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spk02: ladies and gentlemen good afternoon my name is Abby and I will be your conference operator today at this time I would like to welcome everyone to the Proterra second quarter 2022 conference call today's conference is being recorded and all lines have been placed on mute to prevent any background noise after the speaker's prepared remarks there will be a question and answer session If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you. And I will now turn the conference over to Aaron Chu, Vice President of Investor Relations at Proterra. You may begin your conference.
spk03: Thank you, operator, and thank you all for joining us for Proterra's second quarter 2022 conference 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 in an SEC filing, which we encourage everyone to read for details on our financials and insights into our operating results in the strategy, industry dynamics, and outlook. During this conference call, we will make statements related to our business and industry that are forward-looking statements under federal securities laws. 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. Reconciliation of these measures to their most directly comparable GAAP financial measures can be found in today's quarterly letter. We'll kick off the call today by introducing our Chief Executive Officer, Gareth Joyce, for his opening remarks. Gareth?
spk05: Thank you, Aaron, and to everyone for joining us on the call today. In Q2 2022, our team's preparation and execution enabled us to continue to navigate to a difficult operating environment with global supply chain conditions remaining disruptive and unpredictable. As a result, we delivered excellent growth in Q2, driven by continued momentum at Proterra Power and strong execution at Proterra Transit, while sustaining a strong balance sheet with more than a half a billion in cash and equivalents as of June 30th. Q2 operating highlights include growth by a factor of 10 times for Proterra-powered deliveries to another record of 348 battery systems, as well as a new high in revenue of $24 million for the quarter, a rebound in Proterra transit deliveries from Q1 levels to 52 new electric transit buses, yielding $51 million of transit revenue for the quarter. Battery production closed to doubling year-over-year to 79 megawatt-hours, and Proterra Energy delivering 3 megawatts of charging solutions despite continued power shortages as well as site commissioning delays. Altogether, we generated record revenues of $75 million, growing 27% both year-over-year and compared to Q1 2020. 2021 and positive gross margin of 1%, down from 2% a year ago, but up significantly from negative 5% in Q1 2022. Meanwhile, demand for electrification solutions not only remains healthy, but the tailwinds are on the verge of becoming even stronger in the United States in the second half of 2022, with over $800 million of awards funding electric transit buses as part of the federal loaner program anticipated to be announced this month, as well as the first $250 to $500 million in awards under the EPA's electric school bus funding expected to be announced in October, both of these being markets which Proterra serves through either Proterra Transit or Proterra Power. Our team is doing an excellent job executing. But I can't overstate how difficult an environment we're operating in right now. The economy and capital markets are in a much different state than they were just six months ago, not to mention two years ago before we went public. We're now in a market that has lost some of its enthusiasm over high-growth companies and is focused far more on margin improvement, capital management, and cash flow generation. Fortunately, our new leadership team has been instrumental in evolving our management operating systems to improve our ability to steer the business as we've made the shift from startup to scaler. We will explore these dynamics at the end of the call, but we will first provide a more detailed review of our Q2 results. I will start with the Q2's operating metrics and business trends, and then I will pass it to Karina to review revenue, gross margins, and cash. And then I will close with a reiteration of our 2022 guidance, as well as some strategic commentary on how we are responding to the current economic and capital markets. Let me begin with Proterra Power and Energy. Momentum continues to grow at Proterra Power. Battery systems delivered in Q2 were higher than