Vicinity Motor Corp.

Greetings, and welcome to the Vicinity Motor Corp Third Quarter 2022 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 Vicinity Motor Corp. William, the floor is yours.

Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to today's third quarter 2022 corporate update conference call. The third quarter of 2022 was highlighted by strong momentum in our VMC-1200 Class III electric truck and Vicinity Lightning electric bus product lines. Additional sales and distribution wins of our portfolio of electric vehicles were propelled by intense customer demand for commercial EVs, particularly in the Class III segment with our VMC-1200. New government incentives for EV adoption in the pipeline are building interest and support from enterprise customers and government agencies as fleets seek to be part of our shared electrified future. The rising demand for our Class III EVs in particular was demonstrated through our further $100 million purchase order for 1,000 VMC 1200 vehicles from the Pioneer Auto Group, a transformational milestone in Vicinity's evolution from an internal combustion engine bus OEM to a multi-segment emerging leader in the electric vehicle space. The order validated the years of innovation, development, and strategy that we've invested into our EV product lines, all with the goal of expanding our capabilities into new markets. As a clear indicator of this momentum, our sales backlog grew to over $100 million, the vast majority of which are for electric vehicles. While the global automotive industry supply chain continues to impact our transit bus business, our VMC 1200 supply chain remains fairly insulated from these disruptions. Delivery of many bus orders have been pushed into 2023, but initial VMC 1200 deliveries began in October, and we expect these sales to to gradually ramp up and meet the immense demand we're seeing for this product line. Our first vehicles will be assembled here in British Columbia, Canada. And given that we believe we have solved the power switch issue, which we faced previously, by year end, we expect that our Ferndale, Washington facility will have received our initial certificate of occupancy with final Ferndale production expected in the first quarter of 2023. To support our growing production goals, we are increasing our credit facilities to support short-term working capital requirements for the rapidly ramping VMC 1200 production. Taken as a whole, we are confident in our ability to drive significant revenue growth in 2023. During the quarter, we continued our aggressive expansion of our distribution reach across North America, adding dealers in Toronto, Canada for our VMC 1200 Class III electric truck, and Washington, Oregon, Idaho, and Alaska for the vicinity Lightning and Classic vehicles. We saw, as we saw from the Pioneer Auto Group's order, growing our distribution network is a key component of our future growth and our ongoing sales efforts. Now with that, I'll turn it over to Dan to review our financial results for the quarter ended September 30th, 2022. Dan?

Thank you, William. Good afternoon, everyone. I will keep 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 yesterday. Please note that I will refer to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to the Q3 MD&A, which is available on CDAR. In addition, all figures are in US dollars unless stated otherwise. Revenue totaled $1.5 million in the third quarter of 2022, as compared to $2.3 million in the third quarter of 2021. Revenue totaled $16.4 million for the nine months ended September 30, 2022, as compared to $39.4 million in the nine months ended September 30, 2021. The decrease is primarily attributable to lower vehicle deliveries due to global supply chain disruptions. Gross loss in the quarter ended September 30, 2022, totaled $0.2 million, or 15% of revenue, as compared to $0.6 million, or 25% of revenue for the quarter ended September 30, 2021. Gross profit totaled $1 million, or 6% of revenue, for the nine months ended September 30, 2022, as compared to gross profit of $4.6 million, or 12% of revenue, for the nine months ended September 30, 2021. Gross margins were affected by product mix and a low volume of buses delivered. with global supply chain disruptions affecting certain transit bus components continuing to delay deliveries. Cash used in operating activities in the nine months ended September 30, 2022, totaled $5.2 million, as compared to cash provided by operating activities, $7.8 million in the nine months ended September 30, 2021. Net loss in the quarter ended September 30, 2022, was $7.4 million, or 19 cents per share, as compared to a net loss of $3.8 million, or 13 cents per share, in the third quarter of 2021. Net loss for the nine months ended September 30, 2022, was $14.1 million, as compared to net loss of $2.5 million for the nine months ended September 30, 2021. Adjusted EBITDA loss for the three months ended September 30th, 2022 was $2.7 million as compared to an adjusted EBITDA loss of $2.8 million for the three months ended September 30th, 2021. Adjusted EBITDA loss for the nine months ended September 30th, 2022 was $6 million as compared to an adjusted EBITDA loss of $0.5 million for the nine months ended September 30th, 2021. Cash and cash equivalents as of September 30th, 2022 totaled $1.1 million as compared to $4.4 million as at December 30th, 2021. Subsequent to the end of the third quarter, the company fortified its balance sheet through an opportunistic $4.8 million raise utilizing the company's at the market program. We are currently working on expanding our existing credit facility to support a quicker ramp up in BMC 1200 production and further support our working capital position. We are well positioned to execute and the fundamentals of our operations remain strong. While we have suspended guidance for the full year 2022, given an uncertain supply chain environment, demand remains very strong and we are well positioned for a high level of operational execution in 2023. I'd now like to pass it back to William to offer some closing remarks, after which we'll begin our question and answer session.