Q4 2022 GreenPower Motor Company Inc Earnings Call
Speaker 1: The the the.
Speaker 1: Part to me. This is the operator. The green power conference call will start momentarily. I repeat: the green power conference call will start momentarily. Thank you for your patience.
Speaker 1: The.
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Speaker 2: You may press Star than one on your telephone key pad and to withdraw your question, please press Star than two Please note this event is being recorded. I would now like to turn the conference over to Michael seaford, Chief Financial Officer. Please go ahead, sir.
Speaker 3: Thank you. This is Michael seiefort, the Chief Financial Officer, GRE power motor company. I would like to welcome everyone to recall to discuss green pow' corporate update and financial results for the period ended March 31, twent y and 22. I'm here today with our Chief Executive Officer, raiser arkinson, and our President, Brendan Riley.
Speaker 3: Bring today's call.
Speaker 4: We may make comments or statements about our future expectations, plans and prospects which may constitute forward-looking statements for the purposes of safe harbor provision under the Private Securities Litigation Reform Act of 1995 applicable Canadian securities laws.
Speaker 4: Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors.
Speaker 4: Including those discussed in in our annual results and DNA filed on SEDAR and donometor.
Speaker 4: In addition, these forward-looking statements relate to the date on which they are made. We anticipate with subsequent events and developments may cause the company's views to change. dpre empowerwe disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Speaker 4: Also during the course of today's call we may refer to certain non-IFRS financial measures. Reconciliation of these non-IFRS measures can be found in our mdna to filed on crandonegar and is also located on our website at w power loadtor com.
Speaker 4: I will now provide a brief summary.
Speaker 4: Of our results.
Speaker 4: For the year ended March threety-one 2020, two.
Speaker 4: Recorded revenues of 17.2 million for the year end in March 31. 2022 represented an increase of over 30% of the restated revenue of thir three thousand for the previous fiscal year.
Speaker 4: Revenue for the year was generated from the 93 vehicle sales, including 18 B school buses, leven e stars core, EV Star plus and 21 e Star CS, as well as one EV AR and 10 EV Star CS, for which we provided the lease financing, and 28 EV Stars which had previously been on lease and who leases were cancelled in the vehicle subsequently sold.
Speaker 4: Our cash, including restricted cash, in year-end was six point nine million. We ended the year with 32.3 million of inventory, compared to twelve point a half million of the previous yearend.
Speaker 4: Our gross profit margin for the fourth quarter was negatively impacted by several onetime costs that pushstream powers for gross profit margin below our 30% historical run rate.
Speaker 4: Briefly. For the quarter ended June thirtythousand and thousand and 22, we delivered over two and 20 vehicles, including three BEAST, and the remainder were a mix of B stars, EV Star, caain chassis, EV Star plus and E Star cargoi'll now pass the call back to Brendan Riley.
Speaker 3: redther, Please go out. Good morning everybody and thank you today.
Speaker 5: Some very interesting things that I'd like to discuss today. First and foremost is our workhorce.
Speaker 5: Deal we are under contract with workhorse.
Speaker 5: For thousand 500 evstar CS which we are selling, the workhorse. Workhorse is putting their co custom, very compelling body on these vehicles, adding some of their own telematics and other features that were horre supplies, and then they're selling these vehicles to the step fan market.
Speaker 5: This is compelling on many levels, but I think most importantly, this is business that green power was not addressing previously. We've not had a plan to enter the stepmanand market.
Speaker 5: It's also leveraging the sales of working power sold the vehicles once the workhorse, and that workhorse is selling these vehicles into the marketplace.
Speaker 5: And supporting the vehicle in the marketplace include tributing.
Speaker 5: Place include tributing and vehicles.
Speaker 5: So we really believe this is- I don't want to say found business, but that's kind of a good way of looking at it. This was not part of what typically we would normally do in a business transaction, where we would launch the vehicles, train customer, support them. We've got one touch point and that is workcourse, which really makes this deal very, very compelling to us and hopefully to the market.
Speaker 6: The schoolulebus sector has really been a very very attractive area for us slightly. Also not only did we introduce our nanoobes which will steep livelied here which is.
Speaker 5: Type a kind of smaller school bus in addition to our BEAST. But the announcement of the new infrastructure law, which this year alone has already enabled a lot of schools to start buying zero mission school buses at no cost to them, which includes offsets for infrastructure and and other training and other things that make this a very, very compelling space for green colley right now. Currently we've got a lot of money in California. We've got money on the federal.
Speaker 7: iting and that's that. Green power was a able company delivering on the new Jersey VIP program. It's kind of a clone or program that's planned in very much in the spirit of the California H VIP program and this is for the new Jersey's area.
Speaker 5: This program is again very generous and we've started to deliver. I believe we've got seven deliveries already under this program and they're just starting now. We're very excited to take advantage of.
Speaker 5: Of the opportunities in new Jersey for that.
Speaker 5: Opportunities in new Jersey for that, and with that I'll pass it to frazier actks.
Speaker 1: So brennan provided an overview on the workhorce arrangement and, I think, one of the.
Speaker 8: The key aspects of this is that brennan, in particular, and the team have been working on this for almost the better part of a year and our first delivery start this month.
Speaker 8: So we're literally getting our first set of the evstar CS or, as we refer to, our cabin chassity, which is the picture on the left there.
Speaker 8: And delivering the first triche to workhor, which they will integrate with a product that they brought to market that they branded as the w seven 50, and I believe they have two models of this vehicle, So that's what they will be selling to their customer. The overall transaction is for 1500 R C C sayas we previously disclosed and it's important to note that there's that works out to just a an average in excess of two hundred per quarter for the next seven quarters. That relates to that agreement.
Speaker 8: And as noted on this slide, this is one of the largest medium or heavy duty EV transactions and minutitess not one of these up to a certain number. This is for thousand thousand hundred EV Star cab in chasts.
