Vicinity Motor (VMC) 15 Aug 222022 Q2 Earnings call transcript

Greetings and welcome to the Vicinity Motor Corp.’s Second Quarter 2022 Corporate Update Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] 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 recording, 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 defer materially from those described in the call. Please refer to the company’s regulatory filings for a list of associated risks and we will also refer you to the company’s website for more supporting industry information. hand Executive over Corp. Officer to Founder William now Chief and of like the to call Trainer, I’d Vicinity Motor the yours. floor William, is

to second operator, you conference you, and afternoon, I’m Thank good call. to XXXX quarter pleased today’s corporate update everybody. welcome

quarter to by government sales The partners agencies. to traction a electrified adoptions electric wins is vehicles. of and further vehicles the was in new of program. in we’re government strategies, EV receiving customers for future. testament portfolio from market for This From our to such incentives enterprise electric XXXX an The support incredible validating optimizing distribution quickly marked second additional as electric for our interest financing transition new is the sustainability vehicle-as-a-service

supply be over others. in our second million continue automotive continues facing catches engineer areas work to they are XX demand, address problems backlog of which We to issues arise. stretched, that electric time the as new creative The vehicles it and in together, to new industry until chain majority some grew for to solutions supply the we’ll vehicles. delivered such to while obstacles up surmounting $XX global chain new quarter, Taken to

That Our said, XXXX orders as despite provide XXXX. financial pushed current forecast be makes prior are continue possible. we goal chain the are given it difficult guidance a is we’ll and may our seeing, to many suspending vehicles we to the from continue customers environment, to being this to it extent supply appears environment to greatest and to our to so pressures do

an demand share U.S. us facility in Washington Ferndale, compliant customer completion, with helping America’ capture market meet ‘Buy is product. and the Our to American-built nearing

our truck electric We new on starting to VMC the this the line industrial XXXX. with making support home also plan

additional Oregon, an that established across costs well. Hawaii, Idaho, build energy Adding great us Pacific help Islands, range, States second strategic the Washington, customers and traction continue our during will region daily electric Alaska, the world and to options entire of Ohio, We United territory in the the the in providing operation. U.S. dealers expand required central real distribution The Michigan, to Indiana, quarter offer and as dealers from speeds while expanded ability mitigate exposure carbon to all the

I’ll results Now ended for financial over June with to XXXX. the that, Dan? turn Dan our review quarter it XX, to

to press filings A market is you, financial Thank Good and refer will release a adjusted the afternoon, EBITDA Please our breakdown William. constrain note measures. portion other non-GAAP and the review in full wire across everyone. to regulatory I’ll our in results. of today. I after my brief available closed

to the refer on adjusted other EBITDA is and For of the non-GAAP calculation please QX MD&A, available SEDAR. which measures

in as of the compared months for compared for to $X.X compared XXXX three EBITDA XX, ended million half for stated loss of XXXX, months XX $XX.X to $X.XX vehicles six XXXX quarter, in the dollars million, $XX.X million the $X.XX an XXXX. decrease ended June adjusted equivalents second delay $X.X as in otherwise. compared in $X.X compared of XX, million The XX, vehicles to June net supply for million, ended deliveries. deliveries chassis EBITDA of The in to XXX cash Shipping to months as XX totaled XXXX. activities $X.X XXXX. compared share, XXXX, million, and ended ago quarter. of the as first six XX, compared revenue, Adjusted to disruptions. XXXX December of XX, for a an to compared the ended delivered half the as million, gross the Gross XXXX totaled in June in compared as June $X.X EBITDA supply for or of XX, of second per for in the XX, $X.X the XXXX. ended ended global or operating a products ended XXXX. the for loss quarter XX, quarter the $XX the for of result months adjusted by profit $X.X $X.X in XX, first ended six $X XXXX. XXXX June by months totaled our was XX, second XX.X% Optimal was months compared operating chain Revenue XX, million, cash profit continues the revenue, net deliveries Gross of share, of to ended were million of quarter $X.X June company in June million components as chain and of Gross delivered. as global million XXXX, Cash year bus the delivery driven half $X.X June the as XX.X% in quarter VMC ended million the unless ended all second revenue of XXXX. June revenue certain in XX or million, June X.X% revenue the as of the six the compared margins Cash X.X% by Adjusted volume of was or In totaled difficulties or low million, decrease product as primarily XXXX, six U.S. XX, of mix the Net loss totaled availability the the June to the provided totaled of in ended months to six disruptions and million as $X.X of and or with activities million, six quarter same the XXXX. quarter EBITDA as as in June June loss June primarily of million, XXXX. provided by six are XXXX million in was XX, months $X.X XX, $XX.X addition, quarter to to buses of first months $X.X profit of figures loss income totaled XXXX, Revenue compared affected $X.X to the million, six XX, Net months the million, for $XX.X XXXX per of for XXXX

