Vicinity Motor Corp.

At this time, all participants are in 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 on the call. Please refer to the company's regulatory filings for a list of associated risks. We would also refer you to the company's website for more supporting industry information. I would now like to turn 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 fourth quarter and full year 2023 corporate update and conference call. The fourth quarter of 2023 was focused on the build-out of our VMC 1200 dealership network across Canada and deliveries of our VMC 1200 electric trucks and transit buses. During the quarter, we sold 11 transit buses to eager customers as well as invoice dealership customers for an additional 71 VMC 1200 electric trucks in December 2023, which we expect to recognize in the first half of 2024. To meet the growing demand during the quarter, we recently announced several new VMC 1200 dealership partners in Canada, including VMC Laval in Laval, Quebec, Peninsula VMC Truck Center in South Toronto, Shift EV Trucks in West Toronto, and Jack Carter VMC Trucks in Southern Alberta. These new EV-specific dealerships expand the VMC 1200 sales and service coverage in strategic markets across Canada. Each partner has exceptional experience and expertise in the automotive market in fleet services, making them well-suited to help fleet operators seamlessly transition to an all-electric future. For our company, the VMC-1200 carries a healthy margin profile and year-round purchasing habits of the differentiated customer base helps us to smooth the traditional revenue lumpiness of our established transit bus business. The VMC-1200 provides an ideal entry into the underserved commercial EV market for dealerships, and customers are attracted by the extremely competitive price point inclusive of tax incentives. In addition to delivering immediately cost savings and contributing to carbon emission reductions, the VMC-1200 is further reduced through Canadian federal and provincial rebates. It qualifies for a federal rebate nationwide of $40,000 Canadian from Transport Canada. Recently, it was approved by the Quebec Minister of Transportation and Sustainability and Mobility in Canada for the VMC-1200 to be included in its EV development program to further the electrification of commercial freight and heavy vehicle transportation industry within Quebec. This $85,000 incentive represents an exciting opportunity to attract attention and lower costs for new buyers who are considering making the transition into EVs. We have continued to seek new partners and opportunities for the Vicente Lightning EV Transit Bus. We partnered with automated driving software platform provider, Adaztech, to create an SCE Level 4 automated variant of our upcoming Vicinity Lightning EV Transit Bus, which will be called the Vicinity Autonomous Lightning EV for the North American market. Over the last year, we have worked closely with Adaztech recognizing our leading position in the industry to formalize our partnership agreement while jointly pursuing opportunities to deploy automated solutions. The collaboration marks a substantial leap in realism of transportation, with a strong emphasis on automated, connected, and shared solutions, driving innovation accessibility, and sustainability. The partnership brings together our expertise in medium-duty, accessible, fully electrified low-floor transit vehicles with the DevTech's SCE Level 4 automated driving software platform. Together, we aim to revolutionize the mobility sector and make a lasting impact on communities and passengers. To this end, we will jointly deploy initial vicinity autonomous lightning electric transit buses at Michigan State University and Buffalo Niagara Medical Campus in mid-2024, making history as the one and only full-sized automated bus deployed on public roads in the U.S., to transport passengers within their communities. A DevTech partnership has allowed us to accomplish exciting new applications for our all-electric vicinity lightning bus, powering the next generation public transportation system of forward-looking organizations nationally. Our transit bus business continued to provide a solid reoccurring customer base with strong order momentum for the vicinity classic transit bus. A new purchase order from Autobus Quebec for vicinity classic buses to service the city of Joliet, Quebec, and follow-on purchase orders to service smaller communities around the south shore of Montreal. Once again, demonstrating our position as a market leader in the Canadian mid-sized heavy duty segment. Our transit buses continue to play an important role in our backlog, providing an important pillar while we concurrently grow our electric vehicle business. As supply chains have improved, we restarted delivery of transit buses to our customers as of spring 2023, with 11 delivered in the fourth quarter of 2023. We believe our ability to offer both legacy and next generation electric vehicles in a variety of classes and configurations positions us to address an incredibly wide variety of customer needs. Our new U.S. manufacturing campus in Ferndale, Washington continued to ramp production during the quarter tackle the fulfillment of our robust order backlog, which as of December 31st exceeded $125 million. The vast majority of which are for electric vehicles. The facility is designed to meet our current and future production needs with annual capacities of up to 1,000 buses or 6,000 DMC-1200 electric trucks. As we stand today, we are aggressively building out our VMC 1200 dealer network continent-wide, and are ramping up production in our Ferndale manufacturing campus. Our vicinity Lightning next generation electric bus continues to attract attention from industry players, as our classic bus line continues to drive sales as a leading Canadian supplier in the midsize heavy-duty bus market. In summary, with improving margins, a growing sales funnel, and a strong backlog, we are executing across our product line and positioning the vicinity for a sustainable growth in 2024 and beyond. Now, with that, I'll turn it over to Dan to review the financial results for our quarter and year-end at December 31st, 2023. 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 that crossed the wire after market closed today. Revenue in the fourth quarter of 2023 increased to $5.1 million as compared to $2 million for the fourth quarter of 2022. Revenue totals $19.1 million for the year ended December 31st, 2023. as compared to $18.5 million for the year ended December 31st, 2022. The increase in revenue was primarily driven by the sale of 11 bus deliveries in the fourth quarter as compared to 11 trucks in the same year-ago quarter. We invoiced dealership customers for an additional 71 BMC 1200 all-electric trucks in December 2023, which are expected to be recognized as revenue in the first half of 2024. Gross loss in the fourth quarter of 2023 improved to 0.4 million or negative 9% of revenue as compared to a gross loss of 0.6 million or negative 28% of revenue. In the fourth quarter of 2022, gross profit totaled $2.1 million or 11% of revenue for the year ended December 31st, 2023 as compared to 0.4 million or 2% of revenue and the year ended December 31, 2022. The higher margins realized in 2023 are mainly a result of a product mix that has increasingly shifted towards electric trucks, which generally have a higher margin profile as compared to transit buses. Cash used in operating activities for the fourth quarter of 2023 totaled $5.7 million, as compared to $3.9 million in 2022. Cash used in operating activities for the year ended December 31st, 2023 totaled $24.7 million as compared to $9.1 million in 2022. Net loss in the fourth quarter of 2023 totaled $9.1 million or negative 20 cents per basic and diluted share as compared to $3.8 million or negative 8 cents per share and diluted share in the fourth quarter of 2022. Net loss for the year ended December 31st of 2023 improved to $16.6 million or negative $0.36 per share as compared to $18 million or negative $0.45 per basic and diluted share in the year ended December 31st, 2022. Adjusted EBITDA loss in the fourth quarter of 2023 totaled $3.2 million. as compared to $1.4 million in the fourth quarter of 2022. Adjusted EBITDA loss for the year ended December 31st, 2023 totaled $6.9 million as compared to $7.4 million in the year ended December 31st, 2022. Cash and cash equivalents as of December 31st, 2023 totaled $2 million as compared to $1.6 million as at December 31st, 2022. We believe we are well positioned for a high level of operational execution in the quarters ahead as we ramp production at Ferndale and continue to deliver against our robust over $125 million backlog. Taking a look at our balance sheet, we had $23.3 million in inventory as at December 31st, which we expect will be converted into cash as we deliver against our backlog in the coming quarters. I'd like to now pass it back to William to offer some closing remarks after which we will begin our question and answer session.