The Lion Electric Company Common Shares

Q4 2022 Earnings Conference Call


spk_0: what we the line electric fourth quarter of fiscal twenty twenty two without conference go at this time opec has been around a little only mode a brief question and answer session will follow the formal presentation as a reminder this conference call is being recorded i would now like turn the coo over to isabella johnny vice president investor relations and sustainable development
spk_1: please go ahead good morning everyone
spk_2: welcome to lighten was quarter resistance towards toward toward you to return come from school
spk_1: yeah we're in a cultural for literally for that of the he decryption kim editing defeated verbal the did you today i'm here with much better are you wonder are you gonna go there are even be and sequel please note that are discussion really good estimate and order for forward looking good for mission and butler action of regrets could differ materially from to imply into statement we invited to redo the bush learn language in this morning press with the and in our and dna regarding the big factor assumption agree that could cause or therapy beg to differ materially from to imply that overlooking said nope
spk_3: with that
spk_1: let me turn it over to work to begin
spk_4: mark thank you the damn good morning everyone at the beginning of last year and we were discussing our strategic objectives for twenty twenty two we are loaded the following spirit of a real the borders that guy that are will work and investments renting a production at our montreal plant building and starting production and i will join your plant an hour battery factory and accelerating beagle and charging infrastructure deliveries i'm glad to report we delivered on our plan for each of the light him while maintaining our commending leadership in the electric school bus there are three main elements would be talking about today number one we continue to increase our beagle production t them from do for which translated me to growing beagle delivery and and will we were you and with like this time to continue in twenty twenty three number two we're teeth significant milestone and i were to group projects at we assembled our first electric school bus unit at our us manufacturing plant in our first battery pack in our battery factory and laboratory wilding twenty twenty three we will continue to invent and i were to new manufacturing factories to ramp up production capacity we will also continue to smartly align capitals men with expected near time demand for our beagle and to carefully manage our liquidity we will provide call her on each of these items before we open the line for questions let's begin with deliveries and orders during the quarter we delivered one hundred seventy four vehicles consisting of one hundred thirty nine buses and thirty five trucks this is the first quarter in a row of sequential growth and beagle deliveries in fiscal two little anything we delivered five hundred ninety bagels more than twice the one hundred ninety six beagles delivering and twenty twenty one i'll peel book currently stands at two thousand four hundred sixty eight vehicles for total in order value of five hundred seventy five million dollars it includes orders for two thousand one hundred and sixty seven electric school buses including one hundred maybe from bp program at school the show
spk_5: get that were awarded grantham their the program i've started to play purchase orders ahead of the april twentieth deadline
spk_4: speaking of bp a clean school bus program we have already started delivering electric buses funded program well ahead of the october twenty three four deadline also as per the prolong rules we expect the key to make a plan payments to put mom our these after receiving proof of a confirm purchase order this will have a significant positive impact on our liquidity used by allowing us to invest in that front program and caught required to manufacture these people's i would appeal but also includes orders for three hundred and one electric trucks and left our london energy peel but and months approximately six million dollars mostly for charging infrastructure and related services besides bp in three d f and many other programs discovery to sleep other the legislation that funding initiated continue to support the ship to the electrification that the transportation sector which represents great news for lion in our customers for example the us federal government recently published the us national blueprint for transportation decarbonization and find a global memorandum of understanding on zealand mission be and and eighty two typical which commit to thirty percent of medium and heavy duty equal self during the
spk_6: you emission vehicles beagles when twenty thirty and one hundred percent by twenty forty
spk_5: in california the proposed twenty twenty three
spk_4: budget allocated forty eight billion dollars to climate change on the ira fun lion with officially approved at a qualifying manufacturer by the i r s which means that our vehicles sold in the united states starting january first when twenty for me three are eligible for text ray that the forty thousand dollars for people let me know provide an update on our supply chain last year the supply chain continue to be impacted by several factors although to a lesser extent than and twenty twenty one at this has previously this as generally translated into longer lead times increased transportation costs and ultimately or your caught of components were legal production while supply chain issues are improving we nevertheless expect continue challenges this year which means that our production cadence and equal cost to mitigate the supply chain impacts we have successfully put in place several measures which will continue and twenty twenty three including qualifying additional suppliers and proactively managing inventory for critical components such as buried in motors at the end of the quarter we had approximately three forty seven hundred bmw battery packs will net this inventor you should enable us to gradually convert to congratulating in battery as we ramp up our own battery production which i will address in a minute i phone battery packs to be supplied by romeo the arbitration process is progressing in addition we need added legal proceedings against a corporation on the basis that it intentionally interfered in our contractual relationship with romeo and in our business expectancy which is back to our relationship with romeo and you can expect we will refrain from commenting on the situation let me know talk about the development of are different vehicles we have substantially completed the development work for delaying me but the line be but the line by truck and the lion a tractor trailer and we expect these platforms to begin commercial production this year please note that the timing of the start of commercial with action to the lion a tractor truck could be impacted by the supply of the romeo powered battery pack for the reason and like of mention also as a reminder our buses will be manufactured that both the montreal and julia plant while our trucks will be manufactured in montreal for the time being where we have ample capacity to accommodate your and the demand which takes me now to an update on de jong implant under bad as announced we completed in two for the assembly of the first electric school bus unit at our us plant and delivered our first made in america electric school buses while we ramp up our manufacturing capacity joint in this regard we expect to manufacture a modest number of to enjoying up during the first quarter followed by a gradual increase in production shelter year we will continue to be carefully in the junior plump this year where to go to have an annual production capacity of twenty five hundred buses by the end of the year as for an hour battery plant following the completion of the installation of a first portion of our battery assembly line in our battery manufacturing facility we completed in two for the production of our first battery pack at our own baggage factory final certification of different battery pack model is expected in the first half of this year followed by gradual production wrapped up into twenty two between the fruit lion batteries will serve to power the lions the and and be school buses and the line fire trucks with are planned twenty twenty three investments in the battery glenn we are targeting to reach a battery production capacity at one point seven didn't want our by the end of the year this represents capacity for approximately five thousand eagles in a mix of both of them trucks as for the mothers inside a building the show word is now substantially completed and this building will initially be used this year for teflon certification program battery for pre liberal inspection of vehicles and as warehousing space let me and i'll talk about our recently announced north american agreement with mitsubishi and mgs commercial payments the financing for all electric buses and medium and heavy duty trucks to our line capital solutions offering this agreement will allow line capital solutions to provide our customers with financing solution specifically designed for line school buses and trucks thereby making it easier and center for our clients to secure the financing required for the purchase of their line beagles all of this without putting in leasing little
