Q1 2023 GreenPower Motor Company Inc Earnings Call
[music].
Good morning, and welcome to the Green power Motor Company's first quarter earnings conference call all.
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I would now like to turn the conference over to Michael Sheaffer, Chief Financial Officer. Please go ahead.
Thank you. This is Michael <unk>, the Chief Financial Officer of Green Power Motor Company I'd like to welcome everyone to our call to discuss the empowers financial results for the period ended June 32022, I'm here today, with our Chief Executive Officer, Freezer Atkinson, and our President Brendan Ryan.
During today's call, we may make comments or statements about our future expectations plans and prospects may constitute forward looking statements for the purposes of the safe Harbor provision under the private Securities Litigation Reform Act of 1995.
Well Canadian Securities laws.
Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors included those discussed in our quarterly interim results in MD&A filed on SEDAR and Edgar.
In addition, these forward looking statements relate to the date on which they are made we anticipate that subsequent events and developments may cause the company's views to change green.
Green power disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise.
Also during the course of today's call we may refer to certain non <unk> financial measures reconciliation of these non <unk> measures can be found in our MD&A filed on SEDAR and Edgar and Theres also located on our website at Www Dot Green power Motor Darko.
I will now pass the call over to clean power CEO freezer Atkinson.
Yeah.
Thank you. Thank you Michael one.
I wanted to start off by talking about the challenges facing our business and what we're doing to address this.
First we've encountered unstable shipping where some savings or routes have been canceled as well as a reduction of available slots. We started to split shipments you lives ports on the east coast for sales in that region and are exploring other means of reducing shipping times.
Second we earn counting all we are also in countering delays with the delivery of certain parts and components.
For example, one of our suppliers for our onboard charging systems has been taking longer to ship as we ramp up production with a robust supply chain with multiple suppliers. We are able to adapt where we see these trends that are going to lead to delays.
This is not as simple as changing a vendor as we go through a rigorous testing animal that <unk> process.
In order to incorporate alternatives.
Third increased funding for voucher and incentive programs has led to longer approval periods, we prioritized our processes to optimize the timing of boettcher approvals in terms of our delivery.
Opportunities.
Our team is doing a great job of meeting these challenges head on and adapting to the changing environment that we operate in.
I believe that the steps we've been taking will be seen in the ramp up of deliveries to customers. This.
And the next couple of quarters.
Let's shift the discussion to our current strategy as.
As we outlined on our update call in early July we moved to a go to market strategy with the school bus group commercial trucks, and vans group and passenger vehicles and buses we.
We see multiple growth drivers for each of these.
For our all electric commercial vehicles. There are recent federal programs with funding that will help accelerate adoption of these vehicles.
This is really a first for the commercial side of the business as many of the programs to date have focused more on school buses and transit buses.
For example, the recently passed inflation reduction Act features numerous programs that will benefit green power to highlight one of these commencing after December 31st 2022, there will be a $40000 tax credit for class four vehicles are higher D V Starr platform and models.
Our all class four vehicles.
On July 11, 2022, Canada introduced over $500 million of incentives for medium and heavy duty zero emission vehicles.
We have 13 of our commercial E. B stars with shuttle buses listed as eligible vehicles by transport, Canada for this program with point of sale incentives ranging from 75000 to $150000 per vehicle.
They are also permitting that they these can be stacked with other funding programs up to 75% of the purchase price of the vehicle providing for a very compelling net sales price for the AR 13 vehicles listed under this program.
Next the school bus group is able to draw numerous funding programs, which we have talked about in the past but.
To quickly highlight a few of these previously announced D. P. A school program with 500 million for the purchase of all Electric school buses are kicked off this year for the first five years from 'twenty to 'twenty two to 'twenty 'twenty six.
California's 130 million dollar school by set aside program for this year with the NEC funding are already allocated for the next two years.
California Energy Commission or C. E C funding for qualified air quality management districts as well as the ongoing voucher programs with New Jersey, California, B C to name a few.
I'll now turn it over to Brendan Ryan President Green power to talk about the many highlights current activities at the company.
Thank you for Asia.
Recently, we announced the acquisition of Lion truck body.
Our regional truck body company located in Torrance, California.
