Q3 2022 Lightning eMotors Inc Earnings Call
Greetings and welcome to the Lightning E Motors third quarter 2022 earnings results call. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded I would now like to turn the call over to Brian Smith, Vice President of Investor Relations. Thank you you may begin.
Thank you Daryl and thank you all for joining us hosting the call today are light <unk> co founder and CEO , Tim Reasor, Chief revenue officer, cash Cepheid and CFO David <unk>.
Ahead of this call lightening issued its third quarter 2022 earnings press release and presentation deck, which we will reference today. These can be found on the Investor Relations section.
<unk> at Lightning E Motors Dot com on this call management will be making statements based on current expectations and assumptions, which are subject to certain risks and uncertainties.
Actual results could differ materially from these forward looking statements due to risk factors that are listed in today's earnings release and in our filings with the SEC, which can also be found on our website, we assume no duty to update any forward looking statements except as required by law. Today's presentation also includes non-GAAP .
Measures. Please refer to the information contained contained in today's earnings press release for definitional information and reconciliations of non-GAAP measures to the comparable GAAP measures with that let me turn it over to Tim.
Thank you, Brian and thanks to everyone for joining us today.
I'll start off on slide four with today's agenda I will begin with an overview of lightning some highlights from the quarter.
Session of our progress on managing our supply chain and a discussion of our focus on gross margin improvements.
Cash will then provide an update on products and markets, including an example of how the new incentives landscape stacks up to drive accelerated sales and business development initiatives and David will wrap up with a financial overview.
Moving to slide six a summary of the quarter at $11 $1 million. Our Q3 revenue was a record and was 78% higher than our previous record from one year ago.
Our production team executed very well in the quarter, producing 104 vehicles, which is more than double our production from a year ago.
We are focused from our inception on attracting and hiring top talent.
And we're excited that David Atkinson has joined us as Chief Financial Officer.
David is an experienced technology finance executive and he is already making an impact by building on the solid financial systems and disciplines that Teresa our former CFO instituted and he is now augmenting that with the talent and infrastructure to support accelerated organic and inorganic growth in 2023.
Moving to slide seven we believe lightning motors continues to be the only full range manufacturer of class three through seven zero emission vehicles in the market, including ambulances shuttle buses utility trucks school buses and motor coaches.
We are the only company currently shipping products in all of these classes today.
We started in 2008 with commercial vehicle hybrid solutions and have now shipped over 430 zero emission vehicles with over $2 8 million zero emission miles driven by our customers.
Our strategy to start by electrifying ice chassis has allowed us to produce in volume earlier than our peers advancing our experience with designing manufacturing and selling a wide range of commercial <unk> and powertrains and giving us a competitive lead as we now move to designing and building our own ground up Z Evs.
Alongside our current vehicle and powertrain offerings.
We continue to invest heavily in R&D and engineering to develop and perfect new commercial vehicle platforms, and powertrains and improve our reliability reduce the cost of our current offerings and expand our service and support capabilities.
Moving to slides eight and nine.
We have built a modular software and hardware architecture that allows us to serve a highly segmented and customize market with cost effective solutions.
Our high level of software and hardware customization.
That is required for commercial electric vehicles is something that legacy Oems have not historically offered and are not well suited for.
You can see from slide eight the full suite of Lightning is electrification solutions enabled by our deep software vehicle integration and full ecosystem expertise.
Slide nine shows our broad range of vehicle and powertrain platforms, either already in production or expected to be in production in 2023.
Moving to slide 10.
Since our last earnings call, we've announced a strong lineup of new products and partnerships, including 170 vehicle deal with <unk>, a sustainable fulfillment and last mile delivery company based in Canada.
For delivery vehicles in the USA and Canada.
We also announced our second generation re power offering for large motor coaches, which builds on our successful single and double Decker motor coach demonstration vehicles, we built and tested over the last two years.
This class seven and eight powertrain designed for Repower applications extends the life of the buses at less than half the cost of a new bus and terms are highly polluting vehicle into a zero emission masterpiece.
And just last week, we announced that transport, Canada, a federal institution promoting environmentally responsible transportation has registered lightning <unk> motors, creating additional opportunities for customers to leverage Canadian incentive and funding programs for our entire portfolio.
Moving to slide 11, let's discuss the supply chain landscape as.
As we stated previously batteries, which were supply limited last year are in much better shape due to new battery partnership agreements and we have inventory on hand today.