spk_5: on mind balance sheet which as we will leverage mitsubishi beagle financing expertise capital
spk_4: this type of product offering should have a positive impact for our customers as it could eliminate or reduce up from capital requirements for literature that line bagels
spk_7: nicholas will not further discounts our financial performance review for fiscal twenty twenty two and he will also provide color regarding our capek subjective for twenty two the thank you my
spk_4: i will start with the financial i like the to for and full year two thousand twenty two result i will then cover that twenty twenty three investment outlook travel growth project and conclude with our liquidity for this
spk_7: during the quarter he delivered one hundred and seventy four group consisting of hundred thirty nine busted and thirty five drugs which translated into reading your forty six point eight million dollars compared to twenty two point nine million in two for twenty twenty a hundred and four percent year over year growth in ready
spk_4: one hundred and sixty of the he called delivered in to for or delivered and canada and fourteen in the united states that's what our fifth consecutive quarter of sequential gold and eagle delivery
spk_7: he posted gross margin of negative ten percent the impacted by supply chain challenges ongoing inflationary pressures with and manufacturing drop and i were conscious decision to continue to death and to ramp up which is an important part of our growth strategy and our goal to achieve long term profitable grow
spk_4: at create the applying for the foreseeable future gross margins should continue to reflect the investment we are making to establish manufacturing operations at our draw your facility and the line campus and to ramp up production at all of our facility
spk_7: as we scale production expect margins to into a sticks costs will be spread over increased numbers of enough actually they amounted to fifteen point six million dollars into for after removing the impact of noncash or based compensation as dna about the thirteen point one million dollars this is a slight decrease persecutory expenditure of fourteen point eight million dollars again that of noncash they competition
spk_4: jack and he did that with negative thirteen point nine million dollars dollar coupon as compared to negative seven point five million for the same period last year and negative is been point one million dollars in two three twenty twenty during the quarter get x amount of the thirty nine point one million dollars including eighteen point nine million in cared for the volume plant and nineteen point six million and curb for the line campus as compared to nineteen point two million dollars during the same period last year
spk_7: capital expenditures for joliet and to for were higher than the previously disclosed that the of twelve million dollars mostly due to herbs your timing of equipment construction model some and to car capital expenditures for the line campus into four or lower than the previously disclosed that i'm a thirty five million dollars it later timing of construction of the innovation factor and due to bad park equipment received an early twenty twenty three as opposed to the end of to me drink
spk_4: for the quarter addition to intangible that that which mostly consists in rb amounted to approximately twenty one point three million dollars as compared to nine point seven million dollars last year let me down make a few comments on selected twenty twenty two full year to form into it
spk_7: he delivered of a total of five hundred nineteen beagle during the year consisting at four hundred been busted and a hundred and ten tracks as compared to a hundred ninety six people in two thousand twenty one four hundred seventy one of the twenty twenty can read the place in canada and forty eight in the united states the translated in revenue of one hundred thirty nine point nine million dollars for twenty twenty two up eighty two million or one hundred forty two percent as compared to fifty seven point seven billion in two thousand twenty one
spk_4: our gross process were negative twelve point nine million or negative nine point three percent for the year and they're just that he did that negative fifty five night most of the cap acting cared for the year related to the to go projects
spk_7: seventy two million dollars with in for the draw plan and seventy one billion dollars including approximately five million of our and he was encouraged to the line campus finally additions intangible after that seventy nine million dollars for the year let me know any a minute i'm capital investments drive our growth project and twenty twenty three
spk_4: as signal we've tried to further investment tax activity although at a reduced a stars is what we did in twenty two
spk_7: for joliet we expect twenty twenty three get extra amount of twenty million dollars these investments should allow us to have the infrastructure in place for an annual production capacity of twenty five hundred battered by the end of the year
spk_5: for the battery facility be expecting to get back twenty three million dollars and forty kilometers with a goal of bringing annual production capacity of the one point seven gigawatt hours by the an idiot
spk_7: and fairleigh expecting her approximately twenty two million dollars and cap extra the innovation center and twenty twenty two expect that approximately fifty five percent are approximately twenty five million of the forty five million dollars in capital expenditures expected to be entered in twenty twenty three for the line kept it will be financed through the federal and provincial long ago to such burton
spk_4: let me now say if you were done liquidity and capital resources
spk_7: and you for he successfully closed a fifty million dollar offering of unit with each unit consisting of a college share and a warrant to purchase a common check the also really ten million dollars an hour a pm program during the holiday finally you do fifty six million and our debts activity including the revolving credit facility a government muslims related to like captain and on a new credit facility the stood up and ppg which was used to be fine and our previous credit facilities would sit album
spk_4: and of the end of two for he had a cash position and eighty eight million dollars we were also or ten million dollars on the government loans or the line captive for kept texting turning twenty times
spk_7: shortly after the and supportive we announced the exercise of the overlap that option for the unit offering increasingly proceed by seven point five million dollars he also announced failed his back transaction for bad reply building in their bank rate and gross proceeds that approximately twenty one as previously mentioned he expected approximately fifty five percent of the cat actually been kirby twenty twenty three for the line it will be find out to the federal and provincial at the end of the quarter capacity approximately ninety four billion dollar remain available for issue and under our a pm program
