The Lion Electric Company (LEV) 6 Nov 242024 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen. Welcome to the Lion Electric's Third Quarter 2024 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Dominique Perron, Chief Legal Officer and Corporate Secretary. Please go ahead, Ms. Perrone.

and to press am Quarter our that here Nicolas results our Welcome Call. Results CEO differ our everyone. Chief could and Brunet, I our that estimates Today, with President; forward-looking discussion afternoon, may Lion's Please and XXXX Third Conference Founder; Financial include Good Officer. Coulombe, language other note information Richard Marc actual Bedard, and release our various We those in invite such you me in over Mark implied this actual the review factors, could turn from which afternoon's materially MD&A, to let our statements. to cautionary and regarding our With contains risks in to information that, begin. results. it impact any important that assumptions

Thank deploy the for significant our in towards Lion. Dominique. joining quarter, liquidity build afternoon, for position last the march foundations long-term you, us efforts to team both Since Good at continued and short-term of improving the and everyone. you success our relentless Lion today. Thank sustainable

announced, implemented we these multiple and streamline operations, impact our the seen have our have previously cash outflows. on we initiatives to As of

approximately result We reductions initiatives million. to other savings and in $XX of annualized cost have expected cost reduction initiated headcount implemented

maintaining We leadership our orders production while directly and in manufacturing in expenditures market. have to the truck order approach a our size truck implemented burn cash purchase batch electric to business, tying to minimize

to the selling Despite battery signaled in entire third starting are packs maintaining significant put timing sublease position production from the exploring we a third and our program, to quarter The reduce to cash aiming year our our formal the a flow XXXX. standpoint. launched in pressure the plant. Federal program reduce challenges production movements recently our have facilities-related process plan the cadence to to the alternatives liquidity on rounds EPA U.S. footprint. a will with impacting both company had execute expenditures the being impacted in In ZETF of negatively on capacity to we current continued have half EPA the first And portion the Canadian associated we while our positive ZDTF substantial the facility programs a the seen delays to said, parties Finally, various [indiscernible] at That expenditures we our in be of liquidity parallel, our we continued initiatives, in that few and that and of have in our these addressing continue across minutes. production we revenues. start

have challenges may concern but reflection As of options. as the and additional statements you months the if seen, is the funding ability going inclusion continue company's next we concern note going existence our it of interim uncertainty is about a MD&A over mean XX to a financial no not the we signal are of that of currently does facing, The raised. are out a

best and the in relief our maturity. path position the review actively sustainability test the our with our the holders to while upcoming the final period different of and light CDPQ and to debt working to to strengthen financing of continue additional secure We COVID-XX debt of financial expiry business identify opportunities consider ensure long-term

some to of Turning our quarter attention the third highlights.

fulfill obtained provide grant under We expense other details more to with and And million continue formal obtain with work to the from payments actively the EPA requirements reimbursement Nick are orders positive momentum $XX will customers rebate and payments purchase receive seeing round program. ramp. totaling the to shortly. also we

we been to under being note constructive the the the happy are dialogue improve as program, with processed. processing informed recent to We applications have and by are that their government continuing applications of to several of regard operators are and been that work Canadian the ZETF has operators the closely we in timing this the

also to XX, in inventory the QX raw of million which reduction vast our majority million alone a September reduction plan and reduction $XX relates with execute year-to-date on inventory to of continue as materials. We a $XX

therefore, well aligned to on realize XXXX very headcount received from to producing performed inventory up focus and in platforms. Lion commercial preserving continue million existing our production on result we vehicle respect $XX reduction to battery With Lion are, of and been has have of platform. new buses to Separately, with our We reductions to as the and feedback and positive allocate this a proprietary delivering ramp customers production of the development, packs School our the XXXX. AT resources a liquidity thus Allion pushed

the as position, Nicholas. our financial I we us tirelessly and initiatives now the earlier. very is to our this focus maintain continue strengthening costs as liquidity remains it to a preserving demand is a will adjust significant mentioned the us our to position our support on structure, the towards to substantially electric forward, future. and CapEx the to allow will challenging work and increasing spend in and all development positioning to leadership reduction clear that of ourselves company behind we being XXXX position turn it With bus year, vehicle in and With platforms completed, taken segment. to cost continue for our will efforts work Looking result school

Thank you, Mark.