Speaker 8: So it's very exciting for the company, but in particular given that we are now entering into the delivery phase and the first few months will be bring it up to that average that we note here. But it'll be a fairly quick progression in terms of getting to that average of 200 a quarter.
Speaker 1: bren talked about the school bus. The BEAST we was was a second iteration of our type D electric school bus and that's the larger school Bo. And there's a type C and a type D. the type C is the one with the hood. The type D is the one that looks like a more of a transit flat front, the we like the type D. it's the driver has great fight lines in terms of any kids that walk in front of the bus. The vehicle is maximized in terms of for the seing configuration. So we really have an industry leading vehicle with.
Speaker 8: For this size of vehicle that can accommodate up to 90 passengers. The analbeast is the smaller vehicle, the type a electric school bus, and it comes in two models. This one is shown without the curb side, rear 80 a door, the disability that would have the disability left for wheelchair mobility aid, and that's the second model that we have for this vehicle.
Speaker 9: Next slideso our sales strategy a year or two years ago we would- you would look at green power andcy- that we had sort of a broad umbrella in terms of ourselves, a marketing that really was a trying to address multiple sectors and multiple industries all with the same or similar ceselves- a marketing strategy.
Speaker 8: We determined that that first, certain sectors full for the truck sector that the cvinassi, for the workhorce deal that we previously talked about, or for the school bus- you needed a dedicated focus, you needed the resources the, the product infrastructure that really was specific to that particular sector.
Speaker 8: So we have a group led by joint angey and Michael parz that are that are focused in this area, and the approach is to build a network, and the network consists of the combination of dealer, S as well as getting on state contracts to ensure the maximum outreach into each of the particular markets, and each state is different, So you can have a one size fit all approach across the nation. You have to address each of the requirements by state by state, So it's a it's fairly lengthy process to put the pieces of the puzle together.
Speaker 8: What's going to drive the school bus sector is, and we talk about the funding, but at both funding and mandate, through money and mandates as we like to talk about.
Speaker 8: And the environmental protection agency program which was introduced or talked about for the for at least a year, went live at the end of May and the application process closes on the first tranche of $5 million for this year, with other five million slated for the next four years, and this year's funding is currently open. In terms of the application process, e P a said it will close August nineteenth. They will be issuing award letters through September and OEMs at the purchasers can start to.
Speaker 8: Deliver vehicles as early as October of this year and we believe we're one of the few companies that has inventory of both our type B BEAST and our type day nan.
Speaker 8: So the funding is up to $375 thousand for the BEAST which is in the picture on the top right there and then the nanl BEAST, which was the smaller vehicle we saw on the previous Slide.
Speaker 8: The other fundings, significant funding sources that a California introduced through their eight their program, a school bus set aside fund that 13 million this year and 13 million the next two years. They opened it at the end of March for 90 days, which took us through to the end of June , and were're now just working through the various applications that have being submitted and waiting for approval letters, at which point in time we can commmenced. Some early deliveries in the current quarter were, in which is July to the September quarter.
Speaker 8: Lastly, on the dedicated sales group, we have announced a number of dealer agreements and states that we have a specific footprint or sales effort in and, as Brendan said, stay tuned, we have a number of other dealers that we hope or expect to complete shortly, given the timeline on the epp application process, So we can ensure that those applications are submitted and included with the consideration for the funding.
Speaker 8: Dedicated sales group. We have announced a number of dealer agreements and states that we have a specific footprint or sales effort in and, as brennan said, stay tuned. We we have a number of other dealers that we hope or expect to complete shortly, given the timeline on the e P application process, So we can ensure that those applications are submitted and included with the consideration for the fundant. Next slide place.
Speaker 8: So it's one thing to get the sales. The other thing is you've got to be able to produce products. On the estar cabin chassis, we previously discloseed that we have the capability capacity to go up to 200 a month.
Speaker 8: And so you, 'know having the ability to doing 600 a quarter, we can certainly do. The 200 that are plus, that are needed in terms of the ultimate run rate on workhorse, in terms of the cabin chass is that are needed for the truck opportunities as well as our for all needs as we use that e Star platform or the cabin chassis platform for our e Star plus and for a nano beat.
Speaker 8: So but on the school bus side we're going to be building this product in West virgin and previously we announced an arrangement with the state of West Virginia for the acquisition of the facility. That the picture of the building in the top right hand corner there. I was out there last week with the team. brenit's going to be out there next week with the team and we're proud to say that we take occupancy of this place on August first. The current tenet that's in that building, I must say, WOn't quite be ready to be. They WOn't be gone on August first. So we've worked with them to to.
Speaker 8: Have the flexibility and being able to get some of the initial things we need to accomplish in that building starting at the end of last month through this month, and so, as a result of that, we're planning to bring 10 of our e Star cabin chassis next week into the facility So that we in August we're ready to go with the first tranche of our production for the Tai Bay nanl bes.
Speaker 8: Ultimately the goal is by the end of next year is to have production up in the range of 40 to 50 SCO buses per month, or annualized at around five hundred.
Speaker 8: Just a quick recap on the deal is that the the state of West Virginia in conjunction with the city of South Charleston which is literally connected to the city of Charleston itself that they purchased that building and our deal is to that we have lease payments of five thousand a month that start next spring. So we have a nice holiday that allows us to get up and running and get product flowing out out of the out of the facility and then we also get two different levels of.
Speaker 8: Forgiveness on that sat funding or purchase price, and so such that there's an initial $1.3 million forgiveness on an initial employment level and then every hundred employees thereafter another $5 thousand. That is applied against this. Ultimately, when it's fully paid through either the forgiveness on employment levels or payments of the, the lease payments is that then the building is green powers building outright, and so that's why we refer to this as a contract of lease purchase.
Speaker 8: Least ultimately at least, to the ownership of the building next slide place. And the third component that brennan talked about was the vachers and the vachers, according to you know. There's a couple points here that you might find of interest. Is that, according to California resource Board, is that from inceptction, green power has the second highest redemption of vachers. So our challenge with the program is that in the past two or three years it has opened and being sold up literally same day, and so made has made it very, very difficult.
