
Some of the material risks and other important factors that could affect our actual results. Please site and via the Investor Relations.
Section of our website.
Thank you.
Additionally, non-GAAP financial measures will be discussed on today's conference call. A reconciliation of these measures to their most directly comparable GAAP financial measures can be found today by introducing our Chief Executive Officer, Garrett Joyce, for the of bootstraps and another
Additionally, non-GAAP financial measures will be discussed on today's conference call. A reconciliation of these measures to their most directly comparable GAAP financial measures can be found by introducing our chief Executive officer.
After careful choice for dumping.
Thanks Darren.
Thank you, Aaron, and to everyone for joining us on the call today. Before we begin our business update, we wanted to acknowledge the anguish and suffering caused by the war in Ukraine on people around the world, including our customers, partners, employees and their friends and family.
Thank you Erin and to everyone for joining us on the call today.
Before we begin our business update we wanted to acknowledge the English and suffering caused by the war in Ukraine on people around the world, including our customers partners employees and their friends and family.
As we turn the page onto 2022, the year has begun largely along the lines we laid out when we first offered our guidance for the year about two months ago. As expected, 2022 is turning out to be the year Proterra Powered really comes of age as its own business, while trials of growth is constrained by continued supply chain challenges, even as demand remains robust. Our Q1 results
As we turn the page on 2020 to the Euro has begun largely along the lines. We laid out when we first put out guidance for the year about two months ago.
As expected 2022 is turning out to be the year material powered really comes of age as its own business. While trials of growth is constrained by continued supply chain challenges, even as demand remains robust.
Our Q1 results really underscore that dynamic.
Let me start with Proterra Powered Energy. Q1 really demonstrated how Proterra Powered is coming into its own. Not only is there encouraging momentum in new partnerships, orders and deliveries, but most importantly, the business is starting to deliver material really as well. Proterra Powered delivered battery systems for 287 vehicles in Q1.
Let me start with which our power and energy.
Q1, really demonstrated hopper general powered is coming into its own.
Not only is there encouraging momentum in new partnerships orders and deliveries, but most importantly, the business is starting to deliver material revenue as well.
Power delivered battery systems for 287 vehicles in Q1.
That is more than 10 times the 26 vehicles we delivered battery systems for a year ago.
That is more than 10 times, the 26 vehicles, we delivered battery systems for a year ago.
and more than double the number of vehicles we delivered battery systems for in Q4 2021. In fact, we delivered battery systems to more vehicles in Q1 2022 than we delivered for all of 2021.
More than double the number of vehicles, we had another battery systems fall in Q4, 'twenty 'twenty. One in fact, we delivered battery systems to more vehicles. In Q1 2022, then we delivered for all of 2021.
Deliveries have not only grown in magnitude, but importantly breadth of applications as well in Q1 regenerative Allied delivered battery systems to 10 different Oems.
Deliveries have not only grown in magnitude, but importantly, rates of application as well. In Q1, Futura Power delivered battery systems to 10 different OEMs, four of which are.
All of which are in series production.
with the rest being prototypes in preparation for series production later this year or in the near future.
With the rest being prototypes in preparation for series production later this year or in the near future.
Battery production also hit a record in the quarter, including supply for both powered and strong goods. We produced 82 megawatt hours of batteries in Q1, almost double the 42 megawatt hours produced in Q1 of 2021.
Battery production also hit a record in the quarter.
Including supply for both powered <unk>, we produced 82 megawatt hours of batteries in Q1, almost double the 42 megawatt hours produced in Q1 of 2021.
And we have now cumulatively produced over 550 megawatt hours of batteries. In addition, we also.
And we have now cumulatively produced over 550 megawatt hours of batteries.
In addition.
We also.
We opened the quarter with the shift group.
This new partnership is yet another example of how we are executing on our goal to become a predominant supplier of heavy duty batteries for commercial and industrial vehicles in North America and Europe .
This new partnership is yet. Another example of how we are executing on our goal to become a predominant supplier of heavy duty batteries for commercial and industrial vehicles in North America and Europe .
Part of our strategy is to very deliberately balance our portfolio of supply contracts carefully between incumbents who have led the industry with the leading combustion engine products today, and on making them move into electric, such as Daimler Trucks and Komatsu, but also a new entrance focused purely on zero-emission technology, such as Nikola Motors, Lightning eMotors, and Volta Trucks.
Part of our strategy is to very deliberately balance of our portfolio of supply contracts carefully between incumbents, who have led the industry with the leading combustion engine products today.
And on making the move into electric such as Daimler trucks and commodity.
But also new entrants focused purely on zero emission technologies such as.
Nikola Motors, Logmein items and Volvo trucks.
The shift group represents adoption by another major incumbent in the Class 3-6 commercial vehicle segment.
The shelf group represents adoption by another major incumbents in the class three to six commercial vehicle segments.
The Schiff Group has designed a new purpose-built EV chassis for Class 3-6 vehicles and we are proud to have been chosen as a battery supplier for it.
The shift group has designed a new purpose built even chassis for cross region six vehicles and we are proud to be chosen as the battery supplier for us.
This new partnership will not materially impact 2022 results, but helps bolster our growth outlook in 2023 and beyond. Further supporting our growth outlook over the next few years, on the heels of the approval of $2.5 billion of new federal funding for zero-emission school buses,
This new partnership will not materially impact 2022 results, but helps bolster our growth outlook in 2023 and beyond further supporting our growth outlook over the next few years on the heels of the approval of $2 $5 billion of new federal funding for zero emission school buses.
State-level programs to utilize that funding are starting to proliferate. Following New York City passing a bill last year requiring all of its fleet of 9,500 school buses to be electric by 2035, the New York State budget passed in April established a new state law, the first of its kind across the country, to convert the state's 50,000 school buses to electric also by 2035.
Several programs to utilize that funding are starting to proliferate following New York City's positing a bowl last year, requiring all of its fleet of not and a half thousand school buses to be electric by 2035, The New York State budget costs in April we established a new cycle. The first of its kind of across the country.
To convert the state's 50000 school buses to electric also by 2035.
Jeopardy last month, Boston Public Schools announced a new plan to convert all 739 of its school buses to electric by the year 2030, starting with this coming school year.
Separately last month.
And public schools announced a new plan to convert all 739 or at school buses to electric by the year 2030.
With this coming school year.
So school buses are now on the fast track in following transit buses on the route towards electrification and we expect to be a prime participant in this through our relationship with Daimler and the supply of batteries for its C2G electric school bus.
So school buses are now on the fast track in following transit buses on the route towards electrification and we expect to be a prime participant in this through our relationship with Daimler on the supply of batteries for in situ Julie Electric School bus.
Meanwhile, Proterra Energy put up its best results of the last three quarters. Although deliveries were down year over year, they grew 71% as compared to Q4 2021 to 3.3 megawatts.
Meanwhile, <unk> energy.
Its best results over the last three quarters, although deliveries were down year over year that grew 71% as compared to Q4, 2021 to three three megawatts.
As we were able to complete deliveries on six projects that had been pushed out from the end of last year.
As we were able to complete deliveries on six projects that had been pushed out from the end of last year.
