Q4 2022 Proterra Inc Earnings Call
Speaker 1: of convertible notes outstanding, for which there is a minimum liquidity covenant that requires our cash and liquidity to exceed four times the cash consumption at the end of each quarter.
Speaker 1: At the end of Q4 2022, we did not meet this covenant.
Speaker 1: The convertible debt holders provided a waiver retroactively for the end of 2022 for this covenant in addition to a waiver for a quarterly reporting covenant for prior periods.
Speaker 1: They also provided a prospective waiver in respect to our auditor's report containing a going concern qualification in our 2022 10K.
Speaker 1: If we do not obtain a further waiver beyond March 31, 2023, all amounts outstanding under the convertible notes could become immediately due and payable and all commitment obligations under our credit facility could be terminised.
Speaker 1: But we are working with our debt holders and are optimistic about finding a resolution.
Speaker 1: We have also implemented a number of cost reduction initiatives since the start of 2023 and we expect to lower our cash consumption starting in Q2.
Speaker 1: At the end of 2022, our cash, cash equivalents and investments were $298 million.
Speaker 1: Our 2022 10K will also include management and auditor reports disclosing material weaknesses in our internal controls. To be clear, there is no restatement of prior financial statements.
Speaker 1: In 2022, Proterra became a large accelerated partner within six months of the closing of our DSPAC transaction and thus became required to provide an independent auditor's attestation of our internal controls over financial reporting.
Speaker 1: We are hard at work implementing a remediation plan.
Speaker 1: Now, having addressed these two important financial matters, I would like to give a
Speaker 1: I will turn to our operating results.
Speaker 1: While Karina will dive into the queue for quarterly detail, I'll provide a summary of what was very busy and back to the end.
Speaker 1: All in, we accomplished a great deal in 2020.
Speaker 1: and so far in 2023.
Speaker 1: We have completed construction of what we call powered one, a new factory designed to manufacture multiple gigawatt hours of factory.
Speaker 1: per year once fully ramped. We produced the first complete modules and pack assemblies at the facility at the start of the year. And while the first stages of the ramp will be slow in January and February , we have made significant progress over the last few weeks.
Speaker 1: We've also produced a little more than 100 battery packs at Powered One since the start of production and more than half have been produced in the last four weeks.
Speaker 1: Last year we also announced multiple new battery supplies.
Speaker 1: with OEMs including the shift group and the rev group's DMC, amongst others, growing the Patera powered and energy backlog to approximately 1 billion dollars.
Speaker 1: total company backlog to approximately 1.6 billion dollars including transit.
Speaker 1: And, we achieved our revenue guidance for 2022 despite continued past shortages.
Speaker 1: Total revenue for the full year 2022 grew 27% year over year to $309 million.
Speaker 1: In line with the radio guidance range
Speaker 1: of $300 to $325 million that we offered in March of last year, despite challenges in the year.
Speaker 1: At Proterra Power & Energy, revenue for the full year 2022 grew 150% year over year to a record $118 million.
Speaker 1: ATERA-powered delivered 1,229 vehicle battery systems for the full year 2022, up to 350% of bids, 2021.
Speaker 1: In 2022 we delivered battery systems to 17 OEMs including prototypes for vehicles ranging from electric school buses to coach buses, step vans and cargo vans to class 7 and 8 battery trucks, excavators, forklifts and mining equipment.
Speaker 1: Through year end 2022 Proterra Power has delivered battery systems to our OEM customers for more than 1,600 vehicles since our first deliveries in 2018, excluding the batteries produced for more than 1,000 Proterra transit buses.
Speaker 1: Battery production, including Patera Transit, was 342 megawatt hours for the full year 2022, which is up 81% from 189 megawatt hours in 2021.
Speaker 1: Through the year 2022, we have cumulatively produced
Speaker 1: more than 800 megawatt hours of heavy duty batteries for commercial and industrial vehicles. And at Patera Energy, deliveries grew 143 percent year over year to 35 megawatts in 2022. As mentioned, Patera Power and Energy ended 2022 with a backlog of approximately $1 billion.
