Q3 2024 GreenPower Motor Co Inc Earnings Call
Operator: Good day, and welcome to the GreenPower Motor Company 3rd Quarter Earnings Conference Call. All participants will be in listen-only mode.
Good day and welcome to the Green Power Motor Company third quarter earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.
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Operator: Please note, this event is being recorded. I would now like to turn the conference over to Michael Seifert, Chief Financial Officer. Please go ahead.
Please note this event is being recorded.
I would now like to turn the conference over to Michael Sheaffer, Chief Financial Officer. Please go ahead.
Michael Seifert: Thank you. This is Michael Seifert, the Chief Financial Officer of GreenPower Motor Company. I would like to welcome everyone to our call to discuss GreenPower's results for the three and nine-month period ended December 31st, 2023, and recent developments. I'm here today with our Chief Executive Officer, Fraser Atkinson, and our President, Brendan Riley.
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 Dream Power's results for the three and nine month periods ended December 31 2023.
And recent developments.
I'm here today, with our Chief Executive Officer, Frazer Atkinson and President Brendan Riley.
Michael Seifert: 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 those indicated by these forward-looking statements as a result of various important factors, including those discussed in our quarterly in-term results and NBNA's filing on CDAR and Deletica. In addition, these forward-looking statements relate to the date on which they are made.
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.
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 our quarterly interim results.
N D. They filed on SEDAR and does that occur.
In addition, these forward looking statements relate to the date in which Theyre made we anticipate that subsequent events and developments may cause the company's views to change Green Green power disclaims any intention or obligation to update or revise any forward looking statements, whether as a result, new information future events or otherwise.
Michael Seifert: We anticipate that subsequent events and developments may cause the company's views to change. GreenPower 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 MD&A file on CDAR and on EDGAR and is also located on our website at www.greenpowermotor.com.
Also during the course of today's call we may refer to certain non <unk> financial measures reconciliation of these non <unk> measures can be found in our MD&A filed on SEDAR and Edgar and is also located on our website at Www Dot Green Powerboater dotcom.
Michael Seifert: I'll now pass the call over to Fraser Atkinson, GreenPower's CEO, to discuss highlights for the quarter. Good morning, and thank you for joining GreenPower's quarterly earnings call today. Our school bus group continued to make great strides in the third quarter.
I'll pass the call over to Frazer Atkinson Repower CEO to discuss highlights for the quarter.
Good morning, and thank you for joining green powers quarterly earnings call today.
Our school bus group continued to make great strides in the third quarter, we achieved a significant milestone with the delivery of core type a and that'll be school buses that were the first all electric purpose built school buses manufactured in West Virginia.
Fraser Atkinson: We achieved a significant milestone with the delivery of four Type A NanoB school buses that were the first all-electric purpose-built school buses manufactured in West Virginia. Immediately following that delivery, production of the Type D BEAST school bus began in the West Virginia plant, which in the immediate term will fulfill current orders for 38 BEAST school buses in West Virginia and prepare the production team for the mixed manufacturing of BEAST and NanoBees at the facility to meet the projected demand. Presently, we have live orders for 102 of our Type D Mega Beasts.
Immediately following that to library production of the tight D. B School bus began in the West Virginia plant, which in the immediate term local call current quarters for 38, B School buses in West, Virginia and prepare the production team for the men next manufacturing obese.
And that'll be set that facility to meet the projected the bad.
Presently we have live orders for 102 of our tight Mega beef beef.
Beast and type a nano B school buses, including our first order from our dealer in the state of New York.
Fraser Atkinson: BEAST and Type A NanoBEAST school buses, including our first order from our dealer in the state of New York. We also have a qualified sales pipeline for 164 GreenPower school buses. On the commercial vehicle side of the business, we had deliveries this quarter that included 10 EVstar cabin chassis to the Canadian unit of a global retailer who will upfit the vehicles for fulfillment of their orders to customers in the greater Toronto market. Having said that, our commercial vehicle group, with EVstar Cargo and EVstar Passenger Vehicles, is several quarters behind the school bus group in terms of its order book. We expect to achieve similar growth with live orders, purchase orders, and a qualified sales pipeline by leveraging new and existing incentive programs as well as third-party relationships. However, we've had delays from customers with deliveries of our EVstar cabin chassis.
We all saw the qualified sales pipeline 464 Green power School buses.
On the commercial vehicle side of the business. We had deliveries this quarter that included 10, even star cabin chassis to the Canadian unit of a global retailer who up at the vehicle correct fulfillment of their orders to customers in the greater Toronto market.
Having said that our commercial vehicle group with D V Starr cargo and E V. Starr passenger vehicles, there's several quarters behind the school bus group in terms of its order book.
We expect to achieve similar growth with live order purchase orders and our qualified sales pipeline.
