Q2 2024 GreenPower Motor Company Inc Earnings Call
Good day and welcome to the Green power second quarter earnings Conference call.
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I would now like to turn the conference over to Michael Sheaffer, Chief Financial Officer. Please go ahead.
Thank you. This is Michael <unk>, Chief Financial Officer of Green Power Motor Company I would like to welcome everyone to our call to discuss Green Power's results for the three and six month periods ended September 32023, and recent developments.
I'm here today, with our Chief Executive Officer, Frazer Atkinson, our President Brendan Riley Vice President Klaus trip, and Vice President Michael Press drinks.
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 purpose 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 there.
As indicated in these forward looking statements as a result of various important factors.
Including those discussed in our quarterly interim results and MD&A filed on SEDAR and Edgar. In addition, these forward looking statements relate to the date on which they are made we anticipate that subsequent events and developments may cause the company's views to change pretty empowered disclaims any intention or obligation to update or revise any forward looking state.
Whether as a result of new information future events or otherwise.
Also during the course of today's call. We may be we may refer to certain non <unk> financial measures reconciliation of these non <unk> measures can be found in our MD&A filed on SEDAR and on Edgar.
And this is also located on our website at Www Dot Green power Motor Dot Com I will now pass the call over to Repower CEO Fraser Atkinson.
Thank you Michael over.
Over the years, we've talked about money and mandates driving fleet operators electrification strategies for medium and heavy duty vehicles.
A lot of money in the form of boaters and incentives can have a near term impact on sales.
It is our view that the longer term growth opportunities for the medium and heavy duty EV sector will be realized by those companies that are best positioned to take advantage of key mandates.
On today's call the Green power team will talk about recent mandates or drive demand for Green power is commercial vehicle and school bus groups.
Earlier this year, our focus has been on making the transition from utilizing our inventory to satisfy customer needs to the production of school buses in West Virginia.
We've expanded the production capabilities with line truck body are in house bodybuilder to produce completed vehicles utilizing our own E V Starr cabin chassis.
We achieved a number of milestones in the most recent period and completed key deliverables in order for us to achieve these longer term strategy strategic objectives.
Green power reported revenues of 26 million for the first half of the 2020 for fiscal year, an increase of 125% over the revenue of $11 6 million for the first half of the previous fiscal year.
For the quarter, we generated revenue of $8 4 million with collaborators are 31 vehicles.
Adding a record 16 school buses.
Being a record for the company.
Finally, with our financial position, we increased our cash by 1.4 million from the beginning of the current fiscal year and we've maintained a strong working capital balance I'll now hand, it over to Michael for discussion on the financial highlights for the court.
Thank you Fraser for the three months ended September 32023, pre power generated revenue of $8 4 million, primarily from the sale of 16, Beeston Nat obese and 15 EV stars, which was an increase of nine 1% from $7 7 million of revenue generated in the same quarter in the prior year from the sale.
Four Bcm 50. The stars both quarters also included revenue from leases part sales and truck bodies gross profit was $1 2 million and gross profit margin was 14, 6% compared to $1 6 million and 21% in the prior year's quarter. The margin decline was primarily due to higher parts inventory costs.
Your margins outlying truck body and delivery of new products.
Sales general and administrative costs were $5 2 million compared to $4 7 million in the prior year, an increase of 10, 5% primarily due to the expansion of the company's operations and workforce in West, Virginia, and California as.
As well as an increase in allowance for credit losses, which was partially partially offset by lower share based payments expense and lower product development costs.
Repower generated a loss for the quarter of $4 3 million compared to a loss of $3 6 million in the same quarter of the prior year for.
For the six months ended September 32023, Green power generated revenue of $26 million, primarily from the sale of 162 vehicles in the current period, which was an increase of 124, 5% from revenue of 11, 6% in the first six months of the prior year.
Which was due to the sale of 75 vehicles and other sources.
Gross profit was four 4 million and gross profit margin was 15, 4% and six months ended September 32002, or three compared to $2 7 million and 23, 1% in the same period of the prior year. The margin decline was primarily due to the same factors as during the.
The recent quarter.