The situation remains dynamic however, as new platforms may require and benefit from new battery configurations, both to support more range on a given platform as well as reduce the price and improve quality and safety.
We're working on both 400 volt and 800 volt configurations with both nickel manganese cobalt based batteries.
Which have begun to see price stabilization after a large price increase mid year.
In lithium iron phosphate pack options. We are pleased to have long term supply agreements for both battery chemistries with some proprietary safety technology built into our LSP battery systems offerings.
On chassis, we now have much better availability for Q4, and Q1 with a new platform partnerships and agreements with over 270 chassis currently on our lot.
Our manufacturing and engineering teams are readying the production lines to produce our first GM class four platforms, which we expect to deliver to customers this quarter.
In addition, our lightning HFC and blueberry chassis powertrains are on target for production in the second half of 2023.
Beyond chassis in batteries, we continue to work to diversify our supply chain with new higher production and lower cost suppliers to help reduce the cost and lead times, we are seeing for components, such as high voltage heaters high voltage air conditioners, and heat pumps and thermal management parts.
Turning to slide 12.
We are again now seeing an increase in momentum towards the electrification of commercial vehicles. After a brief pause in new orders, while customers waited for the EPA and FDA incentives passed last year to hit the market.
In addition to these new programs funded by the 2021 infrastructure Act, which are now close to being awarded we believe the passing of the inflation reduction Act during Q3 with its $40000 federal tax credit for zero emission commercial vehicles and class four and larger.
Is motivating customers to accelerate their efforts to transition to zero emission trucks and buses.
We believe the IRA scope will benefit lightning more than other vehicle manufacturers given the alignment of the Aries incentives with our wide vehicle portfolio.
Turning to slide 13, let's discuss our business model and the progress, we're making toward reaching positive gross margin.
Our growing sales and production volumes are enabling both supplier cost reductions and labor efficiencies.
Our engineering and manufacturing teams are making material progress in unit cost reductions via manufacturing automation and engineering costs down work.
We have said in the past that we need to approach our single shift to annual production capacity of 500 units to fully absorb our overhead and our sales growth to fully absorb our overhead and our sales growth continues progressing toward that goal, reducing our overhead allocation per unit.
Finally lightning has increased our prices across our product lines, some of which will be absorbed by government grants and incentives rather than by customers directly.
With these changes we expect to reach positive gross margin during the second half of 2023.
And now I will turn it to cash to provide an update of our products markets sales momentum and a look at how the incentives now stack up to drive market acceleration.
Thanks, Tim I'll begin on slide 15, first I'm glad to report that unlike many of our peers, who are still in early prototype development and testing we continue to deploy zero emission vehicles in real world environments across multiple market verticals and commercial vehicle applications are deployed fleet.
Over 400 vehicles recently crossed a collective $2 8 million miles on the road a number growing rapidly every week.
We continue to sign new orders, new customers receive repeat orders and generate strong demand for our core products and market verticals shown on slide 15 zero emission cargo events delivery trucks passenger vans shuttle buses and school buses our sales pipeline as of October 31 2020.
<unk> was approximately $1 8 billion.
And backlog was around $164 million.
Our dealer network is expanding and our strategic partnerships with market, leading Oems and specialty vehicle builders like Forrester and <unk> have been.
Enables us to engage with a wide range of customers by leveraging our partners brand reputation and extensive distribution networks.
On slide 17, we show some new and existing vehicle applications and partnerships step vans ambulances Rv's transit bus and motor coach Repower.
We expect to see strong growth in these market segments over the next 12 to 18 months.
We also continued to explore additional vehicle partnerships and look forward to sharing those details in the near future.
Now I will turn to slide 18 to provide an update on forces that continue to drive adoption of zero emission commercial vehicles.
Government regulations and mandates across the U S and Canada continued to grow in scope and ambition California's Act regulation trends at Rome Airport Shuttle rule and a 15 state Mou on zero emission vehicles are all delivering a strong message to the market the future must be zero emissions.
Next grants and incentives from both state and federal governments are now providing more funding to accelerate the adoption of zero emission vehicles programs like the federal transit authorities low or no emission vehicle program in California, as HP program are providing significantly more money this year than they ever have.
New mechanisms like the Epa's clean scuba program and Canada, New federal programs are all helping to expedite the industry's drive towards electrification.
We have been able to leverage these programs to develop projects with several new customers. These projects are expected to result in orders in the next six to 12 months due to the lengthy grant cycles and timelines.
