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spk03: Greetings and welcome to the Vicinity Motor Corp., previously Grande West Transportation Group, first quarter 2021 corporate update conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's regulatory filings for a list of associated risks, and we would also refer you to the company's website for more supporting industry information. I would now like to hand the call over to William Treanor, Founder and Chief Executive Officer of Ascinity Motor Corp. William, the floor is yours.
spk01: Thank you, Operator. And good afternoon, everyone. I'm pleased to welcome you to today's first quarter 2021 corporate update conference call. The first quarter of 2021 was a blockbuster quarter by any measure, having delivered an incredible 67 buses compared to six in the same year-ago quarter and 20% more buses than we did in all of 2020 combined. This is a true testament to the unraveled value we bring to our transit agency customers. We are leveraging our strong momentum to accelerate the launch of our next generation electric EV products, including our breakthrough Vicinity Lightning EV and our upcoming Vicinity Bolt EV, as well as other exciting to be announced EV opportunities we're pursuing in the background. The land grab for EV market share is underway, and we're well positioned to gain traction through our long-lasting partnerships with Tier 1 North American transit agencies. Our world-class, purpose-built EV design includes world-class technology partners, allowing us to integrate proven battery systems from components from Tier 1 suppliers like BMW, The development and production of a mid-sized, low-floor, fully electric transit bus with proven, readily available technology that can accommodate up to four wheelchair positions is a large step forward for our company in the increasingly sustainably-minded transit market. The Vicinity Lightning EV has received its first orders, with further indications of interest in additional customer orders expected shortly. 25 Vicinity Lightning EV buses are currently in the production phase to meet near-term anticipated demand. Our operations are running very smoothly and we continue to refine our strategy to meet our new level of demand. We have strengthened our management team with the addition of respected Canadian transit leader Manuel Achadina as Chief Operating Officer and initiated development of our Washington State Manufacturing Plant and U.S. Headquarters, with operations expected to commence in Q1 2022. In his new role, Mr. Acciadena will drive innovation and efficiency to maximize our operations and engineering teams, position the build of our Washington Manufacturing Facility to support optimal output and scale, and increase overall productivity in the organization as we are poised to scale rapidly. We have a solid US growth strategy in place as our manufacturing facility there is spooling up. In order to grow our sales in a significant US market, we've entered into a strategic distribution agreement with the ABC Group of Companies, a leading provider of motor coach and transit equipment in North America, to distribute are vicinity heavy duty vehicles throughout the United States. This partnership will allow us to scale operational in this critical growth market and is more significant than many may realize. In addition, recently the state of New Mexico and the state of Washington have selected vicinity buses in their statewide purchasing contracts. That gives the state transit agencies the right to purchase directly from the company's diverse bus portfolio. We expect to see similar contract wins in other US states in months to come. Along with these strategic shifts, we have recognized the need to change our corporate name to better reflect our increasingly focus on the commercialization of our industry-leading vicinity buses, particularly our new electric lineup. The updated name will bring together our sales and marketing branding with our corporate identity to take us forward as a major player in the North American public transit market space. Now, with that, I'll turn it over to Dan to review the financial statements for the quarter-ended March 31st, 2021. Dan?
spk00: Thanks, William. Good afternoon, everyone. I will constrain my portion to a brief review of our financial results. A full breakdown is available in our regulatory filings and in the press release across the wire after market closed today. Please note, I'll refer to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to Q1 MD&A, which is available on CDAR. Revenue grew 588% to $27.3 million in the first quarter of 2021, as compared to $4 million in Q1 of 2020. The increased revenue is primarily driven by the delivery of 67 buses in the quarter as compared to six buses in the first quarter of 2020. Gross margin increased to $4.3 million or 15.9% of revenue in the first quarter of 2021 as compared to a gross margin of 100,000 or 2.3% of revenue in Q1 of 2020. The margins in the first quarter of 2021 were positively affected by sales mix with 2021 deliveries generally having higher expected margins than those realized in 2020. Net income for the first quarter of 2021 increased to $2 million, or 7 cents per share, as compared to a net loss of $1.7 million, or negative 7 cents per share in Q1 of 2020. Adjusted EBITDA for the first quarter of 2021 increased to $2.6 million, as compared to adjusted EBITDA loss of $1.3 million in the first quarter of 2020. Working capital as of March 31st, 2021 totaled $20.8 million as compared to $16.7 million as of December 31st, 2020. Working capital has increased due to strong demand for the company's buses with ongoing liquidity provided by robust first quarter revenues. Financially, our company is in a strong position. We have a strong balance sheet, regained profitability, and the fundamentals of our operations are very positive. We remain well positioned for future growth and profitability. I'd like to pass it back to William to offer some closing remarks, after which we'll begin our question and answer session.
