Q1 2024 The Lion Electric Co Earnings Call

Inventory.

Okay.

Okay.

Got it.

Okay.

Okay.

Okay.

Okay.

Uh huh.

Okay.

[music].

Operator: Good morning, everyone. Welcome to Lion Electric's first quarter 2024 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. I would now like to turn the call over to Isabelle Adjahi, Vice President, Investor Relations and Sustainable Development. Please go ahead, Ms. Adjahi.

Speaker Change: Good morning, everyone and welcome to line Electric's first quarter 2020 full results conference call.

Speaker Change: At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded I would now like to turn the call over to Isabella <unk>, Vice President Investor Relations and sustainable development. Please go ahead Mr. Charlie.

Isabella: Good morning, everyone.

Isabelle Adjahi: Good morning, everyone. Welcome to the Lions First Quarter 2024 Results Conference Corner. Bienvenue à la conférence téléphonique sur les résultats financiers du premier trimestre 2024 de Lyon. Today, I'm here with Marc Bedard, our CEO and funder, Nicolas Brunet, our president, and Richard Coulombe, our chief financial officer. Please note that our discussion may include estimates and other forward-looking information and that our actual results could differ materially from those implied in any such statement. We invite you to review the cautionary language in this morning's press release and in our MDMA, which contains important information regarding various factors, assumptions, and risks that could impact our actual results. With that, let me turn it over to Marc to begin. Marc.

Isabella: Welcome to <unk> first quarter 2024 results conference call.

Isabella: Do you ever hear that Costello Phillip unique sort of aggressive Jeff Feeler, Kip you put Mexico Southern cats.

Isabella: Today, I'm here with much better our CEO funder.

Isabella: We collaborate.

Isabella: Our president and Richard <unk>, our Chief Financial Officer. Please.

Isabella: Please note that our discussion may include estimates and other forward looking information and that our actual results could differ materially from those implied in any such statements.

Isabella: We invite you to review the cautionary language in this morning's press release and in our MD&A, which contains important information regarding various factors assumptions and risks that could impact our extra presents with that let me turn it over to mark to begin Mark.

Marc Bedard: Thank you, Isabelle. Good morning, everyone.

Mark: Thank you Lisa good morning, everyone.

Marc Bedard: Thank you for joining us today to discuss Lion Electric's performance for the first quarter of 2024. Q1 was marked by significant commercial and operational achievements we have been able to accomplish despite important challenges, mostly related to the timing of some subsidy programs. Let me start by highlighting some of our achievements in Q1.

Mark: Thank you for joining us today to discuss <unk> Electric's performance for the first quarter of 2024.

Mark: Q1 was marked by significant commercial and operational achievements, we have been able to accomplish despite important challenges mostly related to the timing of some subsidy programs.

Speaker Change: Let me start by aligning some of our achievements in Q1.

Marc Bedard: The Canadian ZDTF Fund approved the first sizable application for 200 buses, for which we have delivered 50 buses in Cuba. We started delivering our Lion 5 trucks equipped with our Lion MD battery packs, and we anticipate a gradual increase in Lion 5 production throughout the rest of the year as we fulfill orders and bolster our market. We started the deliveries of our Lion diesel buses manufactured at our Joliet facility. We are planning the commercialization of our Lion-A tractor truck this summer, and we will make its formal commercial introduction at the ACT conference in Las Vegas in two weeks. Our Lion 8 tractor will be equipped with our Lion Battery HD Pack, a state-of-the-art 105 kilowatt hour battery.

Mark: The Canadians that Etfs fund approved the first sizeable application for 200 buses.

Mark: For which we have delivered 50 buses in Q1.

Mark: We started delivering our alliance Hyatt chunks.

Mark: With our Lion MD battery packs and we anticipate the gradual increase in land side production throughout the rest of the year as we fulfill orders and bolsters our market presence.

Mark: We started the deliveries of our Lion diesel buses manufactured at our Joliet facility.

Mark: We are planning the commercialization of our <unk> drug this summer and we will make its formal commercial introduction at the Act conference in Las Vegas in two weeks.

Mark: Our lion they tractor will be equipped with our Lion battery HD pack a state of the art 105 kilowatt hour pack.

Marc Bedard: The commercialization of our Lion 8 tractor truck, expected this summer, marks the end of our new model development, allowing us to be fully focused on our vehicle optimization, including cost reduction. Q1 was also the first quarter in the last few years with almost no CapEx investment, allowing us to capitalize on our previous investments made in our three factories and be fully focused on manufacturing process improvements and supply chain optimization. Lastly, our expertise has been recognized with the prestigious AmHub Chicago's Manufacturer of the Year Award, that honors manufacturers and organizations for being innovative and focusing on economics.

Mark: The commercialization of our <unk> tractor truck expected. This summer marks the end of our new model development, allowing us to be fully focused on our vehicle optimization <unk>.

Mark: <unk> cost reduction.

Mark: Q1 was also the first quarter within the last few years with almost no capex investment.

Mark: Wowing us to capitalize on our previous investments made in our three factories and be fully focused on manufacturing process improvements and supply chain optimization.

Mark: Lastly.

Mark: Our expertise has been recognized with a prestigious am hub Chicago as manufacturer of the year Award.

Mark: Honors manufacturers and organizations for being innovative and focusing on economic growth.

Marc Bedard: To date, we are proud to report that over 2000 of our vehicles are on the road and have collectively driven 25 million miles, metrics that demonstrate Lion's leadership in the medium and heavy duty electric vehicle market on the financial front. Q1 revenues remain steady year-over-year, with margins impacted by initial increased costs related to the introduction of our Lion 5 and Lion D new models and the integration of our Lion batteries, as previously communicated.

Mark: To date, we are proud to report that over 2000 of our vehicles are on the road and have collectively driven 25 million miles metrics that demonstrate lyon's leadership in the medium and heavy duty electric work.

Mark: On the financial front Q.

Mark: Q1 revenues remained steady year over year with margins impacted by initial increased cost related to the introduction of our reliance <unk> and <unk> models and the integration of our lion batteries as previously communicated.

Marc Bedard: While we are pleased with the first ZDTF approval and the deliveries of 50 buses in Q1 under this program, revenues in Canada continue to be significantly impacted by the delays and challenges associated with the granting of subsidies related to the ZETF program. This approval of 200 electric buses is great news, and definitely a step in the right direction, but this represents only a fraction of the programs within.

Mark: While we are pleased with the efforts that ETF approval and the deliveries of 50 buses in Q1 under this program.

Mark: Revenues in Canada continue to be significantly impacted by the delays and challenges associated with the granting of subsidies related to visit ETF program.

Mark: This approval is 200 electric buses is a great news and definitely a step in the right direction, but this represents only a fraction of the program's potential.

Marc Bedard: Revenues in the U.S. were largely impacted by the timing of orders and deliveries tied to the EPA program, being in the transition phase between two funding rounds for this $5 billion program that is crucial for advancing electrification in this market. In response to these timing challenges and to safeguard our liquidity, We continue to proactively make difficult but necessary decisions, including implementing additional cost control measures such as right sizing our work. Combined with the measures announced late last year and early this year, we estimate that these initiatives will result in annual lion's cut savings of $40 million. Going forward,

Mark: Revenues in the U S were largely impacted by the timing of orders and deliveries tight to the EPA program.

Mark: Being in the transition phase between two funding runs for this $5 billion program that is crucial for advancing electrification in this market.

Mark: And your response to these timing challenges and to safeguard our liquidities.

Mark: We continue to proactively make difficult but necessary decisions.

Mark: Including implementing additional cost control measures such as right sizing our workforce.

Mark: Combined with the measures announced late last year and early this year. We estimate that these initiatives will result in annualized cost savings of $40 million.

Mark: Going forward.

Marc Bedard: We are confident that the recent announcement of new funding programs, such as the additional billion dollars allocation under the EPA's Clean Heavy Duty Vehicles Grant Program, along with the renewal of Canadian programs, such as Éco-Camionnage and the Québec school bus subsidy program, will possibly impact orders for the rest of the year. Our focus remains on growing our order book and accelerating delivery while diligently managing liquidity and controlling costs, including a significant improvement in our working capital, now that the supply chain crisis is behind us. Nicolas will now provide insights into our commercial performance. Thank you, Marc.

Mark: We are confident that the recent announcements of new funding programs such as the additional $1 billion of location under the Epa's clean heavy duty vehicles Grant program.

Mark: Along with the renewal of Canadian programs, such as <unk> and the <unk> School bus subsidy program will positively impact orders and deliveries.

Mark: But the rest of the year.

Mark: Our focus remains on growing our order book and accelerating deliveries, while diligently managing liquidity and controlling cost, including significant improvement of our working capital.

Mark: Now that the supply chain crisis is behind us.

Mark: Nicolas will now provide insights into our commercial performance Nicolas.

Nicolas: Thank you Mark.

Nicolas Brunet: Let me start by discussing deliveries, then address the order book, and conclude with an update on certain subsidy programs. During the quarter, we delivered a total of 196 vehicles, comprising 184 buses and 12 trucks. Of these, 165 were delivered in Canada, with the remaining 31 delivered in the U.S.

Nicolas: Let me start by discussing delivery then address the order book and conclude with an update on certain subsidy programs.

Nicolas: During the quarter, we delivered a total of 196 vehicles, comprising 184 buses and 12 trucks.

Nicolas: Of these 165 were deliberate in Canada with the remaining 31 delivered in the U S.

Nicolas Brunet: Notably, this includes 50 buses for one of our customers for which funding approval under the ZETF program was obtained for an order of 200 school buses. While this initial ZETF approval is a positive milestone, these 50 deliveries represent only a fraction of the program's potential. And we look forward to the government accelerating the processing of applications. Additionally, we experienced a slowdown on EPA-related deliveries as we are currently in between funding. I will elaborate on this in a moment.

