Q4 2023 GreenPower Motor Company Inc Earnings Call
I.
Hello and welcome to the Green Power Motor Company fourth quarter and year-end earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
To ask a question, you may press star then one on your touch tone phone. Please note this event is being recorded. I would like now to turn the conference over to Michael Seifert, CFO . Please go ahead.
Thank you. This is Michael Siefert, the Chief Financial Officer of Green Power Motor Company. I would like to welcome everyone to our call to discuss Green Power's financial results for the fourth quarter and year-ended March 31, 2023. I'm here today with our Chief Executive Officer, Fraser Atkinson, and our President, Brendan Reilly.
During today's call, we may make comments or statements about our future expectations, plans, and prospects, which may constitute forward-looking statements for the purposes of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws.
Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in this video.
discussed in our quarterly interim results in that DNA filed on CDAR and on EICR.
In addition, these forward-looking statements relate to the date on which they are made. We anticipate subsequent events and developments may cause the company's views to change.
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-IFRS financial measures. Reconciliation of these non-IFRS measures can be found in our NDA files on CDAR and on EDGAR and is also located on our website at www.greenpowermotor.com.
I will now pass the call of the Green Power CEO Fraser Atkinson.
Thanks, Michael.
This was a record setting quarter for Green Power as we recorded revenues in the fourth quarter of $15.3 million, more than 3.5 times the revenue of $4.3 million for the fourth quarter in the previous fiscal year, and we delivered 123 Green Power vehicles in the quarter.
revenue of $17.2 million.
and we delivered 299 green power vehicles compared to 93 vehicles in the previous year.
One of the most frequent questions we hear from stakeholders is how is Green Power's brush position?
In September 2022, we put in place an ATM or at the market offering.
During the year ended, March 31, 2023, we had raised gross proceeds of $4.9 million and in April we raised another $520,000 with the ATM. We have not been on the ATM since then.
We have an $8 million line of credit with BMO. At year end we are on our line of credit for $6.6 million and had $600,000 of cash in the bank.
effectively giving us about $2 million of available funding.
At the end of last week, we were not having to utilize any of the line of credit, in other words, we were completely off our line, and had approximately 1.5 million in cash.
So we have gone from available funding of $2 million at year-end to approximately $9.5 million at the end of last week.
Presently, the Commercial Vehicle Group has 42 active or live orders and 141 signed purchase orders for various EV Star models, which excludes our workhorse activity. So this is our Commercial Vehicle Group over and above that particular contractual arrangement.
The school bus group has 63 active orders or live orders and additional purchase orders for our Beast and NanoBeast school buses with deliveries for the first orders for these utilizing current inventory.
I'll now hand it over to Brandon for discussion on the operations.
Thank you, Frazier, and thank you, everyone, on the call today.
You know, not only did we record record amount of our battery electric vehicles,
some of the first that we accomplished over the fiscal year.
things were that we delivered our first new EV Star Cargo 22 foot van.
We delivered a large order of our EVSTAR CCs to Workhorse, the first ones of that order started. We also delivered the first of our nano beasts.
So, the first were important for us. Our NanoBeasts won an award last year at the FTN Network, which is currently going on.
and deliveries of those have started. And as excited as I am about our record sales and deliveries of our compelling EV products.
The work does continue with the bringing of our new
West Virginia production facility online, and the building of our National Dealer Network and After Sales Network.
Government incentives, both federal and local, are higher now than they have ever been.
For example, government funding for GPBeasts, NanoBeasts, and our commercial EV star line has now gone national and has moved GP from being just a regional player in California or the West to being a national one. We've added dealers across the country for our school buses and for our commercial EVs.
production facilities are already building school buses.
and it's become a second hub for our after sales and administrative report, as well as providing sales for the Eastern and Midwest of the U.S.
School bus production training with our education partner, Bridge Valley College, located in West Virginia, is progressing.
A large number of employees have already started attending classes that we co-developed with the school.
Yesterday, at the Transportation Network Conference in Reno that I had mentioned previously, it goes on in Nevada every year at this time.
We presented the results of our school bus pilot project in West Virginia.
This is where four of our battery electric school buses were operated at different school properties throughout the state.
on a rotating basis.
The pilot project has proven to be so wildly successful, actually the most wildly successful pilot project I've ever been involved with on the EV space.
