Q2 2025 GreenPower Motor Company Inc Earnings Call
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Speaker Change: Please note. This event is being recorded I would like now as I turn the conference over to Mr. Michael Sheaffer, Chief Financial Officer of Green Power. Please go ahead.
Speaker Change: Thank you. This is Michael <unk>, the Chief Financial Officer of Green Power Motor Company I would like to welcome everyone to our call to discuss <unk> financial results for the three six months ended September 32024, and to provide an update on green Power's operations and manufacturing.
Speaker Change: I'm here today, with our Chief Executive Officer, Frazer Atkinson, and our President Brendan Ryan.
Speaker Change: During today's call, we may make comments or statements about our future expectations plans and prospects, which may constitute forward looking statements for the purposes of the safe Harbor provisions under the private Securities Litigation Reform Act of $19 95, and applicable Canadian Securities laws.
Speaker Change: <unk> results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in our quarterly interim results and MD&A filed on SEDAR and Edgar.
Speaker Change: In addition, these forward looking statements relate to the date of what state or Nate we anticipate subsequent events and developments may cause the company's views to change cream.
Speaker Change: Green power disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise.
Speaker Change: Also during the course of today's call we may refer to certain non <unk> financial measures reconciliation of these non <unk> financial measures can be found in our MD&A.
Speaker Change: For additional information on the results of operations for the period ended September 32024, you can access the financial statements and MTV MD&A posted on Green Power's website as well as on Ww SEDAR plus dot com were filed on Edgar.
Speaker Change: Ill pass the call over to Green power CEO Fraser Atkinson.
Fraser Atkinson: Thank you Michael.
Fraser Atkinson: I'm going to start with Green power strategy and the recent election we.
Fraser Atkinson: We still don't know the extent of changes that will be made to federal programs. However, it's safe to say that it won't be the status quo.
Fraser Atkinson: We are expecting changes with the EPA Clean School bus program and 40000 dollar high R&D tax credit to name a few.
Speaker Change: Good morning and welcome to the Green Power Motor Company second quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad.
Fraser Atkinson: The perception of many is that the change in the administration the Senate doesn't bode well private sector.
Fraser Atkinson: While that might be true for some EV Oems that's not the case with green power.
Fraser Atkinson: For over a year, our strategy has been to be opportunistic with federal programs in the short term.
To withdraw your question, please press star then 2.
Speaker Change: Please note, this event is being recorded. I would like now to turn the conference over to Mr. Michael Sieffert, Chief Financial Officer of Green Power. Please go ahead.
Fraser Atkinson: Longer term focus has been on states that have put policies and plans in place to provide a cleaner healthier arrive for students through the deployment of electric school buses.
Speaker Change: Thank you. This is Michael Sieffert, the Chief Financial Officer of Green Power Motor Company.
Fraser Atkinson: States, like California, and New York and regions like the southwest.
Speaker Change: I would like to welcome everyone to our call to discuss Green Power's financial results for the three and six months ended September 30, 2024, and to provide an update on Green Power's operations and manufacturing.
Fraser Atkinson: Many of these states have already indicated that they will continue to push for the electrification of school buses and commercial vehicles Green.
Speaker Change: I'm here today with our Chief Executive Officer Fraser Atkinson and our President Brendan Riley.
Speaker Change: Green power is over 300 live orders and qualified leads for our our electric school buses and are well positioned to add to this.
Speaker Change: During today's call we may make comments or statements about our future expectations, plans, and prospects, which may constitute four booking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws.
Speaker Change: Next I want to give you a quick snapshot of our current quarter earlier today, we announced that we had shipped heat of our EV starz to wash U and St. Louis.
Speaker Change: Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our quarterly interim results and MD&A filed on CDAR and on EDCODE.
Speaker Change: There will be two more EV stars delivered to wash U for a total of 10, which is a follow on order to the five <unk> stars that we delivered around two years ago.
Speaker Change: Great Testament to our UV star with the follow on order.