spk_4: while our balance sheet provides us with flexibility and when we will continue to closely monitor our liquidity and twenty twenty three and look at these opportunities that may become available to raise additional capital with that i will pass back the mark the concluding remarks thanks nicholas people we open the line for questions let me conclude by saying that a we are twenty twenty three with a good or do but in that were treatment actually plants gradually ramping up we up everything in place for long term growth and profitability
spk_8: i would focus on for needing this trend also you will be able to see all of over improvements yourself since we will proceed with the optional look opening about team new factory is year starting with a that of the that you plant displaying
spk_1: thank you for your kind of morning operator
spk_2: we now with them the line of question
spk_0: i just want to add you to the me to to the number of questions as to allow other and to answer that question you gotta post go back in two children if you have any food what question
spk_9: thank you if you would like to ask a question pp said now by pressing start followed by the number one on your talents hanky panky if you change your mind and would like to be removed from the key piece star and then case
spk_7: a first question state comes from might slip gave be a davidson might please go ahead
spk_9: good morning and should take my question i'm i know you don't usually give a a kind of been gutted that were at last few weeks of march you he was some kind of directional
spk_4: or range for the biggest new trucks were released the first quarter you
spk_7: but i'm i'm sorry i mean a person i mean trucks and buses course
spk_4: certain but get more he might this is that that mark things were ah thanks for your right you're you're a question yeah absolutely we are yeah we don't give you know i gave that you as you just that but it's going there will be from that the of men i drink at the ah night drink about in montreal just not reminder that you know we aren't them and i think about it one and
spk_10: units and we're ramping up in that in joliet as well so what i can tell you it that you know that trim that we feel we clean them are in the last fight wars
spk_9: aren't you know keep keep growing ah this is what we're expecting as well into town and twenty three so i said it i will time them eat the it see a constant broke one quarter to the other and this is exactly what we keep them what we we we thank you know will that will act in your twenty for you to you know from one border to the other okay okay another question of their whole bunch i'll just go to the other one here so this week out that out there were truck week i saw the last movie i love nice next time around the show as you kind of want to show there aren't really a new the many other class
spk_4: six shrug they wanted to other pets i the only only really euro graphics trucks are many know at the show i'm curious i had to show when to think for your folks them and be i i guess i'm curious why are we seeing a real of war is there really can kill him in in any be classic anywhere else i practically been in general are in short supply on the i'm on the actor yeah i bet you know we set it right at the beginning make a you know the classics we have right now is he is one of the kind of mean you know this is a purpose built electric to act like everything else we're doing purpose built but there are very purpose built wax are so it's not an accurate talk rafa mean that started to be anywhere it were doing you're absolutely right that either this is a market where there is almost nobody else right now the classic than you'd think that you know with some of the partnership ah that you know we have we to partner that we were out we were are winning wet at that additional so we feel you know it's a it's a good market for ask me feel better to act market the just at the beginning of this and you see that also you know with the at the order book at three hundred and one not one year that to us i mean it's only the being and beginning of that and whitfield you know that be exploiting crisis and the pulpit crisis and last couple of years at basically you know delayed everything by about two years and damn so we feel very good then you you if you if you want the floor you probably saw i you know the number of partner that we out there and also the intrepid be operators ah for our trucks so that's true you look for the class that great but that also to you know for the class age but also for the other marvel i mean that we are launching this year because after all go with years
spk_9: of working so hard on the those rocked like you for example the line time in the lie in a tractor i'll finally aiming are launching them this year and and this is exciting and mean all the operator you've seen on the floor and he beat the that he wanted the adeline fight while many of them and seen them already the are driving them and be a good thing about those operators the are looking a lot of them they're looking at electrifying the old think so did the whole fleet basically the are looking at their operation the at that very good understanding of the total cost of ownership and what that means that the and so much money and beetle right now and in maintenance as well that be are excited by you know be that the trucks that we have right now that one
spk_4: that are coming along so angry a question i d i think you know your what is it starting to see the difference between what we're doing and some of be you know the be the other incomplete incumbent a we and have i been doing bay which are basically took the retrofit you know what their current products oh okay but as just have to say but they'll have a question the astral or took me itself how you feel it when what be that the your forcing the good give you a charger cousin of is it said the on orders beats cetera
spk_9: i am sorry i might yet so the word talk show that we went well i'm in those shows it's always you know like the the while we we do it i mean obviously to meet them customers but we don't meet those shows to meet you know when the customers we do that already so it's really know about also well about brand
spk_11: recognition then also to lead to expose some of the equipment that the operator you know can put on be on the truck so when they're well i mean that part of what we're doing basically on their on a daily basis we keep building the brand we keep building via the relationship with the with the with all of those that of those that
spk_0: numbers so i think you know as i said earlier i think we're just at the beginning of what we will in the future but you know this is the reason we killed that market is going to be so big at some point this is the reason why we reserve the week three quarter of our it about enjoying it i mean for rocks at some point you know in a few years from now
spk_4: they appreciated ali with their thank you
spk_7: did you michael
spk_5: i'm next question comes from when one party eight with they shot on capital markets please go ahead than one
spk_4: yes thank you and good morning everyone or if you look or if we look at the order book it was produced feynman men cute three are you seen booking slow down given the macro environment and higher fine and and financing buffs if we look specifically for the truck venture calvin klein over the last two quarters so what what could explain this yeah i've been one next year that figure this morning know at that to europe or sparred your question no word we're not in a declining at that shirt know there's a number of factors in selecting a yeah the the order book can end up when we look forward obviously bp a program we expect will that will help with the order book comment
spk_7: some we asked we always have been you know that the smaller orders with a good number of operators that we're working too well
spk_4: the again and under and there are also that the bigger contract that we're working on so yeah continue to get up about the order book come forward i'm in terms of that market director of the question on trucks what is that it it's still early age but the momentum the building well and optically what
spk_7: we want it out there it is orders that but we remain that excited about that