Speaker 1: This only includes minimum order quantities in our backlogs, not the deliveries targeted in our supply agreements.
Speaker 1: Some of our supply agreements do not include any minimum order quantities, but we expect our existing supply agreements to generate additional revenue.
Speaker 1: Lastly on Proterra Transit
Speaker 1: We delivered 199 new electric transit buses in 2020 down slightly from 218 2021
Speaker 1: as well as 14 pre-owned buses over the course of the year, up from 9 in 2021.
Speaker 1: The decline in new bus deliveries was largely attributable to shortages in wiring harnesses.
Speaker 1: which was most acute in Q4 and prevented us from adding a second shift.
Speaker 1: As these constraints on our bus production growth not only translated into lower revenue growth but also significantly lower gross margins, which were under pressure from inflation, low fixed cost absorption due to the inefficient material flow to the production line, as well as the fire penalties incurred in Q4 on volume
Speaker 1: For Terra Transit's backlog remains strong at $550 million at the end of 2022, which is up more than $100 million from year end 2021.
Speaker 1: Now I'll pass it over to our CFO Karina Padilla who will discuss more specifically our Q4 results. Karina? Thanks Gareth. I'll provide a summary of our Q4 revenue, gross margin, adjusted EBITDA and cash flow.
Speaker 2: First, starting with our Q4 results.
Speaker 2: Consolidated revenue was $80 million in the fourth quarter of 2022, representing growth of 17% year over year. Albeit a decline of 17% compared to Q3 2022 due largely to supply chain constraints limiting Proterra transit production and difficult comparisons with a record quarter of deliveries at the time of the disaster, produce more jobs andonomous Confnum jobops inike
Speaker 2: energy delivery. with
Speaker 2: Patera Power and Energy represented more than 40 percent of the total revenue in Q4, more than doubling its 19 percent contribution in Q4 of the prior year.
Speaker 2: Proterra Power delivery in Q4 from 117 percent year over year to 302 battery systems.
Speaker 2: Proterra Energy delivered 6.5 megawatts of heavy duty, fleet specific DC fast chargers into 4.
Speaker 2: of 242% year over year.
Speaker 2: I'll be declining from the record 22.5 megawatts delivered in Q3 when we completed delivery of our largest charging project to date, 9 megawatts, in Miami, Florida.
Speaker 2: Deliberate scanned 14 different customers in Q4 and included one of our megawatt scale fleet chargers.
Speaker 2: More than 50 percent of deliveries for approximately 3.4 megawatts were delivered to non-transit bus customers in Q4.
Speaker 2: EpiTERRA Transit revenue supported with $49 million.
Speaker 2: This represented 12 percent year over year and 14 percent sequential decline as our production output continued to be hamstrung by wiring harness shortages. The wiring harness shortage resulted in us delivering 47 new electric buses in the quarter down 13 percent year over year and 22 percent sequential.
Speaker 2: as well as four pre-owned buses down from 9 in Q4 of 2021.
Speaker 2: I'm pleased to share that the efforts regarding our harnessing strength are coming to fruition.
Speaker 2: And at the end of the first quarter, we are no longer relying on a single source supplier.
Speaker 2: We expect the improvement of supply to continue and to improve as the year progresses as we continue to grant our new supply sources.
Speaker 2: Moving on to growth margins.
Speaker 2: We are disappointed with our gross margin performance. With that said, there's a lot in there that's worth unpacking in the quarter.
Speaker 2: The reported gross loss in Q4 of 2022 was $20 million.
Speaker 2: compared to a gross loss of $2.8 million in Q4 2021.
Speaker 2: A large portion of the gross loss was driven by a few period charges booked into quarter as will the start of cost for powered one.
Speaker 2: We booked approximately $17 million of costs in Q4 related to a variety of circumstances accounting for approximately 20 percentage points of gross margin.