Leveraging new and existing incentive programs as well as third party relationships.
We've had delays from customers with deliveries of our EV star cabin chassis with inventory ready to go we are now working nonscheduled late deliveries for these <unk>.
Fraser Atkinson: With inventory ready to go, we are now working on scheduling deliveries for the. Collectively, these will create a robust commercial vehicle group, which, combined with the school bus group, will uniquely position GreenPower in the medium and heavy-duty EV sector. Over the past few years, we've maintained significant levels of finished goods inventory. We don't need to maintain these levels due to stocking orders from dealers who could provide demonstrations and ride and drives to their customers, along with a reduced competitive landscape.
Collectively these will create a robust commercial vehicle group, which combined with the school bus group will uniquely position green power in the medium and heavy duty EV sector.
Over the past few years, we've maintained significant levels of finished goods inventory, we don't need to maintain these levels due to stocking orders from dealers, who could provide demonstrations and Ryan and drives to their customers along with a reduced competitive landscape.
Fraser Atkinson: This is allowing us to shift from fulfilling orders from inventory to manufacturing vehicles pursuant to customer orders. How is GreenPower going to finance an increase in school bus orders and changes with our commercial vehicles? Instead of a traditional facility, we needed to secure a facility focused on production finance.
This is allowing us to ship from fulfilling orders from inventory to manufacturing vehicles pursuant to customer orders.
How is green power going to finance, an increase in school bus orders and changes with our commercial vehicles.
Instead of a traditional facility we needed to secure a facility focused job production financing.
Fraser Atkinson: This morning, we announced that we've entered into a revolving loan agreement with Export Development Canada, or EDC, for up to $5 million to fund all electric vehicle production for certain customer orders, allowing for multiple advances over a two-year period with repayments when vehicles are delivered. The revolving nature of the facility provides the flexibility to fund multiple orders and offers incremental capital in addition to GreenPower's existing $8 million operating line of credit and the guarantee of up to $5 million of standby letters of credit provided by EDC. I'll now pass the call to Michael Siefert, GreenPower's CFO, to discuss our financial results for the quarter. Thank you, Fraser.
This morning, we announced that we've entered into a revolving loan agreement.
With export development, Canada or E D C for up to $5 million to fund all electric vehicle production for certain customer orders, allowing for multiple advances over a two year period with repayments when vehicles are delivered.
The revolving nature of the facility provides a flexibility on multiple orders and offers incremental capital. In addition to green Power's existing 8 million dollar operating line of credit and the guarantee of up to 5 million of standby letters of credit provided by E. D C.
I'll now pass the call to bankruptcy or Green power CFO to discuss our financial results for the quarter.
Thank you Fraser.
Michael Seifert: For the three months ended December 31st, 2023, GreenPower generated revenue of $8.2 million, primarily from the sale and lease of 34 all-electric vehicles, which included 13 Bista NanoB school buses. This is a decline of 36.3% from the $12.8 million of revenue generated in the same quarter of the prior year from the sale of 101 all-electric vehicles, which included one Nano. Both quarters also included revenue from leases, parts sales, and truck body. Gross profit was $1.4 million, and the gross profit margin was 16.6% compared to $2.2 million and a gross profit of 17.4% in the prior year's quarter. The margin decline in the current quarter was primarily due to an inventory write-down of $408,000, which included cost of sales. The gross profit margin for the quarter would have been 21.6% without the inventory write-down. GreenPower generated a loss for the quarter of $4.6 million compared to a loss of $3.4 million in the same quarter of the prior year.
For the three months ended December 31, 2023, Green power generated revenue of $8 2 million, primarily from the sale of at least 34, all electric vehicles, which included 13 Beeston that'll be school buses.
This is a decline of 36, 3% from the $12 8 million of revenue generated in the same quarter in the prior year from the sale of 101 O Electric vehicles, which included one man obese.
Both quarters also included revenue from leases part sales and truck bodies.
Gross profit was $1 4 million and gross profit margin was 16, 6% compared to $2 2 million and a gross profit of 17, 4% in the prior year's quarter. The margin declined in the current quarter was primarily due to an inventory write down of 408000, which was included in cost of sales the gross profit margin.
For the quarter would've been 21, 6% without the inventory write down.
Green power generated a loss for the quarter of $4 6 million compared to a loss of $3 4 million in the same quarter prior year.
For the nine months ended December 31, 2023, empower generated revenue of $34 2 million, primarily from the sale of 196 vehicles in the current period, which was an increase of 41% from revenue of $24 4 million in the first nine months of the prior year, which was from the sale of 176.