Q1, which itself was higher than all of 2021. enabling another quarter of record deliveries and revenue in Q2. Proterra Power delivered battery systems for 348 vehicles in Q2. That is more than 10 times the 30 vehicles we delivered battery systems for a year ago and 21% higher than the 287 vehicle units delivered in Q1 2022. Through June 30, 2022, we have now delivered battery systems to more than 1,000 vehicles for our OEM partners. While this figure includes some prototypes and vehicles still in production or in transit to the end user and is not reflective of the underlying kilowatt-hour battery capacity, Powered has now delivered batteries to more vehicles for our OEM partners than to Proterra Transit vehicles. Proterra Power's pace of growth is underpinned by the expansion in the number of our customers' vehicle programs entering series production, and by the growth in volumes of these programs as our customers scale up production. To put it all in perspective, at the start of 2021, we had established partnerships for five vehicle programs, but we're only delivering to one in series production. In Q2 2022, we had announced partnerships with more than a dozen OEMs covering over 20 vehicle programs. and we delivered battery systems to 15 different OEMs in the quarter, four of which were in series production, and the rest prototypes for current or potential partners. While the four vehicle programs in series production accounted for the vast majority of our volumes in Q2, many of our other vehicle programs that are still in the development phase achieved some important milestones over the last few months. showcased its first electric double-decker bus using our battery systems. And we supplied the batteries to Steyr ahead of Volta Trucks' start of production verification vehicles. And in recent weeks, we shipped prototypes to Nikola for both its Tray Bev and Tray fuel cell EV vehicles. Battery production also continued to grow materially year over year, including supply for both powered and transit we produced 79 megawatt hours of batteries in Q2, almost double the 41 megawatt hours we produced in Q2 2021. And we have now cumulatively produced over 650 megawatt hours of heavy-duty batteries for commercial and industrial customers and vehicles. At Proterra Energy, however, significant supply chain constraints continue to impact results in Q2. On top of continued shortages in charging hardware, we are now also coping with the shortages in SwitchGear 2. Nevertheless, we delivered 3 megawatts of DC fast charger solutions, down just 300 kilowatts from 3.3 megawatts in Q1 2022 and compared to 4.6 megawatts in Q2 2021. However, demand for our fleet-specific megawatt-scale charging solutions continues to expand. In addition to our foundational demand for the transit bus segment, highlighted by an order from BC Transit in Canada for our megawatt scale chargers, along with their order for Team ZS5 electric transit buses, we received multiple megawatts of orders from non-transit customers in Q2, namely in the school bus and coach bus segments. So together, total Proterra powered and energy revenue grew 127% year over year, to a new quarterly record of $24 million. Moving on to Proterra Transit. Transit deliveries grew significantly versus Q1 2022 as production rebounded from Q1 2022, which was particularly impacted by supply chain disruptions. Q2 results reflect the benefits of some of our efforts to improve supply chain performance and production processes for the current environment. As a result, in Q2, we delivered 52 new electric transit buses in a quarter, as compared to 54 in Q2 2021. This also represents 30% growth from Q1 2022 as our proactive supply chain initiatives to create more flexibility in our production system paid off, with our highest quarterly production rate on record for our Greenville factory. We also delivered five pre-owned buses in the quarter, which continues to demonstrate the potential for a pre-owned market in electric transit buses. To be clear, overall supply chain issues haven't improved, and we continue to face constraints in wiring harnesses and power connectors amongst other items. And the COVID-19 lockdowns in China early in Q2 compounded some shortages, particularly in motors and other electrical components. But all the credit goes to our team who put in an incredible effort and got the job done. I'll now hand over to our CFO, Karina Padilla, to provide deeper insights into our revenue, gross margin, and cash flow performance. Karina?