Last but not least many fleets continue their march towards electrification motivated by corporate and societal sustainability goals. We see this pattern across various industries last mile logistics public transit and school transportation.
We applaud these companies ambitions and look forward to working with many of them to help meet their carbon emissions reduction goals.
On slide 19, you'll see how our products can leverage multiple state and federal grants that are stackable with each other including the $40000 of IRS tax credits mentioned by Tim.
Combining these grants can completely offset the upfront cost of going electric in many cases fully paying for the vehicle.
We look forward to working with our customers and helping them leverage these grant programs in the coming months.
And with that I'll turn it over to David to provide an update on <unk> financial results and outlook. Thanks, Kash I'll now provide some commentary on our third quarter results followed by our fourth quarter outlook beginning on slide 22 for the third quarter, we generated revenues of $11 1 million, which increased 78% from the year ago period, and $7 6 million.
In dollars sequentially in the quarter Lightened produced 104 vehicles and sold 93 to.
The gross margin percentage was 700 basis points better than last quarter due to higher volume and better factory utilization as Tim highlighted we remain focused on driving towards a positive gross margin through higher prices fixed cost leverage on labor and overhead material cost reductions and operational efficiency as we ramp production.
The adjusted EBITDA loss for the second quarter was $17 million compared to a $9 $3 million loss in the prior year period.
The change is primarily related to higher operating expenses in the current period, a reconciliation of net income to the adjusted EBITDA loss can be found on slide 25.
Turning to slide 23.
We ended the third quarter with $95 $8 million in cash and cash equivalents, which we believe is sufficient to fund our operations for the next 12 months, we gave ourselves a bit more cushion by implementing a $50 million equity line of credit in the quarter, we have not yet drawn on it but we have the ability to do so if needed.
Inventory at the end of the third quarter was $36 $8 million to the higher inventory level stems, primarily primarily from the larger number of chassis in batteries, we purchased to support future growth growth and also about $6 $5 million of finished goods on slide 24, I will summarize our outlook for the fourth quarter, while our battery suppliers.
<unk> have mostly been mitigated in the near term, we continue to experience supply chain challenges with certain chassis and other components delays associated with any of these components may impact the timing of revenue based on current conditions. We expect for the quarter ending December 31, 2022 revenues to be in the range of 13 to 18 million.
<unk>.
Vehicle and powertrain system sales to be in the range of 100 to 130 units vehicle and powertrain production to be in the range of 130 to 140 units now I will turn it back over to Tim for closing remarks.
Thank you David.
I remain very excited about the outlook for Lightning motors as we continue to execute our strategy.
While many of our peers are still working on their first U S manufacturing facilities or working to build the first production vehicles, we've put more medium duty zero emission commercial vehicles in customers' hands and on the road than anyone else.
We are accelerating our production scale and introducing new products pushing towards positive gross margin or.
Our industry is transforming which is presenting us with opportunities through investments and acquisitions to achieve critical scale.
We have a clear vision, a solid near and long term strategy and our path to growth and profitability. The lightning team is energized passionate and focused moving with velocity towards a strong future.
With each day that passes the barriers to widespread adoption in the commercial vehicle space are falling and government incentive programs are growing.
Although these programs most of which have at least a five year horizon provide an accelerated inflection point for commercial Evs. The fact is that today our products provide a very compelling return on investment versus their ice counterparts, even without the subsidies.
This gives us confidence that regardless of future elections or politics, we expect to see many years of strong growth ahead.
I would like to finish by thanking all of our customers for their confidence in lightning our partners for their contributions to our company's success and our shareholders for their support.
I, especially want to thank our employees, who are executing at a high level through a challenging operating environment.
And with that thank you everyone I appreciate your time today.
Operator, we're now ready to open the lines for questions.
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One moment, please while we poll for your questions.
Our first questions come from the line of Mike <unk> with D. A Davidson. Please proceed with your questions.
Hello, Good afternoon, and thank you for taking my question.
Could you tell me if there were any appreciable.
Non truck revenues in the third quarter, such as like charging parts data services et cetera.
And whether we should start to model any of that.
Any official numbers for 2023 at this point.
We had very minimal revenues, Mike. Thanks for the question in the quarter, but we certainly see.
Some of those revenue streams are picking up certainly into the first half of next year.
Okay. Okay.
And then also looking at 2020, we just just trying to triangulate some of your comments earlier about gross margin.
And how long does it take to get to a positive gross margin.
As we go through the year is it appropriate to expect.
A very steady.
