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spk01: 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.
spk03: 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.
spk02: 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.
spk03: Thank you, Dan. During the quarter, our accomplishments included continued diversification of our dealer network across North America, ramping up production in our Ferndale manufacturing campus, a growing sales funnel, and a strong backlog that includes continued strength from our transit bus line. The increase in adoption of commercial EVs is being driven by government incentives, corporate sustainability goals, and declining cost of ownership. And our EV lineup is growing dealer network, capitalizing on this transition to be a commercial EV supplier choice of many. As we move into 2024, we continue to execute against our key milestones. I believe that we've built the foundation of a business that can deliver value to its stakeholders and their communities for years to come. And now with that, I'd like to hand it back to the operator to begin our question and answer session. Operator?
spk01: Thank you, William. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. And you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
spk00: One moment, please, while we pull for questions. Thank you.
spk01: Our first question comes from the line of Robin Cornwell with Catalyst Research. Please proceed with your question.
spk05: Hi. Good afternoon. I guess one of my questions is, is there any issue with the government's slowing or being very slow with their funding and giving, I guess, your clients difficulty to... to get confirmation so that they can purchase the various vehicles?
spk03: Well, it's taken a little while to get into the system for the incentives, particularly in Quebec. We're well established right now in BC. There's about a $92,000 incentive program inclusive of the federal program. incentive in the BC area. And in Quebec, we're at 85,000 now. But yes, it has taken a while to get those put in place. And now that they're in place, they seem to be working.
spk05: And I guess there was, I think I picked up an article that Calgary had an order backlog with you, which is your client. But is there, Still, I guess, a backlog in supply for the buses?
spk03: Well, the Calgary, what you're referring to there is a Calgary transit order of some electric vehicles. We're just finishing up that order now, and we will be delivering those this year to Calgary. It has taken a lot longer than we anticipated. But, you know, there's been a lot of bumpiness in the supply chain on the bus side.
spk05: Right. You had mentioned that last time. So that has improved somewhat now? Yes, it has now. Okay. And so back to the Ferndale, is Ferndale pretty well fully staffed or is that still an ongoing project?
spk03: It is still an ongoing project. We're lightly staffed there. We are looking to increase the staffing capability down in Ferndale. But we are, you know, the doors are open there.
spk05: Okay. So can you give us any idea of deliveries for 2024? Well, we haven't.
spk03: give a lot of guidance but you know what I can say is that we have a hundred buses to deliver that are all in the queue to go out this year in 2024. You know to date I think we you can see on our inventory levels we have a lot of inventory built up that is related mostly to the to the truck side and we do have I think Dan you probably know the numbers that we have.
spk02: Yeah so we had just over 200 trucks at year end that we're either ready to sell or close to being ready to sell. Since then we've produced another bunch of trucks. So I think if you look at what we had at year end plus production to date in 2024, we could sell about 325 trucks. We're still looking at producing more, obviously, for the year. but that's the current inventory levels, and some of those have been sold in 2024 as well.
spk05: Right, so 325 trucks potentially this year. Sorry, I wasn't too sure if that was all Ferndale.
spk02: No, it's not all Ferndale. Quite a bit of that goes through Ferndale, though.
spk06: The majority went through Ferndale. Okay, great. Thanks, Aubrey, too. Thank you.
spk01: Our next question comes from the line of Poe Fratt with Alliance Global Partners. Please proceed with your question.
spk04: Yeah, just to follow up on the last question. So, Dan, I think I heard you say that 125 trucks had been produced in the first quarter. You know, we're effectively done with the quarter, so... All right, so...
spk02: We had, at the end of the first quarter, we had, let's say, we had 210 at year end. So yes, then we had another 115, 116 that were produced during the quarter.
spk04: And is 115 trucks produced a reasonable run rate for the next couple quarters? Or can you give me a flavor on what's going to happen there?
spk02: Well, honestly, we could ramp that up to way more than $115 per quarter when we're actually going at a full run rate. I think the important thing now is to bring down the inventory levels and then we'll produce as needed.
spk03: We're bringing more dealers online, Paul. It's our intention to have 10 dealers in Canada, a minimum of 10 dealers in Canada. I think we've got, what do we have now, Dan? We have six. We have six that are onboarding right now. And each of those dealers are supposed to be doing a minimum of about 100 trucks a year. So we've got to ramp that up to get our 10 dealers established here on the Canadian side. And we've already started looking for prospecting for dealers in the U.S.