Michael Seifert: For the nine months ended December 31st, 2023, GreenPower generated revenue of $34.2 million, primarily from the sale of 196 vehicles in the current period, which was an increase of 40.1% from revenue of $24.4 million in the first nine months of the prior year, which was from the sale of 176 vehicles. Gross profit was $5.4 million, and the gross profit margin was 15.7%, in the nine months ended December 31, 2023, compared to $4.9 million and a gross profit margin of 20.1% in the same period of the prior year. The inventory right down to 408,000 included in the current year period reduced the gross profit margin by 1.2% from 16.9% to 15.7%. GreenPower generated a loss for the nine-month period of $11.7 million, compared to a loss of $11.2 million in the same period of the prior year.
Vehicles gross profit was $5 4 million and a gross profit margin was $15 7 million sorry, 15, 7% in the nine months ended December 31, 2023, compared to $4 9 million and a gross profit margin of 21, 21% in the same period of the prior year inventory.
Inventory write down of 480000 included in the current year period reduced the gross profit margin by one 2% from 16, 9% to 15, 7%.
Repower generated a loss for the nine months period of $11 7 million compared to a loss of $11 2 million in the same period of the prior year.
As at December 31, 2023, Green power had cash of $4 million, which was an increase of $3 4 million since the beginning of the year and working capital of $19 4 million.
<unk> and the company's cash and available liquidity since March 31, 2023 were largely due to higher sales and due to a focus on collections, which led to lower levels of inventory and accounts receivable.
Now I'd like to turn the call over to Green powers, President Brendan Riley to highlight some of the innovative achievements green power reached during the quarter.
Thank you Michael and good morning to you all sprays.
Brendan Riley: As of December 31, 2023, GreenPower had cash of $4 million, which was an increase of $3.4 million since the beginning of the year, and working capital of $19.4 million. Improvements in the company's cash and available equities since March 31, 2023 were largely due to higher sales and due to a focus on collections, which led to lower levels of inventory and accounts receivable. I would now like to turn the call over to GreenPower's President, Brendan Riley, to highlight some of the innovative achievements GreenPower reached during the quarter. Thank you, Michael, and good morning to you all.
As Frazer mentioned the continued strides are being made by our school bus Division.
To this end and in our efforts to help eliminate smelly polluting diesel school buses, we have been expanding our national efforts.
Through the addition of new dealers and have hired more territory managers to support both our school bus and customers and dealerships alike.
The major technical accomplishment of this division during this quarter was the introduction of the new Megabits.
It's our newest all electric purpose built school bus.
We launched the type the Maccabees school bus to meet the demands from school districts, requiring BTG and longer range.
This 40 foot.
90 passenger type D zero emission school bus deliveries class, leading range of up to 300 miles on a single charge.
This is all due to the 387 kilowatt hour battery pack.
Brendan Riley: As Frasier mentioned, continued strides are being made by our school bus division. To this end, and in our efforts to help eliminate smelly, polluting diesel school buses, we have been expanding our national efforts through the addition of new dealers and have hired more territory managers to support both our school bus end customers and dealerships alike. A major technical accomplishment of this division during this quarter was the introduction of the new MegaBeam.
If you need a G capabilities.
While for more stable electric grid and community sustainability in areas, which is deployed.
I'm pleased to say that the market responded immediately.
So the introduction of our product and our California dealer model, one just placed an order for 25 megabits or the.
Montebello School District, just two weeks after we made the announcement of this product.
Our commercial vehicle Division has also produced a new innovative product during the quarter Green power delivered its first east our cargo refrigerated bad So you see school in California.
Brendan Riley: It's our newest, all-electric, purpose-built school bus. We launched the Type D Megabeast school bus to meet the demands from school districts requiring V to G and longer range. This 40-foot, 90-passenger, Type D, zero-emission school bus delivers class-leading range of up to 300 miles on a single charge.
With dual batteries for increased resilience and continual E true cooling for the cargo area. It has diamond plate floor and an F. D. A spec interior area that it's smooth.
Brendan Riley: This is all due to the 387 kilowatt-hour battery pack. Its V2G capabilities allow for more stable electric grids and community sustainability in areas where it is deployed. I'm pleased to say that the market responded immediately to the introduction of our product and our California dealer, Model One, just placed an order for 25 megabits for the Montebello School District just two weeks after we made the announcement of this product. Our commercial vehicle division has also produced a new, innovative product during the quarter. GreenPower delivered its first EV-Star cargo refrigerated van to a UC school in California, with dual batteries for increased resilience and continual E-True cooling for the cargo area. It has a diamond plate floor and an FDA-spec interior area that is smooth and allows for easier cleaning and sanitation for any of the refrigerated goods.
And allows for easier cleaning and sanitation for any of the refrigerated goods.
And the next few months, we are expecting more innovation from this group.
The cargo transportation space.
At this point, we would like to now open up the call to any questions.
Thank you we will now begin our question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys you said anytime. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
And the first question will be from Greg Lewis from V. T. I G. Please go ahead.