Speaker Change: In addition, these forward-looking statements relate to the date on which they are made. We anticipate subsequent events and developments may cause the company's views to change.
Speaker Change: Combined with the deliveries of nine type D Beast.
Speaker Change: <unk> all electric school buses.
Speaker Change: Green Card disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Speaker Change: One type a non obese and two EV star passenger bonds in the first half of this quarter. We are close to surpassing the total number of vehicles to levered during the September 30th corner.
Speaker Change: Also, during the course of today's call, we may refer to certain non-IFRS financial measures. Reconciliation of these non-IFRS financial measures can be found in our MD&A.
Speaker Change: Lastly.
Speaker Change: We have talked recently about our tradable credits.
Speaker Change: California's advanced clean truck regulation.
Speaker Change: For additional information on the results of operations for the period ended September 30, 2024, you can access the financial statements and MD&A posted on Green Power's website, as well as on www.cedarplus.com or filed on Medgar.
Speaker Change: The Epa's phase III DHT regulation of niches fuel consumption credit program.
Speaker Change: Along with other state level mandates each include credit trading programs that provide manufacturers enhanced compliance flexibility.
Speaker Change: I will now pass the call over to Green Power CEO, Fraser Atkinson.
www.cdc.gov.au
Speaker Change: And the opportunity for reduced compliance costs through the acquisition of credits.
Thank you, Michael.
Speaker Change: I'm going to start with Green Power's strategy in the recent election.
Speaker Change: Being a manufacturer of all electric vehicles Green power has no internal deficit.
Speaker Change: We still don't know the extent of changes that will be made to federal programs. However, it's safe to say that it won't be the status quo. We are expecting changes with the EPA Clean School Bus Program and the $40,000 IRA tax credit to name a few.
Speaker Change: As dusk positioned to credit trade every credit it generates.
Speaker Change: The medium heavy duty or as we refer.
Speaker Change: As it is referred to the MH D market is new.
Speaker Change: According to the California Air Resource Board only two trades have been completed to date.
Speaker Change: The perception of many is that the change in the administration and the Senate doesn't bode well for the EV sector.
Speaker Change: As opposed to the light duty sector, where companies like Tesla have been trading credits for years.
Speaker Change: Well, that might be true for some EV OEMs, but that's not the case with green power.
Speaker Change: In their most recent quarter they reported revenue of $739 million close to 25% of Tesla's gross profit is due to the sale of their credits Green.
Speaker Change: For over a year, our strategy has been to be opportunistic with federal programs in the short term.
Speaker Change: But the longer-term focus has been on states that have put policies and plans in place to provide a cleaner, healthier ride for students through the deployment of electric school buses.
Speaker Change: Green power has generated hundreds of tradable credits and we will continue to generate significant numbers of tradable credits. We have signed several NDA with all Oems and have engaged a broker who is a seasoned veteran with trading credits with manufacturers of light duty vehicles.
Speaker Change: states like California and New York and regions like the Southwest.
Speaker Change: Many of these states have already indicated that they will continue to push for the electrification of school buses and commercial vehicles.
Speaker Change: So we are working on monetizing these credits.
Speaker Change: Green Power has over 300 live orders and qualified leads for our all electric school buses and are well positioned to add to these.
Speaker Change: I'll now turn it over to Brendan to discuss our operations.
Brendan Ryan: Thank you for Asia.
Brendan Ryan: I'd like to remind the listeners on this call that our mantra at Green power is creating compelling EV products offered at compelling prices.
Speaker Change: Next I want to give you a quick snapshot of our current quarter. Earlier today we announced that we had shipped eight of our EV stars to Wash U in St. Louis.
Brendan Ryan: All while generating a gross profit.
Brendan Ryan: This past quarter, we are developing a path so that our products are made in a timely manner.
Speaker Change: There will be two more EVSTARS delivered to WashU for a total of 10, which is a follow-on order to the five EVSTARS that we delivered around two years ago. A great testament to our EVSTAR with the follow-on order.