by the Let deliveries, me book. address order then discussing start

of a XX vehicles. in continued also During the the related ZETF was batteries result The slowdown the deliveries to and the to with the ramp-up onto our in program, XX in our production XX U.S. in delays coupled XX XX our we quarter, of the deliveries. delivered Canada were vehicles with Lion and integration timing by EPA-related mostly decline delivered trucks. were vehicles the of Deliveries due cadence impacted buses comprising

of an XX. XXX who quarter, this Our buses quarter. third include to XX under liquidity production objective deliveries client bringing approval impacted the the ZETF for delivered to program rate and buses obtained buses during to our last to deliveries our preserve QX also additional the customer funding total

the order this remaining be expect over remainder the to of units and over XXXX delivered from XXXX. We

The units book In of total November million. as bus $XXX our trucks, approximately the order of value process at mainly terms ZETF orders related to vehicle vehicles, orders, X,XXX book XXXX, decrease current order are of combined also line truck commercial momentum Lion's over stood resulted U.S. the withdraw application related due XXX School X,XXX and order is Clean to buses the in related in XXXX, program, deliveries given a representing decision seeing with to under have and delays purchase the The our XXX of ZETF the in uncertainty of to to the consisting orders purchase Line delay book of from XX X, program the the removal Bus the with of EPA order program for today. our XX, XX we March of in the the order book. launch in program. time production of as XXX Separately, the

work In We under with school round, of and with obtained been a rebate awarded districts connection line the have $XX are have rounds requests purchasing of XXXX the continue to with grant placed that EPA. additional vehicles. and number considering the and contractors payment been we million payment

payment with customers to requirements requests work actively fulfill rebid place to round. continue under to necessary the latest We the

in September rebate with deployed heavy-duty XXXX. to allocations XXXX February and are XXXX. all until electric January bus. tax charging program, over May Other to per priority other by the credits districts districts electric an Clean expected the and available of total Bus was in announced Altogether, $XXX $XXX,XXX addition rounds be announced of Program submitted EPA stacking school of An selectees for programs $XXX,XXX will XXXX, new of for be new to School for for to program buses Bus will funding aggregate of the notified clean latest state a permitted. result September expected round, X in which School the million. providing EPA are the infrastructure in a be the Applications in of can end and round Clean up certain Additionally, inclusive to receive XX,XXX total buses with be expected federal are eligible funding in XXXX, by aggregate being XXXX

are success X million the by now Lion traveled having delivered its proud EPA program program Lion under with achieved We miles. and over the of the vehicles customers under

featuring our of array C During This consumption. Unit in to facility's customers, the a by state-of-the-art buses, positive Herscher the federal a the XX investments school energy example dedicated new unveiling offset energy electric clear one of all-electric Lion have. Community solar way is School can bus that a school into the its for clean District, led electrification quarter, third barn bus impact initiative

book performance. order approximately Energy stands now Richard Lion to will currently it to our turn I million. $X at discuss financial our over Finally,

QX, with from will and continued costs driven unit quarterly we to impacted discussed increased commenting unit and on $XX.X Nicholas. you, factors X resulting of profitability. D our start ramp-up integration Nicholas. Thank models These of manufacturing revenues, by Marc liquidity due In QX lower Lion vehicles then both Lion by and also the of new discuss I position. revenue onto by million, results sales lower already will the our and Lion our batteries continued recorded coupled

million. previously announced gross and down million we the million from materialization QX. million was down continue was EBITDA and $XX.X QX, was of over negative see SG&A prior $XX.X to cost-cutting $X.X QX margin positive and Nevertheless, negative million impact For $XX the of measures. year $X.X

to amounted last of of last down a significant $X down CapEx from saw from million million and approximately R&D, respectively approximately $XXX,XXX, which of year CapEx also We R&D $XX $X million, reduction and year.

