Q3 2024 Nikola Corp Earnings Call

Good morning and welcome to Nikola Corporation's third quarter, 2024 earnings and business update call. Currently, I'll participate in Surnalist Nullim mode. We will begin today's call with a short video presentation, followed by management prepared remarks.

A question and answer session will follow the prepared remarks. As a reminder, this conference is being recorded.

Hello from the Coolidge Assembly factories. One of the key features of our factory is its flexibility.

Remember, we're one truck platform in two power train options, battery electric or hydrogen fuel cell truck.

The agility, flexibility, super important in this business, market demand shifts from month to month, and we need the ability to react to that shift.

So within the line we have the flexibility that switch back and forth depending upon market demand. One truck platform, two power train options, all zero mission.

This is where trucking is going. This is where the future is.

Speaker Change: We haven't seen anything that's as advanced as the Nicolas. The technology is actually made of more efficient, the power.

The over ability, it can turn on the down, it's just a smooth try to vehicle.

The power that it has going up the hill, there's no comparison. It's faster than anything I've ever driven. After a shift recovery on, I say on the body is definitely a lot better than before.

I love that it's not a lot of noise.

Being in the truck is almost like soundproof, you don't really hear the outside. It's a keyless entry, you know everyone has an app that they can utilize to get into the trucks.

Guy was like the fact that it was cool to meet their fun to drive. I find it very convenient that a lot of features are built into the HMI system. Just makes my job overall easier. It's cutting edge equipment and it's really, it's a great vehicle on the road.

Thank you, operator and good morning everyone. My name is Soei Shin, head of Investor Relations.

I'd like to welcome those listening by phone and those on the webcast to make a look corporation third quarter, 2024 earnings and business update call. Joining me today are Steve Girsky, President and CEO and Tom Okray, Chief Financial Officer.

A press release detailing our financial and business results with distributed earlier this morning. This release can be found on the Investor Relations section of our website, along with presentation slides, accompanying today's call.

Today's discussion includes references to non-gap measures. The presentation includes adjusted EBDAH, non-gap earnings per share, adjusted free cash flows and other non-gap measures.

These measures are reconciled to the most comparable US gap measures, and can be found at the end of the Q3 earnings press release we issued today.

Today's discussion also includes forward-looking statements about our future results, expectations and plans.

Speaker Change: Actual results made different materially from those stated and some factors that could cause actual results to differ are also explained at the end of today's earnings press release on page 2 of our earnings call deck and in our filings with the SEC.

Forward-looking statements speak only as of the date on which they are made. You are cautioned not to put undue reliance on forward-looking statements. After Steve and Thomas prepare remarks, we'll take questions from our stockholders and then conclude with questions from Analyst.

Thanks Soei and good morning everyone. Welcome to our third quarter 2020 for earnings and business update call.

Here today through the third quarter we had record sales of hydrogen fuel cell electric trucks.

A 78% growth in fuel cell electrical fleet adoption and an nearly 350% increase in hydrogen fuel dispensed at our commercial stations.

We also returned 78 Beb 2.0 trucks back to End Fleet and Dealers.

With every truck delivered and fueled at our stations, we continue to deliver proof points to the market that zero mission trucks are driving the future of class 8 mobility.

Programmed to date, Nika Lepuicell Electric Trucks and Battery Electric Trucks have accumulated over 4 million validation miles, avoiding over 6,000 metric tons of CO2 pale type emissions, which is equivalent to the emissions generated by over 1500 gasoline power passenger cars in one year.

The third quarter is an example of how we're executing our strategic and operational objectives by strengthening our resolve to push forward, meet the demands of our end fleets and lay a path for a sustainable future.

First, at the end of Q3, we announced we had wholesale the record 88 hydrogen fuel cell electric trucks, firmly within the guidance range of 80 to 100.

We continue to dominate the heavy duty fuel cell electric vehicle market in North America, with over 90% share based on the most recent bulk registration data.