Brendan Ryan: We have added a new large volume paint booth that had been busy doing a re layout of our production floor, which has added space for more simultaneous school buses on the line.
Speaker Change: combined with the deliveries of nine Type D BEAST all-electric school buses
While you don't see it in our deliveries yet we have been increasing number of units on the factory floor.
This increase in production coupled with manufacturing process improvements is expected to result in higher gross profit margins and cost reductions on a per unit basis.
Speaker Change: one Type A NanoBeast and two EVSTAR passenger vans in the first half of this quarter. We are close to surpassing the total number of vehicles delivered during the September 30th quarter.
As the throughput improves.
Lastly, we have talked recently about our tradable credits.
Brendan Ryan: Throughout the last quarter, we have held multiple job fairs that has yielded excellent production talent and.
California's Advanced Clean Truck Regulation
Brendan Ryan: And we've added all of these to our ranks.
Speaker Change: The EPA's Phase 3 GHG regulation and NHTSA's Fuel Consumption Credit Program
Brendan Ryan: We have seen season production staff graduate from Bridge Valley College, which certificate with if it gets leveraging.
along with other state-level mandates, each include credit trading programs,
A program that we at Green power help developed.
Speaker Change: that provide manufacturers enhanced compliance flexibility and the opportunity for reduced compliance costs through the acquisition of credits.
Brendan Ryan: Our goal is to increase production. So that we are consistently building and shipping 20 units per month steady.
Speaker Change: Being a manufacturer of all electric vehicles, green power has no internal deficits and is thus positioned to trade every credit it generates.
Brendan Ryan: Measured both a foundation of Green powers model is critical for maintaining quality throughout the production process.
Brendan Ryan: Has to be done profitably and efficiently adherent GP, our goal is to lower production and material cost, while increasing volume and maintaining quality.
Speaker Change: The medium heavy-duty, or as we refer, or as it's referred to, the MHD market is new. According to the California Air Resource Board, only two trades have been completed to date.
Speaker Change: Now I'd like to hand, it over to Michael to discuss financial highlights.
Speaker Change: as opposed to the light-duty sector where companies like Tesla have been trading credits for years.
Michael Sheaffer: Thank you Brendan.
Michael Sheaffer: For the three months ended September 32020 for Green power generated revenue of $5 3 million, which was a 78% increase over revenue generated in the first quarter our cost of sales for the quarter was $4 9 million and we generated a gross profit of approximately 460000 or eight 6% of revenues.
Speaker Change: In their most recent quarter, they reported revenue of $739 million.
Speaker Change: Close to 25% of Tesla's gross profit is due to the sale of their credits.
Green Power has generated hundreds of tradable credits.
Michael Sheaffer: Our revenue was generated from the sale of 11 vs type D. All electric school buses 60, he start cargo plus and five stars as well as revenue from leases from the sale of parts and from their truck body Division.
and will continue to generate significant numbers of tradable credits.
Speaker Change: We have signed several NDAs with OEMs and have engaged a broker who is a seasoned veteran with trading credits with manufacturers of light duty vehicles.
Michael Sheaffer: The lower than anticipated gross profit margin. This quarter was primarily due to negative gross profit margins at the company's truck body Division and this was caused by lower throughput compared to prior periods in this division.
So we are working on monetizing these credits.
Brendan Riley: I'll now turn it over to Brendan to discuss our operations.
Speaker Change: Management expects gross profit merchants to increase throughput at the truck body division of increases.
Thank you, Fraser.
Brendan Riley: I'd like to remind the listeners on this call that our mantra at Green Power is creating compelling EV products offered at compelling prices, all while generating a gross profit.
Speaker Change: For the quarter ended September 32024, compared to the quarter ended September 32023, our SG&A costs declined by 630000 or 12, 1%.
Brendan Riley: This past quarter we've been developing a path so that our products are made in a timely manner.