And this product shows that our beast and our nano-beast can perform in all different types of terrain, weather, and operating environments.
And again, it proves that you can operate green power, beats, or battery electric vehicles without changing the way a school district performs their existing operation.
Maintaining our competitive advantage is paramount as we balance expanding our production, sales, and support while keeping our costs down.
To this end, we continue to nurture the funds entrusted to us by the investors.
and make responsible yet strategic decisions on how we allocate and spend those resources on sustainable and profitable growth.
Now I'd like to turn it over to Michael Seifert, Green Power's CEO , who will cover the quarterly and year-end financial highlights.
Thank you, Brendan.
The 2023 fiscal year highlights included, we generated record revenues of $39.7 million.
which was an increase of 130% over the previous year's revenue of 17.2 million.
Gross profit for the year was $7.3 million compared to $3.9 million in the prior year.
This sales increase was driven by record vehicle deliveries.
of 299 vehicles for the full year compared to 93 in the prior year.
As of March 31, 2023, we reported deferred revenue of $10 million, which includes the current portion of $8.19 million.
Working capital improved to $27.7 million at the end of the fourth quarter compared to $25.7 million at the end of the third quarter.
We finished the year with inventory of 41.6 million and this included 31.9 million of finished goods inventory Which was primarily comprised of EV Star Transit Pluses, EV Star Cabin Chassis, EV Stars, EV Star Cargos and Beast and Nanobie School Buses.
During the year we closed the contract of lease purchase in May 2022 and in August we took possession of this 80,000 square foot facility in South Charleston West Virginia.
manufacture all electric school buses.
as well as other electric vehicles. This was the primary driver of the significant increase in our right-of-use assets over the year, and this increased to $4.8 million from $100,000 at the prior year end.
We completed the acquisition of Lion Truck Body, a truck body manufacturer located in the Greater LA area, and this was primarily funded with an assumption of a $1.5 million term loan that has a maturity of May of 2050 and an interest rate of 3.75%.
Over the course of the 2023 fiscal year, the growth in our business and revenue, as well as operational enhancements have led to improvements in our cost structure and inventory utilization.
Selling general and administrative costs as a percentage of revenue have declined from 133% in the first quarter to 36% in the fourth quarter. This demonstrates the improving operational leverage in our business model as revenues have steadily increased.
The inventory at March 31, 2023 was $41.6 million, which was 3.2 times our fourth quarter cost of goods sold. This was a significant improvement over the prior year, as inventory at March 31, 2022 was $32.3 million, or 8.7 times our quarterly cost of goods sold for the quarter ended March 31, 2022.
As inventory represents the largest single financial asset of the company, increasing inventory turnover allows us to more efficiently utilize our financial resources.
More efficient use of our inventory remains a key focus area for management. We'll now open the call for Q&A.
Operator, please open the call for questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2.
At this time, we will pause momentarily to assemble our roster. Our first question comes from Craig Irwin of Roth Capital Partners.
Good morning, and I should start with congratulations for the strong revenue results.
morning and I should start with the congratulations for the strong revenue result.
Fraser, can you maybe give us a little bit more color on the West Virginia facility and the potential tempo of delivery, so both beast and nano-beast, from that facility and then, of course, from inventory, given that you do hold units, or you did hold units coming to this calendar year? Well, I'll start with the...
and with the West Virginia and I think Brendan can probably provide some additional color commentary, but we had during the year or I should say during the year, but more recently we have undertaken our apparent
production of our nano beasts which is the first production of those vehicles in the West Virginia facility and we're currently organizing to produce the larger type D beast school buses in that facility as well. That will be on the hills of the
first tron to the nanoB. Ultimately, over the course of this current fiscal year we're now in, the objective is to be building both and having the first of those off the production line.
into our sales deliveries. So that's kind of the first step and our objective when we first undertook that facility was to get it up to a place where we could build 50 to 60 per month or a run rate of in the magnitude of 600 to 700 plus in that facility.
On the inventory, I think this is as Michael just commented is one of the key operational goals that we achieved during the year which was really to not just continually build inventory but to manage our inventory.
is our inventory has gone from the beginning of the last fiscal year to over eight quarters.
to just over three quarters of effectively the inventory that we're holding. So, you know much much better utilization of that inventory and that's a continued goal through the next year and as a result of that, that has significantly helped or assisted us with our
available funding. Brennan anything to add on the West Virginia?