on to Now liquidity. moving

available $XX As had of XX, September million. liquidity approximately we of

inventory of make months the the million to vast reduction. good We XXXX, in related raw by to which first QX continue on million our $XX decreasing majority reduction inventory material of $XX plan, progress and X for

inventory is additional from by to million the stated facilities, to to September $XX objective XXXX X from covenants previously October relief XX XX. announced providing to as now for year on to lower-than-expected $XX full certain loan $XX million sales opposed volume. reduce November continued We financial due million various until Our amendments approximately

upcoming to We with end the are the maturity relief and of loan. in lenders upcoming of the CDPQ period continued dialogue address Finalta

of seeking are strengthen source As stated opportunities balance over pass our also by Marc potential to concluding it I we other sheet. Mark, to now and/or remarks. financing will for currently

by whole the continue to be electric support as on vehicles very Thank Lion headwinds more X,XXX facing, million than the to the we our miles is transition demonstrated their road. equipped and well driven Richard. in operators XX the on you, industry the to Despite

our to business to we materialize executing objective us a our XXXX on strengthen very the cost that attack be announced and initiatives with efficient all fully structure for continue of the Our to strategy. continue XXXX balance liquidity to position to is will allow prepared

our clients Lion our mission trust to thank commitment determination to like our for at would fleet. I in of team the and electrification and their for your Finally, their Lion for

questions. for line the open now Let's

first the from with Our comes Instructions] Kevin question CIBC. [Operator Chiang company,

Maybe just over for in the me. a Obviously, U.S. new administration X

Just suspect of I wondering, school impact electric just I how the that adoption the meant mean days subsidize here, programs some you of it's and to vehicles. commercial buses might think early

of pushing in the was stuff that Some maybe we're that terms suggests electric. vehicles of the lessen hearing the to regulatory efforts some administration more of previous they'll converting

and Just sales strategy wondering moving thinking your you're change how forward strategy? might your -- maybe what that

Yes. Marc. is Well, you thank for your Kevin. This question,

point, early think this at say be. to to think going the I impact what too exact it's is I

And that obviously. within with there will know, that well right in we're administration underway funding But right terms the that to the from the now well. we're should that in be thing of you the program lot EPA of few to issues next probably districts electrification, XXXX, on was some bipartisan Obviously, collaborate bus now, And already crucial a OEMs. as one and out well. We ready note going working as school months. is and working coming law energy finding are and very we transition, to is new school operators, infrastructure clean was it's there probably also

to should subsidies Texas, lot something Colorado, California, York we -- Michigan, addition as the note EPA. lot And state to a in in New well level. of And at a and well Illinois there's few, them the just there's of the as is a name

I sounds -- the to days. talked it's you and lot Maybe appreciate it That's second it had that some of question, the taken. my had early was moving impacted parts that you helpful. of order you about the answer a actions like And still stuff given Nick, book,

happens your I from out, units the kind do your a were XXX end you program. days? Just units? backlog the of lost think, maybe Or at units that were these called how like past what of some the You expect because orders view point? delays XXX you to are ZETF guess removed question, just to proactively that related XXX I XX guess, those subsidy removed I the in program? over that reenter simple to Would

before to that removed let's order this purchase the start say And Kevin. program, the It as Yes, line the can estimates is that calls not customer. ZETF order XXX really And a by for a the look over cancellation let's at when March saying to of is that the which approach we current disclosing XXXX, time be our by make we delivery hence, we time line, book. delivered period. to have from units what book.

Now with good momentum dialogue second with worth to some that but the back? also have your order we today clients purchase some that part hence, ZETF we question we're The bring intention some some have disclosing -- processing. is, -- of seen the work seen have answer adjustment. of good is had and of the book the saying your and of It's to to the course, as

despite by the we that the seeing altogether, the we're part were of removing ZETF. in that some So book, order of movement encouraged

question with next is The Davidson. from Mike D. A. Shlisky

Mike wanted me hear guys to okay? up here Davidson. Can you just I on price. It's the with you follow Shlisky from

can hear We well, Mike. you

Great. Okay.

lowering prices get of coming just for I your sounds reductions down part customers the your buses EPA on rounds But some just from to your also prices federal and can planned on Or match sort keeping you you are the whether the subsequent subsidy? are like similar are are school of program finding So to in It top of that subsidies price happening, are your plan. curious that kind the and comments the EV you pricing. the prices that's there EPA be mentioned list in I'm subsidies. subsidies of the elsewhere? want of stacked additional