spk01: Thanks, Gareth. Underscoring Gareth's comments, I'm extremely proud of our team for adapting to what continues to be an unpredictable and volatile operating environment. Our laser focus on execution enabled us to achieve sequential growth in transit and power deliveries, and both year-on-year and sequential revenue growth across both business units and sequential growth margin improvement. In addition, we retain a healthy balance of cash and equivalents on our balance sheet of more than $520 million as of June 30th. While this year's investment in our new factory accelerates our cash usage in 2022, The new Greer South Carolina facility will allow us to multiply our existing battery production capacity several times. This positions us for growth on revenue, improved margins, and cash flow in the years ahead. Now let me give you a little color on our financial performance beginning with revenue. Total Q2 revenue grew 27% to $75 million. Proterra powered and energy revenue grew 122% year over year to a new high of $24 million in the quarter representing an incremental $13 million over Q2 2021. The growth was driven by more than tenfold increase in Proterra-powered deliveries of battery systems for 348 vehicles. Proterra-powered delivery growth rate exceeded the pace of revenue growth because of a greater mix of lower weight vehicles with smaller battery systems. In addition, Proterra Energy commissioned three megawatts of fleet-specific DC fast chargers, down by 0.3 megawatts versus Q1 2022, and down 1.6 megawatts year over year. The completion of Proterra Energy's projects continues to be impacted by shortages and delays in critical hardware components, as well as permitting and site readiness delays. Switching to Proterra Transit, the revenue in the quarter was $51 million, representing 44% growth over Q1 2022, and 6% revenue growth year over year. We delivered 52 new electric buses, and we were able to grow our revenue on two fewer bus deliveries year over year, excluding our five pre-owned bus sales. Our average price per bus grew year over year and sequentially. This was due to a richer mix of bus product configurations. Electric bus deliveries in Q2 included repeat customers such as Edmonton Transit Services, which received its third order for Proterra buses to make it the largest Proterra electric transit bus fleet with 60 buses, and Metrolink in Moline, Illinois, which also received its third order of Proterra buses with a fleet now at 17 of our buses. We also had new customer deliveries, including ABQ Ride in Albuquerque, New Mexico, and Suburban Mobility Authority for Regional Transportation, the second largest transit agency in Michigan, to name a few. Moving on to gross margins and EBITDA. We reported a positive gross margin of approximately $600,000 in the quarter, a significant improvement versus the gross loss of $3 million in each of the last two quarters, albeit below the gross profit of $1.3 million reported in the prior year before inflation and supply chain impacts really came to the fore. The Q2 margin improvement versus the prior six months was a result of all the efforts we have been diligently working on to mitigate supply chain disruption. Some of these actions include but are not limited to qualifying alternate suppliers, expanding our broker network, and continuing to make investments with our key suppliers alongside their operations to increase their throughput. We are seeing the payoff of our efforts through higher production volumes, improved fixed cost absorption, and improvement in our labor efficiency. I also want to give a brief update on our pricing initiatives I mentioned last quarter. As you recall, we implemented new contract pricing across both business units for future sales orders. On the power and energy side, we expect to begin realizing the benefit in the latter part of the year as customer deliveries on the renegotiated contracts begin to shift. On the transit side of our business, there is a greater lag due to the long cycle nature of the business. It will be more of a 2023 impact before we begin to see the impact of the repricing of our contracts. Improvement in gross margin from our pricing actions as soon as inflation begins to stabilize. If we continue to see inflation trend upward, we may not realize these improvements without additional pricing actions. I am confident about our team, and I am very proud of what we accomplished in the last six months. This demonstrates our agility and our ability to execute in an extremely challenging and unpredictable environment. That said, I want to emphasize that our business is neither seasonal nor linear, particularly in transit where margins can swing based on the mix of orders or order sizes delivered in any given quarter. In the second half of 2022, gross margins should benefit in part from a higher mix of power deliveries under renegotiated pricing. On the other hand, transit gross margins will not be as favorable as they were in Q2 due to a higher mix of bus deliveries with older contract pricing, but subject to recent cost inflation. In addition, we will see an increase of startup costs associated with the completion and initial ramp of our new battery facility in Greer, South Carolina, as is typically the case for any new facility ramp. Many of these costs will be reflected in our gross margin performance in the second half of the year in accordance to GAAP standards. yet the revenue will lag until we begin to ship product to our end customers. Looking beyond the short-term impact of ramping our new manufacturing facility, our underlying growth margins should continue to improve in the years ahead from higher pricing that balances our costs, greater production volumes and scale benefits, and improvement in our labor efficiency, more effective supply chain, and greater manufacturing efficiencies overall as we bring our new manufacturing capacity online. Our adjusted EBITDA loss of $33 million in Q2 was driven mostly by the gross profit of $600,000, less operating expenses of approximately $47 million, plus non-cash stock compensation of $6 million and depreciation and amortization of $3.3 million. Lastly, on the cash front, our balance sheet remains strong. with $523 million in cash, cash equivalents, and short-term investments as of June 30th. Our cash usage in the quarter was $75 million versus $61 million in the first quarter, a sequential increase