Speaker 8: To try and make it to have any prolonged sales effort when a program's only available one day year.
Speaker 8: So the the this particular year though, when they introduced it on March thirtieth, they they had reduced the amount of the voucher per vehicle, and so we have found that there is still available funds in certain pockets and for certain size of fleets, and so it's much more of our robust sales tool like the program was four or five years ago.
Speaker 8: And so we- and secondly Brendan, referred to the new Jersey program that we were the first oweem to receive a reimbursement of the voucher. I think we re collectively a little surprised with that, in that we had a number of vouchers to deliver off of But for various reasons, we thought that at least know one or two other companies would have been ahead about. So two great validations in terms of how we're able to leverage the state programs, in terms of where we are today we have 70 approved vouchers for these, just these two programs.
Speaker 8: Without any school buses. So any of the school buses, either on vouchers, which there are a handful, or for school bus set aside funds which we haven't released yet, isn't in these numbers. But we have 70 approved vouers on the two state programs, representing or amounting to five point seven million, representing sales of eight point nine and pending approval for 28 vouers. So if we combine these numbers that's 13 million of sales that is supported by $7.7 million of vouers.
Speaker 8: And as I've said, on both programs, we're seeing the ability to refresh these.
Speaker 8: The voachters, as we're delivering on the one end, were're able to refresh an increase or get additional pending approval of pending voachters that ultimately become approved voters.
Speaker 8: Within this mix there is a fairly significant number of both approved impending vouchures for our 22 foot cargo- the numberers that Michael alluded to at the beginning of our program. Here talked about the- a number of the EV Star cargoes, and this is our 22 foot model, not the 25 foot, and we expect to deliver 30. most of those 30 will be in this month, early part of August .
Speaker 8: Through that will be part of our September thirtieth qut and our.
Speaker 4: As we go to our last slide, the summary that we'd like to leave you with is historically, with the numbers. At Bret that Michael outllineed for you from our year-end was 93 vehicles that generated 17.2 million.
Speaker 4: So the way to look at our business is that we've got workhorse that is just starting to deleverage in the next week or two and over the next one or two quarters we get up to that in excess of two hundred a quarter.
Speaker 4: Or annualized of 800 for the year.
Speaker 4: By the end of next year we expect to have our West Virginia facility with a net plus or minus 500 vehicles on the school bus side- and the boachchers continue to see that- contributing to a significant number of MAN deliveries.
Speaker 4: So the sum of all those three provide for an annualized number in excess of a thousand vehicles within the next year and we- it's not that we will see that a year from now- we will be seeing that exponential growth hit in the September 30 quarter and in particular in the December 30 first qutter. So we believe that that will get us through to from where we are today into positive cash flow, which is something that will deccalcolo from really the the rest of the e OEMs that are in the medium and heavy duty equipment or vehicle space.
Speaker 4: And that's being a big part of the core focus of the group- is that really focusing on the business and getting the business to positive cash flow, as opposed to having other aspects of the business to talk about that have have an impact on the business years from now. All of the hard work that the team has done over the past couple of years is now coming into play, with some significant delivery starting in this month that we're in now, which is part of the reason we wanted to do the corporate update now to really give a sense of a refresh of the business in the quarter that we've just started.
Speaker 4: Before turning it to the qa. We did announce an acquisition this morning. It's there was a small cash payment and assumption of a very favorable obligations. The acquisition is a company called Lion truck body that is headquartered in Southern California. It's actually not that far from long Beach, which has has some advantages in terms of components and the light that we bring through a long beach from time to time. But lineion truck body is.
Speaker 4: Is and brennan was on site yesterday just tending to sort of final closing matters and I know there's a lot of excitement on both sides know the land truck body folks who have done traditional bodies. When I say traditional on diesel gasoline powered in the likevehicles is they're very excited of doing a lot more work on all electric vehicles. But what this does for us is that it expands our ability to better support the truck business. We have truck customers that are waiting the better part of four five or six months to get a body on our.
Speaker 8: As oppposed to you'll having to wait for and deal with supply chain issues. And brennan, did you have anything else had on the acquisition? I know I've missed a lot of really keen great Thank you.
Speaker 5: partmy folks. I've got someallergies kicking in and the cough coming up, So beg your pardon in advance the. The real, I think, compelling part of this acquisition- besides with brazaser talked about as far as lead time- is that you know, the e truck body space is fairly new and and really developing and all the truck bodies in the space have been developed for legacy vehicles that have internal combustion engines and to that end they were developed differently. It's, it's been and if you look at the workhorse product with perfect example, their w 750 is incredibly compelling.
Speaker 5: bodies- lightweight truck bodies- very efficient refrigerated unit, S specifically to save weight.
Speaker 5: Increased production time and make the bodyies more long lasting, and that's something that the truck bodyfaceed in general, which is a legacy business, hasn't advanced very quickly. So I could go to any of the wonderful truck body companies out there and get a body, but not exactly the body I wanted for an T.
Speaker 5: Material wise design-wise, So on and so forth. And the EV space is a space of small incremental.
Speaker 5: Improvements, So we continue to advance. And all of these improvements.
Speaker 5: Cumulative, our cumulative- and make a big impact. But it takes a lot of effort to make these small improvements and acquiring this company really gives us an opportunity to make.
Speaker 8: Truck body specifically for EV's green power or even our competitors if, if they would like our body at some point.
Speaker 10: Thank you fres.
Speaker 10: Thank you for suregrazsure and one of the show.
Speaker 10: Can you hear meokay, before getting into the Q and a one question that Michael brennan and I have have heard and with our stakeholders, So I'll ask, I'll ask a question of us and Michael brennan can sort of add to this comment. But know, one of the questions is being: well you, where you you going to get cash to fund all this business?