Nicolas: Notably this includes 50 buses to one of our customers for which funding approval under the debt ETF program was obtained for an order of 200 school buses.

Nicolas: While this initial is that ETF approval is a positive milestone the 50 deliveries represent only a fraction of the program's potential and we look forward to the government accelerating the processing of application.

Nicolas: Additionally, we experienced a slowdown on EPA related deliveries as we are currently in between funding round.

Speaker Change: I will elaborate on this in a moment.

Nicolas Brunet: In terms of purchase orders, as of May 7, 2024, Lion's vehicle order book stood at 2,004 vehicles, consisting of 1,793 buses and 211 trucks, representing a combined total order value of approximately $475 million. The momentum in the purchase order book and the deliveries for the quarter were impacted by the timing of funding rounds in the EPA's Clean School Bus Program. First, the vast majority of awardees in this billion-dollar grant round announced earlier this year are not yet able to issue purchase orders and accept vehicle delivery.

Speaker Change: In terms of purchase orders as of May seven 2024 lines vehicle order book stood at 2004 vehicle consisting of 793 buses and 211 trucks, representing a combined total order value of approximately $475 million.

Speaker Change: The momentum in the purchase order book and the deliveries for the quarter was impacted by the timing of funding rounds, and the EPA screen School bus program.

Speaker Change: First the vast majority of award in the $1 billion Grant round announced earlier this year are not yet able to issue purchase orders and accept vehicle delivery.

Nicolas Brunet: As a reminder, the EPA announced in January the awards for the grant round, which allocated close to a billion dollars of funding for clean school buses and related infrastructure. As part of this round, Lion was awarded funding of $38 million for 97 school projects. Additionally, we estimate that 70% of the awards were allocated to parties that are not directly associated with a school bus OEM or dealership.

Nicolas: As a reminder, EPA announced in January the awards for the grant round, which allocated close to $1 billion of funding for clean school buses and related infrastructure.

Nicolas: As part of this round Lion was awarded funding of $38 million for 97 School bus.

Nicolas: Additionally, we estimate that 70% of the awards were allocated the parties that are not directly associated with the school bus OEM or dealership.

Nicolas Brunet: We have, over the past month, been proactively working with awardees in this grant round, and we are in advanced dialogue with a number of them to potentially purchase Mineschool products. Orders from this grant round are expected to be allowed shortly for deliveries later this year and in 2025. Second, applicants under the latest rebate round of the EPA program, which is expected to allocate $500 million in funding, are still awaiting the result of their allocation. Applications were filed on February 14. We work with a number of clients to file applications on their behalf and are also in dialogue with a number of potential clients who have applied.

Nicolas: We have over the past months been proactively working with authorities in this Glen Brown and we are in advanced dialogue with a number of them to potentially purchase mine school bus.

Nicolas: Orders from this grant round are expected to be allowed shortly for deliveries later this year and in 2025.

Nicolas: Second applicant under the latest rebate round of the EPA program, which is expected to allocate $500 million of funding are still awaiting the results of their allocation.

Nicolas: Applications were filed on February 2014.

Nicolas: We worked with a number of clients to file applications on their behalf and also and are also in dialogue with a number of potential clients who applied directly.

Nicolas Brunet: Awards under this round of the EPA program are expected to be announced imminently. However, just as with the grant round, this funding has not yet impacted our order. So altogether, close to $1.5 billion is expected to soon be available for districts and private operators that purchase school buses under the EPA's Clean School Bus Program. Additionally, the recent launch of the EPA Clean Heavy Duty Vehicles program, which allocates $932 million to purchase Class 6 and 7 Zero Emission Vehicles, including over $650 million specifically for school buses, is expected to further stimulate demand for electric school buses.

Nicolas: Awards under this round of the EPA program are expected to be announced imminently.

Nicolas: Just as with the grant now this funding has not yet impacted our order book.

Nicolas: So all together close to $1 5 billion are expected to soon be available for districts and private operators that purchase school buses and Epa's Clean School bus program.

Nicolas: Additionally, the recent launch of the EPA clean heavy duty vehicles program, which allocates $932 million to.

Nicolas: The purchase class six and seven zero emission vehicle, including over $650 million specifically for school buses.

Nicolas: As expected to further stimulate demand for electric school buses.

Nicolas Brunet: We are also excited for the upcoming opening in California of the Zero Emissions School Bus and Infrastructure, or ZESB program, which allocates $500 million for the purchase of electric school buses and charging stations. Combined with the upcoming EPA rounds I just discussed, this translates into over $2.5 billion of funding to be available for school bus and infrastructure. On the truck side, the Line 5 and Line 8 tractor platforms continue to drive strong interest from potential customers, which we believe positions us well to serve truck operators when the shift to EV accelerates. Finally, 65 truck purchase orders were removed from our appeal book relating to a client that filed for credit or potential.

Nicolas: We are also excited for the upcoming opening in California Zero emission school bus and infrastructure or is that the program, which allocates $500 million for the purchase of electric school buses and charging infrastructure.

Nicolas: Combined with the upcoming EPA round I just discussed this translates into over $2 $5 billion of funding to be available for school bus and infrastructure purchase.

Nicolas: On the truck side the line five in line a tractor platform continued to drive strong interest from potential customers, which we believe positions us well to serve truck operators when the shift to EV accelerate.

Nicolas: Finally, 65 truck purchase orders were removed from our appeal book relating to a client that filed for credit or protection.

Richard Coulombe: In Canada, we remain hopeful that more applications under the ZET ETF program will be approved, which would have an impact on both our upcoming deliveries from existing orders as well as drive momentum in the order. Last, in Quebec, the extension of both the Éco-Camionnage program for trucks and the Quebec school bus subsidy program until March 2025 represents a favorable development, as both of these programs offer very attractive subsidies. I will now turn it over to Richard to discuss our financial performance. Richard.

Nicolas: In Canada, we remain hopeful that more applications under the debt ETF program will be approved.

Nicolas: Which would have an impact on both our upcoming deliveries from existing order as well as drive momentum in the order book.

Nicolas: Lastly in Quebec, the extension of both the Echo come your Nash program for trucks, and the Quebec School bus subsidy program until March 2025 represents a favorable development as both of these programs offer very attractive subsidy.

Nicolas: I will now turn it over to Richard to discuss our financial performance Richard.

Richard: Thank you Nicolas I.

Richard Coulombe: Thank you, Nicolas. I will start by commenting on the Q1 results. I will then discuss our liquidity position and provide color for the rest of 2024. In Q1, we recorded quarterly revenue of $55.5 million, up 1% compared to Q1 2023, despite fewer vehicles delivered, 196 compared to 220 in Q1 2023. Growth margin was negative 20.1% compared to negative 4.1% last year. As communicated previously, margins were impacted by initial increased manufacturing costs mostly due to the introduction of the Lion D and Lion 5 vehicles and the initial production of the Lion battery packs. Our SG&A expenses stood at $14.5 million, excluding $0.4 million of non-cash, share-based compensation.

Richard: I will start by commenting on Q1 results I will then discuss our liquidity position and provide color for the rest of 2024.

Richard: In Q1, we recorded quarterly revenue of $55 5 million up 1% compared to Q1 2023, despite fewer vehicles delivered 196 compared to 220 in Q1 2023.

Richard: Gross margin was negative 21% compared to negative four 1% last year.

Richard: As communicated previously.

Richard: Margins were impacted by initial increased manufacturing costs, mostly due to the introduction of <unk> and 95 vehicles into the initial production of Lion battery packs.

Richard: Our SG&A expenses stood at $14 5 million, excluding 0.4 million of non cash share based compensation. This represents 26% of revenue in Q1 2024 compared to 28% in Q4 2023.

Richard Coulombe: This represents 26% of revenue in Q1 2024, compared to 28% in Q4 2022. In Q1, Adjusted Edita was negative $17.3 million, compared to negative $14.5 million in Q1 2020. Our net investments in intangible assets, mostly related to R&D, amounted to $8.2 million, down from $16.5 million in Q1 2023, as we continue delivering on significant development milestones. Total CAPEX incurred significantly decreased to $400,000 compared to $23.1 million in Q1 2023 and mostly relates to maintenance CAPEX.

Richard: In Q1, adjusted EBITDA was negative $17 3 million compared to negative $14 5 million in Q1 2023.

Richard: Our net investments in intangible assets, mostly related to R&D amounted to $8 2 million down from $16 5 million in Q Q1, 'twenty two 'twenty three as we continue delivering on significant development milestones.

Richard: Total capex in cured significantly decreased to 400000 compared to $23 1 million in Q1, 2023, and mostly relates to maintenance Capex. We now expect capex for 2024 to be approximately $5 million lowering the previously communicated guidance for Capex.

Richard Coulombe: We now expect CAPEX for 2024 to be approximately $5 million, lowering the previously communicated guidance for CAPEX. Now, moving on to liquidity. At the end of Q1, we had available liquidity of $31 million, including $5 million in cash and $26 million in immediate borrowing capacity on our revolvers. During Q1, we made good progress with our inventory reduction plan, achieving a $12 million reduction. This puts us on track to deliver on our objective of a $50 to $75 million inventory reduction for the year. However, despite this $12 million inventory reduction, several specific factors impacted Q1 and resulted in a negative working capital of $21 million.

Richard: Now moving on to liquidity at the end of Q1, we had available liquidity of $31 million, including $5 million in cash and $26 million in immediate borrowing capacity on our revolver.

Richard: During Q1, we made good progress with our inventory reduction plan.

Richard: <unk> at $12 million reduction.

Richard: This puts us on track to deliver on our objective of a 50% to 75 million inventory reduction for the year.