This combination of green power as EV expertise and the advanced body building experience of Lion truck body.
Giving green power competitive advantage.
This not only results in shortened lead time.
Also truck bodies that are optimized for EV trucks.
Here's an example.
Our soon to be delivered east our cargo plus refrigerated truck.
Has more payload.
Longer range.
Lower cost factor.
And lower overall price and.
Any competitive EV refrigerated truck on the market as a result of this combination.
This is just one example of what we can expect with the close relationship.
And collaboration between light truck body and Green power Motor Company.
Our commercial truck strategy of selling our truck products through dealerships is being executed by bringing dealerships online.
We have dealerships in California.
And are working on additional dealerships throughout the USA.
And we are very close to making those dealerships.
Active.
As we have already demonstrated with our workhorse deal. We are also pursuing a wholesale approach and that we are selling our EV star theses the companies.
That need efficient ready to go platforms upon which they can add their bodies.
And then market the completed vehicle themselves.
Also our EV start cargo 22 foot delivery van.
Practically jumping off the shelves.
We have just started deliveries and are already getting follow on orders from these customers that have received at least one unit.
We have 40 units already committed to customers with P o's and that claim as the first tranche of vehicles that we built.
And we are getting ready to start our next tranche of vehicles any day now.
Our best and our newly introduced Nan obese or school buses, which are being received with amazing fanfare.
As we demonstrate these vehicles across the country in person.
We have multiple state contracts for both models and our nano Beast has recently received best New Green Technology Award at the student Transportation Network Expo in Reno, just get last July .
Our dealer deliveries have started for both units and the Green power factory in West Virginia has been vacated by the previous occupant.
And we have taken possession of the building.
We are currently busy outfitting it to produce school buses.
And finally Green power began manufacturing its first new tranches of EDI Star Ccs for the 1500 unit purchase and sale contracts and workforce.
During the quarter Green power coordinated with our suppliers.
For delivery of key components and initiated production of 100 vehicle tranches.
Of EDI stars he sees.
By the end of the quarter.
The first 100, EV Star Ccs with near completion and the next tranche had already entered production and key components for additional tranches have been ordered.
The first deliveries to workhorse began in July .
With follow on deliveries made in August .
Green power. His team is working closely with workhorse to assist with the integration of the <unk> six.
Now I'd like to turn it over to Michael Seeker.
CFO of Green power to talk about our first quarter financial results over to you Michael.
Thank you Brandon for.
For the first quarter ended June 32022, Green power reported revenues of $3 9 million, which was an increase of 29% over the revenue of $3 million for the comparable quarter in the previous fiscal year.
Revenue for the first quarter included the delivery of three Beast type D. All electric school buses to even start plus one EV start cargo plus five EV Star 22 foot cargos six television stars in four <unk> Star cabin chassis.
Gross profit for the quarter was $1 1 million or 28, 8% of revenue, which compares to 850000 or 28, 5% of revenue in the first quarter of the last year.
We anticipate that our gross profit margin will be lower than this level for the remainder of the year as we expect that the majority of <unk> sales for the rest of the year will be under higher volume contracts and that we will have increased sales of school buses, both of which will be at lower gross profit margins in the current quarter.
Our cash expenses during the quarter were approximately $3 4 million, which was lower than our prior quarter cash expenses of $3 $85 million.
This was largely due to several onetime cost during the prior quarter.
We anticipate that our cash cost will increase throughout the year due to an anticipated increase in salaries rental expense and lease payments interest expense and other costs related primarily to our business expansion.
We finished the quarter with $28 3 million of working capital, including $5 4 million in cash and restricted cash of approximately $3 9 million of accounts receivable at approximately zero point $8 million in land held for sale.
As well, we had approximately $24 6 million and finished goods inventory at the end of the quarter, which was comprised type a and type D School buses a full range of D V stars and several class eight vehicles.
Our increase in inventory during the quarter was primarily due to investments in E V Starr Ccs.
That will be fulfilling our contract with workhorse.
As discussed previously management remains focused on working towards securing a solution to a near mid term capital needs. While managing current production requirements. We've been prioritizing our working capital towards strategic projects that we expect to generate near term cash flows and have been successful in improving terms with certain vendors.