Speaker 4: And the answer is really I mean there's there's many layers to this but.
Speaker 4: A big part of our financial requirement will be defined this fault. We don't know how many deals we're going to get on either the co bus set aside fund yet, or the EPA.
Speaker 4: But the e P a program is a structure such that the deliveries that can start in October you get two years. So we have lots of time to spread that out. But we also have inventory. So on some of the initial deals where they have the, they can get the infrastructure in place quickly in terms of charging and everything else. We can make those delevers and we believe we're one of the few, if not the only 1, with both the a and the D, that can do that.
Speaker 4: The second thing is that the as we talked about through this presentation is that we're now delivering at a level. The completely is thatat a totally different level than we've seen in any previous court. The highest number of vehicles we've ever delivered before is 44 in the court. In the history of this company. We have a good shot of doing that this month and and let alone that through August September when the school bus is really kicked in is that that's just going to accelerate in the December quarter and the March quarter. Thereafter So.
Speaker 4: That's the second point to make and the third is that as we've said on the last couple of earnings calls.
Speaker 4: Could we can see that this working capital requirement is on the horizon. So, Michael in particular, But as a team we have been engaged and talking to and discussing. There is traditional financing with asset based slenders and the like that are not necessarily they're requiring any equity where, where there is a traditional debt type financing. So there is anything that we can communicate on that front at this juncture. But all I can sit refer to is previous exercise that we went through two or three years ago.
Speaker 4: Where a member that I ad, along with a couple other members of our team, at one the conference and being peppered on some recent announcement that we'd made, and everybody felt that, while you're going to have to GoTo the Mark and raise money, I said no, that's not the only alternative for us, and at that time you. six weeks later, we announced that we had secured a $5 million facility from a traditional bank- no equity a de, a decent financial structure for the company, and it really helped elevate the company to the next level.
Speaker 4: So we we plan our business in terms of what we need, not just on a month by month basis, but over know the next 2, three years. So, as such know, the combination of the inventory that we enjoy now that has a significant amount of finished goods set is, will be converting into invoices and cash is really kicking in in this month of July , coupled with the, once we see where we are with the, the programs is fall.
Speaker 8: Then we can layer that in terms of what our financial requirement is and how we're going to roll that out with our customer base. So it's.
Speaker 8: I think, from a capital markets point of view, what we can do to decouple ourselves from the rest of the pack, which all seem to be moved in more or less the same direction on a given day, is the delivery of vehicles and getting the business to positive cash flow, and that is what we see in the next two quarters.
Speaker 1: You know frazier, you mentioned earlier the.
Speaker 1: You know frazier, you mentioned earlier the, the nanobbeasts and the BEAST.
Speaker 5: And it's one thing we found, and I've been traveling Coast to Coast with that vehicle with Joe angeli and Michael Perez in our school bus team.
Speaker 5: You really see the difference between our product and all the legacy products and even the converted legacy products which are basically the market right now for electric school buses besides ours.
Speaker 5: And those would be a traditional school bus that's been modified to accept batteries and electric traction motor.
Speaker 7: And when we travel Coast to Coast basically in the U's and going through these different.
Speaker 5: Districts, meeting with different dealers and oftentimes the regulators to decide on the specifications.
Speaker 7: You really see how compelling our product is on a product basis compared to what is out there with competitors. The features we have, the fact that we're purpose built on both platforms- are, in Corporation of the aluminum, very lightweight yet stronger body components. Some of our compelling design differences, including a higher floor, keeping the passengers out of.
Speaker 5: Out of the crash zone, making a fully flat floor. So seedating is more fungible and we've got better ability to add ADA accessibility and what have you, without having to worry about humps on the floor and things of that nature. When you compare what we've got, what's out there.
Speaker 7: It really is a shot in the arm for everybody, including the team, and you offer people are just wildfire products, and that's one thing we haven't really discussed on this Paul, is we've got not only a.
Speaker 7: Path to manufacture products, deliver products that I would consider superior through competitors.
Speaker 7: But our products, I also believe, believe- are superior to our competitors and which really gives us the trifecta of what we need in this space to differentiate ourselves from the entire Class.
Speaker 8: Sorry Michael is there if there is no questions and.
Speaker 10: We do so. Pop partner, that go go ahead. I'll just pass it over to the moderator. It does look like we have one question in the Q and eightq.
Speaker 3: Some moderator. Could we Please go ahead with that one question? And yes, I want to prompt for further commcials. That'd be great. Yes, sir.
Speaker 2: To ask a question, you may press Star than one on your telephone key pad. If you're using a speaker phone, Please pick up your handset before pressing the keys. And to withdraw your question, please press Star than two and at this time will' pausema momentarily to assembol roster.
Speaker 11: Thank you, and the first question will come from Tate Sullivan with the maximum group. Please go ahead.
Speaker 12: I thank you all. Michael, to start just with the quarter that ended in March and increase in deferred revenue by about six point a half million, is that related to the workcoursece contract and can you review the public details of the workforce contract? How much they have the deposit Head of deliveries and should we forecast those deposits going forward?
Speaker 3: Yes So the there was a large upfront deposit. I don't believe we mentioned previously exactly how much that was, But when you look at that thedeferred revenue number that you just quoted, that's almost entirely that would course deposit, and so what that does represent is a deposit for the entire contract. So you'll see that slowly deplete over the term of the contract, thewhich is to March 2024. however, I think when you're looking at that contract, the right way to think of it is, as brazer said, going on average of 200 units per quarter, and so that's LL be scaling up quite rapidly. So we do have first of delivery starting into live and think, but you know, 200 per quarters the right way to think about that.
Speaker 12: allyto that from from workcourse. Excuse me, in terms of the timing that they they take those deliveries and that dependent on customer borders on their side, or can you talk about timing of delivery? Or they're contracted alreadywell, there is a mechanism that allows for a variance on a monthly basis and then that variance is made up over the next several months.