spk01: Thank you, Dan. Looking ahead into 2021, we are incredibly well positioned to create long-term value for our shareholders. We are intensely focused on delivering upon our robust 2021 order book, completing our US manufacturing plant, and increasing orders for our innovative vicinity Lightning EV. I expect to see robust year-over-year growth throughout the remainder of 2021, empowering our drive to create a more sustainable public transit system. I look forward to providing our shareholders with further updates in the near term as we launch new products, announce new transit agency customers, and successfully execute upon our business plan. I thank you all for calling in, and now I'd like to hand the call over to the operator to begin our question and answer session. Operator?
spk03: Thank you, sir. If you would like to ask a question, please press star then one on your touch-tone phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Chris Souther with B. Riley. Please go ahead.
spk04: Hey, guys. Thanks for taking my question here. So heading into the year, you talked about delivering over $40 million in revenue before the second half of 2021. So you appear to be more than on track there. But is that $40 million still a target we should be thinking about for the first half? And how should we think about the overall order book and where it stands positioning for the second half of the year here?
spk00: Yeah, I'll take that. Dan here. Thanks for the question, Chris. Yeah, I would say that we're on track to break $40 million for the first half of 2020, or 2021, sorry. But for the entire year, we haven't really given much guidance out there right now, but what we are What we are saying is that we expect to deliver over 150 buses for the year.
spk04: Got it. Okay. And then maybe just on the first quarter mix from a geographic standpoint of the 67 buses, you could kind of walk us through that. And then were there any lightning that shipped in the first quarter? I'd be curious, you know, what the timing is of kind of those initial shipments you guys had talked about with a few different customers.
spk00: Yeah, no, we had no lightnings in the first quarter. Our lightnings are planned for Q4 of 2021. We did have almost all of our buses being sold into the U.S. this year for the first quarter, but we had a mix of probably four different customers in the first quarter.
spk04: Okay, that's helpful. And then the new lightning orders, the 10 orders we're talking about, Where does the order book stand now for that product, if you can share that? And what geography are the new Lightning orders coming from? I'd be curious.
spk01: Yeah, we've seen increased demand and customers asking, inquiring on it from both sides of the border, actually. But the Lightning, we have 25 in production as we speak right now. Out of that 25, 15 of them are already pre-sold. Ten of them are going – actually, all 15 of those are going to a U.S. customer, one to a university and one into our dealer network down there, the other 10. We have a lot of interest right now on the Canadian side. We have a nice large tender outstanding on the Canadian side as well that we should be able to get some clarity in definitely probably within the next 30 to 60 days.
spk04: That's helpful. And then the release hinted at future EV products potentially in the pipeline here. Can you provide any color there? Are these larger buses, smaller buses, or some other end market that you guys are looking at? Or is that something we should kind of wait and see for more info?
spk01: Yeah, we'll news release everything as it comes out. We've got a mix of customer base all over the place inquiring on these units right now. But we will news release as the orders come in, Chris.
spk04: Okay. That's helpful. And then maybe just update on the U.S. facility progress and timeline there. It would be great to get kind of a snapshot where we stand and the timelines that we're looking at as far as getting that up and running.
spk01: Yeah, we're still, you know, targeting to have the building completed by the end of this year in Q4. And then we'll probably put it operational. in Q1 of next year. You know, you've still got to outfit it with some of the equipment that's got to go in there and whatnot. But I think we should be on track to actually have the building completed by Q4. And then, like I say, to get it operational will be Q1 next year.