Speaker Change: The reduction in these expenses was primarily due to reductions in professional fees and share based payments and salaries and administration costs as well as from recoveries and allowance for credit losses, and these were partially offset by increases in other expenses.
Brendan Riley: We have added a new large-volume paint booth and have been busy doing a re-layout of our production floor which has added space for more simultaneous school buses on the line.
Brendan Riley: While you don't see it in our deliveries yet, we have been increasing the number of units on the factory floor. This increase in production, coupled with manufacturing process improvements, is expected to result in higher gross profit margins.
Speaker Change: We continued to utilize the EDC revolving credit facility during the quarter to fund production and we finished the quarter with approximately 850000 remaining and available liquidity under the facility.
and cost reductions on a per unit basis.
Speaker Change: This facility along with UBC letter of credit guarantees continue to be an important source of capital for our company and they allow us to fund investments in inventory overtime.
as the throughput improves.
Brendan Riley: Throughout the last quarter we have held multiple job fairs that have yielded excellent production talent and we have added all of these to our ranks.
Speaker Change: In October we completed an underwritten offering of 3 million common shares raising gross proceeds of $3 million.
Brendan Riley: We have seen seasoned production staff graduate from Bridge Valley College with certificates leveraging
Speaker Change: The net proceeds from this offering are intended for the production of all electric vehicles, including our B School buses and EV start commercial vehicles through product development with the remainder if any for general corporate purposes.
a program that we at Green Power helped develop.
Brendan Riley: Our goal is to increase production so that we are consistently building and shipping 20 units per month.
Speaker Change: Finally, we continued to receive important and much needed financial support from Green power as directors and officers during and after the quarter.
Brendan Riley: Steady, measured growth, a foundation of Green Power's model, is critical for maintaining quality throughout the production process.
Speaker Change: I will now pass the call back over to Frazer.
Well at this time, we will open it up for any questions.
Brendan Riley: This has to be done profitably and efficiently, and here at GP our goal is to lower production and material costs while increasing volume and maintaining quality.
Speaker Change: Our listeners have.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone.
Speaker Change: Now I'd like to hand it over to Michael to discuss financial highlights.
Speaker Change: Please pickup your handset before pressing the keys to withdraw your question. Please press Star then two we will pause momentarily to assemble our roster.
Thank you, Brendan.
Michael Sieffert: For the three months ended September 30, 2024, Green Card generated revenue of $5.3 million, which was a 78% increase over revenue generated in the first quarter.
Speaker Change: The first question comes from Mr. Tate Sullivan of Maxim Group. Please go ahead.
Michael Sieffert: Our cost of sales for the quarter was $4.9 million and we generated a gross profit of approximately $460,000 or 8.6% of revenues.
Thank you and to start I'm looking at the October 28 press release with the update on the EPA fundings for 50 Electric school buses.
Michael Sieffert: Our revenue is generated from the sale of 11 type D all-electric school buses, 6 EV Star Cargo Plus, and 5 EV Stars, as well as revenue from leases, from the sale of parts, and from our truck body division.
Speaker Change: The logistics of getting that funding does it go to the districts buying the buses is there any way to get that funding in the door before delivery of the buses or is it still a work in progress negotiation. Please.
Michael Sieffert: A lower than anticipated gross profit margin this quarter was primarily due to negative gross profit margins at the company's truck body division, and this was caused by lower throughput compared to prior periods in this division.
Speaker Change: Well we.
Speaker Change: It's a state that we have in our dealer and and so it's.
Michael Sieffert: Management expects gross profit margin to increase as throughput at the truck body division increases.
Speaker Change: The EPA contract is with the dealer and our range on this with our dealers so were.
Michael Sieffert: For the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, our SG&A costs declined by $630,000 or 12.1%.
Speaker Change: One step removed if you will from the EPA contract.
Speaker Change: And then as far as the.
Speaker Change: The timing of funding and so on.
Michael Sieffert: The reduction in these expenses was primarily due to reductions in professional fees, in share-based payments, in salaries and administration costs, as well as from recoveries and allowance for credit losses, and these were partially offset by increases in other expenses.