Yes, Thank you and good morning, everybody and thanks for taking my questions.
Fraser I was hoping to talk a little bit more about west Virginia, Congratulations on getting some of those orders out the door in terms of the production ramp you mentioned the ability to go dual line Beast and now.
Operator: In the next few months, we are expecting more innovation from this group in the cargo transportation space. At this point, we would like to now open up the call to any questions. Thank you. To ask a question, you may press star and then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the key.
And any thoughts of how.
How we should think about.
Over the next few quarters, what those deliveries that delivery production profile could look like and just as we think about the remaining.
So all of the.
The B class D buses to West Virginia is is that order.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our assembly. And the first question will be from Greg Lewis from BTIG. Please go ahead. Yes, thank you, and good morning, everybody, and thanks for taking my questions. Fraser, I was hoping to talk a little bit more about West Virginia.
Do we need to get that order of the way before we start selling buses into New York.
Or is that or we can expect those to be coming off the line concurrently.
Well, our first well thanks for the the the multifaceted questions Eric Greg first off the.
Our initial thought was that we would really only be positioned to do one.
The the type a or the tight T b nano booster the Beast in West, Virginia, but we're now at a place that.
Fraser Atkinson: Congratulations on getting some of those orders out the door in terms of production and the ability to go dual line, beast and nano. Any thoughts of what we should think about over the next few quarters what those deliveries, that delivery production profile could look like? And just as we think about the remaining Beast Class D buses for West Virginia, is that order, do we need to get that order out of the way before we start selling buses into New York, or is that, are we going to expect those kinds of buses to be coming off the line concurrently? Well, first, well, thanks for the multifaceted questions there, Greg.
Having gone through the full cycle with banana obese and.
And well into the first two.
<unk>.
The type D Beast that we believe we can do both.
And we certainly have the.
Capacity to to manage our runs a bulk of both of those vehicles.
So that that has changed the dynamics in terms of our expectation or.
The throughput.
You know, where we're going to need.
What a full cycle of the Beast as we have done with the nano Beast.
The first production run you run into all of the various start up issues and so on in terms of each of those right and so.
Fraser Atkinson: First off, our initial thought was that we would really only be positioned to do one of the Type A or the Type D, being the NanoBeast or the BEAST, in West Virginia. But we're now at a place that, having gone through the full cycle of the NanoBeast and well into the first tranche for the Type D BEAST, we believe we can do both. And we certainly have the capacity to manage runs of both of those vehicles. So that has changed the dynamics.
That's what we're going through right now and once we get this production run true and we're starting into the third the fourth.
<unk>, if you will have much better visibility on.
What that throughput would be but we continue to add people and grow the production crews. So the capabilities are.
Fraser Atkinson: In terms of our expectation or the throughput, you know, we're going to need a full cycle of the BEAST, as we have done with the NanoBEAST. As the first production run, you run into all of the various startup issues and so on in terms of each of those runs. So, you know, that's what we're going through right now. Once we get this production run through and we're starting into the third and the fourth runs, if you will, we'll have much better visibility on what that throughput will be. But we continue to add people and grow the production crew, so the capabilities are increasing by the month. In terms of the priorities, we've got, the orders from New York and certainly the expectation is orders from additional states on the East Coast that all of those or substantially all of those will be fulfilled out of West Virginia.
Increasing by the month in terms of the priorities we've got.
The the orders from New York, and certainly the expectation is or orders.
Additional states on the East coast is that all.
All of those are substantially all of those will be fulfilled out of West Virginia.
And the ordering of that will depend on you know.
Really what we're focused on in terms of the production run at that point in time. So for example, if we are.
The third or the fourth production line are run as Fernando piece, and we have more that'll be so outside of the state of West Virginia, then that will end up being the mix of the deliveries in the sales.
<unk> car.
Fraser Atkinson: The ordering of that will depend on what we're focused on in terms of the production run at that point in time. For example, if the third or the fourth production line or run is for nanobees, and we have more nanobees outside of the state of West Virginia, then that will end up being the mix of the deliveries and the sales for that particular period.
For that particular period.
Okay, Great and then I did have a question on the inventory. It was good to see that come down and you made some comments in the prepared remarks around maybe a little bit more.
You know the build to order is there any kind of way, we should be thinking or any kind of guidance you can give us how you're thinking about inventory management and are we going to be maybe for the next couple of quarters, we're going to be able to kind of whittle that whittle down that some of that inventory.