Richard: Despite this $12 million inventory reduction several specific factors impacted Q1 and resulted in a negative working capital of $21 million.

Richard Coulombe: First, accounts payable decreased by approximately $16 million, driven by non-recurring payments to suppliers for purchases made prior to the launch of our Inventory Reduction Plan and strategic capex incurred in 2023, for which payments were made this quarter. We do not anticipate this trend to persist as we continue working closely with our suppliers in optimizing our supply chain management. Second, accounts receivable increased by approximately $7 million, largely attributed to overdue amounts mostly owed by government agencies.

Richard: Accounts payable decreased by approximately $16 million driven by nonrecurring payments to suppliers for purchases made prior to the launch of our inventory reduction plan and strategic Capex incurred in 2023 for which.

Richard: Payments were made this quarter, we do not anticipate this trend to persist as we continue working closely with our suppliers and optimizing our supply chain management.

Richard: Second accounts receivable increased by approximately 7 million largely attributed to overdue amounts mostly owned by government agencies.

Richard Coulombe: Potential amounts have since been collected, and we are in active discussions to expedite remaining payments. Third, the unearned revenue balance with regard to the EPA program represented a net reduction of $5 million for the quarter as we are currently between EPA grant rounds.

Richard: Essential amounts were collected since and we are in active discussions to expedite remaining payments.

Richard: Third unearned revenue balance with regards to the EPA program represented a net reduction of $5 million for the quarter. As we are currently between EPA Grand rounds.

Richard Coulombe: We are focused on optimizing our balance sheet, which, as at March 31st, 2024, includes 329 million of current assets compared to 124 million of current liabilities and therefore provides important opportunities to unlock liquidity. As of April 30th, our liquidity position is largely unchanged relative to our March 31st position. During the quarter, we also made difficult decisions to streamline our operations by implementing additional workforce and other cost-reduction initiatives. These decisions were necessary to safeguard our liquidity and ensure our long-term sustainability, considering the significant delays encountered in some of these subsidy programs. Combined with the measures announced in November 2023 and February 2024, these initiatives are expected to result in annualized cost savings of approximately $40 million.

Richard: We are focused on optimizing our balance sheet, which as at March 31, 2024 includes $329 million of current assets compared to $124 million of current liabilities and therefore provides important opportunities to unlock liquidity.

Richard: As of April 30, our liquidity position is largely unchanged relative to our March 31 position.

Richard: During the quarter, we also made difficult decisions to streamline our operations by implementing additional workforce and other cost reduction initiatives.

Richard: These decisions were necessary to safeguard our liquidity and ensure our long term sustainability considering the significant delays encountered in some of the subsidy programs combined with the measures announced in November 2023, and February 2020 for these initiatives are expected to result in annualized cost savings of approximately 40 million.

Richard: Yeah.

Marc Bedard: As we look ahead, we anticipate persistent volatility in the short term. Our focus will remain on growing our order book and accelerating deliveries while closely managing our liquidity, driving our inventory reduction plan, and controlling our overall costs. In parallel, we stay apprised of potential opportunities to strengthen our balance sheet and ensure financial resilience in the face of evolving market conditions. I will now pass it over to Marc for his concluding remarks.

Richard: As we look ahead, we anticipate persistent volatility in the short term our focus will remain on growing our order book and accelerating deliveries while closely managing our liquidity driving our inventory reduction plan and controlling our overall cost.

Richard: In parallel we stay appraised of potential opportunities to strengthen our balance sheet and ensure financial resilience in the face of evolving market conditions.

Richard: I'll now pass it over to Mark for concluding remarks.

Richard: <unk>.

Marc Bedard: Thank you, Richard. Let me conclude by reiterating that despite having to navigate through delays in the granting of some subsidy programs, we are very excited by the many opportunities that lie ahead. The shift to electrification might have taken a little longer than initially expected.

Mark: Thank you Richard.

Mark: Let me conclude by reiterating that despite having to navigate through the delays in the granting of some subsidy programs. We are very excited by the many opportunities that lie ahead.

Mark: A shift to electrification might have taken a little longer than initially expected.

Marc Bedard: But it is clearly happening, and Lion is playing a key role in it, as demonstrated by our leadership in the electric school bus market. While we expect volatility in the short term, we are confident in the decisions we are making for our company, and we will remain agile and proactive to maintain stability and forward momentum, which is part of our DNA. We will also maintain our steadfast focus on optimally managing liquidity and controlling costs, our ultimate objective being to generate EBITDA and free cash flow, key milestones of our financial stability and sustainable growth. Thank you for your attention this morning. Let's now open the lines for questions.

Speaker Change: But it is clearly evident and.

Richard: Alliant is playing a key role in it as demonstrated by our leadership in the electric school bus market.

Richard: While we expect volatility in the short term we are confident in the decisions we are making for our company.

Richard: And we will remain agile and proactive to.

Richard: To maintain stability and forward momentum, which is part of our DNA.

Richard: We will also maintain our steadfast focus on that timberly, managing liquidity and controlling cost.

Richard: Ultimate objective being to generate EBITDA and free cash flow.

Richard: Milestones of our financial stability and sustainable growth.

Speaker Change: Thank you for your attention. This morning, let's now open the lines for questions.

Isabelle Adjahi: Operator, we will now open the lines for questions. I just want to ask you to limit the number of questions asked to two to allow other participants to ask their questions. You can, of course, go back in the queue if you have any followers.

Speaker Change: Operator, we will now open the lines for questions I, just wanted to ask you to limit to.

Richard: The number of questions asked to allow participants to ask questions.

Speaker Change: And of course go back into the queue. If you have any follow up.

Richard: Yes.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. The first question comes from Kevin Chiang from CIBC. Please go ahead.

Richard: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question. Please press star two the first question comes from Kevin Chiang from CIBC. Please go ahead.

Richard: Yes.

Kevin Chiang: Hi, thanks for taking my question and good morning, everybody. Maybe I'll start on the liquidity front. You know, $31 million of available liquidity. If I look at some of the moving parts, you have $27 million of debt due this year, and about $8 million of lease liabilities due over the next 12 months. CapEx is $5 million. I think spending on R&D is probably in the $45 million range this year. So if you kind of add all that up, that's about an $85 million spend before accounting for potential operating losses.

Kevin Chiang: Alright, Thanks for taking my question and good morning, everybody.

Kevin Chiang: Maybe I'll start on the liquidity.

Kevin Chiang: The liquidity front.

Kevin Chiang: $1 million of available liquidity.

Kevin Chiang: If I look at some of the moving parts you have.

Kevin Chiang: $27 million of debt due this year about $8 million of lease liabilities due over the next 12 months.

Kevin Chiang: Capex was five I think spending on R&D is probably in the $45 million range. This year. So if you kind of add all that up that's about $85 million spend before.

Kevin Chiang: With liquidity at 31, maybe if you could just help me bridge how you manage that gap, whether it's working capital tailwinds from here on forward, maybe the delivery ramp as we get through the years, just anything to maybe provide some finer points to how you look to manage this as you ramp up deliveries.

Kevin Chiang: Accounting for potential operating losses.

Speaker Change: Liquidity at 31, maybe if you could just help me bridge, how you manage that gap, whether it's working capital tailwind from from here on forward, maybe the delivery ramp as we get through the years just anything to me.

Speaker Change: Provide some.

Speaker Change: Finer points to how you how you look to manage this as you ramp up deliveries.

Speaker Change: Okay.

Richard Coulombe: I'll take that one. Good morning, Kevin. Thanks for the question. So the answer is...

Speaker Change: I'll take that one good morning, Kevin Thanks for the question.

Richard Coulombe: So, liquidity-wise, as I stated earlier, we have a, I guess, a liquidity position right now of $31 million, right, consisting of $5 million of cash and $26 million available on our borrowing facility. The key element for us in terms of driving liquidity is really, right now, our balance sheet and our short-term assets. Right now, kids' food cash is $323 million versus $123 million in current liabilities, so that's a kind of ratio of 2.6.

Speaker Change: So liquidity wise.

Speaker Change: As stated earlier, we had to get the liquidity position right now 31 million.

Speaker Change: We had 5 million of cash and our $26 million available.

Speaker Change: Our borrowing facility.

Speaker Change: The key element for us in terms of driving liquidity is really right now our balance sheet. Our short term assets right. Now if you exclude cash of 323 million versus $123 million of current liabilities. So so thats kind of a ratio of two six.

Richard Coulombe: And this is what we're focusing on. Our inventory reduction plan is a key driver. In Q1, we were very happy that we were able to reduce our inventory by $12 million. And that quarter was a transition quarter, I can call it that.

Speaker Change: And this is what we're focusing on our inventory reduction plan is a key driver in Q1 and very happy that we were able to reduce our inventory by 12 million and last quarter. It was a transition quarter I can follow up.

Richard Coulombe: We really worked closely with our supply chain and kind of adjusted the cadences across the board and really aligned it to our current order book. So, we're really confident that we're going to achieve our inventory reduction. As you stated, CATEX, right now, we spent only $400K this quarter, and we're going to remain very disciplined there. We believe right now that $5 million is a number that we can confidently work with. And again, we're not necessarily going to commit to that.

Speaker Change: We really work.

Speaker Change: Closely with our supply chain and any kind of.

Speaker Change: Adjusted.

Speaker Change: The cadence is across the board and maybe online into our current order books are really confident that we're going to achieve our.

Speaker Change: <unk> reductions.

Speaker Change: Did you say that Capex right now we spent like only 400 K this quarter and we're going to remain very disciplined there be bill, even though right now $5 million.

Sure.

Speaker Change: We can company worked with and again, we're not going to necessarily commit to that we're going to really be very discipline there.