of cash usage of $14 million. This includes $40 million of cash usage in the second quarter related to securing our long-term cell supply and inventory and capital expenditures primarily tied to our new battery facility. We made a $10 million prepayment to LG Energy Solutions for the extension of our battery self-supply contract announced last August for multiple gigawatt hours of supply through 2028. We had $10 million incremental capital expenditures related to our new battery manufacturing facility as compared to Q1 2022. In addition, we grew our inventory by approximately $20 million versus the prior quarter. The growth in inventory is strategic. We have purchased key materials in advance of production to be go-live ready over the next several months and will continue to invest in supply chain security. Our Agria facility will multiply our existing battery production capacity once ramped, and we are strategically acquiring the inventory in advance to help protect us from potential supply chain and logistics challenges. We recognize that our balance sheet strength at $523 million in cash and equipment as of June 30th sets us apart from others. The health of our balance sheet is not coincidental. Liquidity is a priority. It always has been and will continue to be. But we will continue to invest responsibly in battery capacity expansion, product research and development, and across our operations to support our growth strategy for the years to come. At face value, the result will appear as elevated cash flow when compared to normalized rates without the go-live of the new facility. Together, inventory and capital investment accounted for two-thirds of this quarter's cash flow. I cannot emphasize enough that we understand the importance of prudent cash management, especially in such volatile times. Despite the challenging environment we are all currently facing, I believe we are in an excellent position to ride out any potential economic downturn on the horizon and have ample room to improve our gross margins over time as supply chain and inflation headwinds normalize and as we ramp up our new capacity to full production. And with that, I'll pass it back to Gareth for his closing commentary. Gareth?
spk05: Thanks, Karina. So already, as you can see, we delivered excellent results in Q2. Despite all the challenges, we are ultimately tracking relatively light of our expectations so far this year. As a result, we reiterate our guidance for revenue growth to accelerate to between 24% and 34% year-over-year to a range of $300 million to $325 million in 2022, as well as for CapEx of $80 to $100 million, largely focused on completing construction of our new battery factory this year. Our performance year to date is not a result of an improvement in global supply chain, also that matter economic conditions, but our team's hard work, experience, and execution orientation. In fact, at the midpoint of 2022, the global economy is in a much different place than it was at the start of the year. On top of the lasting effects of COVID-19 in our society, we have the Russia-Ukraine conflict. We're experiencing the biggest jump in inflation and interest rates in almost a generation, a slowdown in the economy, and capital markets that have become much more discerning. Fortunately, we believe we are prepared to meet these challenges as we transition from startup to scaler, as I've often discussed. Early on this year, we began assessing a strategy of operational and capital disciplines throughout the organization focused on enduring growth that prioritizes margin improvement over revenue growth, cash preservation without sacrificing our growth investments, and focusing on core growth opportunities that can provide the highest return on capital as well as the fastest return of capital. We continue to be supported by a healthy balance sheet with more than $520 million in cash and equivalents as of June 30th, and I reassure you it's not one we take for granted in any way, shape or form. We continue to make investments in our core growth opportunities and are fortunate that we have grown our staff responsibly and are not in a position where we need to reduce headcount at this stage, and in fact are recruiting for many roles, primarily to launch our Greer manufacturing facility later this year. But we're all blind to the current economic and capital market environment. We're continuing to consume cash this year because of these investments, but much of it is discreet, targeted, non-recurring investment designed to increase our production volumes and improve margins and cash flow, including strategic inventory purchases, prepayments for securing long-term battery cell supply domestically, and, of course, capex, particularly for the new Greer battery factory. Construction of the Greer facility continues to progress. The first battery pack line is starting to be delivered and tested. and the automation equipment is undergoing factory testing at the vendor's site. Like anything dependent on the global supply chain, Greer has also encountered its share of equipment delays, but we have been able to work through it such that we remain on target for solid production in Q4 this year. Bringing it all together, I will conclude the call with three key points. One, in Q2, we delivered excellent growth in volumes and revenues driven by both of our business units, and also improved gross margins sequentially from Q1 levels. Two, supply chain conditions have not improved, and there are growing risks to the economic outlook, but our team is demonstrating its ability to execute, and we are focused on targeted investments to continue to grow revenue and improve margins and cash flow. And three, We believe our investments are putting us in a strong position to enter 2023 with a new factory multiplying our battery capacity, secure supply of our key battery module and pack wall materials, supply our development agreements to provide battery systems for more than 20 vehicle programs, transit in a strong position to take advantage of more than $800 million of new annual federal funding of electric transit buses for the next few years, and a well-capitalized balance sheet. So finally, to close, I would like to thank the incredible people we have at Proterra for their dedication and commitment to our mission. We've built a winning team, and I have great confidence in them to execute on our goals.