We also expanded our deal in network for the first time since the launch of the fuel cell electric vehicle in Q3, 2020-3, allowing more access to both nickel-up fuel cells and beves in Southern California.

Second, we are building momentum in the zero mission ecosystem.

Currently, we're the only OEM to offer two zero-mission power trains on one commercial class A platform in North America. This speaks to our unique ability to meet the diverse business needs of our employees.

Regarding fuel cell electric vehicles with the only OEM expanding the market or increasing the pie.

As the market leader and pioneer were also driving an inflated option.

Speaker Change: Here today, in service fleets have grown 78% to 16 distinct end fleets from 9 in Q1.

Across both power trains, 32 discreet and fleets have deployed, Nikola Pusel or battery-electric trucks.

Quarter to Quarter, we're proving as a market for heavy duties, zero mission vehicles in North America.

Third, we are reiterating our year end fuel-selected vehicle guidance volume of 300 to 350 trucks.

Fourth, as we mentioned, the Deb 2.0 is back on the road. Program the date we've made solid progress on the recall and have returned 78 Deb's back to end fleets and dealers to overwhelmingly positive feedback.

Moving on to the business update, we had record sales of 88 fuel cell electric vehicles.

To our dealer network, up from 22% last quarter.

On the retail front, we continue to see strong organic road from existing end fleets.

National Fleet Partners such as JB Hunt

Keenan Advantage Group and THL recently announced deployment of Nikola Fulsel Records.

and noted the important role we play and not only helping them meet their sustainability goals, but those of their end customers Nestle and Diagio.

Nikolay will support the Agio operations with the deployment of its first behind-the-pence hydrogen fueler at its campus in Plainsfield, Illinois.

Enfliques are delivering household goods to their final destinations, wherever that may be, all with zero kale pipe emissions.

Sustainability drives good business and Nikola stands tall with them.

We're also excited to welcome GTS group into the Nikola Dilla Network and Southern California.

Speaker Change: GTS introduced next generation truck or NGT as a new division creative of the sales and service of legal trucks.

What's exciting is that Nikola is a catalyst for dealers like GTS who find value and diversifying their business into zero missions class eight trucks.

The additional deal of brings the number of Nicholas sales and service locations up to 19 across the US.

We're pleased by the traction we're gaining from demos, especially in Canada. Lobba Supa Market's completed its trial of the Beb 2.0 with high praise for its performance and range.

Kim Morton's restaurants will begin demos of both the fuel cell and dev shortly as they evaluate the best fit for a short long distance routes.

Our deal of partner, ITD, is ready and waiting to support max charging as it has recently built a 400 kilowatt charging station in Toronto.

As a reminder, we launched Canada's first modular refueling station editor with ITD last quarter. Together, we are building out the zero-mission ecosystem for the benefit of all.

With building momentum in the zero-mission ecosystem, exploring uncharted territory, testing new technologies, and leading the way for others to follow. Every day our in-service trucks transmit extensive field data that is analyzed and used to make our trucks a better experience for our employees.

Likewise, every kilogram dispensed within the High-Lead Network helps inform our fueling partners and suppliers with the continuous development needed to sufficiently meet the off-take demands on this larger scale.

The more trucks we deploy, the more they fuel and the faster the ecosystem reaches stabilization in the learning curve. Negalist stands alone in these pioneering efforts.

Today 16 fuel cell electric vehicle in service and fleet have accumulated over 1 million road miles up from 9 fleets and 120,000 miles and Q1.

Validating the average fuel economy benchmark of 7.2 miles per kilogram.

The data point that's really telling of the fuel cell electric vehicles capabilities is that since last quarter, the total number of runs exceeding 400 miles before fueling has increased to 285 from 192 runs, up 48%.

We are seeing that it's fuel availability increases and fleet operators get more comfortable with the technology. They are pushing the fuel cell electric vehicle to perform the way it is built to.

For the battery electric vehicle, 19 end fleets have accumulated over 715,000 road miles since putting the Beb 2.0 back into service.