Speaker Change: I think your characterization of a work in process would be quite appropriate.
Speaker Change: Okay understood.
Speaker Change: Can you update on the cab and chassis units.
Michael Sieffert: We continued to utilize the EDC revolving credit facility during the quarter to fund production and we finished the quarter with approximately $850,000 remaining in available liquidity on the facility.
Speaker Change: Inventory or are these still potentially going to.
Speaker Change: Certain number of customers or a single customer.
How should we look at that number unit delivery opportunity going going forward.
Michael Sieffert: This facility, along with EBC letter of credit guarantees, continue to be an important source of capital for our company, and they allow us to fund investments in inventory over time.
Speaker Change: So we have a tranche.
Speaker Change: Of of cabin chassis that we.
Have put through for production of pulse nano beef.
Michael Sieffert: In October, we completed an underwritten offering of $3 million common shares, raising gross proceeds of $3 million.
Speaker Change: And our EV Star plus our mobility access, which is telco shuttle vehicle that uses a very similar build and body as our type a nano piece, so where we are utilizing them for that purpose.
Michael Sieffert: The net proceeds from this offering are intended for the production of all electric vehicles, including RV school buses and EV-STAR commercial vehicles, for product development, and with the remainder, if any, for general corporate purposes.
Michael Sieffert: Finally, we continue to receive important and much-needed financial support from Green Power's directors and officers during and after the quarter.
Speaker Change: And then with a.
Speaker Change: A number of the.
Speaker Change: The qualified leads that we have and when we say qualified leads were talking about.
I'll now pass the call back over to Fraser.
Thank you.
Speaker Change: At this time, we'll open it up for any questions that you may have.
Speaker Change: And the.
Speaker Change: Order that is up to a point where.
Speaker Change: We're sorting out infrastructure, we are getting the.
Our listeners have.
Speaker Change: Funding may already be in place for it.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, press star.
Speaker Change: Theres other logistical issues or approvals required.
Speaker Change: So for some of those we there are.
Please pick up your handset before pressing the keys.
Speaker Change: These are also for type a non obese.
to withdraw your question.
Speaker Change: We would need to increase production in order to fulfill.
please press star then 2.
We will pause momentarily to assemble our roster.
Speaker Change: Okay.
Speaker Change: The first question comes from Mr. Tate Sullivan of the Macfarlane.
Speaker Change: But on the tradable credit effort.
Speaker Change: And look I mean, there are obvious they are within plumbing Tesla does a good job breaking them out and the growth in that revenue stream for Tesla are there have you seen other companies recognize or would you be one of the new companies. Besides Pablo that could could monetize this effort.
Group. Please go ahead.
Speaker Change: Thank you and to start I'm looking at the October 28th press release with the update on the EPA funding for 50 electric school buses. What are the logistics of getting that funding? Does it go to the districts buying the buses?
Speaker Change: Well to the best of our knowledge.
Speaker Change: And to give you context, there's 24.
Speaker Change: Is there any way to get that funding in the door before delivery of the buses, or is it still a work in progress or a negotiation, please?
Speaker Change: Manufacturers that are listed by a California for the medium and heavy duty sales that would give rise to either a deficit or a credit that are potentially offset a deficit.
Speaker Change: Well, we, it's a state that we have a dealer in and so it's
Speaker Change: The EPA contract is with the dealer and our arrangement is with our dealer, so we're
These include companies like <unk> to Lantus gambler, Packer and so on so some traditional as well as.
Speaker Change: one step removed, if you will, from the EPA contract. And then as far as the...
Speaker Change: A number of periods the players, but in the medium and heavy duty space for all of those we haven't encountered any of that.
Speaker Change: you know, the timing of funding and so on. I think your characterization of work and process would be quite appropriate.
Speaker Change: Have disclosed either the purchase of <unk>.
Speaker Change: Tradable credits or the sale of tradable credits.