spk07: With that, I'll open it up to Q&A. Operator?
spk02: Thank you. And at this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. And we'll pause for just a moment to compile the Q&A roster. We will take our first question from Steven Fox with Fox Advisors. Your line is open. Hi.
spk04: Good afternoon, everyone. Two questions, if I could. First off, You mentioned an ASP increase on the transit side related to the mix of bus configurations. I was curious if you could give some more details on that and whether there's any kind of trend line to extrapolate going forward. And then secondly, Karina, can you just maybe, you gave a lot of detail on the cash burn to date. I'm just trying to understand maybe a timeline for when some of the non-recurring events maybe start to die off and when we could start thinking about sort of the cash burn is starting to come down in a sustainable manner. Thank you.
spk05: Stephen, let me start on the pricing topic and then Karina will pick up the cash topic. So specifics on the actual numbers on pricing is not something we would provide because that's obviously competitively sensitive information. But I can share with you that we have price for all forward future business in any, both on powered and transit, in proposals that we have been made or, for example, in the low-no pricing. That has been well covered. We're also continuing to work through our existing customer contracts. We've made very good progress there, as we mentioned on our last earnings call. The majority of the contracts have been reviewed. There are a few sizable ones that are still under negotiation on both sides of the business, both powered and transit. But we feel confident that we've made very good progress there and are obviously looking to recover the supply side inflation pressure that we've been seeing in our business.
spk01: Hi, Stephen. This is Karina. I'll go ahead and tack on the cash burn question. Then if you have any follow-ups, we're happy to take that. So regarding the cash burn, look, there's no doubt that it's been an accelerated cash burn phase due to the prep for growth. It's specifically tied to the manufacturing expansion and our strategic supply of securing inventory. We need to go live. If I were to kind of light it out for you, I would expect us to continue to carry that higher inventory and be on an accelerated burn until we go live and start producing you know, shipping to customers out of our career facility.
spk04: Great. That's helpful. And then, Gareth, just clarification on the first question. Is there anything to consider in terms of your mix, the configuration mix going forward that is sustainable that helps ASPs beyond what you mentioned with contract pricing?
spk05: I don't think I have anything significant to add there. You know, the only comment I would make is obviously The transit side of the business, there is a mix of sort of business that comes out of the Lono process as one example, and then RFPs on the other side where you've got bids, and then in some cases it's direct sourcing. So there's a mix of the kinds of business that you have, and obviously how those prices are put into the market is different in each case. So it's very difficult to sort of uniquely answer that question because, as you know, in the transit business, many of them have very specific requirements on the configuration of the product. And so, yeah, there are nuances across every customer.
spk04: Great. That's helpful.
spk07: Thank you.
spk02: And we will take our next question from Mike Schliske with DA Davidson. Your line is open.
spk08: Good afternoon and thank you. Can you comment on the kind of big news of the week, which was Nikola's purchase of Romeo Power, or at least the announcement that came out yesterday? Can you let me share what that means for your Nikola contract? Is it going to be business as usual going forward from what you know? And then maybe the second part of the question, you know, they also announced that all their non-Nikola business, they're going to be everything that as soon as they can and find other battery suppliers. Do you think there's some opportunities for you to pick up some new business that way?
spk05: Yes, hi, Mike. Thank you. First of all, we've enjoyed a very constructive and healthy relationship with the team at Nikola from the very beginning of our discussions. And they have always emphasized their intention to follow a dual source strategy for their battery packages, both for their battery electric vehicle and the fuel cell vehicle. They reiterated that again on the call this week. If you consider their production targets, it's likely that they would require multiple sources of battery suppliers too. We have a lot of confidence in our product. We have the cells, we have the production capacity coming, and we have leading technology in our battery packs. We feel confident that it's business as usual for us with the Nikola team. To your second question. Yes, they did indicate that they do not intend to pursue merchant battery business. And so today, Romeo is a competitor. And I guess by inference, it means that that may not be the case in the future. And obviously, we have confidence in our products in the market and look forward to continuing to bring good solutions to customers in the commercial vehicle market who are going to need them.