Fratera Energy also received multiple new orders spanning our megawatt scale and vehicle-to-grid charging solutions in Q1, including an order from Pace, the largest transit provider in suburban Chicago, with two megawatt-plus chargers, along with its new order for 20 ZX5 MAX buses.
<unk> energy also received multiple new orders spanning a megawatt scale and vehicle to grid charging solutions in Q1, including an order from ice largest transit provider in suburban Chicago with two megawatt plus charges along with its new order for 20 <unk>.
<unk> buses.
We've also been making continued progress on some of our largest projects in backlog. The two microgrid projects, one for the Los Angeles Department of Transportation, and one for the Santa Clara Valley Transportation Authority, as well as our multi-megawatt project at Miami-Dade Transit.
We've also been making continued progress on some of our largest project in backlog the two micro grid projects.
One for the Los Angeles Department of Transportation, and one for the Santa Clara Valley Transportation Authority as well as a multi megawatt project at Miami Dade Transit.
So this revenue won't be recognized until subsequent quarter.
Does this revenue would be recognized until subsequent quarters.
All in, even with the declines in charging installations in the quarter, growth in battery system deliveries drove proterra-powered and energy revenue up 97% year-over-year to $23 million.
All in.
Even with the declines in charging installations in the quarter growth in battery system deliveries drive for tariff Howard energy revenue up 97% year over year to $23 million.
as you can see, well within sight of our gardens for more than $100 million in revenue this year.
As you can see well with inside of our guidance by more than $100 million in revenue this year.
At Progeria Closet, both deliveries and revenue were down in the quarter.
And for Zurich Transit bus deliveries and revenue were down in the quarter.
This was directly as a result of the past shortages and supply chain challenges we discussed in our last quarterly conference call, which have extended into 2022, significantly constraining production early in Q1.
This was directly as a result of the parts shortages and supply chain challenges, we discussed in our last quarterly conference call, which have extended into <unk> 'twenty two significantly constraining production early in Q1.
But at the same time, it does not reflect a significant improvement in production in March versus January , as well as the benefit of a few targeted initiatives we have recently launched that should stabilize some of the supply chain volatility we've been experiencing and lay the groundwork for normalization and improvement in production through the balance of the year.
But at the same time it does not reflect a significant improvement in production in March versus January as well as the benefit of a few targeted initiatives. We have recently launched that should stabilize some of the supply chain volatility we've been experiencing and lay the groundwork for a normalization and improvement in production.
Through the balance of the year.
On one hand, the supply chain environment hasn't.
On one hand.
The supply chain environment Hasnt.
improved at all since we last provided an update in early March, and has in fact become even more challenging in some areas. As most of you already know, the supply chain has been stressed for some time now, going back to 2020, stemming from COVID-19-related labour availability, extended backups at ports, and certain raw material shortages.
Improved at all since we last provided an update in early March and has in fact become even more challenging in some areas as most of you already know the supply chain has been stressed for some time now going back to 2020 stemming from COVID-19 related labor availability extended backups at ports and certain <unk>.
Material shortages.
Needless to say supply chain hasn't been aided by a new war in Europe which has further disrupted the availability of parts from Europe , contributed to higher shipping costs and reduced global shipping capacity.
Needless to say supply chain hasnt been aided by our new order in Europe , which has further disrupt the availability of parts from Europe .
Contributed to higher shipping costs and reduced global shipping capacity.
Now compounding matters further is the latest COVID-19 outbreak in China and more specifically the complete shutdown of Shanghai for five weeks running which has led to widespread manufacturing stoppages and further shortages and shipping complications.
Now compounding matches further is the latest COVID-19 operates in China and more specifically the complete shutdown of Shanghai for five weeks running which has led to widespread manufacturing stoppages and further shortages and shipping communications.
Even if we are not directly sourcing parts from China or Europe , these disruptions can still impact our Tier 2 and Tier 3 suppliers.
Even if we are not directly sourcing parts from China or Europe . These disruptions can still impact our tier two and tier three suppliers.
Taking all of this into account.
Wiring on a supplier remains a significant constraint for us as it does for the entire industry.
Wiring honest supply remains a significant constraint for us.
As it does for the entire industry.
And motors for some of our drivetrains, as well as power connectors and some other components, have emerged as new bottlenecks that impacted Q1 production. Latest disruptions in China and Europe threaten additional shortages in everything from aluminum extrusions to contactless infusers to sensors, and for that matter, sensor screws.
And motors for some of our drive trains as well as power connectors and some other components have emerged as new bottlenecks that impacted Q1 production.
<unk> disruptions in China, and Europe , straightened additional shortages and everything from aluminum extrusion to contact a infuse those two centers and for that matter since the screws.
Also, high pressure die costs and even some adhesives. On the other hand, our ability to manage through these uncertain and choppy supply chain conditions improved in some important way.
Also high pressure die cast and even some adhesion.
The other hand, our ability to manage through these uncertain and choppy supply chain conditions, improving some important.
has not been a passing phenomenon but has become something we have all had to adjust our lives around. It is increasingly looking like a fragile supply chain environment is an obstacle manufacturers are going to have to deal with for quite some time.
As not being a passing phenomenon that has become something we have all had to adjust our lives around it is increasingly looking like a fragile supply chain environment is then obstacle manufacturers are going to have to deal with for quite some time.
But just as we adapted to manufacturing in the new COVID-19 environment, we're adapting to working within this unpredictable supply chain environment as well.
But just as we adapted to manufacturing in the new COVID-19 environment, we are adapting to working within this unpredictable supply chain environment as well.
We recently launched a number of new supply chain initiatives that have established safeguards that should improve our readiness and ability to pivot around the biggest bottlenecks and shortages we are facing.
Recently launched a number of new supply chain initiatives that have established safeguards that should improve our readiness and ability to pivot around the biggest possible mix and shortages we are facing.
First and foremost.
We are in the process of selecting vendors to provide dual sources of key componentry.
We are in the process of selecting vendors to provide dual sources of key componentry.
Second we have established a new program through which we are now directly sourcing ourselves many of the raw materials that are causing the biggest shortages to our own tier one suppliers.
Second, we've established a new program through which we're now directly sourcing ourselves many of the raw materials that are causing the biggest shortages to our own tier one suppliers, even beyond one.
Even beyond wiring harness connectors.
We've established new relationships with our own brokers and have been able to acquire incremental key components and raw materials needed by our suppliers that would otherwise not have been procured for our use. And importantly, we're starting to use these new... Finally, we've also been working...
We've established new relationships with our own brokers have been have been able to acquire incremental key components and raw materials needed by our suppliers.
Who would otherwise not have been procured for our use and importantly, we are starting to use these needs.
Finally, we have also been working.
Directly onsite at some of our key.
to help them better handle what I call surge capacity. One of the critical issues has become on what that means for actual output. By working on their own part shortages and production constraints, we can schedule their production capacity for us to focus on the parts most critical to us.
<unk> to help them better handle what I call surge capacity one of the critical.
And become and what that means for actual output.
While working on Orion part shortages and production.
Schedule their production capacity.
For us to focus on the parts most.
Critical job both schedule.
With the help of these names.
Production output.
Yeah.
Energy levels and returns.
Buses per quarter.
Production rate.