Richard Coulombe: We're going to really be very disciplined there. R&D, another contributor, is down significantly over the year. So, NHG&A will continue to be very disciplined as well, and you see the trend over the last few quarters is really going down as a percentage of revenue. So, I would say those are the elements that will help us navigate through the year. And obviously, as a management team, we continue looking at market opportunities to strengthen our balance sheet, but right now, our focus is really on driving our working capital.

Richard Coulombe: Another contributor down significantly year over year, and SG&A will continue to be very disciplined as well and you see that trending over the last several quarters.

Richard Coulombe: Going down as a percentage of revenue. So we think those are the elements that will help us.

Richard Coulombe: Through the year and obviously as a management team we continue looking at market opportunities to strengthen our balance sheet, but right now our focus is really driving our working capital initiatives.

Kevin Chiang: Okay, that makes sense. I mean my second question, you know, I appreciate, you know, some of the, you know, some of the moving parts here in growing that vehicle order book, just given how dependent these orders seem to be on government subsidies and grants, but, you know, at a high level, just given the experience you've had over the past couple of years, any change in your sales strategy, any thoughts in changing your sales strategy to maybe accelerate some of these purchases, to maybe, you know, drive more near-term order activity, you know, I guess based on, I guess based on your experience with how these government subsidies get rolled out and sometimes some of the timing, timing uncertainty that seems to weigh on your order activity?

Richard Coulombe: Okay.

Speaker Change: Makes sense and maybe my second question.

Speaker Change: I appreciate.

Some of the.

Kevin Chiang: Some of the moving parts here and growing that vehicle order book, just given how dependent these.

Kevin Chiang: These orders seem to be on government subsidies and grants but.

Kevin Chiang: At a high level just given the experience you've had over the past couple of years any change in your sales strategy or any thoughts on changing your sales strategy to maybe accelerate some of these purchases to maybe maybe.

Kevin Chiang: Drive more near term order activity.

Kevin Chiang: I guess based on.

Kevin Chiang: Just based on your experience with how these government subsidies get rolled out and some sometimes some of the timing timing of uncertainty that that seems.

Kevin Chiang: To weigh on your order activity.

Nicolas Brunet: Hey Kevin, Nick here. I'll take this one. Look, obviously, when there are subsidy programs out there that are attractive, and they are out there, the buyers of the products want to be able to access that funding. We are in somewhat of a unique position, particularly in the U.S. right now, where there is, if I just take a step back, you'll recall that late last year, the EPA announced awards for a billion dollars for school buses and infrastructure under the grant round of the EPA Clean School Bus Program.

Speaker Change: Hey, Kevin next year I'll take this one look obviously when there are subsidy programs out there that are attractive and they are out there.

Nicolas Brunet: The buyers for the products wants to be able to access that funding.

Nicolas Brunet: We'd expect that of course.

Nicolas Brunet: We are in.

Nicolas Brunet: Somewhat of a unique position, particularly in the U S right now where there is.

Nicolas Brunet: Just taking a step back you'll recall that late last year.

Nicolas Brunet: <unk> announced the award for $1 billion.

Nicolas Brunet: School bus and infrastructure under the ground rounds of the EPA Clean School bus program.

Nicolas Brunet: And then in February, the third round of the program, which is back to the discount program, all the applications were filed in February. And for that billion dollars in assets, the first billion has been awarded, but purchase orders are not yet allowed, so it's just following its course. And then the second tranche of $500 million, the applications were filed, and the results are not yet known.

Nicolas Brunet: And then.

Nicolas Brunet: In February.

Nicolas Brunet: The.

Nicolas Brunet: The third round of the program, which was back to the discount program was.

Nicolas Brunet: All of the applications were filed in February and for that billion dollars in assets first billion awarded but purchase orders are not yet allowed to just following its course and then the second tranche of $500 million.

Nicolas Brunet: Applications were filed.

Nicolas Brunet: The results are not yet known.

Nicolas Brunet: This is all very attractive for us selling activity. It just hasnt materialized into the order book just yet for the grant round, we expect purchase orders will be allowed imminently and then for the discount round, we expect the allocations to be known imminently as well. So there's a lot coming of course when you look at the order book do you take a snapshot.

Nicolas Brunet: This is all very attractive for us as a selling activity; it just hasn't materialized in the order book just yet. For the grant round, we expect that purchase orders will be allowed imminently, and then for the discount round, we expect the allocations to be known imminently as well. So there's a lot coming.

Nicolas Brunet: Of course, when you look at the order book, you take a snapshot of a given quarter, well, yes, those programs can cause volatility, but there's enormous demand that's stimulated out there from these programs. So I guess now, in terms of changing the sales strategy, we filed some applications directly for both of these programs. You'll recall we had 97 units for $38 million that were awarded directly to us in the grant round.

Nicolas Brunet: On.

Nicolas Brunet: Given quarter well, yes, those programs can cause volatility, but it's enormous demand stimulated out there from these programs and so that's so so so I guess no in terms of changing our sales strategy. We have had we found some applications directly on both of these programs you'll recall, we had 97 units for 38.

Nicolas Brunet: That were awarded directly to us in the ground.

Nicolas Brunet: And as I mentioned, we filed also a lot of applications for our clients and the discount round.

Nicolas Brunet: The whole sector filed a lot of applications on their own so that demand is coming.

Nicolas Brunet: We expect shortly on both of these programs.

Nicolas Brunet: And as I mentioned, we filed also a lot of applications for our clients in the discount round. [inaudible] new programs that are being put in place the clean heavy-duty program for the EPA which allocates 650 million dollars to school buses does that be program in California that's opening Very shortly, that's 500 million dollars just for the state of California So, you know certainly those those subsidies bring a lot of appeal and a lot of incentives for our clients to buy and if you know you get a subsidy of as much as three hundred and fifty thousand dollars to purchase the vehicle.

Nicolas Brunet: After that new programs that are being put in place to clean heavy duty program from the EPA with allocate $650 million to school buses does that'd be program in California Thats opening.

Nicolas Brunet: Very shortly that's $500 million just for the state of California. So.

Nicolas Brunet: Certainly those those subsidy is bringing a lot of appeal.

Nicolas Brunet: And a lot of incentives for our clients to buy in.

Nicolas Brunet: You get a subsidy.

Nicolas Brunet: As much as $350000 to purchase the vehicle well, yes, it's natural that a lot of the.

Nicolas Brunet: Well, yeah, it's natural that a lot of potential buyers will wait to know the results of those programs. Now if we flip to Canada, of course, Mark alluded to it being prepared to mark the ZET ETF is a program that can generate a lot of demand. We believe we have over half of our order book that is contingent on ZET ETF approval. We've had a first order for one of our customers for 200 units that was approved, which is very interesting, and we know that a number of parties have applications that have been filed as well.

Nicolas Brunet: The potential buyers wait to know the results of those.

Nicolas Brunet: This program now consists of Canada of course.

Nicolas Brunet: Mark alluded to it in his prepared remarks.

Nicolas Brunet: Does that Etfs is a program that can generate a lot of demand. We believe we have over half of our order book that is contingent on that ETF approval, you've had a first order for one of our customers for 200 units through which is very interesting and we don't have a number of parties.

Nicolas Brunet: Applications that had been filed as well so.

Nicolas Brunet: It does.

Nicolas Brunet: So it does, Like I said, these programs can create some volatility on a quarter-to-quarter basis. But if we take a bit of a longer look at things, it's very attractive demand, and we think the selling strategy with these programs

Nicolas Brunet: These programs can create some volatility on a quarter to quarter basis, but if we take a bit of a longer look at things.

Nicolas Brunet: Very attractive demand and we think the southern strategy with these programs.

Kevin Chiang: Thank you for the color there. I appreciate that. I'll jump back in the queue here.

Nicolas Brunet: Okay.

Speaker Change: Thank you for the color there I appreciate it I'll jump back in the queue here.

Speaker Change: Thank you Kevin.

Operator: Our next question comes from George Gianarikas from Panacord Genuity. Please go ahead.

Kevin Chiang: Our next question comes from George <unk> from Canaccord Genuity. Please go ahead.

George Gianarikas: Hi, good morning everyone, and thank you for taking my questions. Let me just follow up on the last question about these programs and the momentum you see underneath the surface. Can you just help us maybe understand what you think? The Cadence of Vehicle Deliveries will be throughout this year. You know, obviously, it sounds like we've started Q1 at a low point. Maybe just a little bit of visibility and color as to how you think we should progress over the last three quarters of the year. Thank you.

George Gianarikas: Hi, Good morning, everyone and thank you for taking my questions just as a follow up to the last question about these programs and the momentum you see underneath the surface could you just help us maybe understand what you think.

George Gianarikas: The cadence of vehicle deliveries will be throughout this year, obviously it sounds like Q1 started at a low point and maybe just a little bit of visibility and color as to how you think we should progress over the last three quarters of the year. Thank you.

Nicolas Brunet: Hi George, Nick here again. We don't have perfect visibility, but when you look at it, we are very well advanced in delivering the units that we were awarded as part of round one of the EPA program. We are now, as I mentioned before, with a billion and a half that's about to be available for, we expect, for purchase orders of school buses from the next two rounds. There's obviously a certain time that's required for the clients to place a formal purchase order, as well as the planning infrastructure.

George Gianarikas: Yeah, Hi, George Nick here again.

Nicolas Brunet: Look we don't have perfect visibility, but when you look at it we are.

Nicolas Brunet: Very well advanced in delivering the units.

Nicolas Brunet: We were awarded as part of round one of the EPA program. We are now as I mentioned before was a $1 billion in assets about to be available for we expect purchase orders of school buses from the next two round.

Nicolas Brunet: There is obviously.

Nicolas Brunet: The time that's required to.