Speaker 2: Almost $8 million was due to a penalty related to minimum commitment to purchase bus bodies.
Speaker 2: The penalty reflects volume adjustments for 2022 and 2023.
Speaker 2: These were based on volume commitments with legacy obligations and limited flexibility based on when the contract was negotiated.
Speaker 2: Production was impacted largely as a result of harness constraints in 2022 and an adjustment for the projected volume impact as we increase our harness supply and a transition period from our footprint consolidation efforts announced in January .
Speaker 2: We will transition all bus manufacturing from City of Industry to our facility in Greenville, South Carolina.
Speaker 2: As you know, prior to COVID, you were projected to be operating across multiple facilities and multiple ships prior to the supply chain constraints currently impacting the entire industry.
Speaker 2: Our backlog continues to grow and industry funding is at historic levels.
Speaker 2: We believe we have the ability to increase capacity and output while reducing costs through footprint consolidation. We plan to add shifts and reduce fixed and variable costs such as logistics.
Speaker 2: Costs were also impacted by $5 million related to inventory and year-end accounting true-ups.
Speaker 2: Lastly, we incurred $3 million in Q4 related to startup costs for powered ones.
Speaker 2: In aggregate, $13 million of the $17 million were related to fourth quarter period charges. While the start of costs and period charges were certainly the biggest contributor in Q4 growth loss, we were also adversely impacted by operating challenges as well.
Speaker 2: On one hand, we're continued delivery of lower price contracts that were added to backlog well before the recent jump in inflation.
Speaker 2: These low and sometimes negative margin deals are expected to improve throughout the year and be flushed out by the second half of 2023, as we have cycled through a large portion of our transit contracts with lower seat inflation pricing.
Speaker 2: We also had inflation headwinds and manufacturing inefficiencies due to low bus capacity utilization, high turnover, and increase in overhead costs.
Speaker 2: Fortunately, we believe price increases we begin implementing in 2022 and the forthcoming consolidation of manufacturing facilities have laid the groundwork to drive higher gross margins by the end of 2023.
Speaker 2: We'll discuss this dynamic in greater detail shortly. We'll discuss this dynamic in greater detail shortly.
Speaker 2: Operating expenses in the fourth quarter were $53 million, representing an increase of 40 percent year-over-year, including $3 million related to startup costs for a powered- run factory that was under construction.
Speaker 2: Compared to Q3 2022, operating expenses declined 6% and we slowed hiring and reduced non-personnel costs.
Speaker 2: Importantly, we are implementing a cost reduction initiative announced in Q1 2023 that includes a workforce restructuring plan that we expect to reduce 2023 operating expenses by approximately $15 million. The last thing I want to do just to say to Reminder surf is that I believe excuse me
Speaker 2: Our adjusted EBITDA loss in Q4 was $60 million, driven largely by our gross loss of $20 million and operating expenses of approximately $55 million, offset by non-cash compensation of $6 million and excluding power to one start of cost of $5 million.
Speaker 2: Moving on to cash. We ended the quarter with $298 million in cash equivalents and short-term investments.
Speaker 2: Total cash usage in Q4 was approximately $110 million. A slight improvement from Q3 2022, on top of our adjusted EBITDA loss of $60 million, total cash usage was impacted by an increase in accounts receivable of almost $30 million.
Speaker 2: the bulk of which we have collected in Q1 of 2023, a $5 million increase in inventory, largely related to battery sales purchases, and $18 million in capex, most of which was related to powered one. In a few months, other b Jonn foreign
Speaker 2: All in, cash consumed in 2022 was $363 million.
Speaker 2: However, we expect an improvement in cash consumption in 2023 from the following. We have a workforce restructuring plan in place.
Speaker 2: consolidation of the bus production facility in Greenville.
Speaker 2: Material reduction in capital expenditures with the completion of powered one, and efficiency in working capital usage.