We reduced the number of buses suspended somewhere along the assembly line waiting for parts like a motor or wiring harness by more than 50% as well.
We reduced the number of passes suspended somewhere along the assembly on waiting for parts.
Water or wiring harnesses.
More than 50% as well.
Doug gave me wrong.
I am by no means saying the coast is clear. Shortages remain a challenge and supply chain uncertainty is a continued complication.
I am by no means saying the coast is clear shortages remain a challenge.
And supply chain uncertainty is a continued complication.
It's a problem next week you don't know about that is a bigger issue than the problem you knew about last week. And we're already working on fixing it.
It's a problem next week you don't know about that is the bigger issue than the problem Eurobond last week and we're already working on fixing.
But we will continue to lay more groundwork to cope with continued supply chain disruptions to first normalize and then improve production to do the balance of the year.
But we will continue to layer more groundwork to cope with continued supply chain disruptions to first normalized net improved production.
Through the balance of the year.
Meanwhile, demand is strong.
Meanwhile, demand is strong.
On top of the order from Chicago's pace for 20 buses we announced last month, we also received a follow-on order from CapMetro which exercised its first option and fourth order overall for an additional 14 DX5 MAX electric transit buses, following its order for 26 we announced last year.
On top of the order from Chicago pace for 'twenty buses, we announced last month. We also received a follow on order from <unk> Metro, which exercised its first option and fourth order overall for an additional 14 VX five Max Electric transit buses following its order for 26th we announced.
Last year.
In addition, the increase in federal funding stemming from the infrastructure investment and jobs Act is progressing in March the FDA announced that federal grant programs to help transit agencies purchased zero emission buses and charges for the fiscal year 2022 that total approximately $1 $3 billion.
In addition, the increase in federal funding stemming from the Infrastructure Investment and Jobs Act is progressing. In March, the FTA announced that federal grant programs to help transit agencies purchase zero-emissions buses and charges for the fiscal year 2022, that total approximately $1.3 billion.
We anticipate inbound orders from these funds to begin starting Q4 2022.
We anticipate inbound orders from these findings to begin starting Q4 2022.
So all in 2022 has played out much as we expected so far through Q1. And we reiterate our guidance for revenue growth to accelerate between 24 percent and 34 percent year over year to a range of 300 to 325 million dollars.
So all in 2022 has played out much as we expected so far through Q1.
And we reiterate our guidance for <unk>.
<unk> growth to accelerate between 24% and 34% year over year to a range of $300 million to $325 million.
As our Q1 results demonstrate, Poterra Power and Energy is on its way to more than $100 million in revenue this year, with $23 million already recorded in the first quarter.
As our Q1 results demonstrate.
Power and energy is on its way to more than $100 million in revenue this year with $23 million already recorded in the first quarter.
and more Patera-powered vehicle programs entering series production later this year.
More for Terra powered vehicle programs entering series production later this year.
At Fratera Energy, one of our major suppliers has overcome its initial production challenges, but because shipping delays remain a problem, Fratera Energy growth will not likely resume until the second half of the year.
And for China Energy, one of our major suppliers is overcoming initial production challenges.
The code shipping delays remain a problem with Terra energy growth will not likely resume until the second half of the year.
And Proterra Transit may still be facing supply chain constraints, but improved supply chain management enabled significant improvement in production rates by the end of Q1 that set the stage for improvement in awkward to the rest of the year.
And procured tons it may still be facing supply chain constraints, but improved supply chain management enabled significant improving in production rate by the end of Q1 that set the stage for improvements in output through the rest of the year.
The raw material and supply chain cost pressures have also consequently continued to affect gross margins as they did in Q4 2021.
The raw material and supply chain cost ratios have also consequently continued to affect gross margins as they did in Q4 2021.
I will now hand over to our Chief Financial Officer, Kareena Padilla, who will discuss these dynamics and other financial metrics in greater detail. Kareena?
I will now hand over to our Chief Financial Officer, Karina Padilla, who will discuss these dynamics and other financial metrics in greater detail Karina.
Thanks, Gareth. I'll focus my comments on three critical elements of our financials, revenue, gross margin, and cash. I'll start with revenue. Q1 revenue grew 8.5% to $59 million. The top line growth was driven by our power and energy business and was partially offset by declines in transit revenue.
Thanks, Karen I'll focus my comments on three critical elements of our financial revenue gross margin and cash let's start with revenue.
<unk> revenue grew eight 5% to $59 million.
Top line growth was driven by our power and energy business, partially offset by declines in transit revenue.
I'll spend the next few minutes going into a bit more detail of our revenue performance by business unit. Starting with Powered in Energy, Proterra Powered in Energy revenue grew 97% year-over-year to $1.8 billion.
And the next few minutes going into a bit more detail of our revenue performance by business unit.
Getting repaired and energy per territory and energy revenue grew 97% year over year 20.
representing an incremental $11 million. And on a trailing 12-month basis, hard and energy...
Representing an incremental $11 million.
On a trailing 12 month basis pardon me.
revenue has now surpassed the $50 million mark for the first time at $59 million.
Revenue has now surpassed the $50 million Mark for the first time at <unk>.
million dollars. The growth was driven by a more than tenfold increase in proterra power delivery to 287 vehicle sets.
$9 million the growth was driven by a more than tenfold increase can procure power delivery to 287 vehicles.
Proterra-powered delivery growth rates exceeded the pace of lower-weight vehicles with smaller battery sizes, including Lightning eMotors Class 3 vans.
<unk> power delivery growth rate exceeded the pace of liver weight vehicles with smaller battery sizes, including vitamin E Motors.
Yeah.
In addition, Proterra energy installations declined year over year, primarily related to continued delays in hardware shipments from a key supplier as well as delays in construction project timelines. However, deliveries improved sequentially and were the highest since the second quarter of last year. Switching to Proterra Transit, revenue in the quarter
In addition, procure energy installations declined year over year, primarily related to continued delays in hardware shipments from a key supplier.
With delays in construction project timelines.
However, deliveries improved sequentially and were the highest since the second quarter of last year.
Turning to procure transit.
Revenue in the quarter.
Order with 35Million dollars, a decline of approximately 7Million dollars versus the prior year as we delivered 40 electric buses. 8 fewer than the 48 we delivered in Q1 of 2021. The lower bus delivery.
<unk> was $35 million a decline of approximately $7 million versus the prior year as we delivered 40 electric buses eight fewer than 10% to 48, we delivered in Q1 of 2021.
A little more fast delivery.
Into gear.
In addition.
The average bus price is defined mostly due to lower mix of customers. Electric bus delivery has a lot of repeat customers, such as the New York and Jersey Port Authority, the New York City Transit Company, and the New York City Transit Corporation.
The average panel prices declined mostly due to lower mix.
Yes.
Electric bus deliveries.
Three key customers such as <unk>.
So New York, New Jersey Port Authority.
Is it 46 presses in Frankfurt.
Mark was delivered in 2018.
Charles Carter, which is adding 20.
20 35-foot ZX5 buses in a follow-on order on top of its existing fleet of six 40-foot Proterra buses.
<unk> 35 for VX, five practice and a follow on order on top of the existing fleet of 640 per care package.
And then maybe you may not be familiar with.