Well, Frazier, you did a great job. Thank you. Perfect. Perfect. Thank you, guys. Next question I wanted to ask is, this is an important quarter for you guys because you already have.
You know solid record with workhorse, but it seems like you're starting to get Cabin chassis sales away from workhorse Was hoping you could give us a little bit of color on sort of what the pipeline looks like there As far as the deliveries that are happening and what you feel about the the sales momentum right now
And then also if you could give us some color on the EV Star cargo and cargo plus What the market uptake looks like, what customers are saying with these now in commercial customer hands.
Well, I'll deal with the latter part first. As we had noted in our press release and in the earlier comments with this earnings call, is that the Commercial Vehicle Group, which is headed by Klaus Trett, right now he has 42 live orders and over 140 signs.
in terms of the orders that we have.
That's a huge step up from where we were a year ago. So that's looking particularly strong on that side. And then on Workhorse, we're continuing to deliver vehicles.
They have publicly announced that their W750 that utilizes the EV Star Cabin chassis is now going through their production process and entering the market in terms of sales in their Q3.
And so, looking ahead, we need to ensure that we're supporting their activity and the sales activity and their production levels in order to achieve their goals. Excellent. So, if I could ask a Workhorse specific question, right?
this agreement that you have with them. Is this something that, you know, will both go up and down over the next number of quarters? Should we see that build gradually? Any color on sort of the way we should model this for the course of your fiscal 24?
Well, I would characterize it as early days with regards to their activity and their throughput. So, we're obviously reliant on what their successes are, become our successes.
We really need another quarter or two under our belt to see how that throughput is looking. I view them as a very strong partner in terms of any issues or issues that we have.
the actual production flow through and things like that. There's good communication within the group so we have a good feel for what we need to do or what we'll need to adjust if there's some significant upticks and we need to be adjusting our deliveries to accommodate that.
Understood, that makes complete sense. So last question for me before I jump back into the queue. Today is July 17th.
And, you know, it's more than two weeks past the end of your first fiscal quarter for 24.
I know you guys are going to be extra careful given the challenges you had in your year-end audit, but are there maybe any high-level metrics you can share with us like total number of deliveries or any other color that you can give us about the success you had in this quarter.
and how this is continuing on top of what you saw in the fourth fiscal quarter? Well, unfortunately, the focus was to get this completed. If your reference to the auditors were, we did make a change during the year to
to upscale to a firm that was well recognized across North America and working with them and getting this filed at the end of last week. It was a Herculean effort by the finance team in particular. So that was kind of the primary focus.
some of the key activities there. So we expect to be back in a position where we can be communicating with our stakeholders and getting our next quarter out as quickly as possible so we can be talking about all those kind of metrics.
Our next question comes from Tate Sullivan of the Maxim Group. Go ahead.
Great, thank you. Thank you, Frazier. You mentioned managing your cash position partly with inventory management, but also you have the $3 million deposit from the state of West Virginia, subsequently your fiscal year end on a $15 million order. Which should we expect additional deposits with additional orders from the state of West Virginia or counties or...
orders within the school bus space for electric school buses that is. And so we want to do a good job in you know producing the vehicles for that order and it also gives us the ability to be scaling our West Virginia facility as we do not just that order.
but other orders that are being generated within the region. I would say we'd love to see a follow-on order, but we're pretty happy about producing vehicles pursuant to that order.
over the next number of quarters. That's a great deposit number. And then on the 63 school bus orders, and I think you mentioned before in your answer the other question, so in the near term more nano beast deliveries.
then shifting to more BEAST deliveries is that fair or did I hear that correctly? Well it really depends what the region is in that the BEAST which we can actually configure for up to 90 kids. That's the grade 6 level.
You know, the high school allows for fewer kids within the school bus because of the obvious size differences. But the 90 is, you know, is generally we're finding a lot of the orders are around 84 seats in terms of the configuration of that vehicle. And that's an important metric in terms of.
what the school districts need to manage for their morning and their afternoon run. So that fits a very specific need and requirement. The NanoBeast is more like a Swiss Army knife. It really accomplishes a lot of different objectives. There's fewer number of passengers. It's more nimble and flexible.