To limit our working capital investments.
Operator, please open up the call for questions.
Thank you we will now begin our question and answer session to ask a question you May Press Star then one on your telephone keypad, if you're using a speakerphone. Please pick up your handset before pressing the keys.
To withdraw from the question queue. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And our first question will come from Chris Souther from B Riley. Please go ahead.
Hey, Thanks for taking my question here guys.
Maybe just talk a little bit about.
It seems like the production ramp is going quite well across the board with lots of different.
Nichols that you've now got an inventory can you talk a little bit about where we have visibility on some of the near term built vehicle deployments with purchase orders.
You seem to stay on that.
We have good visibility on the <unk> side with workhorse.
Maybe some of that these customers are kind of waiting for some funding clarity in the back half of the year here.
And also there has been.
Got a buildup of the EV star kind of regular.
So maybe just kind of mixing and matching.
Kind of near term visibility by byproduct line I think would be helpful for folks.
So thanks for the question, Chris So I'll try and be brief.
Probably spend half an hour going through each and every model line.
But starting off with the school buses.
For the type B and the recently introduced type eight nano east is that we have more than 40 vehicles in finished goods are presently.
Our priority is to ensure that our expanding dealer network.
That we're in a position to sell the necessary vehicles that they require for their their their deployments and their demonstrations. So that's priority one which we expect to substantially complete in the next couple of months.
And then on the heels of that.
With that our finished goods inventory, we would then be focused on customer deliveries. So we have.
Number of vouchers and funding mechanisms are our funding programs.
Supporting customer sales with our school buses.
But as we work through those are initial priority was around getting those.
That.
Finished goods inventory into the hands of our dealer network because that's what is going to be the big driver of sales.
Sales for us down the road in that group. So we expect that to be substantially over the next.
Two quarters being the quarter, we're in September 30, and the December 31st quarter.
Cargo vans that are Brennan referred to we delivered five in the June June 30 quarter.
And we have approximately 40 of the cargoes in finished goods inventory as of today that we're working at pushing out to customers over this current quarter with the balance of that 40, approximately 40 into the December 31st quarter show over the.
Next couple of quarters.
And then for the cabin chassis as you referred to there said our primary focus is to ensure that we're able to do.
Deliver the EV star cabin chassis to workhorse.
That as quickly as we can so that's the priority for that component of our finished goods inventory and then that leaves us with a number of regular EV stars.
<unk> as we call them blanks, where the seating hasn't been installed or with specific seating for our Mac seeding our VIP seating in our rear ADM configurations.
We have in stock.
With many.
That are specifically allocated to vouchers and various programs for adults.
No.
So in summary, the finished goods at our that Michael It summarized in our MD&A is in each of these different groups.
We have.
Several priorities in terms of where where these will be deployed but for our go to market strategy in terms of our groups.
The majority of these are going to be deployed in the next couple of quarters.
Got it Okay. That's helpful and maybe just shifting gears to West Virginia.
In the past you've kind of talked about.
Having kind of low capital needs in order to kind of set up production.
Can we get off to the races, maybe just talk a little bit about where that stands as far as your expectations for where.
Capital uses as you're as you're setting up the facility yet.
Turning to ramp production.
Would be it would be great for an update.
Well, we're the month of August is really more of a move in a we are working with the state of West Virginia and the city in terms of.
A related issue.
Our related opportunities I should say for such as ensuring that everybody gets.
There are applications in with E. P. A program, which are the online applications close at the end of this week.
For the EPA funding as well as.
Ramping up a number of initiatives, we'll be talking about over the next number of weeks.
But the as far as production goes our first.
We will be doing the first.
Roundup production of nano Beast starting in September .
That's a fairly light in terms of the Capex, we're not having to.
To spend a lot of money to get that first tranche coin and then over this fall will be where all the capex is.
Deployed for the various equipment requirements. So we can expand into the production for the type D.
Later on this fall slash winter.
So that's the current plan and and.
As I say, we're expecting to to.
To get that production going in September for the type a nominal piece.
Okay.
Got it so when would those type of areas start to kind of roll off the line.
Assuming that timeline.
While we are being careful about setting timelines on that until until that production starts and the reason I say that is we have the cabin chassis. There for that initial production, but we're still waiting to get all of the.