First Echo Old Orchard Beach Transit, which along with the Portland metro area, are bringing the first electric buses ever to the state of Maine.
First tackle all tortured Beach transit.
Along with the Portland Metro area are bringing the first electric buses ever to the state of Maine.
We are very proud to be at the forefront of enabling zero emissions through electrification in states that are at the beginning of their zero emission mass transit journey.
We are very proud to be at the forefront of enabling zero emissions through electrification in states that are at the beginning at the zero emission mass transit.
Moving on to the gross margin front.
We reported a negative growth margin of $3 million in Q1 of 2022.
We reported a negative gross margin of $3 million in Q1 of 2022.
This compares to a gross profit of almost $900,000 in the prior year and a gross loss of $3 million in Q4 of 2021.
This compares to a gross profit amount of $900000 in the prior year and a gross loss of $3 million in Q4 of 2021.
Human margins were impacted by many of the same items that affected our performance in the previous quarter. Although we were not pleased with the results, they did perform relatively in line with our expectations based on the current environment we're operating in.
Your margins were impacted by many of the same items that affected our performance in the previous quarter. Although we were not pleased with the results. They did perform relatively in line with our expectations based on the current environment, we're operating in.
Summarizing the primary factors of our margin performance in this order was the combination of lower transit deliveries, product mix, manufacturing inefficiency, and cost inflation. Now let me elaborate.
Summarizing the primary factors of our margin performance in the quarter with the combination of lower transit deliveries product mix manufacturing inefficiencies and cost inflation now.
Now, let me elaborate a bit on these drivers.
First on product mix, the revenue for best mix in the quarter was 3% lower both in prior year and sequentially.
First on product mix the revenue progression through the quarter was 3% lower broke in prior year and sequentially.
The mix in revenue is driven by varying customer bus configurations delivered in a quarter.
The mix in revenue is driven by varying customer bus configurations delivered in the quarter.
Second, on cost inflation and manufacturing inefficiencies.
Second on cost inflation in manufacturing inefficiencies.
We are encountering material and freight cost inflation across both business units.
We are encountering material and freight cost inflation across both business units.
On the production side, in our transit business unit, it took 9% more incremental labor hours to complete a bus ready for delivery in Q1 2022 versus prior year, and 25% longer versus Q4 2021.
On the production side and our transit business unit.
9% more incremental labor hours to complete apacs ready for delivery in Q1, 2022 versus prior year and 25% longer versus Q4 2021.
The idle time a bus spends waiting on one component to arrive to be able to move on to the next build station leads to significant inefficiencies across the factory floor. In many cases, we are able to advance a bus to various stations, but at some point the bus requires some level of rework and incremental installation time is required if a component was not installed in the most efficient sequence along the build phase.
The idle time above waiting on one component too right.
To be able to move on to the next Bill station leads to significant inefficiencies across the factory floor.
In many cases, we are able to advance the pass through various stations, but at some point the past requires some level of rework and incremental installation time is required.
<unk> was not installed in the most efficient sequence of the building.
combination of lower revenue per bus and the incremental labor hours required for bus completion had a negative impact on transit margins in the quarter.
The combination of lower revenue per ton and the incremental labor hours required for post completion had a negative impact on transit margins in the quarter.
On the power and energy side of our business, the margin challenges manifested themselves differently from transit, first on batteries.
Underpowered and energy side of our business.
Margin challenges manifested themselves differently from transit.
First on batteries.
The strong unit growth output that you saw on our top line required additional overtime hours and freight expense in order to get the product out to our customers on time for their production schedule.
The strong unit growth output that you saw in our topline required additional overtime hours and freight expense in order to get the product up to our customers on time for their production schedule.
Not only did we incur incremental freight expense from shipping inflation and expedites, but we also utilized 356 percent more overtime hours than prior year and 83 percent more overtime hours than Q4 2021.
Not only did we incur incremental freight expense from shipping and installation and expedite, but we also utilized 356% more overtime hours in prior year and 83% overtime hours. Thank you for 2021.
Specific to freight expense, for perspective, 29% of our powered revenue in Q1 2022 was from international sales.
Specific to freight expense for perspective, 29% of our power revenue in Q1 2022 was from international sales.
However, on an absolute basis, the international sales in Q1 2022 was 135% larger than the total powered revenue a year ago.
However, on an absolute basis, the international sales in Q1, 2022, whereas the 135% larger than the total powered revenue a year ago.
Total freight expense for power alone increased by $1 million versus prior year due to both increase in volume and increases in freight rate.
Total freight expense for powerful loan increased by $1 million versus prior year due to both increase in volume and increases in freight rates.
Our battery business is not immune to supply constraints, however, part shortages on the battery side have not been as prevalent as we've seen in transit thus far.
Our battery business is not immune to supply constraints. However, part shortages on the battery side have not been as prevalent as we've seen in transit thus far.
Lastly, on the energy side, the lower revenue from declines in charging installations in the quarter did not help offset some of the challenges seen across our other product lines.
Lastly on the energy side, the lower revenue from declines in charging installations in the quarter did not help offset some of the challenges seen across our other product lines.
However, given the challenges I just noted, we are taking actions to improve our margins.
However, given the challenges I just noted we are taking actions to improve our margins.
It will take some time to play out, especially as the supply chain itself has not stabilized. But we are making progress on our growth margin initiatives, and I would like to give you a quick update.
We'll take some time to play out, especially the supply chain itself has not stabilized, but we are making progress on our gross margin initiatives and I would like to give you a quick update.
First are the price increases we discussed in our last quarterly call. We have implemented new contract pricing across both business units for all future sales orders.
First for the price increases we discussed in our last quarterly call, we have implemented new contract pricing across both business units for all future sales orders.
Proterra Power has also made good progress on actualizing a market-based, data-driven approach to address inflation of raw material and other cost increases in good faith repricing proposals and negotiations with our customers.
Her care powered it also made good progress on actualizing in marketplace data driven approach to address inflation of raw materials and other cost increases and good phase III pricing proposals and negotiations with our customers.
We have notified all of our customers who are in the series production life cycle and the majority of customers who are in very low volume development trials of the re-pricing approach.
We have notified all of our customers.
The series production lifecycle and the majority of customers who are on very low volume development trials of debris pricing approach.
Given timing of negotiations and contractual obligations, we don't anticipate seeing any of our new pricing to kick in until the latter part of this year.
Given timing of negotiations and contractual obligations, we don't anticipate any of our new pricing to kick in until the latter part of this year.
On the transit business, we have successfully negotiated cost recovery price increase negotiations with another 65% of our customers slated for our 2022 bill plan.
The transit business, we have successfully negotiated cost recovery price increase <unk> with another 65% of our customers rated for our 2022.
With that said.
With that said, given our 12 to 18-month backlog, despite the new pricing going into effect, the letter part...
Given our talk to 18 months backlog, despite the new pricing going into effect the latter part.
The hardware component.
All of our customers suppliers.
and partners to improve our margin performance over time.
And partners to improve our margin performance over time.
We also expect margin improvement for manufacturing efficiency. We continue to expect improvement.
We also expect margin improvement for manufacturing efficiencies.