Michael Seifert: And then I did have a question on the inventory. You know, it was good to see that come down, and you made some comments in the prepared remarks around maybe a little bit more on the bill to order. Is there any kind of way we should be thinking or any kind of guidance you can give us on how you're thinking about inventory management? And are we going to be, you know, maybe for the next couple quarters, able to kind of whittle down some of that inventory, you know, with, you know, I guess, improving our cash conversion? Well, there may be a timing issue where we end up with, at the end of any particular month or, by extension, a quarter or year end, higher than expected finished goods simply because that's what's come off of the production line and we haven't delivered and recognized revenue, and so that's sitting in finished goods inventory. But the plan is certainly over the next few quarters that we can continue to utilize existing finished goods levels and draw that down Okay, great. Thank you very much. Thank you, and our next question is from Craig Irwin from Roth MKM. Please go ahead. Good morning.
Yeah.
I guess, improving our cash conversion.
Well there may be a timing issue, where we end up with at the end of any particular month or by extension a quarter or year end.
Where we have you know.
Higher than expected finished goods simply because that.
What's come off of the production line and we haven't delivered and recognized revenue and saw that sitting in finished goods inventory.
The plan is certainly over the next few quarters that we can continue to.
Utilize existing finished goods level and draw that down.
While were.
Moving from.
Fulfilling customer orders from inventory to you know where we are.
Into manufacturing and production pursuant to customer order so yes.
That's the plan over the next few quarters and the facility we announced this morning as you know.
It is a big part of helping us.
Transition or pivot to to that approach.
Okay, great. Thank you very much.
Thank you and our next question is from Craig Irwin from Roth M. K M. Please go ahead.
Hi, Good morning, first I'd like to say congratulations on the strong backlog and the progress with the Beast and the nanometer and then Megabits.
So it's nice to see everything coming together.
I wanted to ask specifically if you could talk about how you're working with your customers on charging infrastructure.
Craig Edward Irwin: First, I'd like to congratulate you on the strong backlog and the progress with the BEAST and the NanoBEAST and the MegaBEAST. So it's nice to see everything coming together. In particular, I wanted to ask you specifically if you could talk about how you're working with your customers on charging infrastructure. There's a conversation out there about the installation of charging infrastructure being a pinch point for the acceptance of these school buses, about the ability to actually site some of these fleets being restricted because of utility timelines for new infrastructure. Is there really maybe an advantage for the nano-beast as far as near-term volumes given the complexities of adopting this technology?
There's a conversation out there about the installation of charging infrastructure being a pinch point for.
The acceptance of the school buses.
About.
The ability to actually sites from the fleets.
Being restricted because of utility our timelines for for new infrastructure and you know is that really maybe an advantage for the nano east as far as near term volumes.
Given the given the complexities of adopting this technology.
Well I'll, let I'll, let brendan and get into some of the details on your first question, but at a high level the.
And I'm glad you mentioned the word utility because it's not just the perception is that.
Fraser Atkinson: Well, I'll let Brendan get into some of the details on your first question, but at a high level, the I'm glad you mentioned the word utility, because it's not just the perception that, you know, the availability of chargers or, you know, the hardware side of the charging infrastructure is the pinch point. It's really, in large part, the utilities, and it's also the expectation of customers that are looking at vehicle-to-grid solutions and a broader implementation than simply acquiring and running school buses. They're all electric school buses.
The availability of Chargers or yellow.
The the hardware side of the charging infrastructure is the pinch point, it's really in large part.
The utilities.
And it's also the expectation of customers that are looking at.
Vehicle to grid solutions, and a broader implementation than simply acquiring and running a school buses are all electric school buses. So there's a lot of the dynamics that are in play that have affected the timing on on that side of our deployments.
Brendan Riley: So there are a lot of dynamics that are in play that have affected the timing of that side of our deployment. As far as the mix of products that we have brought to market, you're quite right that the Type A Nano Beast, which is built on our EVSTAR platform and by extension utilizes a lot of the same parts and components, which provide for ease of deployment, also is easier to deploy in terms of the infrastructure side, as one can use a Level 2 charger or a DC fast charge. It really has a lot of flexibility in that if the vehicle or the Type A Nano Beast can be charged between a morning run and an afternoon run and still have sufficient battery capacity to do an evening event or activity run, then it's a lot easier to install that Level 2 charger.
As far as the.
The mix of products that we have brought to market is that you are quite right that the tight a non obese, which is built on our <unk> star platform.
And by extension utilizes a lot of the same parts and components.
Which provides for ease of deployment also is easier to deploy in terms of the infrastructure side as one can use a level two charger or E D.
D C fast charge and so it really has a lot of flexibility it Matt if if the vehicle or the type a NAND obese can be charged between the morning running and after noon run them still have.
Sufficient battery capacity to do an evening event or activity run. Then then you know, it's a lot easier to install that level two charger.
Brendan Riley: But if they need to get a much faster top charge, then we have the flexibility of installing a Level 3 charger for that vehicle. And on that, I'll turn it to Brendan, who can provide a little bit more visibility on your first question regarding charging infrastructure. Yeah, thank you, Craig, for the very thoughtful question. And good morning. This is Brendan Riley. The part of our strategy was, of course, to have three different battery sizes from the get-go. We have a car-sized battery in the EVSTAR line of vehicles, which the NanoBeast is built on.