spk_4: oh okay okay great color and jump on the liquidity front you were successful to get or or like me or or wanted to know me another financing and a quarter or if we look at twenty twenty three egypt provided great father about soviet also get at it what about the acquisition of and tangible them out should we look at that free cash flow burn up for twenty twenty three in light of the the ramp up an investment or it and your plants yeah lol up at that back here than one but when you look at your actually we had eighty eight million of cash on balance sheet and that the other december thirty first and then right after the quarter with our daily back when one million dollars and other than a half million from the younger like an option on the up at the december knew that offering we have the room all credit ability at two hundred million was about that and million get at the edinburgh he entered a month but at the end of the pursued me but we expect the boring day a completely agree at the as we get our and of course we expect them up from payments from these be a bird for know the the purchase orders and that program little help significantly
spk_12: as we as as we picture for those you know recall the media we had secured a hundred miles those purchase orders and that yeah orders and the the the specific guy that we're we're getting for twenty twenty three million five million dollar contracts for the go project of course will need to continue to the operation and there will be continued investment in in our
spk_13: jordan in the acquisition of the casual like that and but with all that that with we feel that the bounty provides us with significant rumbling like the dirty we will of course could eat explore alternative the the rape capital were very mindful of the market conditions than will of course try to use as much as possible number needed
spk_0: german and recall the still have ninety four million dollars from in the answer that could be one of the tools that we after the operation
spk_14: okay thank you very much for that part and given one
spk_15: the next question comes from chris south and with be riney chris please go ahead
spk_4: the guys thanks for taking my question here maybe a little bit more of a phd programs are one hundred ninety purchase orders how many of those were applications the huge piles were some the free agent that were out there then filed independently of it and obviously there was a really long way the the program in the first round and kid can you talk a little bit about the discussions with the pay for what they might be looking for him the next round and young construction timing that you guys think might be the case or or that are twenty twenty three
spk_7: rams yet
spk_4: yep i quit inserted that the first part it was like a that the the majority of those those purchase order that were secured work from the two thousand but we are speaking some some that the a conservative converting the free agents so that it going well and i think more importantly there's there's significant dialogue around the free agent so it beeping a time at the deadline or they called twenty you make that they've course the key priority after the company and that the number i'm going with the second part of the questioning what a liquid about the for the rumble or at the front around around
spk_16: yeah yeah the that there will be a billion dollars back allocated next year we expect that part of it will be vi yeah
spk_14: a reimbursement program like the one that template that a but could be a separate component as well ah boo end and we expect to hear more about in the first half of the here in terms of timing in terms of that the put the procedure and then the form of
spk_12: eventually of the attribution of that dog loss gotta look at all possible
spk_4: and maybe i'm on the truck died from with them romeo outcomes really going to dictate the time and for quite a bit can you talk a little bit about demand for the other vehicle period you had a big up taking orders in the third quarter and then matter and a bit past quarter appears to be seeing any momentum or you know customers we're waiting for kind of the ira detail around some of those sub even know what what are you feeling kind of you know now that the new year and them those ira subsidies are starting to kick in there yeah be acquitted the a different get the honorary elf research before he got a unit is good and and that would mention the earlier in the t feel the mean this is really the tool that all the operators are using our to bircher than rate know the peace deal with favorable you know most the in most of the cases so that the that the that's great we're talking about the lion fight earlier there's a lot of them with feel the in l l grumbling five so obviously we will be launching this one this year that same line by look the you i'll the electric ambulance on their the up the partnership that we have with the mares
spk_7: so this is good ally and six you know and we were talking earlier i mean there's almost nothing else know it nobody else in the market right now and and this is a big market also so we're we're we're expecting you know some good results with the lie lion six that it's a matter of timing
spk_4: you mentioned the lion a tractor this one islam we will be launching you know by in the year i you're you're absolutely right mean the thing with romeo mean could have an impact though on be on the launching ah date to that could you know the late the at the launch of that product but that being said though we we we have orders up with a lie in a tractor right now and down there's a lot of
spk_14: momentum also with the i would get customers so we're trying to to go as fast as possible them into luck to launch this product and the and we feel that adding like the full lineup products that medium you can they be duty also makes a huge difference because for most of the operators are the are buying a new many of those models oh every time we'd be a customer the can buy like a lion fix a lying in a tractor and also along and five so adding you know the full lineup
spk_7: is that is gonna be at something very specific to lie in that most of the other we will not be i will not be providing
spk_4: they the last one we would be a little crop provide any update around their timing or body because we need to hit smarter positive gross profit and or the buddha united and you're starting to scale up here
spk_0: what happened the an idea
spk_7: chris we continue to feel good about the that level economics obviously we're investing in scaling up right now and that that leads to some that some drag on the gross margin and as we continue to scale up we think we're it improves the yet the the gross margins and eventually a source thirty he did that well but i won't provide a specific timing or number
spk_4: and
spk_11: thank you
spk_4: the next question consume jewish kendrick expect canaccord genuity george please go ahead hi good morning and thank you for taking my questions i'd like to ask little bit about this the a program ends you obviously we're very close to our orders of being concrete manifests themselves materially in potentially your order book could you help gotta understand little bit of what your
spk_7: market share expectations are in terms of conversion well look i mean we're we're going after all of the the year the market fear are you know there's a clear rid of all the applicants and curtis which one that are free agent their ram you know there are dark them
spk_4: some areas where did you were having more step in certain regions but the idea of grassley the the focused on the regions with critical math than and and world where we're ready to deploy solar for their camp point the specific target market share but the we've already started delivering of units with secured audit nice purchase orders so far and as i mentioned the or we you get good momentum with with the free agents so we're looking to get much sweeter and then switching to the commercial side at like that a little bit about conversion there as well because the inflation or dutch that conservatives are out in i believe that many of your of your offerings are eligible when deal expect you know momentum to to turn their and to start manifesting itself and or
spk_7: reuters
spk_4: the moon
spk_17: or on your order book because it it feel i understand the that the of the tissue arguments very compelling or the incentives are very compelling that when the is sudden do you get me started the momentum on the piano thank you