A very steep progression of sales sequentially from quarter to quarter or is there some kind of.
Startup has gone that goes off but we'll start to see really shipments accelerate in any kind of major way other large contract.
Or something else that happened where things look like.
To a much higher gear at some point during next year.
Thanks, Mike.
The advantages we have is I know you've covered.
Industrial and commercial vehicles for a long time. So you are accustomed to the very cyclical nature of new model years coming out and historically most of the revenue.
Out of the revenue tends to be shifted, especially pre pre COVID-19 and pre supply chain issues that the tradition was an awful lot of revenue was shifted Q3 and Q4 as new model years came out.
I think we will start to return a bit to that some of it is a function of new platform availability.
We see going forward as we released some new products that are very attractive in the market today.
Some of it's a function of as these grants and incentives to take a little while to hit the ground and they tend to be cyclical. So the EPA grants and the FTA grants are typically awarded twice a year and then following the award some three to six months after that is when the customers actually placed their orders. So I think moving forward, we will see a pretty.
Cyclical.
The order bank and delivery bank around both the incentive cycles and on the new platform offerings. So.
I think returning a bit to more backend loaded years is what I would expect.
Okay got it.
Preliminary cash bring real quick can you give me give us a feel for what the cash burn rate might look like over the next couple of quarters.
Okay.
Obviously, it's dependent on volumes.
It would look.
Average of the last two quarters, probably be pretty close we're seeing some benefit in terms of cost downs and labor efficiencies, but.
<unk>.
It will be hard to see whether the volumes will be equivalent to this quarter or not.
Alright.
One last one in here.
As I talk to people, who are actually driving lightning vehicles, everyone seems happy with them.
Planes, but.
You guys have any kind of like.
Uptime for flooring for your vehicles compared to either a previous previous your models or just the the ice vehicles that they are taking the place of <unk>.
I sense that you've got a lot of high warranty cost here or have they been relatively.
Reliable from what you've heard from customers recently.
Yes, it's something and I mentioned it in my prepared remarks that we are actively building bigger and bigger service organizations to ensure a high customer touch models. So it's something I'm passionate about and our team's passion about.
We have seen significant.
Significant improvements over time as you can imagine lower volume early production products that we made in 2017 and 2018 arent as reliable as the products, we're producing today and certainly over the last year since going public when we've been able to make very large and significant investments in quality assurance people in <unk>.
<unk>, and frankly, better suppliers, who have better quality.
Seeing market improvement in our quality over the last 12 months versus what we saw previously before we had made these kind of sequential and very significant investments.
We remain we don't have yet from a warranty costs were pretty traditional in the way we look at warranty reserves, a little more than than a legacy OEM, but not crazy and we're certainly seeing ourselves in that path, but we see a path to very low warranty in the long term.
Given both our improvements and investments, we're making in supply chain and higher quality suppliers as well as the investment we're making.
Ts.
Great I'll leave it there Tim I appreciate the discussion.
Thanks for the questions Mike.
Thank you. Our next question is coming from the line of <unk> with Bank of America. Please proceed with your questions.
Hi, good evening everyone.
So I just wanted to touch on some of the cyclicality you mentioned so looking at backlog, it's been fairly flat for a few quarters, you've mentioned an expectation of a return to some cyclicality.
Is there anything that's beginning to weigh on demand, we're seeing with some of the delays in sales versus production.
Or is there any cancellations that are coming up.
Our customers changing there.
Purchasing behaviors that might be offsetting some of the structural drivers of EV adoption there.
Yeah, Hey, Sherri this is cash.
You've kind of tested right the cyclical nature of the grants really drives the timing of when customers firm up their purchase orders and when they want deliveries.
EPA FTA and some of the other programs do providing some very meaningful funding I mean, 20% to 100% of the vehicle cost not just a 5% 6% sweetener. This is the bulk of the rationale to make the purchase decision.
So given that we are expecting an increase in orders over the next six months or so due to the various efforts we've put in the last six months to help some of these consumers apply for these grants.
It's just the cycles that dictate the timing of when we go from demo to our quotes to purchase order to delivery.
And if you put it in perspective sure. If this is Tim I think kind of an interesting dollars I saw the other day.
We've never seen anything really in the history other than certainly worldwide, what China's put down but if you look at the pure dollar volumes, we're talking about here billions of dollars in EPA billions of dollars in FTA 5 billion or approximately that for both now on.
On the same order of magnitude for this IAA commercial vehicle funding.