We the execute operations have fundamentals of positioned a to well balance and strong. our strong sheet remain are

While which begin now we offer environment, it operational high suspended session. XXXX. our have of are guidance for supply back remains a and strong chain year demand to to question-and-answer we for full the William given in level we’ll remarks after some pass uncertain execution I’d like an closing very to well positioned XXXX,

you, Thank Dan.

backlog. strengthen us for of deliver a in are facility position coming ahead ramp $XX and we million productions as supply chain and significant Looking ahead, up our our expanded dealer growth network, new months U.S. upon online the

we’re look to like additional transportation We sustainable our the continue to to forward create long-term as providing system. positioned operator begin incredibly value to months customers our to to And hand to shareholders public for we I the that, empower believe updates well create it Operator? more to over come. question-and-answer our in I’d with now period.

William. with Souther you, ahead. session. Riley. now Chris [Operator Please comes The first question Instructions] Thank question-and-answer B. go with We’ll the begin

of how ramp guys you start chains working now what Maybe Hey, bit in just which could some do we right Washington components as changes from are we dynamic little kind vehicles talk challenges capital a we thanks question are most and ramp taking we for of suite, right effective? and about given there are as up to the about are supply guys. this the biggest challenge up thinking my think How needs do a now?

Yes.

Chris, Thanks, Will its Okay. here. Yes.

We have to supply immune not issues. chain been the

problems the out They’re affecting some processors – we just the it, look You chips our holding buses any vehicles have building our We specific there. like some really issues lack at components competitors multiplexing in that’s of buses had suppliers see the some some where of one with our for see of that parking plagued that, and that are and biggest with bigger and We’ve getting it’s components. up delivered. micro deliveries, issues. of that’s small

it. Got

Okay.

more are you whole products kind similarly So that basically the have? Or guys kind of affected? specific is kind fleet any of of

the out specifically, would see, issue multiplex have we issues, had be, some main I the there. but we much competitors our not No, guess that like

second Ferndale. do your to there think was down I in factory with the question

planning as well. couple we quickly completed then here intent QX in the – our factory. should running of We and of we – as it’s And that completion as are had up can. down have note, a substantial there to We have on get it we issues

got to what inside unit switching indication one gear down chain really While were I’ve really had brings there. switching board and from supply there building. seen this the having And the would factory a that pretty grid say with of I meeting week. be that that switching be would of say we completed there we unit facility we’re that power electrical nice for are issues as we issue running And it’s I an only the not from the down the that the I’m would issues that with the – long main real sure, into a that but how extent with factory. But looking might it the one just was the at we that

chain Okay. do the that for And or back we and the in shaking do other of some XXXXs delivering looks volumes start given vehicle Difficulty] third having with the Got the some slate challenges? the kind supply quarter kind that in you to out visibility it. order book of near to it see [Technical how on then EV we’re the ones of based term visibility just like half of have

can. vehicles Well, delivered many as to as we we’re trying get

XXXX the not stated, issue. the We the has VMC some book, as as of problems. The has cooperative been have anticipated. just supply the not sort we same order like of been been what that’s not we with It’s plagued chain

starting to we’ll delivery QX XXXX say VMC it. of with here end towards, would beginning delivering are We start the anticipating I here our QX,

those teed a pretty massive got have them. demand for up event media for pent We’ve vehicles that. up customers and waiting for We

get this and out deliveries. some event; government So, do first pretty the here province for for out we officials, to of the large the will news media a try particularly

to there. great in hear. the Thanks hop That’s guys. I’ll the color queue. Appreciate

Thank you so much.