spk08: Okay. Okay. Fair enough. Thank you. Um, I also want to follow up, uh, with some of your comments on opening Greer later on this year. Uh, and I recognize that the, that you're getting this building kind of set up in a very labor light way, but do you have the people that you need at this point hired to fully start up production over there? Or is that coming in the next quarter or so?
spk05: Yeah, we are busy with the, uh, setup process for Greer, both in terms of equipping the facility and obviously, uh, So we are well underway with that process. And as Corina mentioned, part of setting up a new factory is you've obviously got to invest ahead of the startup. And yes, we're well underway with that. And again, we feel very excited about going live with startup production at Grier because it's a significant moment for us to increase our scale materially.
spk08: Okay, great. And last one for me, just about your R&D spend in the quarter. It's been up most of the quarters over the last year or two just because of the growth of the business and your new plans, but is the $15 million level a roughly decent number to go with from here, or could there be further expansion over the next 18 months or so?
spk05: Well, maybe let me start, and then I'll ask Karina to add some thoughts if she has. I think the R&D spend that you see at the moment is really driven by two factors. The first is obviously continuing to invest in our product portfolio as we set the course to have the right products for the market in the long term. But also, as you bring customer programs to life, there is an investment you have to make in those programs ahead of their side of production. So there's a lot of engineering spend in our engineering team that goes into setting up the success for the growth of the business as those vehicles come online.
spk01: I think the only additional color I would add is kind of even just broader than R&D. If I take a look at the kind of total office, the way I think about it is about a third of the growth that you see is really tied to, I'll call it, administrative-type public company growth requirements that we have. But two-thirds is not just heavily focused on R&D, but other, call it, SG&A-type initiatives that help support the customer program. So on that two-thirds of it, we see it more as an investment in the growth and the future growth of the business rather than an expense. I recognize that it's hitting the profits line within the P&L, but it's what we feel we need to do to help support our future growth strategy.
spk05: Yeah, I think Karine has touched on a very important point that highlights one of our uniquenesses as Proterra. Those interfaces between our customer-facing team and engineering resources and commercial vehicle OEMs, is where we really bring to life the richness of our experience, not just in our battery technology, but the experience we have in battery electric powertrains as we work with them to bring high-quality products to market.
spk07: Got it. Well, thanks to you both. I appreciate the discussion. I'll pass it along.
spk02: Thank you.
spk07: Thank you, Mark. As a reminder, it is star one if you would like to ask a question.
spk02: And there are no further questions. I apologize. We do have a follow-up from Mike Schliske with DA Davidson. Our line is open.
spk08: Thanks. Well, if it's just me, I'll ask one or two more if you don't mind. I mean, I was trying to give somebody else a chance, obviously. So thank you for taking the follow-up here. I guess I kind of want to get a feel for just the inventory piece of it. I know you had some, you mentioned some So one-time startup, and then you had that prepayment. There was no actual inventory sent as part of that prepayment. It was just a cash payment. Is that correct? And is that the only one you have to make, or are there additional prepayments to come here?
spk01: Yeah, so let me take that in two parts. First, the $10 million prepayment, you'll see as an other asset on the balance sheet. So that's for the future purchase of cells. Right now, we don't expect to make any additional payments in 22. Our contract is based on milestones. So as certain milestones are achieved, that's when kind of the payments trigger. So as of right now, that is the only anticipated payout in 22. And regarding the rest of it, we had about, if you think about it, if I look at it kind of in a six month, we had about 10 million gross in the first quarter and 20 million kind of sequentially this quarter. It's all tied, in order to be ready to go, right, you need to have everything in place. And not only are we getting ready to go live on our new battery facility, but as you see, our demand is continuing to grow at an accelerated rate when in our power business, and we need to continue to be able to make strategic investments on our transit business as well. Everything's got to shift. So, you know, ideally, you know, My inventory balances wouldn't be as high, but I recognize that this is what's required and what we need in order to have a successful go-live. So we'll invest in it in the short term until we're able to stabilize the capacity, you know, normalize it.