Sales general and administrative costs were $10 five and six months ended September 32023, compared to $9 8 million in the prior year period, an increase of seven 1%, primarily due to expansion of the company's operations and workforce and increase in allowance for credit losses.
These factors were partially offset by lower share based payments expense as well as lower sales and marketing costs.
Power generated a loss for the six month period of $7 million compared to a loss of 8 million in the same period of the prior year.
As at September 32023.
Empower had cash 2 million working capital of $24 2 million and $1 4 million available on its operating line of credit <unk>.
Improvements in the company's cash and available liquidity liquidity. Since March 31, 2023 were largely due to higher sales and due to our focus on collections, which led to lower levels of inventory and accounts receivable Green power was also able to lower its interest bearing debt. During the period, we remain focused on efficiently managing our working capital.
I'll now turn it to Brendan Reilly to discuss operations.
Thank you Michael.
In addition to sales and production during this quarter, we are focused on the future.
The future of meeting the customer demands facing our industry due to money and mandates.
And in doing so we have made preparations to ensure our customers.
School districts and commercial operators that they have product options available to meet or exceed their demands and transportation.
And goods.
The Green power manufacturing facility in West Virginia is in production of the nano Beast, It's our small school bus and provisions have made.
Have been made to start the manufacturing of the Beast in the next quarter.
The first all electric purpose built.
School buses will emerge from the West Virginia factory.
On December 13th.
Nan obese being delivered to schools in West Virginia under the purchase made by the state.
This is a monumental occasion that sets the foundation for the future of pronounced chimps are green power school buses to be delivered to customers.
In the east coast and the Midwest.
The school bus team has also spent the quarter focusing on differing state requirements and regulations.
Found in the state school bus procurement contracts to ensure that Green power school buses are readily available and our purchase of <unk> to.
Be bought by them.
The New York, California, Connecticut, Maine, Maryland, and others now have a level of requirements and incentives available to cause the transition from smelly and polluting diesel the clean and quiet all electric buses with production, California, West, Virginia and with contract manufacturing.
Green power is uniquely positioned to supply battery electric school buses in large quantities and in a timely manner.
Another goal of last quarter was to move school bus inventory and we've done just that all of the inventory of our B school buses have either been shipped to customers or have been allocated to orders.
On the commercial side of our business, we've delivered our first airport ground support vehicle.
The EV Star Heidrick truck.
This is a purpose built all electric large aircraft refueling vehicle.
The vehicle is operating at Vancouver Airport in Canada, and as an example of how we provide our all electric purpose built technology in a variety of settings from specialty vehicles like our heidrick truck.
To our box truck and refrigerated trucks, which are very standard in the market Green.
Green power is truly a one stop shop for compelling zero emission vehicles.
The last topic I wanted to touch on is mandates.
One example of a strenuous mandate Lumi is California advanced clean truck regulation.
This regulation will require 15% of certain fleets to be all electric.
The next year.
2024 in order to operate in California.
And that percentage goes up over time.
This is an example of just one mandate of many that exists from coast to coast here in the USA.
Green powers commitment to provide a quality product in a timely manner to our customers is what we strive for.
And Thats, what last quarter's preparations have been all about.
Now I'd like to turn it over to our Vice President Klaus <unk>, who will discuss the activities in the commercial vehicle group take.
Take it away close.
Thank you Brandon good morning, everyone.
Brendan has set the stage for what I would like to spend a few minutes amplified.
Today Green power is positioned to meet the commercial needs of customers, who want to make the transition to all electric vehicles in their fleets.
Well that desire space the mandates economic opportunity for environmental reasons, we have the cab chassis and start to deliver a complete vehicle within 60 days not the normal six to nine months customers face when dealing with multiple vendors.
And we try and track body brainpower can outfit that product to meet the customers' needs in a one stop shop experience box trucks.
Refrigerated trucks specialty vehicles.
We are prepared to move immediately for the customer nationwide.
We have spent this last quarter.
Patent for this we are prepared for it.
Demand of box trucks, and cargo vans and cars off the California advanced clean track requirements.
And Green power is positioned to help customers with grants and importantly supply vehicles that meet the $40000 tax credit under the inflation reduction.