Nicolas Brunet: For the clients place a formal purchase order.

Nicolas Brunet: Well at the plant infrastructure and so we alluded to some volatility in the short term that is in part driven by that's what our what we're hoping for it.

Nicolas Brunet: And so, you know, we alluded to some volatility in the short term that is in part driven by that. What we are hoping for is that the cadence of deliveries under the EPA program will pick up in the second half of the year. Typically, there's about a two-year window in order for the client to receive the vehicle. We pride ourselves on being able to deliver relatively fast. And so again, we hope and expect that the pace will pick up in the second half of the year and continue throughout 2020.

Nicolas Brunet: The cadence of deliveries under the EPA program will pick up in the second half of the year typically there's about a two year window.

Nicolas Brunet: In order for the clients to receive the vehicles.

Nicolas Brunet: We pride ourselves in being able to deliver a relatively fast.

Nicolas Brunet: And so again, we hope and expect that cadence will pick up in the second half of the year and continue to have one.

George Gianarikas: Great, thank you. And let me just take a question on the commercial market opportunity. Any update on the Amazon relationship and any discussions you've had with them? Thank you. Look, if by commercial you mean trucks, presumably.

Speaker Change: Great. Thank you and let me just second question on.

Nicolas Brunet: Okay.

George Gianarikas: On the commercial market opportunity.

Speaker Change: Update on the Amazon relationship and any discussions you've had with them. Thank you.

George Gianarikas: Yes.

Nicolas Brunet: Look, if by commercial you mean trucks, presumably. Look, the truck market, we've said it numerous times, is about ten times the potential of the school bus market. It has the TCO dynamics that we think are more favorable. There has been continued regulation that is promoting zero emissions vehicles.

George Gianarikas: Look.

Speaker Change: If by commercial you mean, you mean trucks, presumably look the truck market.

Nicolas Brunet: Numerous times is about 10 times the potential in the school bus market. It's got a CTO dynamics that we think are more favorable.

Nicolas Brunet: There has been continued regulation that is promoting zero emission vehicle, but that said the.

Nicolas Brunet: But that said, the market is significantly behind where the school bus market is. We see some interesting developments, of course. You know, you mentioned Amazon. You saw that they were deploying some tractor trucks with another party. We view this as very positive industry news. And, you know, our goal with the trucks is to deliver quality products, to get into large fleets and form relationships so that they can adopt and appreciate our products, and then scale up this business.

Nicolas Brunet: The market is.

Nicolas Brunet: Secondly, behind the truck market is significantly behind where the school bus market is we see some interesting developments of course.

Nicolas Brunet: You mentioned Amazon you saw that they are deploying.

Nicolas Brunet: With another party some attractive trucks, we view this as very positive industry news.

Nicolas Brunet: And our goal with the trucks to deliver quality products to get into large fleets and form relationships. So that they can.

Nicolas Brunet: Adopt and appreciate our products and then scale up this business.

Nicolas Brunet: The market picks up.

Nicolas Brunet: In this trial.

Speaker Change: Thank you.

Operator: Our next question comes from Benoit Poirier from Desjardins. Please go ahead.

Speaker Change: Our next question comes from <unk> <unk> from Chardan. Please go ahead.

Benoit Poirier: Sorry, good morning everyone. ETF Program. You mentioned some delays in terms of funding, and we didn't see any new funding in the Canadian budget. So are there any milestones we should monitor going forward? And I've heard also the word that you currently have a lot of dialogue with customers waiting, obviously, for the $1.5 billion funding to come from the EPA. How would you qualify your bidding pipeline as of now? And also any thoughts about the upcoming U.S. election, whether it will influence the dialogue with the customers or the different funding agendas?

Operator: Yes.

Benoit Poirier: Sorry, good morning, everyone.

Benoit Poirier: To come back on the.

Benoit Poirier: Its ETF program, you mentioned some delays in terms of funding and.

Benoit Poirier: And we didn't see any new fund being indicated in budget. So are there any milestones that we should monitor going forward.

Speaker Change: <unk>. So the work that you are.

Benoit Poirier: Currently a lot of dialogue with customers waiting obviously for the one 5 billion funding to come with the EPA how would you qualify your.

Benoit Poirier: Bidding pipeline as of now and.

Benoit Poirier: Also any thoughts about the upcoming U S election weather influence the dialog with the customers or the <unk>.

Benoit Poirier: <unk> funding agency.

Benoit Poirier: Yeah.

Marc Bedard: Good morning, Benoit. This is Marc.

Benoit Poirier: Good morning, this is mark.

Benoit Poirier: Yes.

Speaker Change: I'll take the one on the <unk>.

Marc Bedard: As you probably know what I mean, it's been going on for almost three years now and some operators started that process almost two years ago.

Marc Bedard: I'll take the one on the ZDTF. As you probably know, it's been going on for almost three years now, and some operators started that process almost three years ago. So the process is obviously a little bit complicated, but we are seeing good movement. I think you know the first approval for the 200 buses is a major step. So we are very satisfied with this at this point, with obviously the approval of this order, and we were able to deliver 50 of those buses as well.

Marc Bedard: So the process is obviously a little bit complicated, but we are seeing good movement.

Marc Bedard: Right now and I think you know the first approval for the 200 buses is a major step. So we are very satisfied with this at this point.

Marc Bedard: Obviously the approval.

Marc Bedard: This order and we were able to deliver 50.

Marc Bedard: Those buses as well so with respect to this that Etfs, we see good momentum right now we see good dialogue as.

Marc Bedard: So with respect to the ZDTF, we see good momentum right now; we see good dialogue as well. As you know, the operators are discussing with the ZDTF, and we're basically supporting the operators at their request, and we know that some operators are still waiting for the formal offer.

Marc Bedard: As well as you know what the operators are discussing with the DTF and we're basically supporting the operators.

Marc Bedard: In their request and we know that some operators are still waiting for the formal offer from <unk>.

Marc Bedard: One thing I can tell you, though is that the operators. They are looking forward to electrify their fleets and and this is a great step I mean <unk> to slow down their diesel purchases right now waiting to receive the green light from the Etfs. So this is.

Marc Bedard: With respect to this ETF, we see that as very good news right now and I will turn it to Nick Nick the EPA in terms of the EPA bidding pipeline.

Nicolas Brunet: [inaudible] In terms of the EPA bidding pipeline, Ben, I would describe it as very healthy. Look, when this first round was announced, the subsidy amounts were the highest, and the objective of the program was to spread out across all states as much as possible. Now the amounts are gradually lowering. [inaudible] In terms of your third question on the elections, of course, we don't know what we don't know, but... I point out the $5 billion EPA program is something that's approved, that's being deployed as, [inaudible] It's a societal view, in our opinion, that school buses, emissions in school buses should be eliminated.

Marc Bedard: I would describe it.

Nicolas Brunet: Look when this first round was announced the subs.

Nicolas Brunet: Subsidy amount for the highest the objectives of the program is that spread out across all states as much as possible.

Nicolas Brunet: Now the amounts are gradually lowering their it remains in our view very.

Nicolas Brunet: Very attractive, but more and more it's about to selling into a larger school districts served by larger operators.

Nicolas Brunet: And sort of more at scale.

Nicolas Brunet: Deployment.

Nicolas Brunet: Which which I can play better into our selling activity. We also have of course out of the factory in Joliet.

Nicolas Brunet: And running that we can we can showcase so I'd describe the pipeline.

Speaker Change: Very helpful.

Nicolas Brunet: In terms of your your third question on the elections, but of course, we don't know what we don't know but.

Nicolas Brunet: In fact, I would point out the $5 billion EPA program, that's something that's approved that being deployed as you can see.

Nicolas Brunet: Quite rapidly on top of the 1 billion and a half that I mentioned, just now the $930 million from the clean heavy duty program. We expect there will be another funding round this year somewhere in the fall under this program.

Nicolas Brunet: The dollars are getting deployed pretty rapidly and we would add that in terms of.

Nicolas Brunet: School buses.

Nicolas Brunet: Okay.

Nicolas Brunet: It's a societal view in our opinion.

Nicolas Brunet: The school buses.

Nicolas Brunet: In school bus it should be eliminated.

Nicolas Brunet: It's a use case that makes a lot of sense, both in terms of health for the children but also operationally speaking, and so I feel pretty good about that. And I'll add that on top of the federal money that we see coming in the space, I mentioned the debt-free program, $500 million in California. There are other examples in Colorado, in Texas, in Illinois, and so there's quite a lot at the state level. And on top of subsidies, there's also regulation in a number of states that are making it mandatory over time for school buses to be eliminated.

Nicolas Brunet: Use case that makes a lot of sense, both in terms of health for the children, but also.

Nicolas Brunet: Operationally speaking and so.

Nicolas Brunet: So feel pretty good about that and I'll add that on top of the federal money that we see coming in the space I mentioned that because thats the program $500 million in California. There are other examples in Colorado, and Texas, and Illinois, and so there's quite a lot at the state level and on top of subsidy. There is regulation also with a number of states that are.

Nicolas Brunet: That are making.

Nicolas Brunet: Making it mandatory overtime for school buses to be the latter.

Nicolas Brunet: Sure.

Benoit Poirier: Okay, thank you very much. I apologize for the long list of questions, and I'll get back in the queue. No problem.

Speaker Change: Okay. Thank you very much I apologize for the long list of question and I'll get back into queue.

Speaker Change: No problem. Thank you.

Operator: Our next question comes from Rupert Merer from National Bank. Please go ahead.

Benoit Poirier: Our next question comes from Bruce <unk> from National Bank. Please go ahead.

Rupert M. Merer: Hi, good morning, everyone. Morning Rupert.

Rupert M. Merer: Hi, good morning, everyone.