And even in the charging infrastructure, generally a level two charger will accommodate that particular vehicle. Most of the sales of the type A class four vehicles, which is the space that the NanoBeast is directed at, and I think the number is around 80% of the sales.
for the Type A school buses is with the wheelchair left in the curbside rear of the vehicle. So that particular configuration is one that really accommodates all of the different requirements that a school district has.
that the larger Type DB school bus can't necessarily accommodate. So that has a fit for a totally different market. And a good example of that is that if you're...
In Manhattan or in the financial district of New York City, you'll see an awful lot of Type A school buses on the road and very few of the Type C or Type D larger school buses.
and that just, you know, it's more suitable for that environment and school districts, you know, where they can effectively integrate that particular vehicle, you know, that's kind of the go-to for that environment.
Thank you. And last for me is you mentioned 42 live orders for EV stars and configurations and 141 signed purchase orders. And I think you've mentioned before switching those signed purchase orders to live orders depends on the voucher timing. Or is that not the case for all those?
Some of them do have vouchers and you know principally New Jersey or the California HVAP. But some of them are related to you know setting up delivery so getting the agreed upon delivery time. Some of them have not agreed to equipment.
we could have a specific vehicle and even a bin number attached to the signed purchase order with the customer and funding attached through a voucher program and their delivery hasn't been set as they're waiting for a charging station to be installed or they're waiting for
to get their own internal organization around the various training that we put in place with the delivery and deployment of vehicles. So it really is a mixed bag. And then as well there's in the case of where we're building out a cabin chassis to say a box truck or...
more sophisticated box truck with lift gates or something like that, then that takes additional time to complete that before a delivery date can be set. Okay, thank you, Frazier. Thank you all.
Our next question comes from John Abe of American Research Media. Again, if you have a question, please press star, then 1.
Go ahead, John .
Good morning gentlemen. Thank you for taking my call.
You mentioned that you have a lot of standing inventory.
Considering the fact that you advance so many buses to create a bus sales in California, is most of that inventory type A or type D?
On the school bus side, it is a mix, but there are more of the Type D than the NanoBees Type A.
So we'll see that's a large revenue infusion for the company that those in fact do transfer.
Most of them are mandatory. Absolutely, and not if they transfer, but when they transfer on to, pursuant to these orders. The final finishing relative to the lettering on the side, the numbering for that particular letter.
school district is sort of the final end of the completion of the vehicle, but the majority of cost that has gone into that beast is already, we've already paid for it in full, sitting in inventory, so we're effectively monetizing.
that inventory as we get these deliveries off our books. And Lion Truck Body, in your statement it looks like you know they're located in Torrance California, a suburb of Los Angeles. Are they going to be relocating to West Virginia?
That's a great question. Brennan in particular has talked about taking Lion Truck Body from a regional to a national player and products like the refrigerated box truck.
That's the kind of vehicle that can be a national product and create much more of a national brand for a line truck body.
And if that's the case, there's certainly an opportunity.
perhaps have a second location for Lion Truck Body and West Virginia could be a logical consideration for that but I think we're going to be pretty busy in West Virginia building school buses in the near term.
Yeah, if I may add real quickly, this is Brendan speaking. John , that's a very good question.
Yeah, if I may add real quickly, this is Brendan speaking. And John , that's a very good question. The Lion Truck Body product line.
is in the process of being completely made into kits also. So not only can we assemble those kits in places like West Virginia, but we can also shift them to our dealers that do body assembly. And the kits are designed for like a dealership to do that might have a body shop to do body assembly.
but also to be able to have the product so it's in such a modular format that it can be built and serviced and maintained even through our dealership network.
And in West Virginia, with the cost of living and the cost of labor being in the lowest, one of the lowest percentiles of any state in the United States.
It just seems to me like it's a bit crowded to build all these different products in just 80,000 square feet.
On an interview, Brendan Riley, which was released on April 18th, was talking about looking for a second facility.
the state of West Virginia. Is that something that you're still looking into? John this is Brendan again. We're looking at additional facilities in multiple locations. West Virginia has been a very good partner to us and we've had amazing success to date.
with our West Virginia facility, both in human resources and our partnerships, and found it to be a very business-friendly environment.
and we are considering a second location in West Virginia, but we're also considering a location with those that we're looking at with the set of.