We continue to expect improvement in production efficiency.
when supply chain and logistics normalize. However, this benefit is unlikely to come in the first half of the year. We continue to work on evaluating alternate suppliers and are currently undergoing, increasing our supplier base will diversify some of the risk and result in improved supply chain utilization. Third, as I mentioned,
Efficiencies when supply chain and logistics normalized however, this benefit is unlikely to come in the first half of the year.
We continue to work on evaluating alternate suppliers and are currently undergoing piece in our supplier base will diversify some of the risks and results and improved supply chain utilization.
Third as I mentioned in our last call.
on capacity expansion projects as supply chain and logistics normalize.
Execute on capacity expansion project is supply chain and logistics normalized.
As I mentioned in the last call, we will execute on capacity extension projects that supply chain and listing for the addition of shifts and the expansion of our new battery facility in Greer, South Carolina will enable revenue growth, scale, and better asset utilization.
As I mentioned in my last call, we will execute on capacity expansion projects the supply chain and logistics with the addition of shifts and the expansion of our new battery facility in Greer, South Carolina will enable revenue growth scale and better asset utilization.
Chris will discuss our progress of our new factory and its closing commentary in a few minutes.
<unk> will discuss our progress of our new factory in its closing commentary in a few minutes.
Moving on to cash.
Our balance sheet remains $599 million in cash.
Our balance sheet remains $199 million in cash.
cash equivalents in Georgian investments as of March 31st, 2022.
Cash equivalents and short term investments as of March 31, 2022.
Our cash flow burn in the quarter was 61.
$1 million and was in line with our expectations for the first quarter.
$1 million and was in line with our expectations for the first quarter.
In addition to our operational cash usage, we had approximately three in Greer, South Carolina.
In addition to our operational cash usage, we had approximately three in Greer South Carolina.
We increased inventory by $14 million, in part from our continued effort to secure early delivery of key components, including battery cells. Lastly, we ended the quarter with higher receivables due to timing, of which we expect to normalize by the end of the quarter.
Increased inventory by 42 million.
And apart from our continued effort to secure early delivery of key components, including battery cells.
We ended the quarter with higher receivables due to timing of which we expect to normalize by the end of the quarter.
Our adjusted EBITDA loss of $35 million in Q1 was driven by a gross loss of $3 million in operating expenses of approximately $37 million.
Our adjusted EBITDA loss of $35 million in Q1 was driven by <unk> 3 million and operating expenses of approximately 37.
$7 million excluding stock compensation offset by depreciation and amortization of $3.4 million.
$10 million, excluding stock compensation, offset by depreciation and amortization of $3 4 million.
All in, on-sheet strength that sets us apart from others. Liquidity is a priority, and we will be prudent with our cash usage to give us the durability to achieve our goals. And as I mentioned, R&D and R&D.
All in on sheet strength that sets us apart from others liquidity as a priority and we will be prudent with our cash usage to give us the durability.
R&D and <unk>.
For many years from here.
Dr. Karen first closing commentary.
Sure. Thanks.
Thanks Karina.
In summary, Q1 was a microcosm of the key dynamics we see playing out in 2022. Power and energy more than doubling revenue to above $100 million for the full year. And transit growth curtailed by continued part shortages and other supply chain related delays.
In summary, Q1 was a microcosm of the key dynamics, we see playing out in 2020 to power and energy more than doubling revenue to about $100 million for the full year and.
<unk> hundred growth curtailed by continued parts shortages and other supply chain related delays.
Demand continues to gather strong momentum, but our ability to capture all of it in 2022 is being limited by production capacity and
Demand continues together strong momentum, but our ability to capture all of it in 2022 is being limited by production capacity.
With Q1 somewhat in line with our expectations, we continue to expect revenue growth to accelerate to at least 24% to 34% this year to $300 million to $325 million.
With Q1 was somewhat in line with our expectations, we continue to expect revenue growth to accelerate.
24% to 34% this year to $300 million to $325 million.
we look forward to our next leg of growth beyond that, which remains largely a function of one, new battery capacity coming online at Greer, South Carolina, and two, transit adding a chain fluidity and predictability. I will conclude.
We look forward to our next leg of growth beyond that which remains largely a function of one new battery capacity coming online in Greer, South Carolina and to try and get adding Chengdu entity and predictability.
I will continue.
Through our prepared remarks with some update.
It's on both fronts.
First, on our battery capacity expansion, construction of our third battery factory is ongoing.
First on our battery capacity expansion construction of our third battery packs.
Is on budget and largely on time.
Equipment installation has proceeded according to plan today. We completed construction of the.
Equipment installation has proceeded according to plan.
We completed construction of the battery.
Two production lines.
And just last week, we installed the first automation equipment and powered it on for the first time. It'll undergo a thorough testing regime.
And just last week, we installed the first automation equipment and powered on for the first time.
It will undergo a thorough testing regime.
Throughout the month of May and we plan to begin installation of the battery module for ancillary products, including <unk>.
throughout the month of May. And we plan to begin installation of the battery module for ancillary products, including.
drive trains and high voltage junction boxes in the next few weeks.
Drivetrains and high voltage junction boxes.
In the next few weeks.
In addition, we're making progress on staffing the facility well.
In addition, we're making progress on staffing the facility well.
Such key leadership positions have already been hired and are on board. We're now in the process of filling out our manufacturing, engineering, maintenance and quality team.
<unk> key leadership positions have already been hired and onboard we're now in the process of filling out our manufacturing engineering and maintenance and quality teams.
So all in, we remain on target for start of production in Q4 this year.
So all in we remain on target for startup production in Q4 this year.
Finally on transit.
There are essentially three primary hurdles we must overcome for our next leg of growth. First and foremost are the supply chain dislocations that have been complicating production these last few quarters. Second is scaling production to new highs, moving from one shift to two shifts, and then a third before expanding additional bus manufacturing capacity. And finally, of course,
There are essentially three primary hurdles, we must overcome for our next leg of growth first and foremost of the supply chain dislocations that have been complicated in production. These last few quarters.
Taking the scaling production to new high moving from one shift to two shifts and then a third before expanding additional manufacturing capacity.
And finally of course is improving gross margin.
Supply chain conditions remain largely out of our hands, but we are adapting our production processes to better manage them. Scaling production and margin improvement is the next order of business, and these are largely within our control. But it's going to take the right leadership.
Supply chain conditions remain largely out of our hands, but we are adapting our production processes to better manage their.
Scaling production and margin improvement is the next order of business and these are largely within our control.
But it's going to take the right leadership to make that happen.
Marking the next era for Proterra Transit leadership, I am excited to have announced the appointment of Julian Sol as the new President of Proterra Transit.
And the next era for the tariff trials of leadership I am excited to have announced the appointment of Julien So as the new President Papa Terra transit.
We introduced some amazing talent.
But no one else bought the combination of internet, strategic thinking, and operational experience that I'm confident will bring a fresh perspective and the operational excellence to help transit not only scale production, but expand margin as well.
But no one else both the combination of Internet strategic thinking and operational experience that I'm confident will bring a fresh perspective, and the operational excellence to help transform not only scale production and expand margin as well.
In conclusion, Q1 is performing in line with our expectations when we provided our outlook in early March, and we reaffirm our guidance for 2022.