Speaker 2: It's important to note that beyond our cash and cash equivalents of almost $300 million, we have more than $100 million utilized in working capital at the end of 2022. The cost reduction combined with working capital efficiency, we expect to reduce our cash consumption in 2023 by up to 30 percent.
Speaker 2: driven by lowered construction costs and restructuring savings. Finally, I would like to provide some commentary around our material weaknesses and internal control.
Speaker 2: Self-compliance is a journey. We are in year one of our journey and we have been working on implementing our internal control processes.
Speaker 2: 2022 was the first year we were required to make a formal assessment in our internal control environment and concluded we had material weaknesses.
Speaker 2: The material weaknesses will be summarized in detail in our 10K. I will close by letting you know that management is committed to execute the remediation plan of our material weaknesses and make this the utmost priority. And with that, I'll turn it back to Gareth.
Speaker 3: Thanks Karina.
Speaker 1: All in, we faced a number of challenging headwinds in 2022. We experienced a surge in inflation to levels not seen in decades. We faced sustained supply chain constraints, particularly from shortages in critical bus parts. And consequently, margins were pressured by low fixed cost absorption due to underutilized bus manufacturing capacity and raw material cost pressures, as well as supplier penalties incurred.
Speaker 1: in Q4 2022 on volume commitments.
Speaker 1: And we also include the startup expenses for our new powered one facility.
Speaker 1: And we also include the startup expenses for our new powered one facility. On the other hand,
Speaker 1: of expenses for our new powered one facility. On the other hand whilst acknowledging the headwind.
Speaker 1: it's important to also reflect on what we achieved in 2022, underscoring the strength of the business that we have built to date.
Speaker 1: We achieved our revenue guidance for the year despite extended part shore records.
Speaker 1: Patera Power & Energy is not only driving this growth, but it has become a material portion of our revenue as well.
Speaker 1: We completed construction of our first high-volume purpose-built factory-factory capable of annual production of multiple gigawatt-hours once ramped. We announced the consolidation of our bus manufacturing at our flagship Greenville site at the end of Q1, 2023, that should reduce manufacturing overhead costs and improve bus manufacturing efficiency and margins.
Speaker 1: As one data point, the average labour hours required.
Speaker 1: Per bus produced in City of Industry in 2022 was more than 250 hours higher than in Greenville.
Speaker 1: Simultaneously, we announced the consolidation of battery manufacturing by the end of Q3.
Speaker 1: As with mass production, we expect efficiencies in non-cell production costs to result from this.
Speaker 1: We concluded approximately half of our workforce restructuring plan during Q1 2023-2, which we expect to reduce 2023 operating expenses by approximately $15 million.
Speaker 1: And we closed out 2022 with a $1.6 billion back offer.
Speaker 1: with power and energy accounting for approximately $1 billion of that.
Speaker 1: Looking ahead to 2023, I feel confident about the foundation we have built to support the future growth of Proterra.
Speaker 1: Our focus will be on improving our operational and manufacturing efficiency and ultimately our margins, operating expenses and cash consumption.
Speaker 1: With the closure of City of Industry, we can increasingly focus our management attention on the core of our operations in South Carolina with reduced complexity in our logistics and manufacturing footprint.
Speaker 1: However, we will still obey facility and other overhead costs for the City of Industry operation for most of the year, and that's mostly carried by power management, as well as severance and restructuring costs. But we expect this closure to have a benefit to margins by next year. With all that's in mind, we're establishing our 2023 guidance today with revenue expected in the range of 450 million.
Speaker 1: to $500 million. Proterra Transit is expected to show modest year-on-year revenue improvement with Proterra powered and energy driving most of the growth.
Speaker 1: As much of this is driven by the ramp of power one, which started slowly in the first few months of the year. Capital revenue growth is expected to be concentrated in the second half of the year.
Speaker 1: with little benefit in Q1 2023.
Speaker 1: On gross margins, we are not providing quantitative guidance, but because of high underutilization of powered one expected in the first half of 2023 and continued city of industry facility costs until the end of Q3, we expect gross margins to remain negative through the first half of the year.