spk04: So you don't have any dealers up and running in the U.S. yet?
spk03: No, we're just looking at that now.
spk04: Got you. And then can you help me understand the 71 that were invoiced? Are those in inventory? Are they in part of that 210 in inventory? Or are those just essentially deferred revenue? I mean, I apologize. I had no time to look at the financials just given how close they were. you know, released to the actual call. So just help me understand why the 71 weren't delivered. They were just invoiced?
spk02: Yes. So they're invoiced. And with the majority of those, our dealers are just putting the final touches on their floor plans to be able to pay for the trucks. And then we have to put the bodies on the trucks as well before we can deliver them. Generally, we sell the cabin chassis to the dealers, and then we upfit the bodies after that.
spk04: But in the context in the second quarter, I think you delivered 34 trucks. In the third quarter, you delivered 26. And then you delivered none in the fourth quarter from a, you know, revenue recognition standpoint?
spk02: That's correct. Unfortunately, those dealers could not have their floor plans set up in time.
spk04: Even the one that was up and running, they didn't sell anything in the fourth quarter? In the fourth quarter,
spk02: That's when we were working on the Quebec incentives as well.
spk03: They weren't in place at that point in time. They are now.
spk02: So that dealer was in Quebec and waiting for those incentives to finalize.
spk04: Yeah, it's Pioneer, right?
spk02: No, that one's not Pioneer.
spk04: No, okay. Who is the dealer that's up and running now?
spk02: We have multiple dealers. Lucier?
spk04: Can you help me understand why the backlog went down from the third quarter? It was $150 million plus and now it's $125 million. Can you give me an idea of the mix of backlog? You said you had 100 buses potentially in that backlog number it sounded like.
spk02: Yes. We're trying to not give the absolute precise number here of the backlog just because we're dealing with Canadian dollars and U.S. dollars, and they do fluctuate, and we don't have everything. Yeah, we have other items in the backlog as well, but the backlog is still closer to that $150 million mark than the $125 million. It's over $125 million. The split right now is about two-thirds, just over two-thirds trucks right now in that backlog. And we have just over 100 buses in the backlog.
spk04: Okay. And just so there were no cancellations that led to that declining backlog, it was all currency related?
spk02: No, it's currency related and deliveries throughout the quarter as well. So we did deliver some buses, but we're kind of hovering around that 150 mark. And just to be safe, we're... And we're saying 125 plus at this point.
spk04: Yeah, I guess so. The bus deliveries would have been in the, what, $5 million range. So, you know, that's for even maybe $4 million. But your backlog went down 25 plus.
spk02: It didn't go down 25. It's greater than 125 million. We're not giving precise numbers on the backlog.
spk04: And the comfort level that $125 million of backlog will be realized in 2024, what's your comfort level on that?
spk03: We're not giving that out right now, Paul.
spk04: That's helpful. How about the refinancing? Now you're in a solid position to really get to the table on the refinancing. Can you just help me? look at what you're going to see on the refinancing side over the next couple of quarters?
spk02: Sure. So right now we are in the renewal process with RBC and EDC on our main facility. That is up for renewal right now. They've extended the terms while they're in the approval phase. to April, we may extend that again for another period, or I don't think we'll have it renewed in the next few days, but there's no indications there that we're not renewing that facility. It just takes time, unfortunately, with the entities we're dealing with and getting the approvals processed. That's going to be the main financing that needs to be renewed. That's really our operating line.
spk04: Yeah, that's the working capital line. But what about the subdebt? I think that there's a tranche of the subdebt that's due in April. Another 25% of that's due in July. And then, you know, the rest in October. What's going to happen to the April part?
spk02: That's correct. So, yeah, we'll be, yeah, we'll talk to those lenders. And either we will refinance that or we'll pay that. But that's in discussions.
spk06: Okay, great. Thanks.
spk00: Thank you.
spk01: This concludes our question and answer session. I'd now like to turn the call back over to Mr. William Treanor for his closing remarks.
spk03: Thank you, Operator. I'd like to thank each of you for joining our earnings conference call. We look forward to continue to update you on ongoing progress and growth as we continue our rapid pace of operational execution. If we are unable to answer any of your questions, please reach out to our IR firm, the MZ Group, who would be more than happy to assist. Thank you again.
spk01: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may now disconnect your lines at this time, and have a wonderful day.
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