Unknown Speaker: Coming back to liquidity, it seems like the biggest moving part over the next couple of quarters is going to be the level of inventory. Can you talk about the cadence of the drop in inventory, that $50 to $75 million in reduction that you're looking at? Can that be front-end loaded this year? And do you have opportunities to reduce inventory by more than that level if needed?

Rupert M. Merer: Good morning, coming back to liquidity it seems like the biggest moving part.

Unknown Speaker: Over the next couple of quarters is going to be the.

Unknown Speaker: The level of inventory can you talk about the.

Unknown Speaker: Cadence of the drop in inventory that $50 million to $75 million in production that youre looking at can that be front end loaded this year and do you have opportunities too.

Unknown Speaker: To reduce inventory by more than that level if needed.

Richard Coulombe: I'll take that one, Rupert. Listen.

Speaker Change: I'll take that one Robert.

Richard Coulombe: As I said earlier, Q1 for us was a quarter where we really worked with our supplier base, and we kind of realigned our approach, shifting from a build-to-stock to a build-to-order approach. So Q1 was like a transition quarter, as some of our suppliers had already built some inventory for us, had already bought some raw materials, so Q1, despite, I would say, all of the alignment that, let's say, that occurred during the quarter, we accepted some inventory in exchange for proclaiming terms and so on, just to, again, get through that transition phase.

Unknown Speaker: As I said earlier Q1 for US was the quarter, where we really work with our supplier base and we kind of re aligned in our approach and obviously I think from a build to stock that build to order approach. So Q1 was a transition quarter some of our suppliers had already built.

Richard Coulombe: And despite all of that, we managed to reduce inventory by $12 million. So I anticipate that Q2, Q3, we will continue seeing an improvement in that inventory reduction. So I do see the numbers increasing in the next few quarters, and internally, for sure, we're driving a higher number. We'll see how things play out.

Richard Coulombe: Build some inventory for us thats already Boston raw materials, So Q1 despite.

Richard Coulombe: I would say all of the alignment.

Richard Coulombe: Let's say that occurred during the quarter, we accepted some inventory in exchange for prepayments or Nicole Andre just to again get through that transition phase and despite all of that we managed to reduce inventory by 12 million. So I anticipate that Q2 Q3, we will continue.

Richard Coulombe: Seeing an.

Richard Coulombe: The improvement.

Richard Coulombe: The inventory reduction so I do see that.

Richard Coulombe: The numbers increasing.

Richard Coulombe: In the next few quarters and then during this for sure were driving a higher number.

Richard Coulombe: Obviously, a lot of it is connected to the order book and how many orders we're going to secure from the ETA round, as Nick pointed out, and the ETF. So there's a lot of moving parts, so it's hard for me at this point to talk about a different set of numbers, but I feel very confident with the $50 to $75 million, and we should see. I'm expecting Q2 to be another good quarter in terms of inventory. Also a Rupert, this is Marc.

Richard Coulombe: We'll see how things play out obviously a lot of it is connected to the order book and how many orders we're going to take share from the EPA around as Nick.

Richard Coulombe: Pointed out there's a lot of moving parts, but it's hard for me at this point to talk about a different set of numbers, but I feel very confident with the $50 million to $75 million and we should see I'm expecting Q2 to be another good quarter in terms of inventory reduction.

Marc Bedard: With respect to the current assets, I mean, Richard referred to that earlier, we have $329 million of current assets and $124 million of current liabilities. So that gives us, you know, almost $200 million of liquidity that we can unlock as well. And obviously, it's mostly inventory, as Richard just mentioned, but it's also accounts receivable. There's a lot of accounts receivable in there, and there's a lot of receivable coming from the government. [inaudible]

Marc Bedard: Also you will this is mark.

Richard Coulombe: With respect to the current assets I mean, Richard.

Marc Bedard: Referred to that earlier, we have $329 million of current assets and $124 million.

Marc Bedard: Current liabilities so that gives us.

Marc Bedard: E E.

Marc Bedard: Almost a two well the $200 million.

Marc Bedard: <unk>.

Marc Bedard: Of liquidity that we can unlock.

Marc Bedard: As well and obviously, it's mostly inventory as Richard just mentioned, but it's also what the accounts receivable.

Marc Bedard: A lot of accounts receivable in there and Theres a lot of time.

Marc Bedard: Receivable coming from the government.

Marc Bedard: So good accounts receivable and then just a matter of timing.

Marc Bedard: Before getting dose and it's.

Marc Bedard: It's an area, where we will unlock we will be unlocked.

Marc Bedard: We will go I'm, sorry, we will be able to unlock some some liquidity going forward.

Rupert M. Merer: So liquidity, I believe you say it's the same today as it was at the end of March. Do you have a forecast for where that could end up at the end of Q2 with all of the initiatives that you're looking at?

Marc Bedard: So liquidity.

Marc Bedard: Would you say.

Marc Bedard: <unk> today as it was at the end of March you have a forecast for where that could end up at the end of Q2 with with all of the initiatives that youre looking at.

Richard Coulombe: I'm not going to get into forecasting cash flows; I can just tell you we're highly focused on our working capital initiative. As I pointed out earlier, our April 30th bounce is more or less the same as March, and as we drive our initiative, confidence is going to be a key contributor for the company.

Speaker Change: But as I said I'm not going to get into forecasting cash flows I guess.

Richard Coulombe: We're highly focused on our working capital initiatives.

Richard Coulombe: Earlier, our April 30th balance was more or less.

Richard Coulombe: Same as at March and as we drive our initiatives.

Richard Coulombe: Contributor for equity.

Rupert M. Merer: Rupert, we also need to keep in mind. I mean, the right sizing that we've done, we feel that was necessary and very responsible of us, and this is $40 million in annualized savings, and a lot of this was coming from the overhead as well. So you will start to see the result of this right sizing going forward, but there was a major decrease, obviously, in the burn rate, and you can add this also to what we've been doing with respect to CapEx, which is less than $5 million for the whole year and $400,000 in the first quarter.

Speaker Change: Rupert we also need to keep in mind I mean, the the rate tightening that we've done.

Rupert M. Merer: We feel that was necessary in the response, both from US and this was $40 million.

Rupert M. Merer: In.

Rupert M. Merer: Annualized savings and a lot of this was coming from the overhead.

Rupert M. Merer: As well so you will start to see the results of this right sizing going forward, but there was a major decrease obviously the burn rate and.

Rupert M. Merer: You can access also to what we've been doing with respect to Capex, which is 11 $5 million for the whole year.

Rupert M. Merer: 400000.

Rupert M. Merer: I mean in the first quarter, just keep in mind that last year in <unk>.

Rupert M. Merer: Just keep in mind that last year, in Q1 of last year, we had CapEx of $23 million, and we had R&D of $16.5 million. In Q1, our R&D was $8.2 million. So I think all of this is going in the right direction.

Rupert M. Merer: Q1 of last year.

Rupert M. Merer: We have capex of $23 million and R&D of $16 5 million in Q1, R&D was $8 $2 million.

Rupert M. Merer: All of this is going in the right direction.

Marc Bedard: Great. And then as a follow-up on the supply chain, can you talk about how the supply chain is progressing? Are you seeing any further relief on prices for key items like your battery cells or other critical parts?

Speaker Change: Alright, and then as a follow up on on the supply chain can you talk about how.

Marc Bedard: Supply chain is progressing are you seeing any further relief on prices for key items like like <unk>.

Marc Bedard: Yourselves or other critical parts.

Marc Bedard: Yeah, well, that's a good question. I mean, obviously, with the technology devolving, we absolutely see some reduction in cost at some point. What is top of mind for us is bringing down the inventory, but at some point, we will start to see some results in, you know, those costs going down. So it will not be a short-term thing because, I mean, we are consuming right now. But, absolutely yes.

Speaker Change: Yes, Thats a good question.

Marc Bedard: Obviously with the.

Marc Bedard: This technology is evolving I mean, we absolutely see some <unk>.

Marc Bedard: Some reduction in cost at some point.

Marc Bedard: What is top of mind for us is bringing down the.

Marc Bedard: The inventory, but at some point, we will start to see some.

Marc Bedard: Some results in those tests going down so it will not be a short term thing.

Marc Bedard: Because of the inventory.

Marc Bedard: Consuming.

Marc Bedard: Right now, but yes, absolutely I mean going forward and I would say on the medium term.

Richard Coulombe: I mean, going forward, and I would say in the medium term, we are absolutely expecting some costs to go down. And I can add, maybe, you know, a lot of it is going to be on the new platform, right? So, like we saw in 2.1, obviously, there was some pressure on our margins stemming from the Line 5 introduction, Line D, and the introduction of our own batteries. So obviously, as we see volume growing on those platforms and as we continue building more of our own batteries, we're definitely going to see costs go down. So there's a lot of effort on that front.

Marc Bedard: There, we are absolutely expecting some costs going down.

Richard Coulombe: And I can add maybe a lot of it is going to be on the new platform.

Richard Coulombe: <unk>, obviously, there was some pressure on.

Richard Coulombe: Some pressure on our margins coming from the line five introduction I E. The introduction of our own batteries. So obviously as we see volume.

Richard Coulombe: Growing on those platforms and as we continue building more of our own batteries.

Richard Coulombe: Definitely going to see costs going down so there's a lot of effort on that trial.

Rupert M. Merer: Great. Thank you. We'll leave it there.

Speaker Change: Great. Thank you I'll leave it there.

Speaker Change: Thank you.

Operator: The next question comes from Daniel Lye at Barclays; please go ahead.

Rupert M. Merer: The next question comes from Daniel Lie at Barclays. Please go ahead.

Dan Meir Levy: Hi, this is Daniel Ahn for Dan. Thanks for taking my question.

Dan Meir Levy: Hi, This is Daniel on for.