But if they need to get a much faster top charge that we have the flexibility of installing our level III charger for that <unk>.
Vehicle.
And.
On that I'll turn it to Brandon, who can provide a little bit more visibility on.
On your first question regarding charging infrastructure.
Yeah. Thank you Craig for the very thoughtful question and good morning. This is Brendan Riley.
<unk>.
Part of our strategy was of course to have the three different battery sizes.
From the get go we have a car sized battery and EV star a line of vehicles, which in an obese is built on that allows us to charge very easily with level two overnight charging.
Brendan Riley: That allows us to charge very easily at level two, overnight charging, the same kind of charging you'd have in your house, the same charging I have in my house. With the Beast, again, we've got a 200 kilowatt hour battery. You can do overnight charging on level two, but you're really pushing it to the limit.
I'm kind of charging you would have in your house the St charging I have in my house.
With the Beast again, we've got a 200 kilowatt hour battery you can do overnight charging on level two.
But you're really pushing it a total limit and then the Mega beef was really designed for those or do you see fast charging available and who have an interest in using the vehicle for.
Brendan Riley: And then the Mega Beast was really designed for those DC fast charging available and to have an interest in using the vehicle for all of it's efforts to bring students to and from school and the V to G. So you have really enough leftover to be meaningful to the grid and have some normal access to the battery storage on the vehicle. Now, the marketplace has changed more slowly than we hoped, but it has changed, in part, because there are a lot more companies able to install chargers, the utilities are trying to get ahead of the curve a lot better these days, and we do see improvements, also including the availability of charging EVSE, which is electric vehicle support equipment, chargers, and related equipment. But...
All of it efforts to bringing students to and from school.
And Devine and gene so you've got really enough leftover to be meaningful to the grid.
Some.
Our normal.
Access to the battery storage on the vehicle now.
The marketplace has.
Changed more slowly than we hoped but has changed due in part there are a lot more companies able to install Chargers utilities are trying to get ahead of the curve a lot better these days and we do see improvements.
Also including the availability of charging a E D C, which is electric vehicles support equipment.
Chargers.
Yeah.
But.
Brendan Riley: The, the main thing we're seeing right now is that we mentioned our pipeline, some of that pipeline, are orders that the customers are waiting to figure out how they're going to charge. I think they've got the money and the ability to buy, but they're waiting till they have their charging figured out. So I think you're going to see kind of a fast uptake on charging capabilities, installation charging for the chargers. We have more companies involved in that space, and I think they're becoming more efficient and better suited at installing the chargers. Thank you for that. So my second question is about working capital.
The the main thing we're seeing right now is we mentioned our pipeline some of that pipeline.
Our order or is that the customers are waiting to figure out how they're gonna do charging I think they've got the money and mobility to buy but there.
They're waiting until they have they're charging figure it out so.
I think youre going to see kind of a fast.
Uptake on charging capabilities installation charging for.
So the Chargers.
We are having more companies involved in that space and I think they're becoming more efficient.
Better apt at.
Installing the charges.
Okay. Thank you for that.
So my my second question is about working capital.
Fraser Atkinson: You guys have done a really good job managing working capital and generated a decent amount of cash there over the last few quarters. Can you maybe describe for us how well-matched the inventory of working process or finished goods is to, you know, anticipated near-term deliveries? Would you expect working capital to be, you know, a positive contribution to cash in this current quarter? Well, I'll turn the details over to Michael, but at a high level, our working process is fairly well aligned with the production flow that matches the, you know, fulfillment of customer orders as opposed to production to inventory.
You guys have done a really good job managing working capital and generated a decent amount of cash there over the last few quarters.
Can you maybe describe for us how long matched.
The inventory of of working process or finished goods is to you know.
Supported near term deliveries you know what.
Would you expect working capital to be.
A positive contribution to cash them.
In this in this current quarter.
Our our I'll turn the details over to Michael but at a high level.
Our work in process is fairly well aligned with the production flow that matches the fulfillment to customer orders as opposed to production inventory, whereas we have been over the last few quarters and will continue over the next couple of quarters.
Fraser Atkinson: Whereas, we have been over the last few quarters and will continue over the next couple of quarters to realign our finished goods to match that. So, you know, at a high level, finished goods need some work to fully align with the rest in terms of working processes, and to some extent, our parts supply that we sell separately as well as to customers is better aligned with where we are right now with our strategy for manufacturing. Yeah, just to add a couple of very quick points. I think it really has been a focus of the company over the past, you know, nine to 12 months to focus on inventory and bringing that down to a level that is better matched to sales. But I think the other thing to point out, Craig, is that with the facility that we announced this morning of $5 million, that's earmarked for funding production.