Speaker 4: So if you, if you look at it, you know, if you Drew a line and said ok, this is what the agreed on number, if you fluctuate up and down a little bit, but all to ultimately the endpoint of March 2024 with 1500 vehicles, if you and bren, I think, if you presjsure, maybe you gave details on the new Jersey H tiip program or very being very similar to the California program. Is that mostly the demand that you've seen from the new Jersey voucher program, mostly for e V stars at this point, for pluses for both can? Can you comment on that? possiblesure I'll all start. brennan can weigh in butif.
Speaker 12: New Jersey.
Speaker 10: And the nice part about that is that we are seeing refresh- I think it was more than 10 in just the past month for the collective programs- and we haven't been had that, that ability to continually sell off aboutouch ER program for, I'd say, almost four years.
Speaker 10: Yes that's. Exactly right frazier, and.
Speaker 7: And and what frazer gam quite uniat fresh is at, this program continues to be available out there. There's still are funds on the new Jersey VIP program and it allows, it's allowing for continuing sales where hip would, as we stated earlier, in some cases be out of funds in a matter of hours. So you know, it was Christmas for an hour when ahi came out and for the new Jersey VIP program it is the gift that keeps giving.
Speaker 1: Thank you all an. If you have a question, please press orar then one our next question will come from Greg Lewis with btig. Please go ahead.
Speaker 13: Hey Thank you, Thank you and and in good morning everybody. I did have a question first around. You know the the, the decision to bring in, you know, lyion truck. Obviously they were a slier. You know, I guess, as we think about building out the business longer, medium in, and we'll say the medium term are there are opportunities for you, for green power to can continue to kind of.
Speaker 13: Supplier other suppliers or maybe even other.
Speaker 14: Companies that would kind of make grain power more of an integrated OEM.
Speaker 9: That absolutely. That opportunity exists and, as it relates to, I'll start this off to printand can certainly elaborate further, but the lineion truck body is something that we needed to do. I mean, it was quite simply that the the truck dealers that we're engaged with, not just in California but across the nation, are looking at: when they buy a cabin chassis, they're going to do something with it. They very rarely just turn around, sell it to a customer. They're buying it to then engag or get quotes from multiple different body builders.
Speaker 4: And get the body built. What we're encountering is that the the initial deals that we have been doing. You know, the timeline is up to six months in terms of getting the quote, getting the specs, getting a built, getting it delivered, and then, as brennan says- and this is one of the keys- is they build it out as if they're building it on to a traditional ice plform.
Speaker 4: It's not the body that they're building isn't necessarily integrated with the cap R cabin chassis for an D V. So that, I think, is one of the key things that we see in this line truck body is that this will be integrated. Know, instead of the truck body company getting an integration manual from us and that working it through is it will be more of a push approach for us, dictating exactly how that integration works, and I think that will help accelerate the adoption of the bodies for the V platform. So the other sectors? Going back to your initial part of the question.
Speaker 4: To green power and gets us into the game right away in terms of not having to build up and sustain a cost that would be a multiple of what this is this has cost us to get into.
Speaker 13: Okay and then for you, justrespond our gu CH. We have an anecdotal.
Speaker 5: Example here of of a product that we are working on delivering, the first of with line truck body. So refrigerated trucks. You probably know they have a box on the back with a refrigerated unit and people usually use those to distribute Foods, anything that requires coal storage. What have you in the delivery space? Well, that's an attractive space and it's ubiquitous. Across the country, actually across the world, people want to ship stuff, keeping it fresh and pull.
Speaker 7: Traditionally when people, when companies built refrigerated units, they would have to use low voltage refrigerators.
Speaker 7: Which worked with internal combustion vehicle. In our case, our vehicles run at high voltage. That's, the fuel of our vehicle is the high voltage.
Speaker 5: So we've been able to develop a product with an integrated high-voltage refrigeration unit, increasing the efficiency of this product about 20%.
Speaker 7: This means lower cost of product. This means lower cost of manufacturing in some of the components that goes into it, it means longer range of the vehicle and it just means lower operating cost of the vehicle long term. Those are the types of development that you can do when you own it, even though there's a very small addressable market.
Speaker 5: The other comes hopefully, what we can bring out by owning this. The truck body company is now a new generation of body specifically tailored to electric trucks. We think that it it'll actually move the industry and just see, you know great. We still intend on a continued use of other truck body companies throughout the country. It's a very regional business. No, it's not like we're.
Speaker 7: We're doing this instead of that. This is an addition to other optionsand then just following up on that.
Speaker 13: I guess obviously Lyon had more customers beyond green power. Does green power now planned to be a third party provider to other other companies with Lyon, or is that something now, where this is?
Speaker 13: I guess obviously Lyon had more customers beyond green power. Does green power now planned to be a third party provider to other other companies with Lyon, or is that something now where this is going to be?
Speaker 13: Know primarily for know green power vehicles onlyno. There's enough capacity to continue to take care of the legacy customers, also the continuing customers, and we intend to keep satisfying them as as line truck by, as in the past. As such, the majority of their revenue was generated from third part. There's very little historical basis. So was in their numbers that related to a green power sale?
Speaker 13: Okay okay great, and then just one more that we're okay. And then just one more from me. I mean clearly we in a bill ramp heading into.
Speaker 13: You know we're in the kind of the season for school bus deliveries. Is there any way to kind of think about the eb and flow of inventory and working capital? I guess, from Mike, as we think about like on on a seasonal basis, as I you know, should we be thinking about, you know, inventory peeking around your fiscal year end and then kind of.
Speaker 14: Moving lower throughout the year, before then picking up. I guess adding in the wn is that kind of a way to think about it, or are we kind of in a trajectory where at least the growth is in front of us, So it's just going to kind of keep building higher?
Speaker 8: So I think I'll start this. Michael is said, the biggest impact that we can have on that is the throughput.
Speaker 4: And what we're doing in West Virginia, which WOn't have an immediate impact but over the course of the next year will have a significant impact, is we see that cutting our total cycle time in half?