EPA cases, certainly in the some our generous. and in Yes. subsidies views, from program Mike, the are, adequate

other that $XXX,XXX As on for and those nimble. And be stacked I is in it competitive to you think vehicle of Look, that. do with are the with what is with infrastructure, when charging the subsidies can attractive. and credit mentioned, pricing up the to the is compare industry. a $XX,XXX tax But latest that to we're subsidies, to you have looking there's that round very dynamics volume the federal goal including our altogether, be Canada, pricing is are and coherent to in

the there's -- a traditionally commercial the of come it's levels. on as cost matter vehicles, and at more which of is very the of down course, ownership Of these ownership, for those room and subsidy operators total selling the as for of attractive total an out-of-pocket operators, there's cost purchasing for really basis there's for

So our it's dynamic. to -- is be goal all

given positioned, dynamics the those remains sell of medium- And the time, to over adapt course, to to, we're long-term market. play. at vehicle objective But changes down. believe, the to Our pricing there's many bring that in of well we directly, we

the your to about in Okay. delivery quarter. fourth I ask cadence wanted secondly

and can numbers, delivery reduction. a your trying fourth being had the that just I able see sustain very to X cadence the the I But I'm in to on make at to inventory Richard, comments I at you look sure into I you minimum. questions. third guess your As path quarter appreciate your quarter

You plan to have but deliveries. fewer you in days have the working quarter, less

these coming cash you've you trying or out whether coming buses. build the just to from to U.S. in I'm other government So allow will got more figure money that all

quarter a cadence having numbers, all. Just seeing hard the the a in increase with time at fourth

looking timing work objective other this funding. in right of to inflows, gist with the provided the expiring I'll I the end relates now liquidity our of the We Mike, remarks, it got of look, as lenders various liquidity various is little mentioned to of and speak as enhance context the can't is to say come stage the -- sheet, it, We subsidies flex to the also updated balance difficult we understand prepared and at period. if in our in the alternatives side. when this of bolster was QX. our we're But the And the what on a of the financing. at as

from with Our next question National comes the Bank. company Rupert Merer

say think under XXXX space? see can I about you heard you DOE to And potential program. And up the vehicles those what the share you talk of in XX,XXX programs, I for you there's of Is that by some competition the that did business right? target?

Yes.

we're ongoing, X the there's the are So be grant and allocated vehicles, right, you for there's the be XXXX it's rounds -- where not EPA where XXXX. some by there's correctly XX% allocated, starting a that as deployments starting been certainly close $XXX or for it you Rupert, round was heavy it's heard to then applications XX,XXX clean some when that, million some see rebate On starting but I'd say, the launched is the due $X the with that was there's deployments round Recall up what to allocated, allocated round duty. current well. there's and buses. to -- that there, where X, funding was of targeted to top that the school billion that And are -- add of January

specific, together, that all to math deployed or X to school years over be vehicles, leads buses in so. So that be next the would XX,XXX our

been like In vehicles many both sell space and well, are terms the are changes, and EVs. on there it's incumbents players focused are a number ICE Lion I competitors EVs then environment, competitive some I wouldn't that mostly think the of right? -- don't the there's in fully that that of really There's

We're possible. of buses looking leaders the what of we're share. in among at certainly mean, obviously in registrations in market America terms market to electric trying you'll as appreciate, share In the North targeting share, terms today highest school we're I get at the

to obviously our share much and market -- is continue increase volume to can. we goal as we capture as So

do Okay. you think up? hit would Great. to production what the if sort to of get it changes you And with your your How back cadence were orders? production capacity, production could easy you made be you to receive

have you equipment, do the as we Rupert, know.

the of it's manufacture right people number buses. able So matter of a having be to to those

were saying have capacity now. But I about we some we're at up we manufacturing really very ramp And of top liquidity is mean, managing obviously, do to earlier, the this mind. cautious As point. right

liquidity. the investigating are runners point? liquidity, and All right. follow And any quickly be the at more looking you're options up if on us I maybe improving what just this color then could you you for options give on at would Can front

Rupert, I this speaking to can We're our the options share. have in stage. we context only looking course, at flex of as more details details expiring reiterate get said, financing, but with at we're various what it we relates to we can't into period. once we share, And of lenders the will

to There queue. to this back in for the are pass hosting more no remarks. closing like time, conference registered team questions I'd over At our

everyone, Thank any free nice contact you, joining evening. to and a to call forward look for you the for follow-up us feel have. Have continuing may today. the questions We discussion

Thank That for your today's and your conference you will participation, conclude day. call. rest enjoy the of