<unk> comes to clubs.
In addition to look in addition to looking into the future.
Also the complete delivery of 10 <unk> filed patents for events in the Boston market during the quarter.
These vehicles are being used there in an innovative approach.
Walker transportation, providing last mile solutions to get people safely to and from work.
Our commercial dealer network continues to expand with appointments during the quarter and to triangulate North Carolina.
North, Texas and West Virginia.
And recent Tradeshow activity has further expose the green power <unk> commercial line of products to new geographical locations and customers as well as theaters in other areas of the country.
I would now like to turn it over to Mike and progress to further discuss school bus activities.
Okay.
Thank you Klaus good morning, everyone.
Over this past quarter, we continue our work on completing certifications and meeting requirements for key states, where we see the best opportunities to meet the demand of all electric zero emission school buses.
I was recently at the <unk>.
Conference and Tradeshow in Ohio, where we launched our Mega Beast type D. All electric purpose built electric school bus.
<unk> has an industry leading range of up to 300 miles from 387 kilowatt hour battery pack.
Largest currently available in school bus transportation.
We were also engaged with several high quality prospects at the show in new geographic territories, including Ohio, Kentucky, Tennessee and Virginia.
This morning, we announced our first order for 25, Megabits to Montebello, USD and California through our dealer model one formerly creative bus sales utilizing vouchers from the H Skip school by satisfied program and the EPA Clean School bus program.
This first of a kind order will begin production immediately with delivery is targeted in late 2024.
We also announced an order for 10 B school buses for garden growth that we're already working on with delivery scheduled over the next couple of quarters.
In the past month, California, Governor Gavin Newsom signed legislation, requiring all new school buses in California be electric by 2035.
With that action, California joined Connecticut, Maine, Maryland, and New York and mandating the switch to all electric zero emission school buses and fleets over the next four to 17 years, the new law makes California. The leader in state funding for the transition to all electric school buses with.
Switch projected to cost roughly $5 billion.
We're working with model won dozens of borders utilizing funding from the H Fib School bus satisfied program. The $1 2 billion to be added in 2024 Air quality Management District funding the VW fund and of course, the EPA Clean School bus program.
We are also very excited to announce very soon new orders that will be the first orders in new states setting up continued momentum as we enter the new year and now I'll turn it back over to Fred you're accurate.
Operator at this time, if you could open the lines for our Q&A session.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble our roster.
The first question comes from Craig Irwin with Roth and plan. Please go ahead.
Good morning, gentlemen, thank you for.
It's really nice to hear the kind.
The West Virginia facility is starting to produce.
You have orders already customers are waiting for the product.
Can you can you maybe just help us shape.
Potential orders in the December quarter for.
Youre Taipei and type C School buses from this facility.
Is there any difference in pricing versus your legacy product.
And margins I should say and.
Can you talk about the number of customers that are visiting this facility as you bring up production and the different.
School districts that are coming in for ride and drives before they make their final commitments.
Right Gregg Brendon.
Yeah.
Yes, Craig this is Brendan and good morning.
Your first question.
Need to be answered.
Buses built in West Virginia are the same buses, we build in California.
And.
Anywhere else there.
It's not a new bus.
Some specification differences, but those are really minor.
Changes that we make could be.
A different option that's added to it could be a different color in one place or another.
<unk>.
Things of that nature, but for the most part the vehicles at least from a.
Certification perspective there.
They are essentially the same vehicle.
The facility is fairly new we've had dealers come through.
And do training customer.
Visits will be are scheduled for this.
This quarter.
And again I don't know if I can name any of them.
So I, probably wont, but we do have customers coming out for ride and drives ended toured the facility.
Including customers from West, Virginia that are actually going to be receiving the buses under the west Virginia contract.
For the first year will be producing.
First the 41 buses from the West Virginia contract and any follow on buses for the West Virginia contract as we've committed to the state to get those out first.
As far as the pricing is concerned to the end user that pricing is the same right now.
And for margins it is.
The new facility, we expect those to improve.
I don't think were.
We're really announcing that number yet, but frankly the.
Market on the East Coast is just opening up for US. We've just been added to the New York State bid.
And.