Yeah, all the components and assembly parts of body and so on that will allow us to commence.
The production for those.
Those vehicles so.
As soon as we start then we'll be in a position that we can give a timeline as to the expected.
First production, Brian Ron that will come off the line.
Okay that makes sense and then just last one.
We're starting to get kind of more visibility for.
Workhorse.
Some of these other agreements in the school bus side.
When do we think we're going to be in a position to start giving kind of either quarterly or annual guidance here is that.
A quarter or two away is that next year.
Just any sense on kind of where we are as far as gaining more visibility there.
Well, where the comfort level is as we're getting more comfortable with that.
Where we are with the finished goods, but not as comfortable in terms of what's.
You know, what's coming down the pipe in terms of the follow on quarters into March and June so with the delivery you said that I was talking about and the activities that Brendan was.
Commenting on earlier is that if we're able to to get the substantial number of those style mantelpiece mb's deployed M. A cargo vans as well as the Ccs deploy that.
Principal focus on workforce and then a secondary focus on other opportunities with Telus cabin chassis were able to accomplish those three then.
Thank God. This later on this fall where you'd have a much better visibility on what we're able to forecast off of.
I think our approach to date has been that until we until we can get there.
That's.
And to move through somewhat of the Lumpiness of the.
The customer orders voucher approvals deliveries, which has been a big impact on us in the past.
With this higher level of deliveries across these different categories will give us the ability to provide for our guidance on deliveries that going forward.
That makes sense appreciate the color there I'll I'll hop in the queue. Thanks, guys.
And the next question is from Craig Irwin from Roth Capital Partners. Please go ahead.
Good morning, and thank you for taking my questions.
Frei here as we're talking to different.
School districts participants out there about the.
The vouchers that we're expecting from from EPA.
One of the biggest concerns is timeline for delivery of the buses from the different vendors out there.
I'm hearing that other vendors are talking about one year and possibly two year lead times.
For delivery of electric school buses.
Can you maybe.
Discuss for us what a what a reasonable scenario.
Scenario would be if someone does get vouchers.
Select Green power.
For the Beast or the mini Beast.
And what your ability might be to flex to serve that.
Given given the issues that are still very real and supply chain.
Great question. So I think I I think we should break that down into two components.
And the first being that.
The E. P. A program doesn't have the same level of certainty of many of the other school bus program. So we.
Being able to to leverage or our customers have been able to take advantage of what I mean by that.
Is that for example, the California Energy Commission, our CEC funding with air quality management districts.
Once you've lined that up and that's been approved then you have certainty in terms of your funding partner to be able to move forward with your purchases with the E. P. A program. They are they are taking the submissions.
The expectation is that the submissions will exceed the available funding. So if and there is a requirement for the funding to it to allocate to each and every state that has at least one applicant. So the expectation is that there won't be 100%.
Seed for the applications that go into that funding. So you may get to your your deal are approved you may not and so that's the the uncertainty with the EPA program that we won't know how it unfolds until we get to October possibly November .
In terms of when they start to push out the contracts for the funded for the EPA funding when.
When they do push it out if the applicant to successful and is moving forward with the green power B.
<unk> NAND will be used under the program than than the contracts once they are assigned.
The program allows for a two year delivery cycle.
We thought what we view as being able to properly or fully leverage. This program is being in a position to deliver those first couple of vehicles and so an applicant that is lucky enough to get up to the maximum of 25 vehicles under the program is it.
Doesn't make sense to deliver all 25 at once because they're not going to have the charging or the infrastructure set up they're not set up to train that number of people across the organization.
It.
We'll be much more.
Of a staged process. So what we want to do is to make sure that for a lot of these customers were able to lever those first a handful.
And if they don't materialize, we've got as.
Alternative.
The various other funding programs that are in place for sales that have been.
That we're that we'd be working on in other states such as or other jurisdictions such as for the state programs in California. So the summary is that we're not.
We certainly understand that some of our competitors have.
Have backlogs are indicating that their delivery time is 12 15 months or even even greater.
But in our case, our focus has been on communicating to our prospect of customers that are.
Is that getting the first.
A number of eastern nano Beast dips.