Speaker 1: before turning further into the second half of the year.
Speaker 1: And though we do not expect to realize the majority of the cost benefits from the ramp of powered one and the closure of City of Industry in 2023, this creates the possibility to achieve new highs and gross margins in 2024.
Speaker 1: On operating expenses, our workforce restructuring was announced in January 2023 with no expected benefits in Q1. But overall, we expect operating expenses to decline from more than 60% of revenue in 2022 to approximately 40% of revenue in 2023.
Speaker 1: We expect capital expenditures of approximately $25 million for the full year 2023. And finally, we anticipate seeking to raise additional capital to strengthen the balance sheet in support of the growth opportunities that lie ahead of us.
Speaker 1: In closing, as the commercial vehicle market converts to zero emission power trains, we believe the combination of our Proterra powered battery technology, our Proterra energy charging solutions, our valence software as a service product, and our Proterra transit buses establish Proterra as a unique brand.
Speaker 1: that is well positioned to provide commercial vehicle manufacturers and fleet operators with solutions to their future needs. We look forward to leveraging this position to continue to drive revenue and margins higher.
Speaker 1: Finally, I would like to thank our team at Proterra for your determination and commitment to our mission, no matter what the challenge.
Speaker 4: With that, I'll open it up to Q&A. As a reminder, to ask a question, you'll need to press star followed by the number 1 on your telephone keypad.
Speaker 4: In the interest of time, we ask that you please limit yourself to one question and one follow-up question. If you have any additional questions, please rejoin the queue.
Speaker 4: Our first question comes from Jordan Levy from Truist Securities. Please go ahead, your line is open.
Speaker 5: Good afternoon all and thanks for taking my question. Just to start, you now all have a really valuable asset with powered one that's been fully constructed and ramping production. Clearly there's some headwinds that worked against you last year and you're working to improve on that. This framework has cut the supply chain Na place for good gainless production. Its own
Speaker 5: First, I just wanted to get your updated thoughts on how you're thinking about, one, transit as a segment, and two, the potential there for any divestitures or other strategic alternatives to help address the cash burn challenge.
Speaker 1: Hi, Gordon. Thank you for...
Speaker 1: So let me start off with the answer to how we see the market. The demand in transit remains healthy. We continue to see federal funding promote the adoption of battery electric transit buses amongst transit authorities across the country.
Speaker 1: And that's evidenced by our backlog and our continued active participation in that market.
Speaker 1: So we remain bullish about the opportunity that exists for transit as a segment in the US and North America broadly. To the second part of your question, at this point we continue to...
Speaker 1: enjoy the benefits of transit being part of our ecosystem, as I mentioned, between powered energy and our valence products and transit being the proving ground for us. It does continue to add value to our portfolio.
Speaker 1: And as I said, we remain bullish about the market. Your comments about how do we think about strategic scenarios. We of course continue to always think about strategic scenarios for our business for transit powered and energy and that's a continuous process.
Speaker 5: Thanks for that. Maybe a follow-up for Karina. If we could just unpack a little more the 30% reduction target on cash, and if you could just give us this component and kind of how we should think about the trajectory there. Yeah, so the way to think about it, if you start with...
Speaker 2: Let's just take our 2022 cash burn of 363, right? So that's on an operational basis. You know, I'm going to grow.
Speaker 2: you know revenue between 45 and 61 percent, but if I just
Speaker 2: Take a look, step back and say, what were my, I'll say, one-time items of cash usage that are likely not going to repeat in 23? You can – there's probably about, I'd say, $60 million of cash that was used to complete the Powered One facility plus the startup costs.
Speaker 2: We had one-tenth strategic investment in Q3 of about $25 million.
Speaker 2: You know, we stated that the restructuring actions that were announced in January will yield about $50 million this year. It's going to be about $20 million on an annual run rate basis. And tied to the closing of City of Industry, there's probably going to be restructuring costs, roughly, call it about $7 million. So –
Speaker 2: the cell supply required to fund the top line sales does require some cash usage there.