In conclusion Q1 is performing in line with our expectations. When we provided our outlook in early March and we reaffirm our guidance for 2022.
Demand for electric trucks and buses continues to gather momentum and we are positioned for significant growth as Greer comes online. More partners launch series production of their Patera powered vehicles and Patera Transit adds a second shift and continues to scale bus production.
Demand for electric trucks, and buses continues to gather momentum and we're positioned for significant growth as Greer comes online.
More partners launched series production of the Turbo power vehicles and material 12, which adds a second shift and continues to scale production.
We believe that power has reached an inflection point and has entered the acceleration growth phase of the S-curve.
We believe that Hollywood has reached an inflection point and is aimed to be acceleration growth phase of the S curve.
To put this in perspective, we produced approximately 25 to 30 megawatt hours of batteries per quarter throughout 2020. In 2021.
To put this into perspective, we produced approximately 25 to 30 megawatt hours of batteries per quarter throughout 2020.
In 2021 that grew to the <unk>.
In the first quarter, our battery production rate almost doubled to more than 80 megawatt-hours.
In the first quarter, our battery production rates almost doubled to more than 80 megawatt hours.
Supply chain and production capacity constraints are limiting growth in 2022, but at the end of the day.
Supply chain and production capacity constraints are limiting growth in 2022, but.
But at the end of the day.
Third-party forecasts for electric penetration of trucks and buses from Morgan Stanley suggest a market for commercial vehicle batteries in North American Europe of close to 90,000 megawatt-hours in 2030.
Third party forecast for electric penetration of trucks and buses from Morgan Stanley suggests the market for commercial vehicle batteries in North America and Europe .
Close to 90000 megawatt hours in 2030.
And we believe that Proterra is ideally positioned to capture a material share of this market at a meaningful margin.
And we believe that <unk> is ideally positioned to capture a material share of this market at a meaningful margin.
Over the past quarter, we've continued to add incredibly talented people to our amazing team at Proterra, and I want to thank them for their tireless efforts in helping us continue the journey from successful startup to maturing scaler.
Over the past quarter, we continued to add incredibly talented people to our amazing team of per Tara and I want to thank them for their tireless efforts and helping US continue the journey from successful startup to maturing scaleup.
With that, we will open it up to Q&A. Operator.
With that we will open it up to Q&A operator.
At this time I would like to remind everyone in order to ask a question press star one on your telephone keypad.
At this time I would like to remind everyone in order to ask a question.
Star one on your telephone keypad.
Please limit yourself to one question and one follow-up. We'll pause for just a moment to compile the Q&A roster.
Please limit yourself to one question and one follow up we'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Sharif El-Shabahi from Bank of America. Your line is now open.
Your first question comes from the line Sharif Sham Bahia from Bank of America. Your line is now open.
Hi, good afternoon.
I just wanted to ask, you mentioned a pickup and improvement in production from January to March. Can you quantify that pickup and what you're seeing into the early months of Q2?
I just wanted to ask you mentioned, a pickup and improvement in production from January to March.
Can you quantify that pickup and what youre seeing into early the early months of Q2.
I don't have a number to quantify for you, but we certainly did see a significant improvement in material flow to our production line as February and March developed.
Thank you.
I don't know.
<unk> quantified for you, but we certainly did see a significant improvement in our material flow to our production line.
As February and March developed.
Some of the strategies we put in place to manage supply in particular of our raw material flow from our wiring harness service provider showed great improvement.
Some of the strategies, we put in place to manage supply in particular.
Our.
Raw material flowing from a wiring harness service provider.
Showed great improvement.
As I mentioned, we've been doing a number of things. One, we sourced a lot of the components ourselves to be able to support their production capacity if they run short of those particular critical components.
As I mentioned.
Been doing a number of things one the resource to a lot of the components ourselves to be able to support their production capacity if they run short to those particular critical components.
to we've had people on the ground with our key strategic suppliers in areas where we have short short delivery of product to help them manage their own production output so that if they're faced with a decision around which is the most important component get out first to keep our line moving. We're managing that tactically on a day to day basis. So.
Two we've had people on the ground with our.
A key strategic suppliers in areas, where we have short short delivery of product to help them manage their own production output. So that if the price of the decision around which is the most important component and get out first to keep our lines moving we're managing that tactically on a day to day basis.
So.
So these sort of actions are starting to deliver results for us. And the result of that was in March we were able to get our production number to levels that support the 50 units a quarter again at least stabilizing our foundation.
Are these sort of actions are starting to deliver results for us.
And the <unk>.
Result of that was in March we were able to get our production numbers to levels that support the 50 units a quarter again at least stabilizing.
Our foundation.
Understood. And then looking at last quarter's margin guidance for 2022 of approximately flat, what assumptions are embedded within that regarding fray and some of these cost headwinds? And do you have to see a substantial drop-off in those in the second half?
Understood and then looking at last quarter's margin guidance.
For 2022 or approximately flat.
What assumptions are embedded within that regarding free and some of these cost headwinds and do you have to see a substantial drop off in those in the second half.
Yeah I think we said it on our last call and reiterated again today. The supply chain environment is fragile on the one hand. So there's a lot of disrupted flow of materials that's causing you know escalated freight costs.
Yes, I think we said on our last call and reiterated again today the supply chain environment is fragile on the one hand. So there is a lot of disruptive flow of materials, it's closing.
Escalated freight costs.
In many cases, we're having to expedite product, both to our own production lines and then on outbound product to our customers as we try and remain customer focused and have them be able to run their own production environments on the powered side. So you've got that sort of fragmentation in the market. And then of course, as we mentioned last call, the real effect of inflation started to be felt and that we don't believe.
There are many cases, we're having to expedite product.
Both to our own production lines, and then on outbound product to our customers as we try and remain customer focused and have them be able to run their own production environments on the.
Powered side.
So you've got that sort of fragmentation in the market and then of course as we mentioned last call.
The real effects of inflation a.
Started to be felt.
We don't believe.
soon. And so we've been preparing the business to be able to respond to that.
Soon and so we've been preparing the business to be able to respond to that and as.
As Karina noted, we've been working on the price side of the business to make sure that we have the potential to recover as much of that as possible in the market, but there is a lag effect between the input cost pressure we've seen and when that recovery comes on the price side, which would be...
<unk> noted <unk> been working on the price side of the business to make sure that we have the potential to recover as much of that is possible in the market, but there is a lag effect between the input cost pressure, we've seen and when that recovery comes on the product side, which would be.
you know, probably Q4 and into 2023, as we mentioned. So, you know, we
Probably Q4 and into 2023 as we mentioned so.
Yes, we see that pressure continuing through this year, which is obviously you're going to.
pressure continuing through this year, which is obviously going to see that pattern of compressed gross margin sustaining for the balance of this year in all likelihood.
See that patent.
<unk> gross margin sustaining.
Balance of this year in all likelihood.
Thank you I'll pass it along.
Your next question comes from the line of Courtney Iacovonez from Morgan Stanley . Your line is open.
Your next question comes from the line of Courtney <unk> from Morgan Stanley . Your line is open.
Great. Good afternoon, guys. Maybe just as a follow up to the conversation on the pricing side, can you give us any sense of how much
Great. Good afternoon, guys maybe.