Speaker Change: Okay, understood. And can you update on the cab and chassis units and inventory? Are these still potentially going to a certain number of customers or a single customer?
Speaker Change: At the light duty.
Speaker Change: Not just Tesla, but ribbon.
Speaker Change: Certainly.
Speaker Change: They have.
Speaker Change: Made trades are have disclosed trades and drive reported them on their financials just like Tesla.
Speaker Change: how should we look at that unit delivery opportunity going forward?
Speaker Change: So the light duty space is I would characterize as fairly advanced.
Speaker Change: There is a market there's hundreds of millions of dollars trade.
have put through for production of both nanobees.
Speaker Change: On a on a quarterly basis, it's not even just an annual basis anymore, whereas on the medium and heavy duty.
Speaker Change: and our EV Star Plus or Mobility Access, which is the shuttle vehicle that uses a very similar build and body as our Type A NanoBeast.
Speaker Change: According to carb there've only ever being just two trades and those were earlier this year.
So we are utilizing them for that purpose.
Speaker Change: For poor tradable credits.
and then with a number of the...
Speaker Change: Okay, well it sounds like.
Speaker Change: But good opportunity. Thank you Tracy.
Speaker Change: the qualified lead that we have. And when we say qualified leads, we're talking about...
you know, a
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mr. Fraser Atkinson for any closing remarks.
Speaker Change: The funding may already be in place for it, but there's other logistical issues or approvals required. So for some of those, these are also for Type A nanobees, so we would need to increase production in order to fulfill.
Fraser Atkinson: In closing.
Fraser Atkinson: As we stated earlier this fiscal year, we expected to see a step up in our deliveries each quarter.
Fraser Atkinson: Halfway through our current quarter, we're close to surpassing the total deliveries in our most recent September 30 quarter.
Fraser Atkinson: As you heard today, we're also making advancements with our manufacturing process in West Virginia.
Speaker Change: Okay, and the tradable credit effort and look I mean they're obvious they're within I mean Tesla does a good job breaking them out and the growth in that revenue stream for Tesla are there have you seen other companies recognized or would you be one of the few companies besides Tesla that could could monetize this effort?
While there have been headwinds in the sector. We are uniquely positioned to take advantage of numerous opportunities in the medium and heavy duty EV sector.
Fraser Atkinson: And Michael and I are available for any follow up questions you might have.
Speaker Change: For your support this ends today's call.
Speaker Change: Well to the best of our knowledge and to give you context there's 24 manufacturers that are listed by California
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: for the medium and heavy-duty sales that would give rise to either a deficit or a credit that would potentially offset a deficit.
Speaker Change: And these include companies like Azuzu, Stellantis, Dammler, Packer, and so on, so some traditional as well as a number of pure ED players.
Speaker Change: But in the medium and heavy-duty space, for all of those, we haven't encountered any that have disclosed either the purchase of tradable credits or the sale of tradable credits.
Speaker Change: but at the light duty, you know, not just Tesla but Rivian has certainly, you know, they have made trades or have disclosed trades and reported them on their financials just like Tesla.
Speaker Change: So, the light-duty space is, you know, I would characterize as fairly advanced.
There's a market, there's hundreds of millions of dollars trade.
Speaker Change: on a quarterly basis, not even just an annual basis anymore.
Okay, well sounds like a good opportunity. Thank you, Fraser.
Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Mr. Fraser Atkinson for any closing remarks.
Fraser Atkinson: In closing, as we stated earlier this fiscal year, we expected to see a step up in our deliveries each quarter.
Fraser Atkinson: Halfway through our current quarter, we're close to surpassing the total deliveries in our most recent September 30th quarter. As you heard today, we're also making advancements with our manufacturing process in West Virginia.
Fraser Atkinson: While there have been headwinds in the EV sector, we are uniquely positioned to take advantage of numerous opportunities in the medium and heavy-duty EV sector.
Speaker Change: Brendan, Michael, and I are available for any follow-up questions you might have. Thank you for your support. This ends today's call.