Deployed with them and sort of working out the Kinks. If you will is a much more advantageous for both parties in terms of a.
Really a optimizing a full rollout of the program and being in a position with finished goods inventory helps us achieve that goal where others can't.
Understood. That's a healthy position. So my second question is about pricing in the market for school buses.
So.
Bluebird.
Has had to put through 25% pricing in the last year.
Just to get margins to hopefully breakeven over the next couple of quarters.
This is obviously due to the heavy steel content in their vehicles.
And.
<unk> cost increases.
Which we all know have been really dramatic your vehicles are made differently.
<unk> has a different bill of material and he is a very different manufacturing approach.
Can you talk about the pricing in the market and whether or not you feel that it's necessary to put through 25% price.
And maybe does this help you be more competitive out there in the market than some of your peers.
Well it turns out.
Sorry go ahead Brendan.
Yeah, I was just going to talk quickly to the strategy of the Green power users also.
So Craig a couple of the most the most expensive component.
And easy right now if you if you break it up into systems, let's say the batteries. The single most expensive thing in any one of these vehicles typically comes to almost half of the vehicle cost in some cases not all.
And not in school buses, but in some of the other vehicles with larger batteries.
But what great Green power only makes evs.
And we have battery commonality cell and module commonality across all of our platforms.
So that gives us a much.
Better let's say.
Purchasing advantage.
Lower cost factor and better manufacturer ability.
We also are we use one brand that traction motors across all of our lines. So we get more competitive pricing because we just buy a lot more of them.
So I would say there is some upward pressure on cost.
If you look at what it cost us to build vehicles.
But because we're not just getting into the EV space right now Green power has been at it managing our supply chain and our vendors.
So really much longer and these guys have been.
Longer than these guys have been making evs.
We believe at least for that we have a better pricing.
Cost factor.
And we are not announced any price increases and we do have.
Statewide contracts.
<unk>.
We are comfortable with our existing pricing right now on our school buses.
That we submitted to the.
The other thing Greg I think we should consider here is that.
Our use of aluminum has really helped us out.
Where steel prices have gone up immensely.
And aluminum did for bit, especially on the <unk> and some of the other big exchanges, we're finding that aluminum stabilize relatively quickly and with our can sell Liam.
Our aluminum suppliers costs being relatively stable, we've not had to make the increases some of our competitors have.
Now I'll turn it over to <unk> for his comments.
Well I think the only thing I'd add is that in.
You probably brought up one of the.
The most relevant aspects of our belt Craig is that.
Our beast at our nano based in our EV star plus for that matter. All three are built with the aluminum extruded.
Extruded aluminum body with a yes.
With a Uh huh.
Basner approach that gives it an incredible strength and some additional flexibility you wouldn't normally get to in terms of a traditional build but the most important thing is it's lighter weight.
It's stronger but later so we don't have to use as much materials as our competitors do and none of our competitors have a build like this and so that's a that does give us a bit of a competitive exam.
Vantage on that.
And as part of the reason that in the case of the Beast.
We're able to have a product that.
With a 40 footer.
Can accommodate up to 90 seats for passenger seats for.
In that vehicle West, which is best of class for any any school box of that land. So.
So that's.
The combination of those two has allowed us probably a more stable cost structure to manage.
Then some of our competitors.
Understood. Thank you for that.
So next about the cabin chassis and got your traction with workhorse.
Not to ask specifically about workhorse, because I'm sure there's confidence confidentiality provisions there, but you know your deliveries of cabin chassis buses cabin chassis units I should say are in the single digits right.
And you know there is an opportunity for a few hundred a quarter, maybe maybe more.
Can you talk about the ability to ramp deliveries in cabin chassis.
What would it take for us to start seeing a couple of hundred units a quarter.
Where are we in that cycle is this something thats fair potentially towards the end of the calendar year.
Well I'll start off with what tax you Brendon was talking about earlier on the earnings call, which is we.
We are building in tranches of 100 or.
So and as far as your single digit you're quite correct that I believe that was the delivery in July but we also had a.
Follow on in early August so yes.
Yes.
Ah is a sort of double what that delivery in July was.
But on a more macro level is we build in tranches of 100 and before we can actually or not before we can but before we do build the the actual cabin chassis is that we need all of the significant and key components.