It dwarfs anything we've ever seen in the past certainly dwarfs traditionally we were all very dependent on pins and needles around HVAC and this dwarfs it but what we see happening is this creating the catalyst we need to get past the supply and demand the cost versus volume curve we face.
Which is we all needed the demand increase to get the costs down and we all needed the cost to go down to get the demand increase and Thats very significant.
Subsidy grant funding really solves that problem.
Mobile over the top of the hill and down down moving forward collecting some momentum such that this business is sustainable even post these grants, but in the meantime. These grants do you can imagine if you're a CFO . Even if you said hey, I don't need these grants to justify this investment and going electric.
Because the vehicles have a compelling return on investment without the grants. Nonetheless, if you can get a grant for 80% youre going to hold off until you get that.
Even if you don't have to have it to make it a compelling case. So that's why you see a lot of pent up.
Demand until these these get awarded in kind of a cycle to go with that but obviously in the out years, we won't need that anymore and it won't be part of the cycle, but for the next certainly 12 to 36 months I think youll see all of us in the business kind of at the mercy of the cycles, because it's such a significant amount of money.
Understood and then touching on the cash burn a bit more you've got cash on hand of just under $96 million now just given the cash burn annualized over the last few quarters has been about $97 million do you expect to take any other actions besides the.
<unk> established equity line of credit.
I mean this is David.
Thanks for the question, obviously, we're looking constantly opportunistically to see.
What we can do we are certainly aware of when the debt comes due in may of 2024 and.
We're certainly actively looking for opportunities that can help us there.
Understood. Thank you very much.
Thank you sheree.
Thank you. Our next question is coming from the line of Colin Rusch with Oppenheimer. Please proceed with your questions.
Thanks, so much guys.
As you guys are out in competitive bidding situations could you talk a little bit about the evolution of the competitive landscape and if youre seeing any new players there and then also the trend line on your win rate.
Hey, Collin this is kash thanks for the question.
So one thing unique about US is that you noticed in one of Tim's slide we have a lot of different products.
Some competitors are only active in one or two of those products. So our competitive situation varies based on which which market vertical youre talking about cargo vans is different and shuttle buses school buses.
I'll bucket them in three different buckets right our class III cargo vans are slightly bigger than the class II Vance offered by legacy Oems like Ford and GM.
They are not the same product and ours, but they're kind of similar enough that it creates conversation with the customer do I buy a much cheaper class two van from forward that doesn't go as far but is cheap enough to maybe modify my operations.
It's been a bit more money to get a higher payload higher range vehicles from lightning.
We see customers go 50, 50 that way some customers opt for the cheaper class two vehicles, some customers realize that they need that extra rain, especially in cold weather climates in our medium duty segments. We don't really compete with traditional legacy Oems are competitors or other EV companies similar to our scale.
They come into categories and flavors one of them are somewhat similar to ours, where they have been in this space for four or five years. They may have few products in the road and they are real competitors, we compete with them on specs and on pricing.
But the second and last category is where a lot of our competitors linked with these are competitors with very good looking websites and great presence at Tradeshows and press releases, but not a whole lot of products to offer.
This one is probably the hardest to deal with because it becomes a distraction with every customer.
See a lower price oil they'll see a range claim that defies the logic of physics for my calculations, but it certainly becomes a conversation.
Over time, we win the business by just delivering product running demos.
Pretty much most of our customers today take a demo from us and when they cannot get a demo from our competitor well that solves a problem right then and there.
Sorry for the long winded answer, but it is different and it's complicated based on which market we're talking about.
I appreciate the detail on that and then in terms of the build schedule. Obviously some of this is being driven by the chassis availability, but how are you guys, making decisions on what to build and what.
To push off because it looks like you're building a pipeline of demand well in excess of the production rate at this point.
As you can imagine Colin it's great to hear from you and.
And you followed our business a while so you've kind of seen or ever.
Evolution in terms of how we look at this obviously like anyone we look at the backlog and we look at what we can make and we look at where the profit margins are and then we look at what we have available on supply chain and so all of that goes into the bucket to come up with an answer.
Twice, a week cash and Brian Barrett and our team are sitting down.
Really analyzing each of those variables and coming up with an answer on the best thing.
To make for the quarter the week the quarter the months et cetera.
I think the team does a great job at it but it is complicated because everything as you can imagine on any given week, some new obstacle or opportunity arises and so the team has to manage to that on a very dynamic basis.
That margin is a big key as we said we were very focused on getting to.