To realign our finished goods to to match that so you know it.
At a high level of finished goods needs some work to go to.
Fully aligned.
And the rest in terms of work in process and to some extent are our parts supply.
We sell separately as well to customers is better aligned with.
You know, what where we are right now with our strategy on manufacturing.
Yes, just to add a couple of very quick points I think it really hasnt been a focus of the company over the past.
Nine to 12 months to focus on inventory and bringing that down to a level that.
There's better match the sales, but I think the other thing to point out Craig is that with the facility that we announced this morning, a $5 million.
Year marked for funding production and so that is really focused on funding that inventory growth.
Fraser Atkinson: And so that is, you know, really focused on funding that inventory growth. And, you know, we anticipate given our current order book that a lot of that will be used towards All Electric School Bus order book fulfillment. So my last question, if I may, gross margins in the quarter, you know, the historic average is quite a bit higher, so is it fair for us to maybe consider, you know, the early production of some of these beasts and nanobeasts units? to be maybe maybe a lower margin because of greater man hours to complete and other factors in there, and that you know we could see those uh you know trend up over the next couple quarters as far as the overall gross margin levels, is that fair? That is very fair of you, Craig. Yeah, go ahead, Brandon. That's very fair. You know, training and getting employees up to speed costs money.
We anticipate given our current order book and a lot of that'll be used towards.
Oh Electric school bus.
Order books fulfillment.
Yeah.
Understood. My last question, if I may I'm gross margins in the quarter you know the historic average is quite a bit higher so is it fair for us to maybe consider a you know the early production of some of these eastern Nov's units.
To be.
Maybe maybe a lower margin because of a.
Greater man hours to complete and other factors in there.
And that we could see those.
Trend up over the next couple of quarters as far as the overall.
Margin levels is that fair.
That is very very high.
Yeah go ahead Brendan.
That's very fair training getting employees up to speed.
Cost money, it's an investment.
Brendan Riley: It's an investment. And you're going to see the margins continually improve. Also, we're starting to see some stabilization in our costs as from materials, raw materials, and so on. So we should see a good shrinkage in our costs and an increase in our GP. In terms of the short term, Craig, Michael, and his section commented on the one-time charges that we had made, which in part relates to your previous question, that as we're realigning our business and working capital and changing the mix in terms of finished goods and work in process, we have incurred some one-time impairment costs on our inventory as we make that transition. That, we expect, is a short-term proposition; as we get into a continuous production flow where the inventory is aligned with all of that, then that's going to help the margins as well.
And.
Youre going to see the margins continually improve.
Also we're starting to see some stabilization.
Our costs are ethical.
For materials raw materials and so on so.
We should see a good shrinkage in our AR and our costs and an increase in RGB.
And in terms of the short term.
Craig the.
The Oh.
Michael in his.
Section commented on the one time charges that we had made which which in part relates to your previous question that you know as we're realigning our business on working capital and you.
Change and changing the mix in terms of finished goods and work in process as we have incurred some one time impairment costs on on our inventory Oh as we make that transition. So that we expect is a short term proposition and as we get into.
Two.
<unk> production flow aware.
Torry is aligned with all of that then you know that.
That's going to help the margins as well.
Excellent well congrats on the progress here, we look forward to watching.
Fraser Atkinson: Excellent. Well, congratulations on the progress here. We look forward to watching, you know, the continued steps forward. Thanks, Greg. Again, if you have a question, please press star then 1. The next question is from John Gay from Quiet Investor. Please go ahead.
Watching.
Continued steps forward.
Thanks, Craig.
Again, if you have a question. Please press Star then one.
The next question is from John Gay from quiet Investor. Please go ahead.
Hi, good morning, guys and.
John Gay: Good morning, guys, and congratulations on the continued progress. I sense from the numbers of vehicles sold that Workhorse is not in the mix by much, if any. Is that true?
Rental lessons on the continued progress.
Since the numbers are.
Vehicles so.
Workhorse is not in the mix by much if any.
Is that true and if so how do we look upon that.
Unnamed Speaker: And if so, how do we look upon that so-called contract? Hello, Sorry I cut out there, we haven't pointed out specific metrics for, for our customers over the last number of quarters, and we did comment in our earlier remarks that, you know, while we have not had, you know, some cabin chassis deliveries, we are, you know, currently, you know, working on schedule in terms of future deliveries for, you know, our cabin chassis. So.
Contract.
Yeah.
Hello.
Sorry, I cut out there.
Well, we we don't Oh, we haven't pointed out a specific metrics for.
For our customers over the last number of quarters and we did comment in our <unk>.
In our earlier remarks that you know, while we have not had.
Some cabin chassis deliveries. We are currently you know where.