Maybe just as a follow up on the conversation on the pricing side can you give us any sense of how much pricing.
pricing you're thinking about taking and, you know, just remind us, you know, how much of the backlog, you know, is eligible for some of these inflation pass-throughs and how the conversations are going with customers at this point, and if there's any sense that customers are at all price sensitive when you're having these conversations. Yeah, thanks.
Youre thinking about <unk>, and just remind us how much of the backlog.
Eligible for some of these the inflation pass through and how the conversations are going with customers at this point and if there's any sense that customers are at all price sensitive when you are having this conversation.
Yeah. Thanks Courtney.
Yes, we have fairly.
Yeah, we have a fairly significant customer base now, both in powered and in transit. So, we're working through them on an individual basis, and each of them has certain uniqueness around the contract. So, it is an individual discussion in each case. On the transit side, we've got through roughly 20% of our customer base successfully, and then there's another roughly 65% that we're still working through.
<unk> customer base, both empowered and in transit so we're working through them on an individual basis.
And each of them has certain uniqueness around the contracts.
As an individual discussion in each case.
On the transit side, we've got through roughly 20% of our customer base successfully and then there is another roughly 65% that we're still working through.
And then, you know, the difference is some of the contracts where product is reproduced and, you know, somewhere between production and delivery and therefore, you know, too late to achieve any sort of price recovery on.
And then the differences some of the contracts where product is already produced and somewhere between production and delivery and therefore, yes, Q2 achieve any sort of price recovery on.
On the power side of the business, also, we're roughly a quarter of the way through our customer base in terms of finalizing price negotiations. So it's a process that takes a little bit of time, as I'm sure you can appreciate. Every customer is sensitive to price increases. But is it a topic that is unfamiliar to customers right now? No, I think the.
The pilot side of the business also where roughly a quarter of the way through our customer base in terms of finalizing price negotiation.
It's a process.
That takes a little bit of time as I'm sure you can appreciate.
Yes every customer is sensitive to price increases, but that is at the.
A topic that is unfamiliar to customers right now I think the.
Awareness in our customer base and in the market in general around supply-side price pressure is fairly high.
Awareness in our customer base and in the market in general around supply stock price pressure is fairly high.
And therefore, we continue to work through it with the appropriate sensitivity. Obviously, our expectation is that we have agreements kind of finalized for the vast majority of the customer-based.
And therefore, we continue to work through it with the appropriate sensitivity.
Obviously, our expectation is that we have agreements kind of finalized for the vast majority of the customer base.
well within the next couple of quarters. So it's a process that we work through and so far we're positively encouraged by the progress that we've made, even although no customer likes to hear that there's going to be price pressure.
Yes, well within the next couple of quarters.
Surprise days that we work through.
So far we are.
Positively encouraged by the progress that we've made even though there is no customer likes to hear that there is going to be price pressure.
I guess one thing I'd like to add, it's just more for clarity than anything else, because I'm not sure.
I just wanted to add.
It's just more for clarity than anything else because I'm not sure.
it was clear that on the transit side of the 20 percent and roughly 20 percent customers that we've already agreed to price increases that's based on the existing 2022 bill.
What's clear is that on.
The transit side of the 20%.
Roughly 20% of the customers that we've already.
Okay, Great if I think that based on the existing 2022.
Sure.
So we should expect to see some benefit of that. And again, others are not necessarily, the other 65 are either, you know, in current negotiations, so, you know, we still have to conclude those we started.
So we should expect to see some benefit of that and again others are not in the other 65 of our either in current negotiations. So we still have to conclude those we started.
Based on kind of order priority based on our build plan. So we do expect to see some benefits from that obviously in the latter part of the year, the remaining.
And kind of order of priority based on our El Paso.
But to see some benefit from that obviously in the latter part of the year the remaining.
call it 15 percentage is based on just where the phase of the bill plan that was or contractual obligations that just didn't allow us to facilitate any type of path to it. So I just wanted to clarify that.
15% is based on just where we are at the phase of the program.
Actual obligations that just didn't allow us.
To facilitate any type of I just wanted to clarify that.
That's one last comment, Courtney, on...
Okay, just one last one.
Alright.
Courtney.
as it relates to sort of overall gross margin component.
As it relates to sort of overall gross margin components.
Yeah we're producing batteries out of our L.A. facility and our Burlingame facility at the moment. Burlingame is is really intended for early stage production as we continue to advance our business and work on development of our battery program.
We're producing batteries out of our la facility at our Burlingame facility at the moment building game is is really intended for early stage production as we continue to advance our business and work on development of our battery program.
We're really excited for the Greer facility to come online towards the end of the year because that is a purpose-built facility for large-scale production. And so we obviously are going to continue to work on the cost-efficiency side of the equation as well, and we do see opportunity there. So it's working on both sides of the business to keep going at the gross margin.
We're really excited for the greater facility to come online towards the end of the year because that is a purpose built facility for large scale production and so we obviously are going to continue to work on the cost efficiency side of the equation as well and we do see opportunity there.
It's working on both sides of the business to keep keep going into gross margins.
Okay. Great. Thanks. And then you gave some comments just about the successive increase in best production month over month. Can you just give us any insight into your production on the powered side? And then also just as we think about the year, how to think about the cadence as you continue to scale, acknowledging that the new facility is coming online later in the year.
Okay, Great. Thanks, and then you gave some comments just about the successive <unk>.
Increase in best production month over month can can you just give us any insight into your production for on the powered side and then also just as we think about the year how to think about the cadence as you continue to scale.
Acknowledging that the new facilities coming online later in the year.
Yeah, as I said, we've we've seen a step up in production output for the power business in Q1, as is evidenced by the results. You know, with the delivery of 280 units in just this quarter, that's more than the sum of all vehicle sets delivered in the entire of 2021. So, you know, significant increase in production output. And, you know, we're we're running our production footprint.
Yes, as I said, we've seen a step up in production output for.
The power business in Q1 as is evidenced by the results.
With the delivery of 280.
Okay, and just this quarter thats more than the sum of all vehicles sets delivered in the entire of 2021.
Sure.
The significant increase in production output.
Yes, we are running our production footprint.
Yeah close to maximum scale right now between L.A. and Burlingame. And so we're very eager to get our career facility live as well as we look to capitalize on the opportunity that the demand side of the business is seeing. We mentioned our last call and reiterated today that we continue to see.
Yes, close to maximum scale right now between early in Burlingame, and so we're very eager to get a green.
<unk> facility.
Live as well as we look to capitalize on the opportunity that.
The demand side of the business we are seeing.
We mentioned in our last call and reiterated today, we continue to see great.
a very favorable demand in the market. And so, yeah, we will maximize our production output through the two facilities we have operating at the moment until the third one comes on stream at the end of the year.
Very favorable demand in the market and so.
We will maximize our production output through.
Through the two facilities, we have operating at the moment until the third one comes on stream at the end of the year.
Okay. Thank you.
One other comment, maybe just to put in perspective the production capability, we talked about 82 megawatt hours of battery production in Q1 being a significant increase on what we produced in prior years. Yeah, the facility in Greer is going to be a multi-gigawatt hour facility, so it gives you a sense of the kind of scale capability that we'll have once that facility goes live.