Speaker Change: The average distance between charging has increased 10% to 143 miles from 130 miles last quarter.

Like the fuel cell electric vehicle, and fleets are pushing the bath to perform to expectations.

Since it's returned to the market, the total number of runs exceeding 200 miles before charging has grown to nearly 950 or 27% of all runs.

On a converted to diesel basis, our SEVs continue to outperform the average class A truck on fuel economy and avoidance of pale type emissions.

The average miles per gallon.

Diesel Equiblin of our fuel cell electric vehicle remains constant at 8.0 or 23% better than the class A fuel economy average of 6.5 miles per diesel gallon equivalent per the DOE.

Speaker Change: In total, across both power trains, we estimate our N-fleet operations have avoided 2700 metric tons of CO2 tailpipe emissions.

Moving to charge 7, we expect to deliver 10 high-lucked fueling solutions by year end.

We are focusing our strategy on providing more support at existing stations to better serve our customers as we scale. Meanwhile, we continue to make progress on stations later for Q4 as the high-latinum engages daily with local jurisdictions for site approvals and permitting.

In fact, we're in the final stages of approvals for several Northern and Central California cities, which further strengthens the North South i5 freight corridor.

Operationally, over the lifetime of the entire Highland Network, we have recorded over 5,900 fueling events, dispensing over 210 metric tons of hydrogen for an average of 36 kilograms per fill.

The year-to-date ramp-up in mobile hydrogen refueling stations has been very strong. Since we began measuring commercial fueling operations in Q1, total hydrogen dispensing has grown nearly 350%.

Moving on to chart 9, we're excited that the web 2.0 is back on the road, hauling freight and validating its use case.

Programmed today, we've returned 78 bags back to the market to overwhelmingly positive feedback.

Of the many lessons we've learned, one is of its resiliency.

These last 12 months have been a story about the desability to which stand challenges, recover from failures and emerge as an adaptive and evolving truck without compromising performance.

Speaker Change: For example, one-end fleet carrier optimizes its line-haul operations for a major consumer company by carrying high-value low payloads from northeast ports to the Midwest with our PEP2.0.

When the load has cubed out before it has weighed out, the depth 2.0 is a perfect fit.

The old data tells us that this vinc completes the over 800-mile run over days with five charges at an average distance of nearly 160 miles between charges.

Overall efficiency for this run is 2.5 kilowatt hours per mile, a more than decent measure considering the average speed of 60 to 70 miles per hour, with limited regenerative braking on this relatively flat route.

Most importantly, the Beb 2.0 is the truck of choice for this entry carrier to meet its clients' sustainability guidelines to source low-carbon or carbon-free logistics services.

Another carrier deployed the Beb 2.0 to haul for a major steel manufacturing the Southeast and U.S.

This Enflit Maximizes Load Capacity with Root Optimization, all the while meeting its clients' preference for zero mission routes. In fact, one quick midday charge enables the Enflit to double its productivity by running the 160-mile run twice a day.

According to the Ent Fleet, no other bad has the range nor the capability to manage the payload against the strong winds along the route on one charge, let alone twice.

These anecdotes are examples of how the Beb 2.0 is adapted in the marketplace to meet and exceed and plead expectations. It is the truck of choice not only for its performance, but also to meet the sustainability goals of end-fleet partners. The Beb 2.0 is back.

Passing it over to Tom to cover the financial results. Thanks Steve.

Charten contains our financial highlights, regarding the top line in Q3 we posted gross revenue of $33 million. Versus the record of $31 million revenue reported last quarter. The increase in revenue was primarily due to higher wholesale deliveries.

On a net basis, revenue was negatively impacted by $8 million associated with the repurchase of 20 Bavs. We view this as a timing event as we have a PO in hand to deliver these units to another dealer.

Speaker Change: ASP for the fuel cell vehicle in the quarter was $361,000, down 7%.

from Q2.

While we expect softer ASP as volume increases, we are pleased that over the last four quarters of sales, the average ASP for fuel cells has held at approximately 370,000 units per truck.