King on schedule in terms of future deliveries for <unk> for.
For our cabin chassis so yes.
There's been a a.
Unnamed Speaker: You know, there's been a short-term pause, and we expect to have that resume in the not-too-distant future. Okay, thank you. End. And once again, if you have a question, please press star then 1. And the next question is a follow-up from Greg Lewis from VTIG; please go ahead. Hey, thanks. And good morning. And sorry to hop back in. But I did want to understand. I thought it'd probably be good to understand. So congrats on the $5 million revolver. Are there different hurdle rates, i.e.
Short term pause and we expect to have that resume in.
And they're not too distant future.
Okay. Thank you.
And once again, if you have a question. Please press Star then one.
Okay.
And the next question is a follow up from Greg Lewis from BTG. Please go ahead.
Hey, Thanks, and good morning, I'm, sorry to hop back in but it but I did want to understand thought it'd probably be good to understand so congrats on the $5 million revolver are there different hurdle rates I E that that could be achieved where you could come back and expand that maybe to eight.
Gregory Robert Lewis: that could be achieved where you could come back and expand that maybe to $8, $10 million? You know, just as we kind of get through this, as we get production going, I would think you'll probably outgrow that $5 million number. Mike, any thoughts around that? Well, you know, first, go ahead. Go ahead, Michael.
I'm.
Just as we kind of get through as we get production going on I I would think youll, probably outgrow that 5 million dollar number.
Mike any thoughts around that.
Well.
Bruce.
Go ahead go ahead Michael.
I was going to say first of all we are.
Michael Seifert: I was going to say, first of all, we are very appreciative of the support from EDC. We think this is a very efficient and well-priced facility for the company. But to answer your question, yeah, there certainly is the opportunity to revisit this in terms of size over time as our business grows.
I'm very appreciative of the support from E. D. C. We think this is a very.
Issuance and well priced facility for the company.
But to answer your question, yes, there certainly is the opportunity to revisit this in terms of size over time is as our business grows and we can certainly look to upsize this but for the time being we we feel this is a.
Michael Seifert: And we can certainly look to upsize this. But, you know, for the time being, we feel this is a good size for the company and will definitely be put to use given the orders we have in place. Fraser, if you have anything to add, www.greenpower.com, Well, that's a good summary. Okay, yeah, now understood. It just seems like pretty good, attractive financing, so yeah.
Good size of the company and.
We'll definitely be put to use.
Given the orders we have in Boise.
Or do you have any longer.
Yeah.
So that's a good summary.
Okay understood. It just seems like pretty good attractive financing so yeah.
Hitting the building.
Building out on that and then expanding that would obviously be super Super positive for the company all right guys. Thank you very much.
Gregory Robert Lewis: Thank you very much. Thanks, Craig. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Fraser Atkinson for any closing remarks. In closing, we delivered the first four Type A and Nano B school buses manufactured in West Virginia to four school districts in the state and started production of our larger Type D and B school buses.
Thanks, Craig.
Ladies and ladies and gentlemen. This concludes our question and answer session I would like to turn the conference back over to Frazer Atkinson for any closing remarks.
Yeah.
In closing we delivered the first for type a and I'll be school buses manufactured in West Virginia to poor school districts in the state and started production of our larger type D. B School buses.
We delivered 10 <unk> star cabin chassis to the Canadian unit of a global retailer, who will update the vehicles per fulfillment of orders to their customers in Toronto we.
Fraser Atkinson: We delivered 10 EVstar cabin chassis to the Canadian unit of a global retailer who will upfit the vehicles for fulfillment of orders to their customers in Toronto. We delivered the first EVstar Cargo Refrigerated Van to a California University. And we launched the Megabeast with twice the battery capacity of the Beast, providing a range of up to 300 miles on a single charge. We made significant progress while increasing our cash position by $3.3 million from the start of the fiscal year. Subsequent to Carter, we secured $5 million of production financing from EDC, who have also guaranteed $5 million of standby letters of credit, which vastly improves our manufacturing capabilities.
We delivered the first start of cargo refrigerated band to a California University.
And we launched the Mega beef with twice the battery capacity of the Beast, providing a range of up to 300 miles on a single charge.
We made significant progress, while increasing our cash position by $3 3 million from the start of the fiscal year.
Subsequent to the quarter, we secured 5 million of production financing from EDC, who are also guaranteed $5 million of standby letters of credit, which vastly improves our manufacturing capabilities.
Fraser Atkinson: Thanks for your support. This concludes the third quarter earnings call for GreenPower. And thank you, sir. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect. Take care. [inaudible] www.GreenPowerMotor.com
Thanks for your support this concludes the third quarter earnings call for Green power.
And thank you Sir the conference has now concluded. Thank you for attending today's presentation and you may now disconnect take care.
Okay.
[music].