In hand in our parts supply on the production line before we start that so then we have to back up to make sure. We've got 100 battery packs that we have the 100 traction motors and we have all of the electronics all are there before so there's a multiple stage of production.
That is occurring is that there's one level that our team is managing.
When I say team, we've got a group of six people that are.
Full time focused on this where the they are managing the all of the key components up to the buildup of cabin chassis.
And so the <unk>.
<unk> said at the end of June we were substantially complete on the first hundred.
We're starting the next hundred in terms of the actual cabin chassis built but we're also on the third hundred working on battery packs and are the key components and the fourth hundred tranche and the fifth hundred tranche with.
In terms of supply chain on electronics and many of the other key sub components that go into the ultimate built so it's it's a very much a layered process that is that we're working through that will result in healthy the increased deliveries.
Over the next quarter or two.
Yeah.
Understood understood well. Thank you for taking my questions congratulations on the progress and the great positioning.
I'll take the rest of my questions offline.
Thank you and then that Christian is from Tate Sullivan from Maxim Group. Please go ahead.
Thank you and then following up on the Workhorse Brendan mentioned earlier in the call the integration of the workhorse EV Ccs on the workhorse side, what does what does that entail.
Testing the Cabot will not I'm not sure it's more putting the cabin on top of your chassis can there be.
Any determination from workhorse in terms of when taking delivery of those chassis theses as well too. Please.
Yeah.
That's a very good question.
So the integration is a workhorse has developed a very compelling body.
For these vehicles are there they're W. 750 is a step van similar to what you see EPS or Fedex and now Amazon.
And some other uniform delivery companies what have you.
Driving around.
Delivering packages.
With that as a vehicle that allows the driver to get into the back of the vehicle walking through the cab itself and.
That has a roll up door typically in the back or hedged or in the back and sliding doors in the front. So you can just drive around with the sliding door open and just kind of pop out.
That product has been largely developed and.
The prototypes have been out there and well received there currently.
Finishing up their assembly line and making sure that that's ready for the vehicles themselves and there's there's always tweaking here and there we've introduced a new a new shift or for the vehicle.
That's a rotary knobs shift or are there.
Incorporating those into their newest vehicles and some other improvements.
That had been requested by our by the workhorse folks, including re Gen. Some other things to make the vehicle more drivable for their duty cycles.
That's.
Really the integration we're talking about.
Integration into production line and integrating integrating some new.
<unk> features or some features that they believe are going to be compelling for their customers.
As far as deliveries are concerned we have a delivery schedule that we've been keeping too.
For them and we have our first small number of vehicles coming out.
That.
That theyre getting that they've gotten actually already that there.
Starting to align with.
Before they start.
And the mass manufacturing as it were.
So that's where we are right now they've gotten their first tranche of vehicles.
For the production of the W 750 <unk>.
Green power is sending out some engineers and technicians to work with their teams kind of go through all of those things that theyre doing making sure. We're all aligned with all the processes and procedures.
And.
And then we're off to the races. So we expect to be very very soon we expect their line to be.
Running at full clip, but I will leave it to them to announce when and where they're going to be doing that.
Okay. Thank you and I mean do you have a meaningful ramps ahead for most product lines and can you just talk about number of employees that you potentially have to add to get there or is it.
I mean, both in South care at both did not booked for the school bus School bus facility in West, Virginia, and your facilities before and yet.
Well, we tried to do a a relatively modest employee a ramp.
Make sure we baseline everything we have employees that are in very very.
Essential positions.
With the appropriate training so.
We've already started hiring our.
South Charleston facility West Virginia employees.
We expect to have a.
150 to 200 employees by this time next year.
Just for the manufacturing where school buses.
And our California facility.
As well as.
Product inspectors, you know for our supply chain.
And QA QC folks for supply chain incoming quality control.
Folks so.
I would expect our workforce.
Quadruple by this time next year.
And a nice steady ramp up to that number.
Thank you.
Thank you.
Youre welcome take thanks for the questions.
And the next question is from Tyler deem a tail from BTG. Please go ahead.