Speaker 4: So if we can take a production cycle that was six to eight months had turned it into three to four months, that's what accelerates our inventory. In response to that question.
Speaker 4: And that's the biggest impact- that the faster we can increase our production. So what we're doing on the workhorce deal, which will get better and better over the next couple of years, on cvin chassis, likewise with the initially nano beasts- and ultimately the beast is increasing or reducing the production time- will allow us to turn that inventory that much faster and get to a lower inventory level in relation to the cost of goods sold numberyes, I would echo that and the one thing I would. That is just in terms of your question.
Speaker 13: Inventory. You have had the same gramis as a prose, cut soldier as sales.
Speaker 14: Okay great here. Hey guys, Thank you very much for the time and have a nice weekend.
Speaker 2: Thanks right. The next question will come from Steve Emerson with Emerson investment group. Please go ahead.
Speaker 15: This is following up on Greg's inventory question.
Speaker 16: What kind of ratio of inventory to revs?
Speaker 17: Do you think is appropriate? Let's say, end of 23, end of 24, has component deliveries, normaliz and availability.
Speaker 17: Improves. And then, as a corollary frazier, you mentioned youyour're seeking heart asset lending. How much are you seeking?
Speaker 17: And I would imagine traditional, low cost.
Speaker 17: umindustry finished goods or inventory financing should be pretty available.
Speaker 11: To Michael. I'll start then So on on the.
Speaker 8: I think the answer we gave Greg is really without getting into future financial numbers because we have not issued guidance and our position is till. We had cash flow positive cash flow. We 're.
Speaker 8: And given all the supply chain issues and other things that we've battled over the last couple of years and' probably been a good call. But it il we're at that point. It's hard to give us hard ratios. But it really does come the inventory in relation to cost. A good sold is impacted by the repeat deliveries to existing customers. So whether it's a workhorce whether it's existing voters or on the school bus which we've been holding inventory for the school bus sector. So if I can take a quick aside on that what I mean is late last year early part of this year when.
Speaker 4: Brendan Michael, jo.e, we're talking to school bus customers. They were off and looking at the programs and saying well I, the feds, are going to come out with some, some money for these, So I'm going to wait.
Speaker 8: And we had that with the school bus set aside fundingin California. We had that with the feds. Now those programs are open but they're not approved. So we're now waiting for approval letters to get out and the next tranch will be what deals that we secure, either in California specifically or off the e p- a program that's fall. Can we move quickly relative to the infrastructure that they're putting in place at either a fleet operator, a school district? And so we have the initial inventory for a number of those early delired.
Speaker 8: And so it's California. We're going to push to get some deliver this summer and the e P a will be this fall and that will help change the dynamic between the inventory we're holding and the cost of good. So right out of the gate. Same thing with workhorps. You know brennan and the team of been working on building up- you know we didn't just sign the deal and announced the deal, I believe that- and the February , early March with workhorce- you know brennan and the team- we working on supply chain and securing aspects of that which end up in the work in process in our inventory. So that is.
Speaker 8: You knowthe first part of the relief of that is the deliveries that we talked about in this presentation that are occurring this month. You know, I know brennan this week was, was showing a number of things that is organizing for those delivery. So know, it's pretty exciting for us that sort of the culmination of all those not just months but quarters of work that are reflected in an inventory. So, with workhorce deliveries and get you and in effect liquidating the inventory we've been holded for folks that are're simply waiting for, take advantage of programs, you you're going to see us rightsizing our inventory.
Speaker 8: And leading to a better mix between the inventory we have and the cost of good Sal. So, without getting into racios, that's probably the best explanation I could give you. Steve on that part of the question.
Speaker 8: To a better mix between the inventory we have and the cost of good salt. So, without getting into racials, that's probably the best explanation I could give you. Steve on that part of the questionno.
Speaker 8: Between the inventory we have and the cost of good Sal. So, without getting into racios, that's probably the best explanation I could give you. Steve on that part of the questionso.
Speaker 17: Let me to you a little further one analyst is using a estimated four million in inventory March 23, versus revenue of twenty six million.
Speaker 17: Which to me sounds absurd. And then the following year, 51 million inventory for 46 million revenues, which to me again.
Speaker 17: Is totally absurd. When normal manufacturing you think no more than 90 days of inventory or inventory in the out year.
Speaker 18: Going from 53 to 15 million. So So that makes a world a difference on financial viability and any better color. Or again the question of how much inventory financing.
Speaker 17: Do you believe this apparth gr, that you're seekingthat? Well, I think Michael can get into the details of the numbers you cited. But if I understood those 26 million of slles, if we just pret illustrate purposes, said that it cost a goods sold is two million and have four million of inventory, that suggests that there's like two years that.
Speaker 8: Makes no sense at all, but what does make what we have said on this call is that with the workhorse, the September thirde quarter that we're in right now is the initial ramp.
Speaker 8: And into the December and subsequent quarters where we're getting into the 200 a quarter which is a simple map of 1500 in the order. Divide by the seven quarters that the deliveries relate to is more than 200 a quarterso you factor that in per quarter, along with school buses that have sort of a similar type Ram. You know some initial deliveries this summer for these various funding programs, and then increasing this fall is layer that on along with the boouchers. That's a totally different run rate and y than what you just outline.
Speaker 1: Yes So Steve. Just very quickly. This is Mike seaford. I would echo what phraseer just said- and two year questions. In regards to financing, I I'm going to say what we have said on prior calls and that we are in discussions with a number of different parties. Those would be traditional banks as well, as you know, other non day financing groups which you, at this point, we're not able to speak to specifics and certainly sort, when we have, you know, something that we can discuss in more detail. We'd be happy to speak to this in the market, but at this point it's a premature.
Speaker 11: The next question will come from John O. with American research, Please go aheadgood morning gentlemen. Mention the capacity of manufacturing 500 buses.