Speaker 3: Thanks so much for that.
Speaker 4: Our next question comes from Steven Fox from Fox Advisors. Please go ahead, your line is open.
Speaker 5: Hi, good afternoon. I think I heard you say that there's still some backlog that's associated with negative gross margins. I'm having trouble conceptualizing that when the backlog is about 5x what the sales you just reported for the last year and 3 to 4x your guidance.
Speaker 5: Why are you having so much trouble generating a profitable backlog at this point? I mean the supply constraints have been going on for over a year and a half now. I'm really confused on that point. Hi Stephen, the
Speaker 1: The backlog has orders in it that can be as far out as 12 to 18 months ago. So we could be producing units.
Speaker 1: for example, in the middle of this year for contracts where we received the order 12 months ago.
Speaker 1: So they were done at, I would say, still sort of legacy pricing. We worked through our entire order book and exercised all the opportunity we could to gain your price position based on contract language.
Speaker 1: But that was not something you could achieve for every single transaction. In addition to that, as is widely known, we're still seeing inflationary pressure coming through in our raw material and supply chain environments.
Speaker 1: So, yeah, making the decisions like we have to consolidate our production in Greenville for transit buses and moving the LA battery production to Greer towards the end of the year. These are critical steps for us to continue to take cost out of the system as we look to optimise gross margin.
Speaker 1: And that applies to logistics, consolidation of operations, fixed cost absorption, etc. So yet it might seem like it's something where we should simply be able to just price for it. But when you have long term contracts that are negotiated 12 to 18 months back, it still has to work its way through the system in some of these.
Speaker 1: that are brought into our order books are done at better gross margins and we certainly believe that that the order book as time passes does have improving quality gross margins.
Speaker 5: both empowered and on the common side of the business. Okay, that kind of brings me to my second question, especially with all the puts and takes around gross margin, which is, given the growth the company has and the backlog, wouldn't it be prudent to sort of slow down the business, to pace the business here, and to get the cost structure in line and.
Speaker 1: Revenue guidance for 2023, we expect modest growth in the transit business. That is exactly as a result of us taking a decisive action to ensure that our production community is kept quiet and
Speaker 1: output is well balanced and not focused entirely on growth to ensure that we're managing your capital consumption as we navigate working capital topics, for example, in a fast growing business. So we are doing exactly that.
Speaker 4: Okay, thank you very much. Our next question comes from Sharice El-Sabahi from the Bank of America. Please go ahead, your line is open. Aye.
Speaker 1: I just wanted to ask, are you seeing any concerns around consumer finance? Sharife, I'm terribly sorry to interrupt you, but we can barely hear you. Perhaps you could try and get closer to your microphone. I'm sorry. Is this better? Is this better?
Speaker 5: That's good, and thank you. Perfect. Just in terms of end customer financing, we've seen some of your customers highlight difficulty for end users lining up financing. Do you see this as a potential headwind in the coming year for the powered business?
Speaker 3: Um.
Speaker 1: I think if what what you're referring to is things like prepayments from customers to secure capacity as a means to provide sort of
Speaker 1: your access to capital and yeah, that's something we continue to think about as we explore contracts with our customers I'm not sure if that's what the question was directed at.
Speaker 5: And just in terms of actual end customers having difficulty lining up financing to purchase the vehicles, are you seeing any potential impact from that?
Speaker 1: I understand the question now. We haven't seen any significant impact on demand as a result of that.
Speaker 1: On the transit side of the business there has been a healthy demand that is well supported by the Infrastructure Act. In addition to that, we've seen with the introduction of the Inflation Reduction Act, obviously continued demand forming beyond the transit.
Speaker 1: of those factors is certainly buoyant demand and we haven't yet seen an impact of financing for end customers as being a sort of demand suppressant. So we're not seeing that yet.