For the third quarter, we reported a gross loss of $62 million compared to a gross loss of $55 million in Q2. Again, the Bev returns where the biggest headwind partially offset by higher fuel cell wholesale volume.

With respect to cash, our unrestricted cash declined $58 million from Q2, ending the quarter with $198 million.

Cash was helped by net ATM proceeds of $20 million and other financing activities of $75 million. We're examining every opportunity to optimize cash.

We have to make that our existing cash is sufficient to fund our forecast that operating costs.

and Meet our obligations into but not beyond Q1 2025. We continue to seek to maintain sufficient capital to support our business.

Speaker Change: Moving on to chart 11.

For fiscal year 2024, our guidance for fuel cell wholesale deliveries remains unchanged at 300 to 350 trucks.

Our Flywheel-based business plan remains unchanged, building scales to enable us and our supplier partners to improve and optimize the unit economics.

While we believe that the fuel cell truck is the best option for most of our customers' use cases, we also believe that our web truck plays a role in most national fleets.

Speaker Change: Therefore, we continue to manage allocations between producing fuel cells and re-manufacturing buzz to support the needs of our customers.

While Meeting Market Expectations.

Back to Steve for closing remarks.

Steve: Thanks Tom, I'd like to close with a video rearing the key message that we have two power trains, one platform, both zero mission.

Steve: Few weeks ago, our team drove two trucks, one fully loaded from our Phoenix headquarters to Ben Dhillarkin, so on.

The team drove up 6% grades to pace and then onto Wednesday, Arizona. They followed I-40 through New Mexico the second day, Texas and Oklahoma the third day, and reached Arkansas on the fourth day.

The trucks were charged over the drivers, lunch breaks, and over dinner in the evenings.

The loaded bibs range was 210 to 310 miles per charge, while the Bob Hill range was 380 to 490 miles per charge. Both trucks kept pace with the highway semi truck speeds of 65 to 70 miles an hour and performed as expected.

The trucks were 100% reliable and had plenty of power to conquer the grades and arrived quietly and efficiently at the traveling 1200 miles that went and built.

Operator, please start the video.

This morning we're preparing to...

Go on an adventure to the south.

We're taking two better electric trucks, one Bob Tail and one with a box trailer.

Speaker Change: From Phoenix Arizona, Cross Country, two Arkansas demonstrating that we can pull 80,000 pounds across the country Using charge stations along the way, you'll pass the 101th out and then as soon as the 101th door it plays open We could have shipped these trucks on the back of a low-boy, but we decided to drive them And we will get these trucks there under their own power Alright there we go My been a CEO driver for going on 17 years The ease of actually driving one of our Nikola trucks is beyond what I've ever experienced That any other diesel conventional truck out there haven't Very easy maneuver, steering's light, great visibility There's no noise, there's no exhaust used from the diesel

The Chargers so far have been excellent, we've been able to pull straight up to a Charger, we'll plug it right in, it'll accept our payment and we start charging at our max charge rate and you can virtually walk away from it and even monitor it remotely.

Speaker Change: It was easy to do this trip with these trucks.

We charged two times per day over over four days. This is the furthest that we've driven the bebbs on a single trip.

The End

Speaker Change: This concludes our prepared remarks. I will now turn the call back to Soei for stockholder questions.

Thank you, operator. We've been seed questions from retail investors through the SAAP platform. Most of which can be summed up into three questions. The first question. In the long run, how and when do you see the company being profitable?

Thanks Soeiya, I'll take that one.

It is just to be clear and as we said in the prepared remarks, our flywheel based.

This is Plan Remains Unchange.

That said, we're optimizing our operations to ensure that all aspects of the business are lean and ready to scale. In this regard, even though it doesn't jump out at you in a lot of the numbers, we've improved on many fronts.

Winding National Accounts remains key to executing this strategy and as evidenced by the past quarter, we're getting traction and we're making headway here.