A positive gross margin as soon as possible and so we spent a lot of time looking at where that is but also spent a lot of time when you've got your first customers in this market. It's a lot about getting the first customer because you want them to be a repeat customer and they need some time with the products of cash mentioned and the sales cycle. Sometimes these customers will take a demo or sometimes they'll buy their firm.
One of their first five or the first time, we want to get those done quickly. So that they can buy their next 100 and a in a faster time in as faster turnaround as we can get there. So all of those play into the mix in the calculation.
To come up with what we sell today, but the biggest one as you mentioned is what we have on hand, because thats, especially on chassis thats been one of the biggest challenges. So it usually starts there looks at where the demand is and sometimes then we mix that sometimes we go to a customer and say that I don't have a red one I've got to whitewater I don't have a truck, but I got a boss or I don't.
Our class four but I've got a kraft class III or and sometimes we have the opportunity to two.
That makes that work other times, the customer says hey, I'll wait till exactly what I want is available.
Okay and then the last one for me is just really around the opex.
You guys scale.
Are there particular areas, where you feel like you need to augment the team here and see.
Some incremental spending as we carry forward here.
I mean.
Some in engineering and research and development to keep the product pipeline and the engineering team also helps with the cost downside, so not only helping with new products, but to help working with manufacturing and manufacturing engineers to help us identify ways to take cost out of the business.
Okay I'll take the rest of that offline. Thanks, a lot guys.
Thank you joelle.
Thank you. Our next question is coming from the line of Avi Sinha with Northland financials. Please proceed with your questions.
Yeah. Thanks for taking the question quickly.
It did.
Just give us some idea on how to think about the IATA impact on CLO vehicles versus powertrain sales I mean, what you had earlier in mind prior to Iras versus now the way things are trending.
Thank you have a great to hear from you.
Yes.
I think we see as we look out and we're constantly evaluating that mix keep in mind, sometimes when we just sell a powertrain. It's still turns out to be a vehicle will sell that powertrain to a partner like Collins School bus who puts it in a school bus vehicle.
Then that vehicle then gets both IRA and is available for EPA and potentially state grant money on top of it as you could see from Cashes example, it could potentially lead to a free vehicle. So even though we've just built the powertrain the customers still benefits from that and ultimately we get some pricing power from that all.
Way back to our side because of that grant money doesn't exist without our electric powertrain. So.
Both both the powertrain and vehicle benefit.
But as we look out we're constantly evaluating our there are some cases, where we should be in the vehicle side of the business and obviously picking up more top end, where do we maximize margin historically, we've talked that sometimes in the when we're selling a chassis we add that dilutes our margin in other cases as we move forward with <unk>.
For partnerships on the chassis side like Bluebird and.
Unlike what we're doing with our own chassis, we think we can rather than having the chassis dilute our margin we can improve our margins. So those are all things, we're evaluating but I think with the with the incentive landscape. It's neutral in terms of which one we do it's really a broader question for our business of what's available how.
Good are the partnerships out there where can we maximize our margin.
Sure.
And then just a follow up.
How much.
Impact do you think you have.
And supply chain.
In the guidance or is it already baked into guidance the range that you have or I mean.
If there was no supply can impact where pre COVID-19 levels.
You still didnt guidance would have been seamless on how much impact would have been there.
It's still an impact for a couple of reasons one of them is what I'd call. The the ongoing Golden screw challenge that I think you hear from everybody else.
And any kind of business, where you're putting systems together, it's not just DVS obviously.
Anytime where youre putting systems together as you know you only need to be missing one park and we're still in a world today, where frankly you read about it. It is still very real China has not come back to normal and ease.
Even indirectly most people are getting some parts from China, whether it's direct or indirect and we're no exception to that so.
Certainly that the cautiousness around can we get parts and the second cautiousness around is can we get chassis and we continue to hear from all the legacy OEM manufacturers that.
Some fashion or another chassis are constrained and chassis parts of constrained everything from axels too.
The infotainment screens that are in the vehicle so.
It's hard to put a number on it because I think it's just become so much a part of our business that we don't we don't play in additive or subtractive, but if I were to just place in an off the cuff number I'd say probably.
30% to 50% of.
Yeah.
We could be at 30% to 50% higher numbers. If we didn't have some of the constraints we have today on chassis and other other systems.
Okay perfect. Thank you very much that's all I have.
Thank you there are no further questions at this time and with that this does conclude today's teleconference. We appreciate your participation you may disconnect your lines at this time.
Enjoy the rest of your day.