Speaker 11: The next question will come from John O. with American research, Please go ahead. Good morning gentlemen. Mention the capacity of manufacturing 500 buses in a year.
Speaker 19: And at 35 thousand, that's $175 million in revenues. Could we be seeing revenues in excess of two million a year? A year or two from now?
Speaker 9: that'si. I like the way you've frame that, John . That's, and the only correction I'd make is that you D need to blend in the a with the D. So if you took the way that brennan and Mike, when I look at this is that our M's RP on our nano BEAST is under 300, our type D is over 300. But if you have a mix of a and D in any given period then on average, 300 thousand number is a fairly reasonable number to apply, So 500 in terms of our target by the end of next year.
Speaker 8: On an annualized basis times that three thousand would be 15 million number of of revenue per ano, So absolute. And adjust on school buses, not on any other business that we have in front of bus.
Speaker 19: Governor of Justice of West Virginia announced that new steel state-of-the-art factory. Is there going to be an incentive for green power to use West Virginia suppliers, and will such steel factories help you with your supply line?
Speaker 9: Well you should go with either myself or brennan on our next trip, because we're in the car. We're like Oh, you know, we're driried by some of these the, when I mean there's some big, big facilities there. Know, the stamp which is risk across the street from us in world war to they manufactured almost all the ammunition for the, the various U's services. So know, there's some big facilities there and there's several that we have our eye on once we get established and once we get bill top going back to governor justices comments.
Speaker 8: It's a great state every time we're there. It just it just reaffirms our decision to not just have a facility there but, more importantly, a partnership with somebody's going to really help us up.
Speaker 8: You know when we did the D C event, we have to give know not to Joel mansin's office and you know senat or capital's office that they were super helpful in helping us get that set up, which brought so many different parties- including know both parties from both sides of the aisle- into an event that resonates with everyone that has you know, in particular schoolchildren. So you know he got getting back to the governor. He's, you know he'-s a big fan of what we're doing and he really is seess a need to to push the kind of business and industry that we, that we're in.
Speaker 7: Yes and John , we are currently customers of constalllium. We use constelllium aluminum for the bodies of all of our school buses and there is a constalllium facility that sells manufactures the aluminum that we use in our the building of our school buses in West virginiaso the answer is yes, we are ready.
Speaker 5: S going to be leveraging some West Virginia manufacturing. Can you gentlemen, please comment about the JUPITER wagon agreement in India? Jupiter just announced that they have gotten a significant contract for the infrastructure for mass transit system. Do you have any comments to your new relationship with them?
Speaker 11: Well I make one other. You brennan, can speak to the. I mean, we're very actively involved in know, getting our right hand drive moulligated to their market and know the initial demo. Let brennan speak to that. But the other thing that is that they just went public on the Indian marketts, So know they. They really increased their profile and and so what you've just referenced, along with their capital market strategy, is all new in relation to when we originally entered into a relationship with them to move for right hand drive B V Star cabin chassis.
Speaker 5: Yes and frazieryou just really hit the nail on the head. We are still working on the vehicle specifications, finalizing the build and setting up demonstrations for the first vehicles, the prototypes that are going out in the market to demonstrate. I expect to have an update through the market soon. We just don't have that information right now.
Speaker 20: Do we have an update on the Forest River dealthe Forest River deal is we. Forest River has purchased five of our vehicles. They have not completed the integration of a new body onto the green power capab chassis.
Speaker 5: When that integration is complete and testing validation goes on, we'll see where that goes, But right now the we're still working with force River on fully integrating. You know they had to develop an entire new busust body for cab chat So that is, I think, has taken longer than at least we had helped. But I will update you as soon as I have more more visibility on where that relationship is go. But I think I think it the highlights in our acquisition ofaply chark body.
Speaker 4: And you know what next steep there will be. You know when they've got the five done.
Speaker 1: My last question is also a statement. I want to congratulate you on your fundamentals being vicosedal and manufacturing plants portable as well's in West Virginia, and being able to reach out into the marketplace and diversify your product line and offer a CS to even the people like workcourse.
Speaker 21: My last question is also a statement I want to congratulate you on your fundamentals being vicoedal and manufacturing plants portable as Wells in West Virginia and being able to reach out into the marketplace and diversify your product line and offer a CS to even the people like workcourse. My last question is.
Speaker 19: Is the institutionions? Are they recognizing increase in fundamentals, that is, the institutional interest in the green power stock increasing? No, they don't recognize it, but yes, we've seen a significant.
Speaker 4: Uptick in our conversations and we do from time to time deal. Non deal room chosen the various web utilizing various web services and and attending conferences. But the last couple mons is seen. A very renewed interest in what we're doing is. People can see that that our company is going through a transition from what we the quarterly deliveries to a very different model in the coming year. Going back to your your comment about the manufacturing is appreciate your comment in that regard and also the fact that what we're doing.
Speaker 8: Is our. We have a view that you know, if you build a manufacturing facility and spend hundreds of millions of dollars, at the end of the day that's coming from shareholders. you- you're a big chunk of that is is going to come from the equity market. So you, brennan and I, we we spent a lot of time looking for a factory ready facility that could build a decent number of units. But the key is, we can do that same thing somewhere else to.
Speaker 8: So what we're? This creates a center of excellence for school buses. It gives us the East Coast distribution. The state of West Virginia is literally South of the state of new York, which has almost five thousand school buses out of the 485 thousand in the nation. So all those things.
Speaker 8: Speak to how the location we've chosen there, but also the building and the partnership. But we can also, in due course, do that elsewhere.
Speaker 8: And but ultimately a number, a year or two years down the road. That same sort of approach can be duplicated outside of North americai have one last question. Quite you, or I believe it was in 2020 1, your praiser- was asked a question in regards to battery and range of battery.