spk_4: yeah mcmansion look we're we're getting good the traction in the discussion that say that boat questions and with the yeah some some fleet operators that are that are trying that unit than are looking eventually convert the yeah that the full week as well as with some some larger name that are thinking are quite big and there are a number of rt we were speaking with a few years ago that where what area do that in the last couple of years that though the dialogue for down and we're seeing that combat in in the that the recent months so it's it's quite chronicling epic what what's interesting about the ira forty thousand dollar tax credits is that it applies willie young broadly and so you know either on itself on it's own or a combination with other programs but just the something that that that that help scale quite a bit because of how
spk_7: broad the program it so
spk_4: we we certainly expect to get up momentum in the truck be this year
spk_7: and it would want it out there is that the purchase orders and so vastly they didn't for that in georgia yeah also you know this is on the us like and this what he doesn't know obviously though is that helping us move the needle but if you take a look awesome they can these sites are there are many programs out there like the in that and also you know the one that we up
spk_18: than internet and those are making he he while those will make in our opinion we feel a bit different as well so there are that type of money right now but there's also some other programs on the might as well like a trip ah program so there's like local money in many places and this is where we feel like
spk_4: that's what we're doing like the line ecosystem with dead the land grants and i'm the it's really easy because it's not easy it's not easy to manage through to all the money available right now and it's it's one thing that we feel you know we're we're we're doing well with the with our customers but many of those programs that me just started to apply to i'm well we spoke about the u p obvious before the school bus i've been waiting i'm keen up or for it for a couple of years and now will be the result of that but we feel that maintain i'm on the truck plane as well so there's some subsidies that you know just came available to be a to the customers so some of that plate let the new money if if something is something new put the operators but were very up to the on all that that and where we're helping them but we feel you know that obviously gonna help because the yeah yeah francona is is always a challenge mean when you're selling electric vehicles the mean that part of the challenge and that's one of the lead the reason ah we and disagreement with that with me you to bc
spk_0: and the and yes as well because we feel that you know the can nab the begun the need to plane and their product and disallowing capital solution we feel you know will really help move be at the needle as well
spk_7: so it it sounds to me like you say that some of the bottlenecks are really red tape as opposed to anything else that contenders because the programs are new and people are still working through a map
spk_19: and the paperwork so to speak
spk_7: and well there's yeah there's a little bit of that but there's also mean that that's a change i mean you know we we've always said it and we can see the difference between the truck business and the but business right now we started selling the buttons in two thousand and sixteen and now when we're selling buses and be worse than back then is that you know it it's reliable facebook to lead to make a living in been with those sprung up with both vehicle than now i mean it is that that question i mean that the anymore a bit that the people and most of the region now they're going full electric we feel that main thing will happen on the truck side but that will not happen you know like just tomorrow i mean those those truck operators their make
spk_4: the calculations with us they're trying the product and we feel that you know be will be purchasing he let the model number of units to start with a little bit like a you know we saw on the school bus site and dumb and after that the media will go with big with that big orders but this is what we're doing now with be out with the truck operators and obviously you notice that this money that he can use to were to too low where you know the front car is really gonna help i mean it's helping the pc here with helping them with everything it's helping them you know making those decisions yes at you and you on next question comes from kevin chang the key ip hey please go ahead kevin good morning britain particular question the get a to to to how you're rapping of labor here you know you quite a great color on on on what joliet going gonna be and and were due to factors gonna be in terms of production capability but i don't i get up how's your ability to to find had couch here in order to to match up your your your production target i guess of the next couple of years year and a maybe it could ridiculous occur comment on what turn overlooked by today beekeepers of the couple of years ago but with the new around with in your current facilities yeah the morning and is this would mark a week on that i'm talking about the much well actually to start with ah the manufacturing capacity for bucks is is that is one thousand units we add the equipment and we are the people to manufacture those units and so where we have a good
spk_20: page right now and dog be to supply chain that been an issue and and like that just earlier i mean it will remain an issue probably for next year maybe the next eighteen months ah but we're able to navigate through that you saw the queue for results and you heard my comment about the tram ah that we're going to so i'm is that it labor challenge absolute
spk_19: playing a mean are we doing i'm yes we we do have the people we need on the on the bus ride on the trucks type we do at the equipment we need to add to manufacture you know that fifteen hundred units a year but we are ramping up their labor as at need be because obviously the while you saw the order book at three hundred units and and the and also he we need to match this with the timing of be of the launch of the year of the new products so we don't see a a specific challenge or which we respect you know to adding that right labour on the truck site than that in montreal right now let me know speak about julia enjoying it were were doing fine we have about you know over one hundred people and right now and we've been there we've been best
spk_7: didn't and it's you add in the capek that nick with mentioning earlier on the manufacturing capacity we will that at the end of this year will be twenty five hundred buses so our decision with respect to the trucks as remaining the same we will not start investing in more talking past the i mean not on on the short term basis because we had meant by drink your best the of fifteen hundred units on now adam the montreal factory so right now we're ramping up on the labour in in joliet as need be but we have over one hundred people right now and damn were doing fine we're doing fine and i like that earlier i mean we will be doing a a a modest
spk_19: a number of beagles in the queue one and we will ramping up we will be ramping up on the the output in joliet to throughout twenty twenty three so that's great we started manufacturing twenty twenty two and this has gotta get constant ramp up so yes the that in our results from you put the for the widow of year but this is a
spk_7: exactly what we're expecting and you can expect that number to go wire them you know would be over one hundred that we have that
spk_21: right now but we we it only a challenge to recruit you know the the right people are but you know we are we are able to i heard the people that we need right now in both in both countries
spk_4: that that that excellent
spk_7: only my second question ill your the local order book or almost twenty five hundred via cold war or the for some of these orders came in john garrett point in in the cycle in terms of supply chain issues commodity cost inflation and and i'm just wondering how you protect the gross margin here as be delivered to that into that or about can get you have a a lot about the in place and and joplin facto some sort of indexing for the time of delivery or or or on on