spk05: Mike, I'm going to just add one or two sentences on to what Karina said around the broader sort of outlook on strategic inventory. It's something that the team is extremely focused on. leveraging our capital position to set us up for success as we grow. But we also have developed a very strong leadership team with great experience in scaling and scaled businesses. So I think we're starting to see the benefits of the leadership experience we've been bringing on board and having leaders who know how to focus you know, invest in the right areas where we know we're going to get return, but then also be very disciplined in areas where we know, you know, we're entering a time where that discipline is absolutely required.
spk08: Got it. Maybe another question. Can you maybe just discuss the pipeline of platforms that your team is bidding on and looking at for the powered business? You know, outside of the things that might come to market, which are pretty sizable from what Romeo might be giving up, but what you're actually pursuing today, has the pipeline of platforms increased any quarter over quarter or year over year? Or do you feel like you've gotten a lot of what you were hoping to get and now you're just kind of delivering on some of those first-time contracts?
spk05: Yeah, Mike, as we've indicated on our last call, we give backlog and order updates once a year. So we're not going to do an update on that in any detail. But I will say that demand in the market has remained healthy. Obviously, supply chain remains constrained. But when you consider the Infrastructure Act and the funding that's been made available just for transit buses and school bus alone, the demand in the market remains healthy. And on the commercial vehicle side, as we've indicated, the growth in our OEM customers and the vehicle platforms, demand is, again, it's healthy, and we have high confidence that our products are well matched to what the market needs right now. And obviously, we're going to continue to seek to grow our product portfolio with the the right products in the right segments where we know we can add value for our customers.
spk07: Okay. Okay. I'll leave it there. Thank you so much.
spk02: And we will take our next question from Dylan Cumming with Morgan Stanley. Your line is open.
spk06: Hey, Stephanie, guys. Thanks for the question. I just had one kind of longer-term strategy question on my side. You know, I think during the public market process, the idea around the transit business is more so to demonstrate the kind of strength of your, you know, battery packs and battery systems. Obviously, let's look at the delivery cadence and the uptake on that side. You know, there's a pretty high level of adoption going on, right? And customers are definitely recognizing the kind of compelling suite of technologies that you're bringing. So I guess just given the level of uptake, you know, given the strength in deliveries, you're going to have gear coming online here by the end of the year. Has that changed the thinking around how long you want to keep the transit business? I mean, I appreciate it's generating a lot of your revenues today, but I'm just curious, you know, at what point in terms of when you can actually, or I guess at what point, at what level of Proterra-powered deliveries do you feel comfortable maybe not holding onto the transit bus business anymore?
spk05: Yeah, thanks for that question. For now, we have a a very well-constructed product portfolio. Our transit business was at the genesis of our sort of innovation track and has proven to be a valuable asset as we can use it to essentially demonstrate the capabilities of our own product in the powertrain business. And so, yeah, for us it's something that gives us that added level of confidence that what we're building in the powered side of the business really is, you know, Ready for market. I mean, we have transit buses running from east coast to west coast, north to south on flat terrain, mountainous terrain, hot and cold. You name it, we have, you know, 30 million miles of real world testing under the vehicle. So, you know, it's added tremendous value for us. And so it's helped us build out the power business successfully. And of course the energy business where the charging systems that we went into fleet scale charging for the transit bus business because the fleet operators really didn't have solutions for that. And so that's also helped us grow and scale the energy product portfolio. So we like the product mix we have today and we're going to continue to develop all of them as we see the economic opportunity in the market. Yeah, if that plan changes, we would update the market. But for now, we're very comfortable with the product portfolio we have.
spk07: Sounds good. Thanks for the time.
spk02: There are no further questions at this time. I would like to turn the call back to Mr. Gareth Joyce for any additional or closing remarks.
spk05: Well, thank you. And really, I guess to close, I would just like to thank you all for your time today and We appreciate what you bring in helping us understand the message of who we are as a company, and thanks for the confidence you have in us. So appreciate the time today, and enjoy the rest of the day.
spk02: Ladies and gentlemen, this concludes today's conference call, and we thank you for your participation. You may now disconnect.
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