Speaker Change: From a corporate sustainability perspective, Nikola is the first mover advantage allows us to meet the needs of companies who seek to reduce their scope three emissions now. We have the fuel cell, the battery electric truck, they offer real zero emissions.

Solutions for any company that relies on logistics services to transport and deliver their goods. We're working with these national accounts and they're demoing with us and buying from us.

The second question, Nikola has the ability to flex production of both the SEV and V, which truck is more profitable, will you continue to offer both?

I'll take this one, Soei and Tom. So we've always, heart done, we're one truck platform, two power train options, all zero mission.

But up till now, we've really only had one or the other in the market, either the dev or the fuel cell. As we move into next year, we will actually have the ability to offer both in the market. As we continue to return these devs, and we can flex the man to what customers want.

So as we make progress through the recall next year, we are getting a poll from the Bebs, and we will start selling these Bebs from Nikola Inventory, and I should point out the Bebs we will be selling from Nikola Inventory will be cash contribution margin positive.

Thanks Steve, the last question is Nikola actively looking for partners that can provide capital to support the company.

I'll take this one also. We are actively talking to lots of potential different partners who value what we do and value what we've built.

It's because we've been doing the hard work out front building the framework and we have proof points. We're on the road today with customers, we're building stations. We now, after working on this for a year, have the ability to connect Northern California and Southern California. We have 32 distinct end fleets and growing that have deployed our trucks.

and there's a market for class A0 mission trucks.

Speaker Change: So we are looking to build the coalition of the willing coalition of like-minded companies that want to pursue and push zero-mission-followed because that's all we do. Companies that value our battery truck that have ranked in the value range versus others. And user experience companies that value our fuel cell truck which gives you even more range and less weight.

Speaker Change: and Company's value, the network we built in California, the hydrogen refueling network we built in California. So we're actively pursuing all of them.

If I could just amplify that a little bit with Steve said

We are looking for these like-minded partners who have stated corporate-wide decarbonization goals for the next decade.

Speaker Change: Hydrogen producers who view hydrogen as a viable energy growth factor. In automotive OEMs who bring either light duty or heavy duty fuel cells to the market.

Speaker Change: i

Speaker Change: Operator, you can open the line for Analyst Q&A.

Speaker Change: Thank you.

Speaker Change: If you would like to ask a question you may signal by pressing star one on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions, we'll go first to make Shilisky with DA Davidson.

Yes, hi, hi, morning, that was taking hi there, that's take my questions.

Your commentary around the Bev sounded quite positive and what people have been saying about so far.

Speaker Change: But last I heard, and then could be going through a lot, but last I heard the plan was to kind of go to those order or only if a certain request comes in, it didn't sound like you were going to be marketing the product all that much.

But now with them back on the road and so we'll see back here is there going to be a change in the strategy around that product that you actually intend to go out there and we're actively muck at the bed starting next year or is still going to be much, you know, kind of a built-in order, smaller volume product here.

So our dealer, basically we have the flexibility, might to do wherever the customer wants.

and we seem to be getting a poll on this product.

Right now we're gonna...

Sandhack, what we have in our inventory, which will be margin positive. So once we grind through that, we can make a decision on what to do, but we are getting a pull from this product and remember we could sell this product anywhere in the country.

Speaker Change: So, TBD, but we will be grinding through Gahaita. Yeah, just to put a little bit more of a specificity on it, for in terms of the actual recall, we've returned 78 trucks as a prepare for a Mark said, and we've got another 81 trucks in the recall that are pending. In addition to that, we've got almost 150, which is in Nikaa, inventory and not part of the recall.

Speaker Change: So we're going to leverage that optionality to do what's best for the market. As Steve said, and just to repeat, as we return these paths, we are getting a strong pull for the market for use cases which are conducive to the bad.

Speaker Change: So we're going to play those two cards that we have for us in the right way.

Speaker Change: Okray.

I'm going to add a quick pricing question ahead of where I think I might have missed what you were talking about as far as why the ISPs were down. We made this review that part again with the best part of that and I know there was still was some instructor pricing you mentioned on the fuel cell products.

