VMC(VEV) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue in Q1 2023 totaled $2.7 million, a decrease from $3.2 million in Q1 2022, impacted by a product mix weighted towards trucks [14] - Gross profit in Q1 2023 was $0.5 million (18% of revenue), compared to $0.2 million (7% of revenue) in Q1 2022, with gross margins positively impacted by an adjustment for expired warranty [14] - Cash used in operating activities in Q1 2023 was $3.6 million, down from $5.1 million in Q1 2022 [15] - Net loss in Q1 2023 was $2.4 million (negative $0.05 per share), an improvement from a loss of $2.9 million (negative $0.08 per share) in Q1 2022 [15] - Adjusted EBITDA loss in Q1 2023 was $1.4 million, compared to a loss of $2.1 million in Q1 2022 [16] - Cash and cash equivalents as of March 31, 2023, were $1.8 million, down from $11 million as of March 31, 2022 [16] Business Line Data and Key Metrics Changes - The company is nearing completion of a batch of 50 VMC 1200 vehicles and several transit buses for delivery in Q2 2023 [5] - The transit bus business has seen supply chains improve, allowing for the restart of bus deliveries as of spring 2023 [12] - The backlog stands at $150 million, indicating strong demand across both trucks and buses, with a significant portion attributed to electric vehicles [12][36] Market Data and Key Metrics Changes - New government incentives for EV adoption, including a CAD40,000 federal rebate for the VMC 1200 in Canada, are driving interest from enterprise customers and government agencies [7] - The company has secured Foreign-Trade Zone status for its Ferndale facility, providing a competitive advantage by reducing import costs [9][10] Company Strategy and Development Direction - The company aims to ramp up production at its new manufacturing campus in Ferndale, Washington, with plans to achieve profitability in the second half of 2023 [8][19] - The focus is on expanding the North American dealer network for the VMC 1200 and enhancing the supply chain for bus production [5][41] - The company is exploring vertical integration to address supply chain challenges, particularly in the truck business [45][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability in the second half of 2023, driven by operational execution and strong demand [19][20] - There is optimism regarding the recovery of ridership for transit buses, which is expected to boost orders and activity in the bus segment [41][44] Other Important Information - The company has supplemented its credit facilities with an additional $9 million working capital credit facility to support near-term operations [11] - The company is actively addressing supply chain issues, particularly for buses, while also preparing to increase inventory of parts to mitigate future disruptions [39][40] Q&A Session Summary Question: Will the sales of the batch of 50 VMC 1200s be recognized in Q2? - The goal is to deliver all 50 trucks in Q2, but bus delivery estimates are not available at this time [22] Question: Can you provide a range for truck versus bus deliveries for the full year? - It is difficult to provide a range until the first 50 trucks are delivered and production ramps up [24][25] Question: What is the status of financing and addressing upcoming maturity? - The company is fully funded and will address the maturity coming up in the fourth quarter [29][30] Question: Any updates on the optimal JV cancellation? - The company is in litigation regarding the JV cancellation and cannot provide updates at this time [31] Question: What is the staffing situation at the Ferndale facility? - Senior management has been hired, and the company is confident in staffing production line positions [34][35] Question: What is the composition of the backlog? - The backlog of over $150 million consists mainly of truck orders, with a significant portion being electric vehicles [36] Question: Are there still supply chain issues for buses? - While many supply chain issues have been resolved, some challenges remain, particularly with mechanical parts [39] Question: Is government funding impacting bus orders? - Yes, government funding is starting to flow through and is positively impacting bus orders [44]