Proterra Inc

Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to Proterra's fourth quarter conference call webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press star 1. Thank you. It is now my pleasure to turn today's call over to Mr. Aaron Chu, Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and thank you all for joining us for Proterra's fourth quarter 2021 Congress call. Joining us today from Proterra are our CEO, Gareth Joyce, as well as our CFO, Karina Padilla. After the markets closed, we published our quarterly letter on our website and an SEC filing, which we encourage everyone to read for details on our financials and insights into our operating results and strategy, industry dynamics, and outlook. During this conference call, we will make statements related to our business and industry that are forward-looking These statements are not guarantees of future performance. They are subject to a variety of risks and uncertainty, and our actual results could differ materially from expectations reflected in any forward-looking statements. For a discussion of the material risks and other important factors that could affect our actual results, please refer to our SEC filings available on the SEC's website and via the investor relations section of our website. Additionally, non-GAAP financial measures will be discussed on today's conference call. The reconciliation of these measures to their most directly comparable GAAP financial measures can be found in today's quarterly letter. We will kick off the call today by introducing our Chief Executive Officer, Gareth Joyce, for his opening remarks.

Thank you, Aaron, and to everyone joining us on the call today. I'm honored to lead my first call as CEO of Proterra and thrilled about the opportunity that lies ahead. I'm fortunate not to have to start from scratch, but I'm taking over as CEO, heading the ground running. I couldn't be more grateful to continue the work that Ryan Popple began in Proterra's foundational years, putting us on the map as a leader in electric transit buses and bringing on board our Chief Technology Officer, Dustin Grace, to develop our proprietary battery technology. And for Jack Allen's subsequent leadership in maturing our manufacturing operations, carrying us across the COVID chasm and helping us raise nearly $650 million in the transaction to take us public. Because of their efforts, I have the luxury of taking the reins of a leading horse in the race. I'm inheriting a company that is on its fourth generation battery technology that has broken new boundaries in the size and weight of vehicles that can be electrified, has produced more than 500 megawatt hours of batteries to date, is on pace to increase its battery manufacturing capacity from around one gigawatt hours today by multiple gigawatt hours in 2023. And as a decade of vehicle manufacturing and electric powertrain integration experience with more than 800 vehicles produced and delivered, including more than 200 electric buses in 2021. And a fantastic team of employees who not only bring their experience intellect, and ingenuity to the table, but the passion to help us pursue our vision of clean, quiet transportation for all. Let me start first by reflecting on our 2021 accomplishments. Second, I will provide our revenue guidance for 2022, and then I will discuss our order backlog growth before handing it off to Karina to discuss Q4 in more detail. First, on 2021, leveraging our technology and manufacturing platform, we reported strong growth. Even in the face of well-publicized supply chain dislocations affecting manufacturers across the globe, in 2021, power deliveries of battery systems increased by 155% year-over-year to 273 vehicle sets. Proterra transit deliveries grew 22% year-over-year to 208 new electric transit buses. Battery production grew by 70% to 189 megawatt hours for the year, and total revenue grew 23% year-over-year to $243 million. In addition, raw order growth across all of our business lines drove our backlog and contracted orders in total to $1.3 billion at year-end. This growth we achieved in 2021 did not come without its share of challenges, though. The impact of global logistics, supply chain, and COVID-related complications has been widely reported across the industrial landscape, not only for Q4, but early in 2022 as well. We have continued to manage through this well, but we aren't immune to the effects. Not only has the production challenges not improved since Q3, but they have gotten worse in some areas. we are somewhat in a perfect storm of past shortages, shipping delays, inflation in material costs, and all of the resulting production line inefficiencies. On top of that, since December and the spike in Omicron, there has been widespread labor absenteeism at our suppliers, our customers, and our facilities that have further complicated operational efficiency. But we don't expect all of this to last. But for now, these complications are not only constraining our growth, but as Karina will discuss in more detail shortly, impacting our gross margins as well. Even in the face of these headwinds, we're establishing 2022 guidance as follows. Revenue growth to accelerate from 2021 levels to between plus 24 and plus 34% year over year. to a range of $300 to $325 million in revenue. Our order backlog supports even faster growth, but given the state of the supply chain, we think it's prudent to establish guidance assuming no material improvement in supply chain and, in turn, transit production rates for the balance of the year. And importantly, our guidance does not reflect any potential impact from Russia's invasion of the Ukraine. This revenue level isn't where we would like it to be for 2022, but the fact is the manufacturing environment is very challenging right now. We will grow as fast as the supply chain and our production capacity allow us to this year. But our guidance assumes, one, that our transit manufacturing operates only on one shift for the rest of the year, and two, the expansion of our battery manufacturing capacity at Greer does not come online until Q4 and doesn't contribute meaningfully to volumes until 2023. Nevertheless, even incorporating these constraints, we're still confident in the opportunity to generate at least 24% revenue growth in 2022. While production is facing constraints, demand is most certainly not. We have built a healthy book of business, supporting strong growth across all of our businesses for the next few years. Our contracted orders are powered, combined with our transit and energy backlog, with approximately $1.2 billion at the end of 2021. First, on transit, orders grew 45% last year, topped by record orders in Q4, which were 50% better than our next best quarter, and our backlog is now at approximately $450 million. This is all before the electric transit bus funding has become available from the Infrastructure Investment and Jobs Act that was just enacted last November. Previously, for example, no-no funding totals approximately $130 million in 2020, where approximately 400 electric buses were deployed in the U.S. Low-note funding for zero-emission buses in the new act will increase more than five-fold to approximately $800 million per year through 2026, supporting a step-changing growth in transit bus demand. Howard experienced even better growth, The fact is, commercial vehicle electrification is no longer only about buses. Demand has truly broadened to the rest of the commercial vehicle landscape. Proterra Power had partnerships with five OEMs early in 2021, four of which were for buses. In 2021, we expanded Proterra Power's partnerships to 13 OEMs covering 19 vehicle programs, spanning trucks to buses to off-highway equipment. Ten of these programs are currently scheduled to be in serial production by the end of 2022. Altogether, Proterra Powered has $800 million of contracted orders, representing close to two-thirds of our total backlog and contracted orders. Meanwhile, Proterra Energy is starting to book some large depot-scale charging projects that our solutions are designed for. One, a 3-megawatt installation for the Santa Clara Transportation Authority, and the other, a 7.5-megawatt one for the LADOT we disclosed in our last call. These projects are orders of magnitude larger than a typical public charging station for passenger vehicles. Both will be built with a solar-storage microgrid that will support critical vehicle charging, even in a power outage. This is the size and type of fleet-scale charging infrastructure that will be increasingly required for higher commercial vehicle adoption and that we believe we have the experience and capabilities to deliver. So while I covered our accomplishments for the full year of 2021 and our outlook for 2022, I will now hand it off to our new Chief Financial Officer, Karina Padilla, who will discuss our Q4 results in more detail, and in particular, our gross margins. Karina?