spk04: Okay. That's very helpful. And just maybe the last one here on the Exo Technologies Partnership, can you talk about what key components you guys are looking to develop with them, to source from them, and kind of what the timeline would be for them to be designed into the Lightning, or are they already designed into that vehicle?
spk01: No. We're looking at their technology. We're always looking to be a leader on the technical side. We'll get some of their product that we can test here probably before the end of this year. We're very excited about it because it has the capability to add another 20% to 30% of reduced power from the motor and getting you that further distance on it. So we're excited to get the technology in one of our vehicles and finish up the testing on it.
spk04: That's great to hear. I'll hop back in the queue.
spk03: Thanks, guys.
spk01: Yeah, thanks. Thanks.
spk03: Hey, ladies and gentlemen, as a reminder to ask your question, please press stars and one. Today's next question comes from Bruce Chan with Stiefel. Please go ahead.
spk02: Yes, good afternoon, gents. I appreciate the time. Just a few left from my side here. We talked a lot about the EV buses, obviously, but just want to get some insights into the order book for the CNG buses as, you know, you roll out your U.S. footprint. You know, maybe you can share some color on what demand is looking like for those units.
spk01: Yeah, thanks, Bruce. It's Will here. Yeah, we've seen a lot of interest on the CNG. You know, the CNG is what they consider to be a near-zero product for emissions. So it's a very, very nice product to really transition ourselves into the EV market. You know, we have, you know, big plans for the EV and, you know, taking a big share of the market share. But as it As these customers are transitioning, we think that the C&G bus is a perfect fit for a lot of them. As you've seen recently, we've had a considerable amount of orders for C&G in the last 30 days.
spk02: At what point, just in terms of cadence, do you expect the orders to switch over from CNG towards EV. Is there a real substitution going on between those two products or is that not really the case?
spk01: Yeah, no, it is. Not all transit authorities or shuttle operators or universities are going to take the EV in year one. A lot of them are talking between a five and a ten year swap over before they can get their full fleet. You've got to remember that some of these buses are built for for a 12-year lifespan, so they're not going to take those off the road until the life has actually ran out of them and replace them with the EVs. But we've seen a tremendous support for the EV business recently. When we talk about tailwinds, you've got a lot of funding capability coming up, both on the Canadian side and on the U.S. side, and it's all driven towards trying to clean the environment and get... you know, get sustainable EV buses out to the market.
spk02: Great. And then you gave an update on the timeline for the EV Lightning, which was very helpful. Any thoughts on timeline for the light duty gas units?
spk01: Yeah, same thing. The light duty gas units are running through their certifications and whatnot. we would feel that they would be ready for marketing early next year. We are bidding tenders on them right now. That's a very large market, and we see some transition going on in there too.
spk02: Awesome. And then just one last question here. You talked a little bit about gross margins and the difference year over year being one of mix. Can you just give us a little bit more color and depth what specifically is driving that high gross margin this time around?
spk00: Sure. It's Dan here. I would say that the margins that you're seeing now are more normalized than the margins we had last year. In 2020, we didn't sell a ton of buses, but the mix was largely low-margin customers in Canada. We had a legacy customer with margins that hovered around the 10% mark. That was the majority of our sales for 2020. So the sales that you're seeing right now are more in line with what we would normally be selling and what we were seeing in 2018 and 2019. And depending on the mix of products, we can do even better than we're doing right now for Q1. as we sell more units and as you start to see a shift into other products as well, as you start to see a shift more into the CNG and the electric side as well.
spk02: Got it. And then just one quick follow-up to that, if I may. The customer there, the low-margin customer, was that mostly a function of legacy or size of the fleet or maybe both?
spk00: It's both of those. That was a legacy customer that was the tail end of a five-year contract that we had with that customer. So that contract is over now. So we will see definitely increased margins in the future.
spk02: Perfect. Thanks, gents. Really appreciate the time.
spk00: Thanks, Bruce.
spk03: Ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Mr. Traynor for any final remarks.
spk01: Thank you, Operator. I'd like to thank each of you for joining our earnings conference call. We look forward to giving you a continued update on our progress and growth. If we're unable to answer any of your questions, please reach out to our IR firm, the MZ Group. They'd be more than happy to assist you with any other questions. Thank you all.
spk03: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
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