Speaker Change: I think sense that the one instruction for pricing and having a more everyday pricing strategy is going to start at your company or we still just try to get people to just try to product here.

Yeah, so I think you have a couple of questions in there because of the 20-bed return-slash The Church is said.

That impacts our revenue, not our gross revenue but our...

But our total revenue and net revenue and it impacts the financial going through so to get a true picture.

You need to really normalize for that. We believe these returns are just a point in time because we've got a customer for them in Q4 and so therefore it's going to be just...

Q3 to Q4 point point in time. As it relates to ASP, you know, where we've kept about 370,000 for truck over the last several quarters.

Speaker Change: We think that that's a reasonable number. We're constantly balancing volume versus ASP.

Speaker Change: We think it's probably more important at least at this point in time to be able to get some scale for our operations and therefore in some cases we are more forgiving on ASP. But obviously over the long-hawr intention would be to work that up and work the bomb costs down.

Speaker Change: Ok, Ok, Ok.

And anyone last one for me, I just heard the last few days or so, another company has to successfully test it at 200 kilowatt fuel cell truck. So that can get all the power that you need with just a single module or that's what it seems like to me. Can you up to us on your R&D? Do you have a lot of...

Improving projects underway or as a plodak kind of suspended until

Capital Situation is the iron thou. Just kind of bit the, I'm worried there are other companies out there that are also making some progress in our getting there to market.

And, you know...

Speaker Change: There's only so much second go around right after the current time.

Yeah, so I'll take that so we're continue to work to make the existing product better.

So the new bad we put into the market is better than the old bad. We continue to focus on the cost.

Speaker Change: In weight of our existing truck with an eye towards a next-gen truck, which will be much more efficient than the current truck. And just to be clear, we're happy other people are coming. Because this is a lonely business hydrogen right now. So we're happy that other people are coming big companies, small companies, more than a barrier, because we're trying to build out an ecosystem here. So yes, we are making incremental improvements to these existing truck, making it better, improving reliability, and then the fuel is also, by the way, we're making incremental improvements on that with our partners. But we are actively looking at a next-gen product, which we'll be leapfrog what we have now.

Speaker Change: Ok, thanks for that pretty sure the discussion I'll pass along.

Mike Shilisky: Thanks Mike.

We'll take our next question from Cole Cousins with Wolf Research.

Hey guys, it's Kowan for Scott Group. Thanks for taking my questions. I think I heard earlier on the call that you guys mentioned that you have

Speaker Change: Suspicious Capital Last Through The First Quarter of 2025. Do you guys expect that you'll need to raise capital after that at some point in 2025 and kind of, What are the internal expectations for when you expect free cash flow to actually reflect positive?

So, so let me try to unpack the, the cash flow. We mentioned it in the prepared remarks that you're referencing, but let me take a little bit of time to try to unpack it for everyone.

We finished the quarter with approximately 198 million unrestricted cash. So you know, let's just round that to 200 because it makes the map easier. The cash burn for the quarter was 162 million.

That is higher than the prior quarter, which had a cash for in a 145 million.

and Hires in the first half which was 135 million per quarter.

What's important to note in this corridor is there were some, you know, one time in some annual payments.

Related to settlements, insurance policies.

There were also some, you know, supplier negotiations in terms of, you know, payments. If you normalize for those, then our 162 gets very close to 145 million, which was the last quarter. Now.

If you do the math and you take the first...

Half Cash Burn, Down from the 45 million to 30 to 40 million a month. That gives you 5 to 6.5 months runway, which is the basis for our prepared remarks.

So what we're doing now as we've said in the answer to some of our questions, we are talking to a number of strategic, a number of people who are interested. And by the way, they continue to be excited by what we're building, as Steve says, we're one of the few out on the field with the hydrogen network. We're not only making the trucks, but we're putting in the infrastructure as well. So there's very good interest from that.