Speaker 1: avoid demand and we haven't yet seen an impact of financing for in customers as being a sort of demands present. So we're not seeing that yet. Thank you.
Speaker 6: Our next question comes from Greg Lewis from BTIG. Please go ahead. Your line is open. Yeah, hi, thank you and good afternoon, everybody. Thank you for the revenue guidance. It sounds like we have a pretty good handle on...
Speaker 6: you know, how we're thinking about 2023 transit bus revenue guidance. So, I guess what I'm wondering is, as we think about, you know, the low high end of guidance, that looks like it's going to primarily be driven by powered one. And so, kind of curious how we should be thinking about the production ramp sounds like it's underway and progressing nicely.
Speaker 1: And so, this is the year where power and energy's growth accelerates very nicely. And so, it's growth in power and energy that will be fueling the bulk of that growth. Volume is a key dimension of that. And.
Speaker 1: Obviously, when you build a large production facility, we're eager to get a high production throughput there in order to get the efficiency that one would expect from a high-output production facility. But equally, as I mentioned when Stephen asked the question, we've also been working at our L
Speaker 1: at the commercial side of the business to make sure that we are very methodical about building out our order book. And so we have for a number of years now had some target customers that we believe will help us grow our order book with a healthy balance of new incumbents and established.
Speaker 2: I think that was focused on power. I can add a little bit of color on the transit side because I think it correlates to a previous question on maybe I'll say – I think maybe I'll add a little bit of color on the transit side because I think it correlates
Speaker 2: slow down or go slow to go fast, right, from a cash consumption perspective. On the transit side, Gareth alluded to modest revenue growth. I'll tell you that it really looks from a volume perspective, I'll say more – I'll say flat on volume because we want to make sure we focus on becoming efficient and we'll be transitioning the manufacturing from California to South Carolina. But we have been successful.
Speaker 2: at pricing.
Speaker 2: the new contracts that are coming into our 23 build plan with richer configs and higher prices. So I'd say it on let's call it relatively flat volume in terms of units for transit. You're going to see modest revenue growth.
Speaker 6: Okay, great. Yeah, thank you. Thank you for that. And then I did want to touch on and I realized it's early days, but I was hoping for a little bit more color around the you know, the initial investment in the LFP.
Speaker 6: investment and really just kind of you know how you're thinking about that and in terms of you know how we should be thinking about that over the next I don't know one two three years in terms of yeah like how we should be thinking about that from a potential revenue opportunity perspective.
Speaker 1: Yeah, thanks Greg. We have a very healthy product architecture and product roadmap for our powered business, for all of them in fact. But clearly for power as the...
Speaker 1: of the commercial vehicle market accelerates.
Speaker 1: We anticipate that new vehicles are starting to come to market now and many are in engineering as we speak, which means they hit the market somewhere between now and 24 months from now. That really tells you that the second half of the decade is where we see acceleration of this market.
Speaker 1: And so we've set ourselves up to be prepared to capitalize on an expanding market where more diverse technologies might be needed to address wider product segments. So it's on our product architecture roadmap and we continue to invest as you see in our R&D environment.
Speaker 1: We have a position of leadership with our technology and we intend to keep that position of technology leadership because that is critical for our future growth plans. Having said that, we're obviously also navigating...
Speaker 1: cash consumption and our balance sheet. And so we're sensitive to keeping the right balance in growth aspirations, setting ourselves up for the future and also managing a healthy balance sheet and income statement to.
Speaker 1: Yeah, continue to feed a path towards profitable growth. Great to hear. Thank you for the time. Have a good night.
Speaker 1: Thank you, Greg. We have no further questions. I would like to turn the call back over to management for closing remarks. Well, let me just thank everybody who joined the call today. We appreciate it sincerely and we look forward to 2023. We have great aspirations for the continued growth of the organisation.
Speaker 1: and look forward to our next earnings call. Thank you for your time today.
Speaker 4: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker 3: Thanks for watching!