Dan Meir Levy: Dan Thanks for taking my question.

Dan Meir Levy: To start off, help us understand the gross margin dynamics in the quarter. Could you provide us with some color on your visibility to future product launch headwinds and any other sorts of puts and takes we should be aware of? And how much of a drag were product launches on gross margins in one?

Daniel Ahn: To start off.

Daniel Ahn: Help us understand the gross margin dynamics in the quarter could you provide us with some color on your visibility to future product launch headwinds and any other puts and takes we should be aware of and how much of a drag or product launches on gross margins and <unk>.

Richard Coulombe: Well, listen, on gross margin, you know, we already communicated previously that there would be some volatility in the short term as we introduce, you know, the new platform. So, definitely this quarter, a couple of things, right? It was a quarter with relatively low volume.

Speaker Change: Well listen on gross margin, we already communicated previously that there would be some volatility in the short term as we introduced the new the new platform. So saw definitely this quarter.

Richard Coulombe: A couple of things right.

Richard Coulombe: For the quarter with relatively low volume.

Richard Coulombe: We introduced, you know, Line 5, Line D started, and, you know, we started introducing our own batteries on our platform. So, obviously, all of this impacted the margin of the quarter, and, you know, we have had several quarters where our margin was positive, and this quarter, like I said, we were expecting to go back into negative territory given what I just mentioned. And there will be a bit of volatility, again, in the short term as we continue ramping up on those new platforms.

Richard Coulombe: Produced normalized <unk> started.

Richard Coulombe: We started introducing our own batteries on our platform. So obviously all of this impacted our margin in the quarter and we had several quarters, where our margin was positive in this quarter that we were expecting to go back into negative territory, given given what I, just mentioned and there will be a bit.

Richard Coulombe: Activity again in the short term as we continue ramping up on those new platforms.

Richard Coulombe: But, again, as we see volumes picking up in the second half and as we continue to see maturity in those platforms, again, the plan is to go back into positive territory as soon as possible. So, a lot of effort there.

Richard Coulombe: As we see volumes.

Richard Coulombe: And you're up in the second half and as we.

Richard Coulombe: We don't see materially in those platforms.

Richard Coulombe: Yes.

Richard Coulombe: Back into positive territory as soon as possible. So a lot of efforts there and as Mark pointed out we did.

Richard Coulombe: And as Mark pointed out, we did take a lot of costs out with the three rounds of restructuring. You know, we're looking at $40 million of savings on an annual basis. We're going to start feeling the full effect of those savings. Let's say it's going to be about $10 million a quarter in Q3. So, we should see, you know, roughly $5 million of tailwind in Q2, and then the full impact will be seen in Q3, Q4. So, that's also going to help our...

Richard Coulombe: Take a lot of cost outs, along with the three rounds of restructuring you know we're looking at $40.

Dan Meir Levy: Thank you. That's very helpful.

Richard Coulombe: Savings.

Dan Meir Levy: On.

Dan Meir Levy: On an annual basis, we're going to start feeling the full effect of those savings, let's say, it's going to be.

Dan Meir Levy: About 10 million a quarter.

Dan Meir Levy: In Q3.

Dan Meir Levy: Should see roughly $5 million.

Dan Meir Levy: A tailwind in Q2 and then.

Dan Meir Levy: It will impact that it will be seen in Q3 Q4 as well. So thats also going to help our margin going forward.

Marc Bedard: And just a quick follow-up on your commentary on the work for three. What sorts of offsets are there to a reduced workforce, and are you currently comfortable with the current size of your headcount you're working Daniel? Yes, we are. Basically, I mean, most of the adjustment was done with respect to the overhead. So, there was almost no direct labor with the recent move that we did. And you probably also remember that the second wave in February of this year was basically taking out the second shift for now.

Speaker Change: Thank you that's very helpful and just a quick follow up on your commentary on the workforce reduction.

Marc Bedard: What sort of offsets are there to reduce the workforce and are you currently comfortable with.

Marc Bedard: Side of your head count.

Marc Bedard: Well of course, yes.

Marc Bedard: Yes.

Daniel: Yes, we are.

Marc Bedard: Basically I mean, we've most of the adjustments was done with respect to the overhead.

Marc Bedard: There was almost no direct labor would.

Marc Bedard: With the recent move that.

Marc Bedard: We've done.

Marc Bedard: As you probably remember also that the second week in February of this year with.

Marc Bedard: Yeah.

Marc Bedard: Basically taking out to move the second shift for now.

Speaker Change: So that was mostly direct labor at this point, but we ask about China. So the reality of some some incentive even though that's related.

Marc Bedard: So, that was mostly direct labor at this point, but we had to adjust to the reality of some incentives that we're late. With what we are seeing now, I feel pretty good that we have the right size for what we can expect for the foreseeable future. So, we've been growing a lot in the last few years, and 2024 is really a year of adapting to those conditions. And it's also a year of launching new products. The Lion 5, the Lion Z, the Lion MD batteries, the Lion HD batteries, and in Q3 of this year, the Lion 8 tractor.

Marc Bedard: With what we are seeing now feel pretty good that we have the right size.

Marc Bedard: For what we can expect for the foreseeable future. So we have been growing a lot within the last few years and 2024, it's really a year of.

Marc Bedard: That thing to those conditions and it's also a year of launching new products.

Marc Bedard: The life science.

Marc Bedard: The lion and the batteries the alliance HD batteries and in Q3 of this year the lion a tractor. So obviously all of this.

Marc Bedard: As an impact on the gross margin, but at the same time, we're going to the market with a great lineup of.

Marc Bedard: So, obviously, all of this has an impact on gross margin. But at the same time, I mean, we're going to the market with a great lineup of products, and that will bring volume over time. So, to go back to your question, I feel very good about the right sizing we're doing. I feel very good that the growth capex that we've been investing in the last few years is behind us. Because it's not only a matter of investing that money but controlling those projects as well. And this is all behind us. And after Q3 of this year, we will also be done with any new product development. (Inaudible) This is very helpful. Thank you.

Marc Bedard: Our products and that will bring volume.

Marc Bedard: Overtime, so to go back to your questions feel very good about the right sizing we're doing I feel very good.

Marc Bedard: The growth Capex that we've been investing within the last few years are behind us because it's not only a matter of like.

Marc Bedard: Investing that money, but controlling.

Marc Bedard: Those projects as well and this is all behind us and after Q3 of this year. We will also be done with any new product development, which is amazing and this is going to drive them and obviously the R&D costs going forward. So it's all about focus we're very focused on growing the pipeline and.

Marc Bedard: Our real goal as I said earlier is to go back to having a positive EBITDA and generating free cash flow and this is what everybody is focused on.

Speaker Change: That's very helpful. Thank you guys.

Speaker Change: Thank you.

Operator: The next question comes from Mike Shlisky from DA Davidson. Please go ahead.

Marc Bedard: The next question comes from Mike <unk> from D. A Davidson. Please go ahead.

Michael Shlisky: Yes, hi, good morning, and thanks for taking my question. I wanted to ask about Lion 8 that's coming out soon. I don't want to jump the gun here, but, you know, I think one of your comments earlier, Nick, Amazon has just placed an order for 14 of another brand's Class 8 EVs for use in the port. I guess at this point, with a couple other models that are already on the market for Class 80Vs, can you give us a sense as to what the differentiators are of the Lion 8 and kind of what, um, how do you think you'll get there over the next, uh, let's say 18 months or so?

Michael Shlisky: Yes, hi, good morning, Thanks for taking my question.

Michael Shlisky: Wanted to ask about the lining coming out soon I don't want to jump the gun here, but.

Michael Shlisky: I think one of your comments earlier, Nick Amazon had.

Michael Shlisky: In order for like 14, or another brand class H.

Michael Shlisky: We're using the courts.

Michael Shlisky: I guess at this point with a couple of other malls that are already on the market.

Michael Shlisky: Class Adv could you maybe give us a sense.

Michael Shlisky: Okay.

Michael Shlisky: The Differentiators are of the line eight and kind of what.

Michael Shlisky: Do you think youll get there over the next.

Michael Shlisky: The 18 months or so.

Marc Bedard: Yeah, no, I feel there's, Mike, I feel there's many differences there. But, you know, we're, as Nick was saying earlier, I mean, every time that, you know, there is good news in the EV space, this is good news for the whole EV market. I think, you know, right now, the battle is more about EVs against the ICE market. So, in some markets, that could be more of a resistance to change than anything else.

Michael Shlisky: Yes, I feel theirs.

Michael Shlisky: Mike I feel theres, maybe differences there, but nowhere as Nick was saying earlier I mean every time that there is a good news in the EV space. This is good news for the OLED market I think right now the battle is more about <unk>.

Marc Bedard: <unk> against <unk>.

Marc Bedard: This market.

Marc Bedard: So in some market that could be a resistance to change than anything else. So we're glad to know when the other companies are having good news. That's why we feel this is good for the OLED market that being said, though I mean, we feel very good about our products and.

Marc Bedard: So we're glad, you know, when other companies are having good news as well. We feel this is good for the whole EV market. That being said, though, I mean, we feel very good about our products.

Marc Bedard: And our DNA is really about adding purpose-built school buses and purpose-built trucks. So those trucks, you know, we had the operator in mind the first day we started thinking about those. So that's going to generate a lot of cost savings going forward, and this is great for the operators. So we feel the total cost of ownership is very good.

Marc Bedard: Our DNA is really about adding purpose built.

Marc Bedard: School buses and purpose built trucks.

Marc Bedard: So those trucks.

Marc Bedard: We have the operator in money.

Marc Bedard: Dave we started thinking about that so that's going to generate a lot of cost savings.