In addition, we're also working on our own self-help. And if you do the math or cash conversion cycle, for example, improved 45 days since the end of Q1. We're working with carve in terms of their speed to improve voucher processing. We're working with dealers in terms of work-pounding issues. We're looking at our organization's structure to make sure it's lean. We're being very rigorous and vigilant on discretionary cash.

So, to sum it all up, we think we've got that runway of five to six months at 30 to 40 million dollars per month. And therefore, we're working right now to try to raise the necessary capital to give us the runway to go much further into 2020.

Great, that's helpful color and maybe just on deliveries can you provide kind of how our deliveries trending quarter to eight through October and maybe just...

Given we're getting close into the year, what are some early expectations for 25 deliveries? And if you could talk through maybe how customer conversations are progressing there and maybe informing your review would be helpful.

Yeah, we've got more potential than what we're guiding to in terms of wholesale deliveries for Q4. Now, obviously you need to cut the deal and make that happen, but whenever you've got more prospects and more potential that gives you confidence and it's why we've guided as such.

You know, we respect the 2025, you know, we'll talk to you about that at the Q4 earnings call.

I'm just the feedback. The customer feedback is good. The momentum is positive. Customer sat is positive. You see lots of testimonials. We get lots of feedback on that. So it's about building a business. And again, we have the flexibility to switch between the two, which we think, which we haven't been taken advantage of. And we'll be able to start taking advantage of that next year.

Yeah, the business is really poised and you know when you look at it you've got governments and incentives which are assisting for hydrogen economy. You've got automotive OEMs.

Speaker Change: that have been working on fuel cells for quite some time and see this as a growth factor. You've got industrial gas producers that are looking for growth factors and hydrogen can be a growth factor for them. And you've also got all of these national accounts and if you read their sustainability reports.

Speaker Change: You know...

Speaker Change: Zero emissions is very important to them and either for their trucking or their trucking partners. So the pieces are all set. We just need to pull this together with the right partners and we're optimistic to think can really take off.

Speaker Change: Guys, I'll turn it back.

Speaker Change: Thank you, Carl.

We'll take our next question from Tyler D. Matio with BTIG.

Hi everyone, a good morning thanks for taking the questions here at 3Gated Steve, I want to follow up on your comments there in terms of the flexibility between

The Two Trucks, How Early of a Decision and How Quickly Can You kind of Manage the Manifactor of the Authority of the Two Trucks and Maybe How Early Do You Know Need to Make a Decision If You Were To Have A Line of Sight, They Hey, Bev's Capacity is, where she's incremental the Manage You Were Alluding To Before. You just curious how you kind of Think About That Decision.

Speaker Change: I'll look a bit more nuanced.

Speaker Change: We would need to make it three to six months in advance because there's some long lead items that we would have to buy to get the truck back.

Ok, Hi Goldidge, Ok, well, things like that, so we...

We're in the market now, as Tom said, we're putting these back in the market. We have our own internal little back to the market. We can get that back. At the same time, we're doing price discovery, demand discovery, we're learning what people want. And if people want this truck and are willing to pay for it, we're happy to give it to them.

Yeah, I think the important point to repeat is approximately 150 in our inventory.

and another 81 as part of the recall. So, you put those together. You got approximately 230 trucks that we have optionality with and we can use that to ease into any production ramp up this week to side too. It's also important to note that the battery packs, the the bed takes nine of them versus the fuel cell which takes two. So we're balancing that in terms of mix all stop.

Speaker Change: Yeah, but just to be clear.

We're rebuilding these. These are on a remand line to get the other ones. The, the, the, the, the, the, the, the, the back into the line will take uh, three to six months.

Speaker Change: So that would be a third, fourth quarter of benefit.

Speaker Change: Ok, Ok, Help, And then, And then, And just Say it to That.

Speaker Change: The reason the flexibility is important is, you know, we're managing customers, we're managing fuel and we're managing the truck on the fuel cell side. So sometimes the truck's getting ahead of the fuel, sometimes we get behind. So if we need to play catch up a little bit, the market, we could supplement the market with debts.