spk_19: put this vehicle into the production line that you get made whole lot maybe unexpected call them more than what they have occurred over the past year or two or or the that fixed price contracts were you word with a japanese the cause and and and and the price lovely the federal tax
spk_4: kevin next year
spk_7: the word to answer your question there yeah yes the yeah the the purchase orders of that and already you're at a fixed price we have prefer seeing some and station in the delta purell over the last year eighteen month and that's reflected under and was march that does that that we're we're presenting at today we continue to think that the model scales really well
spk_4: and so beat the way to protect loves the to start with a level economic that that that that works well and we think that the case that said that you've heard up in the previous quarter talk about some price increases that we rolled out they are relatively modest price increases in be greeted them we're going to gradually start seeing those ah it through the piano one and because the are direct sales model we feel that we're we're we're quite bullet and can be able to implement those that those price increases at the bottom line it's really starting with a a unit level economic that works well in that scales well that's that's the case that a dog with the figures and shock i know you up and give you the number of on the tried cut as bit older but maybe just for from from a qualitative perspective and to do think inflation feel over the past couple of years here than it didn't come of this is turned into overtime but whatever a structural to do you think that materially change what we you the break even unit number was you know what what you know today that amid the what you bought a couple of years ago or or or had inflation the pretty manageable and and and you know that that that break even target is still pretty much the same
spk_7: yeah for sure it had an impact but i paid you know scale unit makes will help you know what what what are more important than just inflationary pressures and as i mentioned going forward when we think longer term
spk_0: you know that the price adjustments will will sort of reset that
spk_4: recall that we've we've always said that our objective is to bring the that priced our customers down over time for for inflation
spk_5: it takes up in a different direction in the very short term the objective remained that and longer term what that cotton that certainly had a delay in price reductions for us
spk_4: he can and also keep in mind that you know that battery that that were using right now i b m the bmw bad read them we we had sex race and we at forty seven under the go with in stock as long as we speak so loud did see as the this as an impact of about you know the bed with admin account for like the thirty to forty percent of the to the material a of a navy so this is is a very significant and got and also we're very pleased by investment that we've made in the battery factory the bad the factory i mean this this is get this is gonna make such a huge difference in terms of of of cussing and been at got a complaint because obviously you know where shaving cost i mean when we're comparing comparing to the others a week togo earlier about all the advantages of adding on battery factory in terms of you know a cooling technology and all that guy and better kitchen clean all of does but also better costing and this makes a huge difference and this is something we're totally controlling to this vertical integration so right now need for twenty twenty three going to be mostly the bmw batteries that done that we will be using and this cost you know as not really change i'm so that a big piece of our beloved material and it is something that really helped us you know managed to the completion although that this was a great point that becky their much and and that's a bucket twenty twenty three of thank you you the next question comes from can leave lately barclays please go ahead than a good morning and i thank you for taking the question on and it's want to go back to your comments on the juliet rant and plan to get to a twenty five hundred and or any like capacity by the end of year maybe you can just talk about them the gating factory you know that are required in that to achieve that capacity and then maybe to give it a little more color of how we think about actual your your one rate of production at that capacity is being a mock yeah was not for you like the morning that so yeah joliet three what thou with we've been doing and will be up official opening within the next you might do you'll be able to see that yourself as well we have we have more are each patient than we have you know i know that much all factory so basically know would be up the
spk_17: go in a few years from now i will be to advocate at your type out buses
spk_4: an an agenda get your it can be twenty five hundred bucks so sylvia don't structures of what we're doing now with the number of working stations which is about you know seventy working stations in the in joliet i've been at been planned ah you know for this kind of that of manufacturing capacity so it's a little bit left labor intensive we detected a little bit little bit more it in the automation as well with you know this was the time but good news though it back you know by end gets year with you know the capital investment that are we still need to do this year to get there after after the end of twenty twenty three when we're looking at the battery factory in a laptop at the that that that one point that seventy go up to our our when we're looking at the twenty five hundred units in that in joliet the mean there were all my
spk_7: on
spk_4: whip out which which capital investment and it goes plant and the think that much about were already only what we're we're kind of don't mean to the big year twenty twenty three for at because it this is really the year we're we're managing those three manufacturing plants and one of them i mean is already scaled up on may be going to school buses and the other two on the other to plant the mean we're we're ramping up what the are there we have the people like a lot of the a quick
spk_5: man you know are already there so it it's great that mean this is twenty twenty three it's really a big year you know app that lets like the kind of kind of turning point you know for for lions are basically by the end of this year if we hired the lever because we feel that we need to do that twenty five
spk_17: andrea the unit well band you know that this will get on that i think you were asking you know the at the the manufacturing base so it's basically like you know fifty units he a week that we will be able to do if we decide to i your the labor in that in joliet but
spk_4: you know you'll see that by yourself and in the equipment you know will be there so the equipment will be there and napster that to go from twenty five hundred to five thousand the amount of capital need it is absolutely not that find that you know the amount of context it took gets twenty five hundred so it it's that it's a lot more mother than anything we've been spending in the past so it will be caleb let the almost easy to double the manufacturing get back at some point and we do not expect we will need to do that before probably a couple of years after that but you know we are ready to take the market by storm and be be even bigger you know then we are right now when that that that i mean will be right oh thank you so to just sit and to read it sounds like to unlock yeah to unlock further further growth they're not a lot of additional ben required meaning you know there's not sure that that an underlying desire to manage expenses and to limit ah volume girl that that the abbey spending it is gone now ah well i mean we're we're we're very carefully managing the of a liquidity them in this type of mine for us and we're making sure we're we're outlining the at the order book a mean with the with are spending and be no doubt and that the reason we've been we've decided to go to one point seven go at our at the at the battery actually and same thing you know with respect to the campaign between lacking in in joliet so we're we're being very very careful about that that think that though i mean you know going from twenty five hundred in joliet to five thousand unit is is is very valid minimal let the at and the at if we compared to everything we've been spending the last so far because everything is in place to get to fight thousand but we will carefully managed and when we're thing on than like doing you know from twenty five hundred the python other doesn't mean that we have to go from twenty five hundred to five thousand and eight there are steps you know the we will be taking ramping up so if we need to go higher than that twenty five hundred because we're adding a lot of success in getting all the build orders we will be able to ramp up carefully and be in the cap expense or cap eggs and other than that meant are always about mind you know everything we're doing