The second location attributes that we're looking at for West Virginia, we're also looking for that in other locations also.
At the EV convention in India, Jupiter wagon featured a GP product, I think it was an EV star. It was an adventure working with Jupiter.
Well, I'll start off on this one. We do have a right-hand drive model of our ED Star platform that is
targeted for that market. There are other markets that can utilize such a product. India is a very different market than most in that sense.
Price sensitivity is incredibly high regardless of whether it's a new product or a product's been around 100 years.
So we are taking the approach in that market on a very measured basis, which is get the product out there, see what the uptake is, see how it fits in the supply chain. There's a leg within their delivery model that doesn't exist in North America. It's almost like the theoc concurs with their meta you will be there.
the last yard within the last mile. And so there's nuances like that that significantly impact on you know what the usability of our kind of vehicles which are medium duty they're not light duty.
our products are medium or heavy duty. So the EV Star has a place in their supply chain that is probably a little further up than where it would be within.
the delivery model within North America. So in short, we are working with them. We do have resources in India that are working with Jupiter. But the approach we are taking is very measured to make sure
in regards to Forest River and your cab and chassis that you're delivering to them?
There are no updates.
Forest River, it preceded what we were doing with Workhorse, it preceded the Acquisitional Lion Truck Body where we have working with Lion Truck Body on specific models in the marketplace. To some extent we've kind of supplanted
the original goal or objective with Forest River Group, but otherwise there's no there's no update in terms of what we're doing with them.
Does your agreement with Forest River preclude you from working with other RV manufacturers?
No, it doesn't. If Klaus is on the line, who heads our commercial vehicle group, he used to work at Daimler and of course with the Mercedes trucks, he's got decades of experience in...
selling and distributing their various models and they had a their 3500 Sprinter you know was was kind of the go-to for you know the smaller recreational vehicles, so that's
something that he has had experience with.
and with a product that had an awful lot of excess as well.
and with a product that had an awful lot of excess as well. He came out of canoe, is that correct?
He was at Canoe for a period, that's correct. And I think during his time when he was at Canoe, didn't they secure a contract with Walmart for 4500 units? I believe you're...
I think that number is right, but otherwise I would need to go back and confirm what they've said in the public domain. But I suspect you've already done that, John .
And lastly, I noticed your next quarterly is scheduled for just a month from now.
I noticed your next quarterly is scheduled for just a month from now. So, That's how the second half of this speech will work,
I guess that would I'm assuming that that means that there's a lot of good news on the horizon if you're only having your You're reporting a month apart
Are we looking possibly at an acceleration of receivables in the next month? While we.
The overall management of our working capital is as we're communicating on our year-end call, that if you look at where we were at the year-end to where we are effectively now, is that I think we've done a great job on collecting the receivables and monetizing our inventory.
managing that cash flow in a fashion that has allowed us to significantly increase our available funding.
But other than commenting on where we are up to now, we'll let the quarter speak for itself when we're able to get it out the door and have earnings call.
Well, thank you very much gentlemen for fielding my call this morning. Congratulations on all your success.
Thanks, John , and all the best. This concludes our question and answer session. I would like to turn the conference back over to Fraser Atkinson for any closing remarks.
Just to conclude our call, thanks for those that were on the call and those that are listening afterwards on our pre-recorded webcast. We really appreciate your support. The EV sector that we operate in has its own challenges.
and building strong relationships with customers and partners.
And more recently, we've made significant strides in terms of operational goals. And as we've noted several times on the call, we've improved our available funding and have access, should we require it, to additional funding that will help fuel the growth that we see with our business plan.
and I think this past few quarters has shown the success of that strategy where we are now getting significant throughput in terms of our cost of goods sold as a measure against our inventory and as Michael noted
At the beginning of this fiscal year we're at over eight quarters in terms of that throughput and at the end of this most recent fiscal year we're at under four just 3.2, 3.3. So that just illustrates the significant improvements that we've made in that one.
one area with our overall business model. So look forward to providing updates in the marketplace in terms of our ongoing successes and look forward to being engaged with our stakeholders on our next earnings call.
business model. So look forward to providing updates in the marketplace in terms of our ongoing successes and look forward to being engaged with with our stakeholders on our next earnings call. Bye for now.
The conference has now ended. Thank you for attending today's presentation. You may now disconnect.