Speaker 14: And I, I believe, a frazier. I excuse me, I'm not trying to verge in your mouth, but I believe you said something along the line that you know we want to find the best quality battery with the best range that's on the market. Are your vehicles being set up to where you could just replayed those longer distance battery in themball? Start and running can expand on this is that we use a chemistry: L FP, lithium ferisphosphate. Coincidentally Tesla, which has traditionally used lithium EON approach with their batteries.
Speaker 4: When they hit the the market in China with their model 3, they determine that their cost structure was upside down. What their approach and what do they do? They went to a Pete for their model three So it's stable. It gives a great charge discharge curve in ter know and it gives a charging cycles that we need. It's still a little heavier than some of the other chemistries but it frankly know brennan and I, every time we talk to people were talk amongst our group know just we we're always happy with the approach we've taken with the CAT underlying chemistry in terms of who does manufacture those.
Speaker 4: Is for us it's key to make sure that you know we we buy a lot of cells that go into the two packs that are make up our the hundred and 18 kilowatt hours thatago into V Star platform, and so it's absolutely critical that they have you the same. You know the more they're the same, the more reliable they're going to be and the more reliable the charging and discharge is going to be, as opposed to having you know one or two cells that are off or how to stack in terms of the voltage. Know now you have a problem from day wk.
Speaker 8: And we've learned that in terms of our own experience with some deployments where you work it back and you determine that you know that the the, the consistency of the spec was you was off on one or two cells that are that we install in our battery packs. And I think brennan. And you know I WOn't nameim all the different team members, but other's.
Speaker 8: You know one in particular that works with Brendan that you know they've just done a great job of managing supply chain. So that our costs on the battery cell side just hasn't exploded which some of our competitors have encountered hasn't you can see and their numbers or there cost. A good sold is equal to their revenue and they're not able to generate a D P. So there's a lot of that goes into the decisions. But it's the the truism that we stick to is that having a really highly reliable battery cell.
Speaker 4: That is consistent with each cell that we bought. Yeah and John , there I is exactly right. It's the reliability factor. You know you can have, you can talk about range all day long, but in the commercial space the vehicle has to charge and discharge efficiently and reliably.
Speaker 19: And before we make any changes to what's really working well, we have to do a very involved validation. So we are validating higher capacity, which is higher energy density, and higher power density batteries.
Speaker 5: But we have not made a decision to change that battery yet because we've not validated it to the point we're comfortable.
Speaker 19: Just to give you an example, we have e stars that are already pushing two thousand miles with losing less than 5% of initial battery capacity.
Speaker 19: So we have EV Stars that are getting very old and well used, that are in the field, that are run every day and basically they're either on the charger or driving customers.
Speaker 19: Making money for somebody, and that is, from my perspective, So compelling from a cost and reliability standpoint that it's going to take a lot for us to make any quick changes. We don't want to chase the range.
Speaker 19: Drag it as they call it in our space. We really want to make sure that we follow reliably safely all that the most but to answer your question. Yes we do have a form factor and a platform where we canchain adds just pop in a different pack. The battery management system is in the pack and.
Speaker 19: Not those in and have longer range. That is, that is a possibility and something we can do. Yeah, just you didn't askwer this question John , but just to to extend the discussion from the actual battery at what that means, translating it to the real world application. Is that our e Star platform is? You know it could address other classes, what addresses the Class four market and that has a growth volume of weight or T V w R of £14.3 thousand or 6500 deels. So that's sort of your top level.
Speaker 4: The curve weight. If I put it F it down, here is: is is a number that gives you, before we put anything on as far as the body, on that U Star cvin chazsiyour platform gives us £7.9 thousand to work with.
Speaker 8: And so you put more batteries on that 7900 is less, but that's the trade off our competitors. They don't have a at a platform or chassis that they built from scratch. That is a clean seat or skcaate Board design that optimizes all of that sort of stop. It's in many cases in the school bus space, for example. Most of our competitors are buying a e four 50 from four that is competing with our type a nano ies. We build our body with an aluminum frame. It's very lightweight and it's it's got a better strength, it's safer, and so we put a body on. That gives you, at the end of the day.
Speaker 4: A maximum capacity where we can have a wheelchair lift in with a rear 80 rear curubside door with different seating configurations. We don't have to worry about limiting that. We can do all that in our nano BEAST and still be within that gth volume weight with the number of passengers that we're able to offer. So that's the combination that we are able to deliver with the V Star platform is we can give the combination of range as well as the the payle.
Speaker 22: Well speaking of quality believe. It was two years ago when green power had their bus outterunerating.
Speaker 14: And I believe two years ago. You are the highest rated alterated bus from all your competitors. I believe you are.
Speaker 14: 10 points higher are. Maybe it was eight points higher than your closest competitor, even though it's been two years. Does anybody have a higher outtererating on their bus?
Speaker 14: Higher or maybe it was eight points higher- than your closest competitor, even though it's been two years. Does anybody have a higher altererating on their bus than GP?
Speaker 1: I don't look recent But I know what I be. I checked. I check regularly. I still believe we are the highest score that they published so far of any medium or heavy duty must of any type.
Speaker 23: Thank you for sending well. Well, I think. I think you have so much stuff going on in your company and it's interesting when I see these other rating agencies. They don't seem to look at the entire picture in your breadth and depth of your business model.
Speaker 14: And so I appreciate your time. Gentlemen, thank for answering all my questions. Congratulations on your increase in fundamentals, and you guys have a great weekend.
Speaker 8: Thank you John and I note that we have no other questions which is great because we have a hard stock shortly but we appreciate everybody who participated as well as listened in on our call and.
Speaker 8: I think collectively we can say: stay tuned. We have a number CAn't wait to be updating our stakeholders in terms of those initial deliveries and the successes we see on the various school bus activities as well. So once again, we really appreciate our shareholders or stakeholder support.
Speaker 1: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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Speaker 24: For call. Please hold. An operator will be with you shortly, course call. What conference would you like? Hi, green power? mourethank you. Your name is pleaserac Al snowand your companyi yearar upthank you a place to line on hold until the call begins for green powerthank you.