spk_22: great thank you and then within follow up you were talking about supply
spk_0: strength still out as an issue maybe you can just hop provide a little more color on our the underlying constraints and he said you take the action the to mitigate that on what are the that like you
spk_23: it's something i didn't get those are the supply chain yeah well that's exactly what would be doing in the last couple of years that bad the mean you know we're a what what of the think we've been doing is that supplier we done and three
spk_24: in it going there well and also with that kind of it's almost natural that supply redundancy especially with what we're doing now like were the only oh yeah i'm ah
spk_25: in the on the school by side with which actually is on both sides of the border so we're robbing suppliers on the us they were having suppliers on the inside but there's nothing you know that prevent us from using at once upon your own the in one country and using it on the other side need the so that's one thing where i'm were doing at some point also what we did ah a little bit like young i don't like to take over start getting but you know this is a little bit what we've been doing and bit and in the past and i think it's served us well and the one getting apple that that number of batteries we have now
spk_4: forty seven hundred you know battery that is great and dad and the price and also you know was that was mine with the same thing with some critical component as well so that's what we've been doing are we like yeah out of the one on all of those supply chain issues absolutely not and can we managed to navigate through that yes and dogs the be up with we we feel you know we're getting we're getting you know better and better you know from one quarter together honestly i feel that you know the worst be i know but will they are well equipped to a for any other at you know headwind in the in this regard can we forward and we feel that will be you know headwinds in the in the in that supply chain supply chain crisis i mean you know obviously we'd be talking about the war also that mean you know in fact that that been acting all of us
spk_25: so there's a war that with the supply chain crisis you know for a lot of other weekend including with and all of that but i feel good that will well equipped to lie to protect lie and you know in our customers and those difficult times
spk_4: great thank you very much and you know the next question comes from rape at merrill with national bank please go ahead for a pet hi good morning everyone money will be so on on the call so far we talked about supply chain and it does seem to be limiting your production run rate and can mentioned these issues could be around for another eighteen months or so but in in joliet you believe you could add capacity to do fifty units a week by the end of the year
spk_25: if you hire new people so that it sounds like you think the supply chain may not be a limitation for joliet by the end of the year is that a fair comment well we feel that you know it's it's it's under control it's it's more and more i'm under control rupert let's let's put it this way it you you know the discussions we are like a year ago i mean that tone was totally different i'm right now mean we feel better and better about an hour good the supply chain a week will kill you know because
spk_26: gonna be up this is gonna be an issue but thought this limiting factor
spk_4: how we feel a is is gonna go away within the next eighteen months you're absolutely right so hopefully have mean in a in a year from now supply chain of mean will be i'm thing that will almost not be eliminate the limiting factor in one and are the are there any other limitations to the production rate we know the order book is is big enough but are there enough of those orders that you could deliver on this year let's say to to produce a that can run rate i'm well there's always gonna be at that the final approval leo you know what at v the than all of that but it's going at it going well because most of the most of the order that we have you always rely you know unknown subsidies but you know absolutely no red flag it's going well but we were are aligning obviously you know the yeah
spk_7: the the dead dead dead the subsidy the mean with be at the delivery schedule and also you know when i was talking about that were ecosystem in that as making sure that be at customers are very well equipped in terms of charging infrastructure to it's the are the buses and that be arguing trained is is is all
spk_4: always something you know that is cup of minecraft so thank god you know that we had this lie in energy
spk_25: that we've we've launched know several years ago we feel this is making a huge huge a different mean in terms of with the operations on a a be of the operators so i will cut you know for them it's really receiving the buses and trucks when they meet them but the need to be fully prepared to receive the
spk_4: them to make sure that it's going to be a very very efficient operation and down i killed this is something that you know throughout the years we became very very good at doing so were you heard me talk you know lot of time about this ecosystem i think it makes a huge difference and i think it's wanna get that big advantage we are when we're compare and to some of the other we have that are selling to the others not easy for dealers shoot to take the lead to be a be turn and the equipped themselves you know with everything that be need to do that and that's one of the meat and with decided to sell direct and ah i think it's serving as their well a that's like that and then secondly on on the battery plants are you believe your capacity could be one point seven gigawatt hours i i think you said that's enough for five thousand vehicles softly by the end of year the battery planned capacity could be greater than what you need for four years internal uses are you contemplating using any of that capacity to sell to third parties or are there any other ways you can optimize those that oppose operations for a for his and same proving your margins it it's always an option rupert because this happened is capacities going to be there and you know the reason we're we're scaling up to one point seven and i mean it's a matter of automation are almost everything is automated you'll see that the mean will do and opening i probably in april and you'll be able to see that it's a very exciting operation the camaro automation a matter of that you know first thing you know that like water at robot so we talked the one point seven gigawatt hours you know what the right number i'm yeah you're right i mean if we're selling only try to me that will be like twenty five hundred trucks like deep were selling only lang lang and a tractor if it's only button is it's like you know ten thousand and buses so we do have and poke ass in this regard
spk_25: we're not planning on selling hour battery packs to anybody else right now because time is the time that and to market is up yet as well right now and doing this you know for other william mean means a lot more
spk_0: you want to do it right the me that meet a lot more than just selling a battery pack that will mean you know integrating this that and this said that the battery pack with their there are you know the be there at their current trucks or buses so we're talking years for it you know those orleans to integrate those packs and the
spk_27: it is something that mean incumbent a we have you know through it with a year that been a with the understating but it takes a lot of time to integrate you know a battery back on the on a truck on the bus so we're not thinking about he need like short term option like now because we don't feel you've gotta serve us well we we want to keep this capacity because we see