Marc Bedard: Going forward and this is great for the operators. So we feel the total cost of ownership is very good and the lining may tractor will be will be launched in two weeks in Las Vegas at the actuals and we feel this one is a game changer and we can see that great momentum with the line five as well that people are driving the line five we start.

Marc Bedard: And the Lion 8 tractor will be launched, I mean, in two weeks in Las Vegas at the actual show. And we feel this one is a game changer. And we can see that great momentum with the Lion 5 as well. The people are driving the Lion 5.

Marc Bedard: We started the delivery. As you know, those trucks, we feel, will really respond, I mean, to the needs of the operators. And this is all that matters.

Marc Bedard: The deliveries.

Marc Bedard: As you know.

Marc Bedard: Those trucks, we feel you know will really.

Marc Bedard: I mean to the need.

Marc Bedard: The operators and this is all that matters, so great quality products real easy products that are fully purpose built.

Marc Bedard: So great quality products, real EV products that are fully purpose-built. And also, all the software and all the communication tools that we have benefited from from the last eight years that we've been selling EVs in the school bus space as well. So we feel that, you know, those trucks that we're putting to market will be a great game changer in the.

Marc Bedard: And also all the software and all the communications that we have.

Marc Bedard: Benefiting from the last.

Marc Bedard: The last eight years.

Marc Bedard: We've been we've been selling EV in the school bus space as well so we feel that those truck that we're putting to market will be a great game changer.

Marc Bedard: Space.

Michael Shlisky: Great. And then my follow-up question was just on the Q1 numbers here, a real quick one. Just the average price per vehicle was a bit higher this year over last year. Is that just a function of just the mix between buses and trucks? I'm also trying to figure out whether there are any credit revenues from environmental credits or other things in there that we should be aware of, or is it just purely all vehicles this quarter?

Marc Bedard: Great.

Marc Bedard: And then my follow up question was just on the Q1 numbers here real quick one.

Michael Shlisky: Just the average price per vehicle was a bit higher this year over last year.

Michael Shlisky: Is that a function of just the mix between bus and truck.

Michael Shlisky: We've been kind of talking about weather.

Michael Shlisky: Credit.

Michael Shlisky: Credit revenues.

Michael Shlisky: Environmental credits or other things in there that we should be aware of or is it just purely all all our vehicles this quarter.

Unknown Speaker: All vehicles and charging infrastructure. No, no, nothing.

Michael Shlisky: All vehicles and charging infrastructure no no nothing unusual there.

Michael Shlisky: So it's just mixed, was the reason for the average price. Thank you. Yes, correct. Yeah. Great. Okay, perfect. Thanks so much, everybody.

Unknown Speaker: So it's just mix was the reason for the average.

Michael Shlisky: Or yes pricing first of all yes.

Michael Shlisky: Correct correct, yes, correct.

Michael Shlisky: Okay perfect. Thanks, so much everybody.

Michael Shlisky: Okay.

Speaker Change: Thank you Mike.

Michael Shlisky: Okay.

Operator: The next question is from Chris Souther from Be Riley. Please go ahead.

Michael Shlisky: The next question is from Chris <unk> from B Riley. Please go ahead.

Christopher Curran Souther: Hey, thanks for taking my question. Maybe just on the truck order book, it looked like it was reduced during the quarter beyond what the sales were during the quarter. Can you comment on what the moving pieces were there? Yeah.

Christopher Curran Souther: Hey, Thanks for taking my question.

Christopher Curran Souther: Maybe just on the truck order book looks like.

Christopher Curran Souther: Reduced during the quarter.

Christopher Curran Souther: Beyond what the sales were during the quarter can you comment on.

Christopher Curran Souther: A lot of moving pieces were there.

Nicolas Brunet: Yeah, as I mentioned in the prepared remark, we had an order of 65 units in the truck order book that was for a client that filed for creditor protection. And so, in light of that, we took out those 65 units.

Speaker Change: Yeah as I mentioned in the prepared remarks.

Nicolas Brunet: <unk> had a an order of 65 units in the truck order book that was for a client that filed for a credit card protection. So in light of that we took out 65 units.

Nicolas Brunet: From the order book that is the bulk of it.

Christopher Curran Souther: Okay, I got it. Thanks. I missed that. And, you know, obviously, a lot of moving pieces on some of the subsidy programs, but I just think today, if we're looking at the current order book and the visibility on delivery, could you give us a refresh on the current order book between VTF, EPA, and other orders that are customer-dependent on the timing and orders that are maybe less constricted on the delivery time? Yeah, over half.

Speaker Change: Okay got it thanks I missed that.

Nicolas Brunet: Obviously, a lot of moving pieces optimal subsidy programs.

Christopher Curran Souther: Today, if we're looking at.

Christopher Curran Souther: The current order book and visibility deliberate could you give us a refresh.

Christopher Curran Souther: Mclaren orders both between the ETF EPA other orders that are customer depending on the timing.

Christopher Curran Souther: The owners that are maybe less constricted.

Christopher Curran Souther: Liberty times.

Nicolas Brunet: Yeah, over half of the order book, Chris, is conditional on ZETI-TF approval. As we mentioned this morning, the first approval for an order of 200 units was obtained, and we started delivering on that. As it relates to the EPA, there is very, very little in there, only what remains from the first round. And as I mentioned, there's a billion and a half that we expect will be available for orders imminently, and we're having a very healthy, encouraging client dialogue about that. But there's...

Christopher Curran Souther: Yes.

Christopher Curran Souther: Half of the order book, Chris conditional on.

Nicolas Brunet: That ETF approval as we mentioned this morning first approval for <unk>.

Christopher Curran Souther: Okay, got it. And then maybe the last one, a little more clarity on the ETF process to get subsequent orders. Do you have any sense as to what made the 200 bucks order that you recently received get through all the red tape and, you know, and where the other orders stand as far as, you know, that similar process? I just wanted to see if we can get a better sense of, you know, well, where we are with the rest of that piece of the order. Yeah, so with respect to the, uh, the 200.

Christopher Curran Souther: 200 units with a pain and we started delivering on that.

Christopher Curran Souther: As it relates to the EPA.

Christopher Curran Souther: Very very little in there only what remains from.

Christopher Curran Souther: From the first round and as I mentioned, there is billions and asked that we expect will be.

Christopher Curran Souther: Available for orders and we are having.

Christopher Curran Souther: Healthy.

Speaker Change: Merging client dialogue for that but there is close to nothing in the order book as it relates to <unk>.

Christopher Curran Souther: Okay got it and then just maybe last one a little more clarity on the ETF process.

Christopher Curran Souther: To get subsequent orders.

Christopher Curran Souther: Do you have any.

Christopher Curran Souther: Like what made the 200 bus orders.

Christopher Curran Souther: Recently received.

Christopher Curran Souther: Get through all the red tape and wisely.

Christopher Curran Souther: Where the other orders stand as far as.

Christopher Curran Souther: Similar processes I just wanted to see if we can get.

Christopher Curran Souther: Better center.

Christopher Curran Souther: Okay.

Christopher Curran Souther: Where we are with the rest of that.

Christopher Curran Souther: This is the order book.

Marc Bedard: Yeah, so with respect to the 200 orders, we are in discussions with the operators. And it's a matter of, you know, putting in the infrastructure and delivering those buses. So there will be deliveries obviously this year, and we're coordinating with the operators to make sure that we please them, and we deliver as soon as possible. As I said earlier, we see very good dialogue right now between the operators and the DTM.

Christopher Curran Souther: Yes, so with respect to the 200 orders.

Marc Bedard: We are in discussion with the operators.

Marc Bedard: Well Dr.

Marc Bedard: And it's a matter of putting in the.

Marc Bedard: Infrastructure and delivering those buses so.

Marc Bedard: There will be there will be deliveries obviously.

Marc Bedard: This year and we're coordinating with the operator to make sure that.

Marc Bedard: We are pleased them and we deliver.

Marc Bedard: As soon as possible as I said earlier, we see very good dialogue right now between the operators and.

Marc Bedard: The DTF.

Marc Bedard: Many of those have been in discussion for more than two years with the DTM, but it's a process where there are many steps, and many of them are getting to the last steps, and hopefully, I mean, that will conclude with the approval of, you know, those files. But we see good momentum right now and we see a lot of, you know, willingness also from the operators to get their electric buses to carry the kids to school, which is a... which is great. So we feel that this order of 200 buses and this approval is a very good sign of where it's going.

Marc Bedard: Any of those.

Marc Bedard: Been in discussion for more than two years with the Dps.

Marc Bedard: It's a process where there are many steps and many of them are getting to the last steps and hopefully I mean that.

Marc Bedard: That will conclude into an approval of the.

Marc Bedard: Those files, but we see we see a good momentum.

Marc Bedard: Right now and we see a lot of willingness also from the operators to get their electric buses to carry the kids to school, which is.

Marc Bedard: Which is great. So we feel that this order of 200 buses and this approval is a very good sign of where it's going.

Marc Bedard: Thanks.

Marc Bedard: Yeah.

Speaker Change: Thank you.

Operator: We have no further questions on the call, so I will hand the floor back to management to conclude.

Speaker Change: We have no further questions on the call. So I will hand, the floor back to management to conclude.

Operator: Yeah.

Marc Bedard: Well, thank you everyone for joining us today. We look forward to continuing the discussion with you, so feel free to contact me with any product questions you may have. Have a nice day.

Speaker Change: Well, thank you everyone for joining with us.

Operator: Great.

Marc Bedard: Forward.

Speaker Change: Especially with your subsidiary to contact me for any further question Matt Abernethy.

Operator: This concludes today's conference call. Thank you all very much for joining us.

Speaker Change: This concludes today's conference call. Thank you all very much for joining.

Operator: [music].

Operator: Yeah.

Operator: Okay.