Hi, everybody. Good morning, Thanks for taking the question I just wanted to follow up on the inflation reduction comments in the $40000 tax credit I know you gave that as an example can you can you speak to some of the other benefits that you guys could potentially see especially on the school bus side.
Yeah.
Yeah.
Well, where we're still sifting through all of the different programs.
That the bill offers to build by the way 725 pages. So it's.
There's a lot of that.
There's a lot that the the act is pushing through.
But there is funding for infrastructure that will be very beneficial in terms of on the on the school bus side over and above what the EPA program is.
Bringing to market.
But the big Federal driver right now is more of the EPA program.
With the half billion dollars a year over the next five years.
Okay.
So I guess following up on that then so in terms of positioning of the EPA program like how would you stack up so far in your in your experience that Canadian incentive is versus the U S expanding into.
Like how did those two compare for green power.
Well I think the the the.
The Big thing is is that a two.
Two months ago, there wasn't really a federal program that provided funding that was directed to the commercial space and when I say commercial space in terms of.
Kelly.
You know like our EV star cargo plus R E V Starr cargo.
There wasn't a federal funding and what we have found in the past is that a big.
A a growth driver that really.
Guests gets legs is one that is has some federal backing of federal support and isn't regionalized as it has been with the California programs and why.
So in the case of the the Canadian program.
There are only a couple of other class four vehicles, where the suite of EV Star class fours on that program.
We're we're one of the dominant.
Eligible vehicles listed by Transport Canada.
And so that's a program that was just introduced July 11th.
And our we have really been engaged with a number of different fleet operators in terms of taking advantage of that program.
As well as the fact that you can stack. It. So for example, our <unk> star could generate a core or utilize a $75000 voucher incentive on the federal program and then get an additional voucher in the province of British Columbia up to 75% of the purchase price of the vehicle.
So that's.
That's a nearer in driver that we're able to utilize both of those programs today on.
On the.
The inflation reduction act the $40000 credit doesn't kick in for purchases until after December 31, 2022, so it'll be a program that is.
As it becomes a great sales tool. This fall for deliveries that can occur literally on January one 2023 to utilize tax credits.
Okay, great. Thanks, guys I really appreciate the color there I'll turn it back to the queue.
Uh huh.
And the next question will come from John Jay from the quiet Investor. Please go ahead.
Good morning, guys.
So there's a lot of signs of progress, but in view of the inventory is youre going to have to build up.
What sort of money are you going to have to.
Get a hold of.
Might it be in order to satisfy it.
Inventory buildup.
Well, we're pretty pretty happy with the current level of inventory in terms of the.
The different groups or go to market.
Our go to market groups, so as we talked about with the school bus.
Side, we see more drawing down what we have not adding to our maintaining an inventory level.
Same with the cargoes is that that's more of a.
A a timing situation in terms of.
All the the vouchers are aligned with the cargoes are are ready to be delivered so over the next number of months, we expect to deliver substantially all of the approximately 40 cargo van So we have a.
And likewise.
Likewise with the cabin chassis the priority is with workhorse and then.
Secondarily, there's a the other market opportunities that we have to to deploy cabin chassis. So on.
Across the different categories, we expect to be be drawing down.
In a number of these as opposed to just continually adding or building up additional inventory.
So that's the.
The.
First part and then the second part is that if there is a substantial uptick and additional orders on on school buses, which will have much better visibility in the next two to three months.
And with other categories of vehicles is as Michael referred to in his comments earlier.
We have been working on traditional financing structures that.
Uh huh.
In terms of our debt facilities.
That we could utilize with that increase.
Increase requirements. This far this winter.
Very good.
And then just satisfied with where you are in terms of capital.
As the sales unfold.
They will act accordingly.
Exactly.
Very good well thank you I appreciate it.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
So thanks, everyone for.
Listening into a green Power's earnings earnings call.
Sure.
Very excited about our current position and our we believe we have a very strong product offerings in the different markets that we're addressing and as the last caller just.
Asked about are we we believe we are well positioned with product that can be delivered.
To to our customer base has as we work through the balance of.
Various vouchers requirements and and take advantage of customers that now have approved vouchers that we can deliver product for so exciting times for us in the next quarter or two and we look forward to providing our stakeholders and shareholders with our next update.
Thanks for listening into the call.
Thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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