spk_4: feel that we will need it
spk_0: i'm on a short or medium term basis and we didn't wanna make sure that we're fully focused on selling be at the lion products and getting the better costs also not an option for now
spk_28: thanks for just one final follow up on that battery planned are there any other limiting factors on the the capacity other plants died you have any supply chain concerns for the battery plant or and it's mostly automated some mentioned few labour concerns any other concerns you might be to hit the the
spk_7: run rate
spk_4: yeah no labour concern you're absolutely right the me labor is not a he let a banana challenge the supply chain is always a challenge so we ah i should say that you know we at the displaying supply chain challenges then we have you know for the other read or of our operations so we'd be where we know the lead times you know of all of our suppliers week a solid you know agreement with the the cells which is teen what car in what we're doing that we've been out that last year so does this isn't place and this is very strong and gum we have a long term relationship with most of those get one suppliers as well so we didn't start with most of the supply years we didn't start building
spk_7: this relationship just lately any many of them neck and we had them
spk_4: at suppliers i me for many many years so it's a very good relationship with typos partnerships that we have with with suppliers so i was the in all the commons have made earlier about the the supply chain and you know the challenges for the next twelve to eighteen months are the same ah but you were we we navigate with or with and we manage those supply chain challenges you know the family were doing for the rest of our our operations right thanks very much on only bitter and your rupert and next question comes from microclimate raymond james please go ahead michael oh hey i'm everything fanatic thanks a think you god
spk_28: i next question comes from abby in half with northland financial ib please go ahead
spk_5: yeah thanks for reading in and so the out one question on on the in the last lot i know you have either lot of is his anyway you can quantify the impact that on revenues are on top of number of unit one bag that impact could have been out lot of it
spk_28: was barely different north like an impact would that would what revenue the are they in could have been
spk_4: yeah be any not love not the to say obviously you know we've been managing goes supply chain challenges that we been irene you know the people we need it accordingly and with our our our production schedule so you that you couldn't use that you know we at the a good solid order book and it is where it's dark and when you're looking at the number of buses and trucks we can do were very well equipped to do that but you know i spoke about this earlier i mean i think you know part of but we were being very care
spk_7: with you know the capital that the capital and than capital spending not only cap that it's also about optics also about operation and making sure you're making money on every single doctors and truck that you're selling and damn this is you know at this is what whereas this is what we're doing so love we we align all of our spending a call
spk_4: returning to the economy can't conditions including including everything so not married be kind sir i mean if there were no supply chain challenges i meet you know how many units we we could have done but obviously we could adnan a lot more unit and the want that we did last year and and did you play more issues on the cat outside of the us and the supply chain would say it's on both sides of the border of be we have a lot of our suppliers on both sides of the border the we're trying to be as local if possible but what we're rob it's it's really like the i'm a london got and the and the called he you know that our top of mind for up for the we add yep suppliers and yeah that we have suppliers in the united states are we have suppliers and some other countries as well we're trying to avoid the way the authoritarian drunk reason we will not need as you know you know we will that that be doing business with the territory and country than the in a few years from now but i won't out i don't think there's any significant difference between us and canada and us right now i think it's really a matter of understanding and really knowing your your supplier because they had their own challenges sometimes you know the will be manufacturing and some other country as well for some component that they're putting into law that the component that be the the are selling us though our again it's really it's a very close with them and make sure we understand their business and and we understand their lead kinds and the we have a full full transparency on the on you know the be when the will deliver that the products but i don't see anything nick and difference between the two countries thanks for this one laugh isn't that good on the back to me if i understand that you know you switch to be in that blew a little for more robust more popular bakri then you are making your own and credits or like what if you could provide some color what the differentiating factor and i talked about the cause of is turning out that add guy with his struggles paid more pile or and one way
spk_29: hundred up to the margin immediate my act for you guys in terms of any kind of politician the how it could have would that be
spk_4: well abby there's so many differences between you know our tax and eighty back you know that you know why in all you can see could be buying you know from my from mad from battery packs our suppliers first of all the need those facts are like the custom made you know for of the and products so it's a perfect weight and balance of our trucks and but
spk_0: his and the operators are saying you're seeing a huge difference
spk_7: because of that so not only i mean it it a better driving experience but it's also it's also safer for for for them and it's also a way to put more kilowatt hour need like we do at a modular approach and the we are selling in multiple that seventy kilowatt hour a one on your title to the an hour as well so basically you know via the customer you know can buy and into the money in the number kilowatt hour didn't need for their operation for that's a huge difference in terms of technology as well i mean wow it it's like night and day beyond the efficiency we could get from our battery is is better it
spk_4: and most of you know the feed the technology that we see out there right now for many reasons i mean the bms is really hated the arts to the baby management system but also the began as the term or management system state of the art
spk_30: truly you know cut the make to the lion battery as well and the users that we're doing you know with the alliance trucks and lion buses are but also i mean be on the we charge like you know that could it that the speed up the the charging peak for the i you know the it the customers of for the operators it's it makes
spk_7: a huge difference on now you know most of the operator than and all of the operators on the truck site are using level three charging stations and we became very very good at at all of that you know which affected the level three so right now mean we're at three hundred and fifty
spk_17: a kilowatt but you know we're working on on getting a lot more than that in the in a short term future so lump
spk_4: the fought for a lot of operator that you know are using our to act like twenty hours a day makes a huge difference so charging speed as well but also i mean the cooling system will affect you know the deficient get the battery it it will attack you know be adept at the charging speak for the bad read than as
spk_0: well but also the life cycle so when you are able to cool your batteries in a timely manner well you're helping your life cycle so your life cycle is getting is getting better also and we feel that all of those factors you know are making a huge difference
spk_1: ah now you've been asking about the gross margin
spk_0: nick i don't know if you want to come on a comedy anymore of this yeah don't look i just say that we're back to get up

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.