We are working on other places on the east coast to start selling more vehicles into.
Excellent. Thank you for that so EPA is slated to start releasing additional.
Additional additional districts as far as the vouchers.
Awarded in this year's funding program.
Can you maybe.
Help us understand the work you've been doing with different school districts and different dealers to support their applications to this program.
And what you feel about your overall competitiveness as far as voucher awards for customers that are likely to work with with Green power.
Okay Alright.
Thanks Pat.
Michael Perez did you want to.
Lead off on that.
Yes of course, we work with several of our existing dealer network on.
Producing webinars producing materials and producing.
Any items that go to school districts within their territory to set up all of these applications.
That are being submitted for the EPA Clean School bus program.
That can include demos.
In person demos right in drives and anything else tailored to that region in that market.
Yeah.
Yeah, and I'd add to that that.
Michael Dell was that the NIH P. T conference that he referenced in our opening remarks and.
And this past summer at Essakane with just kind of like the big annual event for.
For the school bus industry and and within each of those there.
The engagement was numbered in the hundreds in terms of contacts discussions.
We had a panel that.
How many people are in attendance for that Michael.
Right.
And panel.
Yeah. So.
So all of that is in you all as part of the.
People are.
Waiting until a future date, they take advantage of the ride and drive opportunities at events like that.
Where we have our vehicles and we're providing a ride and drives at those conferences and trade shows.
So that's a big part of it as well.
Yes.
Thanks Glenn.
One Brendan I interrupted.
One last thing we do provide assistance if any customers dealers when fleet partners are looking to.
Submit for grant we provide assistance with any of the paperwork, making sure that if they need any help on how to fill it out how to do.
What all of our data is to populate those applications.
We provide that.
Whenever customers dealers or fleet partners need it.
Okay last question, if I may before I hop back in the queue. So.
Youre cabin chassis product you have one very large customer there.
And from from our prior conversations I understand that the contract size in this market is likely to be much larger potentially much more lumpy.
Over the next couple a couple of years.
Can you maybe update us on on market developments. There you do have a number of vehicles actually rolling out in the world now and different customers taking product.
How is this impacting the overall <unk>.
Hempel of conversations.
Potential our potential customer activity.
Collateral.
We have.
A large customer large customer youre, probably referring to had.
Paused the.
Intake of.
Our cabin chassis.
And I think that was in the August timeframe.
Right now, where we said we have over 50 Ccs.
We have available for delivery.
The appropriate time.
I think more importantly.
Part of what Klaus referred to it as well as.
In our opening remarks.
Number one he's got a number of orders and.
And even a greater number of coach just on the C suite. So we've got a.
A rapidly developing market for for our EV Star cabin chassis and we're also utilizing that.
For our nano beads for our production with Lion truck body. So it really has a broad application and.
And one that has really grown over the last.
Two or three quarters.
Excellent well congratulations on the progress and I'll go ahead and hop back in the queue. Thank you. Thank you Craig.
As a reminder, if you wish to ask a question. Please press Star then one can be joined enter the question queue.
The next question comes from Tate Sullivan with Maxim. Please go ahead.
Hi, This is actually Justin Smyth infer Tate Sullivan today kind of just following up on the last question. I was just wondering if you guys were able to provide any details you are still looking to deliver all 1500 at those units.
To your larger customer in regards to the cabin chassis units.
Well, we I.
We don't give forecast we don't provide.
And any guidance in that regard.
I think the the answer that we had on the previous question would be the same in that.
We have vehicles or Ccs ready right now we have Ccs.
That are in the queue.
That are being either completed or substantially completed that could add to that.
The follow on quarter in January and February.
And that'll be something that we'll be working through over the next week or two in terms of this quarter and next quarter.
Alright, great. Thank you and then.
Following up on that as well are you able to provide any information on those units do start coming out. If you think your gross margin for those will be better or worse than the gross margins for your electric school buses that are going out right now.
While the higher volume contracts, we've you know.
We've had margin compression or the margin is lower due to.
A price that.
Wouldn't be the same if we had a one off or two off.
And the reason we do those as that has we are able to to get.
Deliveries that are consistent in <unk>.
And.