Speaker Change: i

Okray, thank you for that. And then in terms of the the whole sales for the fuel cells for the remainder of the year, as you kind of look at the order book here, through the end of the year, what are the key factors you're dictating the range in terms of the 300 to 350 for the rest of the year and I just had to kind of think about the puts and takes there in terms of the low versus the high on that front.

I mean we have a funnel.

Speaker Change: That's fairly large, whether they want to pull the trigger this year or next year remains to be seen. And then there's all this, this is a bunch of incentive activity that's in play that may benefit this year versus next year, but time will tell.

Yeah, I think whenever Tyler, you're looking at a new technology and you're looking at new customers, national account customers, it's really hard to pinpoint where you're going to be in the range. That's why the range is in Q4, you could argue maybe it's a little bit wide. But you know, it's, it's, as you can imagine new technology, new customers have never done hydrogen before, you know, you.

It takes discussions and it takes time to really decide how much of that funnel is really going to be executed in terms of a wholesale delivery.

Speaker Change: i

Speaker Change: Ok, thank you guys really appreciate the time that I will turn back to the kill.

Speaker Change: Thanks Tyler.

We'll take our next question from Ben Kellell with beard.

Good morning guys, thank you for taking my question. Just to have a follow-up in the last question. Can you just talk about?

Ben Kellell: the rate of purchasing from existing customers, how you see that trending, you know, if it's a piloting, then it moves on to bigger orders or, or the weight and see for infrastructure, [inaudible]

Speaker Change: Some require fuel connecting north to south.

will be a big enabler here because we haven't really sold a lot of trucks in Northern California yet.

Say on the truck is do you buy more? So we're static that they want to buy more, but we really want to see lots of different fleets with so we can accumulate data on what's the best use case of a fuel cell versus a bet. And then maybe I can add a little bit more color in terms of that national account purchase. I mean, typically it requires a pilot and those pilots, you know.

Convary in duration, depending on company's desire. And then I think it's also important to note, there's a natural tension within any sort of national account.

Company, you've got the sustainability arm which is really looking at putting this into their fleet. You've got the logistics arm which is, you know,

Speaker Change: Penny's per mile in terms of cost and then you've got the senior leadership that just trying to put this all together in way the sustainability commitment with the cost commitment with the new technology.

It's not a lay-up, so to speak, it's not a half-court shot, either, but it's something that we're getting better at working at, building the connections within those companies. And it's building the relationships, letting them demo the trust, let them mystifying the hydrogen, making sure that we can commit to them that the fueling is going to be up and reliable. So it's a process, but it's a great prize at the end, because these companies that care about the environment and care about the hydrogen economy, you know, get to actually, you know, utilize one of our vehicles to execute to that.

Speaker Change: And remember, Ben, this isn't just about doing what everybody else is doing and trying to do it better. We're doing something that nobody else has done yet. And it's not easy. We grind through it every day. But that's why people show up to work here.

Speaker Change: Thank you for that. In the past, you guys have given a number of trucks to get to break even EBITDA. Is there a number, has that changed? If you remind us what that number is. I know you guys are doing a lot in the cost front too, and just if we could revisit that. Thank you.

Yeah, it's a good question, Ben. You know, no, the neighborhood or the zip code of the number hasn't hasn't changed. You know, don't want to talk about it specifically on the call, but I would point you back to the flywheel. I mean, the only way.

Speaker Change: We are going to improve the unit economics is to build the scale so it gives the, you know, the supplier partners.

Speaker Change: confidence that they can invest and optimize.

You know, the lines that produce the material that comes to us. So, you know, the volume is key. I won't mention a number today, but that is a very key part of the flywheel.

Speaker Change: Okay, thank you guys.

Speaker Change: Thanks, Ben.

Speaker Change: That will conclude our question and answer session. I'd like to turn the call back over to Soei for any additional or closing remarks.

That will conclude today's call. We appreciate your participation.