One other comment maybe just to put in perspective.
Production capability, we talked about 82 megawatt hours of battery production in Q1.
Being a significant increase on what we produced in prior years.
Yes, the facility in Greer is going to be a multi gigawatt hour facilities. So it gives you a sense of the kind of scale capability that we'll have once that facility goes live.
Again, if you would like to ask a question, press star, then the number 1 on your telephone keypad.
Again, if you would like to ask a question press star.
And then the number one on your telephone keypad.
Your next question comes from the line of Brian Johnson from Barclays, your line is open.
Your next question comes from the line of Brian Johnson from Barclays. Your line is open.
Hi, team, this is Jason Stuhl here, on for Brian .
Hi team this is Jason <unk> on.
I was hoping to maybe just ask a question on the court environment, you know, recognize you've got a
On for Brian .
I was hoping maybe just asked a question on the quoting environment.
Recognizing anthem.
You know, talk about back fog on a quarterly basis, but just kind of holistically as we think about the pipeline right now, maybe both in transit and on within powered on, you know, initial award book, you know, on the on the van side. But then I guess more certainly on the on the light on the on the truck side, both medium duty and heavy duty. Are you seeing any kind of hold up or slow down in the quoting process there? I mean, it's.
Talking about backlog on a quarterly basis, but just kind of holistically as we think about the pipeline right now maybe both in transit and on.
With empowered.
Initial work.
On the van side, but then I guess more specifically on the light.
Well on the truck side, both medium duty and heavy duty are you guys seeing any kind of hold up or slow down.
And the quoting process there.
Clearly not going to be a fast and moving market, a bus and van, but.
We're not going to be a fast moving market in Boston band, but.
you know, just heard from others that that that quoting environment has kind of slowed a little bit and wondering if you're seeing the same thing.
You just heard from others that quoting environment as kind of.
Slowed a little bit more that you are seeing the same thing.
Yes.
I'm terribly sorry, but your microphone cut out in the first sentence or so for the key part of the question. I must apologize
I'm terribly sorry, but your microphone cut out in the first century. So sorry, so the key part of the equation I must I apologize I forgot the second part could you just reframe it I apologize.
I've got the second part. Could you just reframe it up a little bit? Sure. Yeah. Yeah. Briefly stated, the quoting environment specifically for medium and heavy-duty trucks, are you seeing that clearly that's a slower-moving market, but has that market, the quoting pipeline, kind of slowed more than expected over the last, you know, call, a few quarters? It just seems like others have kind of hinted at that.
Yeah.
Briefly stated the quoting environment, specifically for medium and heavy duty trucks are you seeing.
But clearly thats, a slower moving market, but.
Has that market quoting pipeline kind of.
Load more than expected over the last.
Few quarters. It just seems like others have kind of hinted at that.
I'm not going to get into backlog today because we do talk about our order backlog once a year and we went through that last quarter, but I will just talk about the general sort of market dynamic. I mean, in our prepared remarks, we referred to additional agreements that have been announced, so there's continued demand and interest, and specifically on the medium-duty, heavy-duty truck side, certainly we have...
Sorry.
Yes, im not going to get into backlog today, because we do talk about our order backlog once a year and we went through that last quarter, but.
Yes.
Talk about the general sort of market dynamic.
Our prepared remarks, we referred to additional agreements that have been announced.
Continued demand and interest and specifically on the sort of medium duty and heavy duty truck side.
Certainly we have we have not seen any tangible changing consumer interest.
any tangible change in consumer interest over the past quarter.
Last quarter.
I would say that one has to bear in mind in the overall market dynamic right now diesel prices have come under significant pressure over the past few months and that's challenging the total cost of ownership economics of traditional combustion engine operations for all commercial vehicles but certainly on the heavier duty side probably more significantly given their exposure to diesel prices and fuel consumption.
I would say.
Say that one has to bear in mind in the overall market dynamic right now.
<unk> prices have come under significant pressure over the past few months.
Yes, that's challenging the total cost of ownership economics of traditional combustion engine operations for all commercial vehicles, but.
Certainly on the heavier duty side, probably more significantly given their exposure to diesel prices and.
Fuel consumption.
So from my perspective, no, we haven't seen any material change in consumer interest.
From my perspective, no we haven't seen any material change in consumer interest.
Understood. And, you know, maybe just another question on what you are seeing in the ordering in the order book or the pipeline, you know, with cell, with battery raw mats, you know, obviously high right now and cell availability limited, you know, you guys have, I think, cell, you know, availability locked up through 2028. Are you seeing any incremental interest from customers?
Understood and maybe just another question on <unk>.
What you are seeing in the corner in the order book or pipeline.
So with battery raw mats, obviously high right now in cell availability.
Ltd.
You guys have.
Think cell availability locked up through 2028 are you seeing any incremental interest from customers specifically because you have good cell availability.
specifically because you have good cell availability, you know, through the midterm, whereas it frankly might just be difficult to get battery raw mats or even packs from other suppliers right now.
Through the midterm, whereas frankly might just be difficult to get battery raw mats or even tax from other suppliers right now.
Yes. So a very good point. And you know that sort of raw material price movement. Yes that's a real issue. And like anybody who's in battery technology we have some exposure to it. But certainly our strategic.
Yes sure.
Very good point, and you noted sort of raw material price movements, yes, that's a real issue and like anybody who's in battery technology, we have some exposure to it but certainly our strategic.
execution of our entry into an agreement with LG Energy Solutions for a long-term supply agreement was something we anticipated, supply being a core strategic advantage, and it is definitely showing benefits today. We like the position we have with LG. They're one of the largest players in the market and produce a very high-quality product.
Execution of our entry into an agreement with LG energy solutions.
For a long term supply agreement was.
Something we anticipated supply being a core strategic advantage and.
It is definitely showing benefits today.
Yes.
Like the position, we have with LG there one of the largest players in the market and produce a very high quality product.
And so, you know, we find that to be one of our strengths at the moment, to have access to cell supply, and as one of the key inputs to our production process, that's something that does allow us to have confidence that we can continue to meet demand.
And so we found it to be one of our strengths at the moment to have access to sell supply and as one of the key inputs drop production process.
That's something that does allow us to have confidence that we can continue to meet demand.
Okay understood. Thank you.
We are out of time. I will pass it back to Mr. Joyce for closing remarks.
We are at a time I'll pass it back to Mr. <unk> for closing remarks.
Well, I just wanted to express my sincere thanks to all of you for joining us today. It's a great opportunity for us to update everybody on the progress we're making here at Proterra. And equally, I'd just extend a thanks to our team. We have an incredible team of people who are very devoted to the mission. And I just wanted to say my sincere thanks to them for their hard work and look forward to talking to you all on the next call.
Brian just wanted to express our sincere thanks to all of you for joining us today.
Great opportunity for us to update everybody on the progress, we're making here at Portera.
And equally on just to extend a thanks to our team.
We have incredible.
A team of people, who are very devoted to the mission and.
I just wanted to say my sincere thanks to them for their hard work and look forward to talking to you all on the next call.
This concludes today's conference call. You may disconnect.
This concludes today's conference call you may disconnect disconnect.
Okay.
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