<unk> continually ramp up volumes related to each of the products, whether it's nat obese or beast or a cabin chassis.
As we're able to get repeatable deliveries.
That's where we're going to enjoy.
Higher gross profit.
Alright, great. Thank you that's it for me appreciate the insight.
Thank you.
The next question comes from Greg Lewis with <unk>. Please go ahead, yes.
Yeah, Hi, Thanks, Thank you and good morning.
Not sure. If this question is more for Mike or Fraser, but.
Clearly you've been walking through some of the challenges are.
The.
The decremental margins.
And we're ramping in West Virginia.
Sure.
Is there any kind of thoughts around what type of volume, we need to be coming out of West Virginia.
In terms of.
Bus sales, we think that starts to be margin accretive.
So maybe on that.
Go ahead.
Yes, just.
We have just to be clear, we haven't really talked through.
Margins of school buses coming from West, Virginia, I would say that the margin compression that we saw this quarter specifically it was I'd say more related to specific parts inflation as well as deliveries of new.
Vehicles, what new products, so less to do with our school bus sales in the quarter. Our school bus sales this quarter actually Jen.
Generated.
Margin that was higher than the.
Overall margin for the quarter just to give you an indication.
As that facility ramps up certainly we would expect there to be.
Better economies of scale, but at this point, we haven't broken that out specifically Gregg so theres, probably not a lot of additional detail I can cover.
I'm not sure if there's more you'd like to add there.
Well I think the we're just getting organized to start the Beast production.
Uh huh.
With the first vehicles for that side of the school bus group coming off the line.
And.
Early spring of 2024, I believe is our targets.
And.
With you know until we get through that first and second cycle.
And look at how we're going to to both ramp and manage our costs. We will have a much much better idea of where where we are.
A positive in that group is that is that both at the state level like on the New York State contract that were on that Brandon talked about in my call <unk> talked about.
And the California programs in the school bus program, they all have price points.
That are very supportive in terms of what our cost structure in other words before those the vehicles, we're probably selling for a little less than what these mandates and incentives are providing.
That's super helpful. And then just just following up on that clearly, though the initial buses rolling out of West Virginia, All go into West Virginia.
As we think about that at what point is that a is that a back is that a back end of 'twenty four maybe calendar year 'twenty five of them when we start selling to non west Virginia.
School bus.
Munis.
Municipalities are customers.
While we have had.
We have had a.
Customers outside of West Virginia that are looking for.
The production out of West Virginia to fulfill their their requirement so.
We're already at a stage from a sales point of view in terms of identifying and quantifying what we're going to need to do.
<unk> for the East coast. So that's why we.
Initially we're looking at chart, South Charleston facility as being predominantly fulfilling requirements, we could see in the short term with west, Virginia, but thats already expanding to other markets on the east coast.
Okay perfect. Thank you very much.
This concludes our question and answer session I would like to turn the conference back over to Richard for any closing remarks.
At the beginning of today's call, we talked about the importance of being positioned in the medium and heavy duty EV space to be able to fully benefit from key mandates.
Green power strategy is to be able to take full advantages of two such mandates.
But the mandates in five states to electrify school buses, including the two big markets of New York and California.
Number one we have the full range of all electric school buses, including the recent launch of the Mega piece for a second type D. Along with multiple configurations for type a nano beast to fulfill.
Almost all of the requirements of the school districts have number two we have strong deal dealers in each of California, and New York.
Three we have spent the last two years locating a facility tooling and commencing with school bus production in West, Virginia for customers up and down the East coast.
For the California advanced clean truck regulation.
That will require a 15% of certain fleets to be all electric by next year number one we can build a completed box truck in 30 to 60 days compared to other outsourced bodybuilders it take at.
At least six to nine months and the customer has to it doesn't have to deal with multiple companies number two green powers innovation has brought a number of products to market such as our refrigerated box truck.
Number three we have our own cabin chassis with the EV star Cc on hand ready to fill customer requirements.
As close as always says within this space, we are truly a one stop shop in conclusion, we position ourselves for not one but two generational mandates that will drive growth for our school bus and our commercial vehicle groups. This concludes our call. We thank you for your support.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.
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