question the Partners. with Global Please Now comes [indiscernible] Alliance ahead. with second go

roll that When I complete, of little one-off of first officially bit line with an the I sort mean, then a out grid. you on expected production you with its think the out configuration? substantially afternoon. over of Can it’s idea an just current issue give had as you connection the good on couple far as next us quarters you’ll Yes, was ramp wondering do would Ferndale, Ferndale? of the the and

we clarity to going we until electric that of that there got you’re switching are – as that out find a orders more Yes, I vehicles the for to assembly off gear. backlog trying wish, We’ve the there. building line, vehicles the clarity can’t get trucks the come significant I of but [ph] what’s also can for, can out home quickly Paul on our with down and planning looking we’re well. of it’s, make we on that well, really give it we’re pretty as as which I has that as give happening going

have more just give clarity we future. here on be that – some to to So, we’ll near hopefully able in and

then obstacles too? the supply there to that other Or and would and address the other you Okay. the mentioned chain obstacles, And be said, obstacle trying switching the then uncertain gear? Ferndale you’re other you are

gear, look they’re we it’s trying issues keep trying to that’s No, with attention and use there contractors I a everybody we we’ll But find that gear, only even our think switch brought we we’ve out ourselves. abreast is and so speak, to it Ferndale there us U.S., they’re for what there. seen company supplying see as can to switch our as and is if large switch that put in to a switch no they work that gear as find to of the gear

impact going Quite Transport of like see something XXXX, that will looks an an XXXX have from Canada where it interesting that, standpoint being program? fiscal in more, interesting. to an program you’re that for from is in approved The, impact

parts of actually and There’s a both our Transport for of Well, of a the program. applied trucks different buses Canada that’s couple for program’s program. it. that our We’ve great

here that I problems to like credit. $XX,XXX truck qualifies we BC, is the think even $XX,XXX, for upwards the because have amazing, which of in quite a

you buy a truck. cheaper can So in vehicle than you’d alone buy problems a or this theory, diesel gas the

out to of trying two programs some that’s that the get what see. on for We big coming great there’s just how really being but together, there, see We’re a to like pushing incentives combined our clarity the vehicles. catalyst we

an looks like, rest is capital working third of cadence capital us you if give in the quarter, of about year? unwind working that the over going Great. And the Or then potentially is sort Dan, could in pretty talk you it of the idea positive can quarter? to the

Sure.

do we and drawn of credit upon. we to at million ABL have not point, open – we that’s currently yes, cash So, this us do through have have line have we CAD$XX our still line

So on And the point had any the do see debt no needs we’re be looking do will at point time. from in substantially standpoint if in fine. if future, a have to a or But but working we the we We from okay operations for in this CapEx time, capital coming have capital’s perspective. for some plant, you for completing more to there. anything foresee take anything we’re the this still up at future, we complete financings working still in capability but

if full wouldn’t Would you a us number XXXX mind? CapEx give then you year

remainder about the $X probably to for year, I of say year. for would spend have the remainder we of million the the

Okay.

a bit total So the north $XX of it’ll for be million little year.

good. sounds That

Okay, help. your Thanks great. for

Thank you.

Thanks.

Instructions]. ahead. comes Cornwell [Operator Robin The go Please next with Catalyst question Research. with

Hi, an issue the batteries you. with supply Will, a chain, I question Dan. have on are Thank the supply?

manufacturers. for not in got supply nice entered as battery batteries Batteries third some us. into one We the there even agreements with and of couple we’ve have been a No. and a Proterra got issue well. BMW, We different

us, not an has that at So Robin. been all issue for

any starting with on lot that? of increase Have shipping, the dramatically. What issues not about actual of there’s cost you a very had shipping shipping just but costs, of backlog complaints to

bit us, Dan shipping, Yes, platform, on Shipping do really how we with communication daily think down global had peaked I with it we is was And this peaked, I on costs we which year. follow it basis. just for that shipping. out it on quite this of have. has a a earlier coming good was a the morning that because discussion

issues, with have So orders that any all had these you lost? been have

not. have we No,

lost order. We single one haven’t

gear that about, can And tell and you that the Terrific. what us more is switching now bit a you’re talking about how…

when got the from we Yes. the our an Well, too, said was switching that with surprised having gears. there letter I they’re issue contractor

comes And And way that It it easiest to the through power for you grid you off the have poles. a, power the your need building. has is So, explain get you of over into come go issue. into U.S. to call switching that voltage power that a gear an right become And amperage that issue, to and become has a it made part. that’s they the what it’s to converts the building. an to

Dan? switching and switching we micro it, Now, use been we smaller find issue now, processors out think may gear be have about And has That’s put ball a the trying them. of in, or able mock of a has gears, us building to the when course, but they’re out right gear. we, this to I do it in a switching find

recently. Just

the supplier. issue they’re Just recently, within found yes, two, week just that with last an out we the having or

that’s of save multiple your and I because potential you on to it these Okay. or new time and clients levels, on Have kind these be programs and maybe too some help clients through even they plan these there Well, through? question’s are stackable. programs based them them call your navigate navigate to bad. experience subsidy programs, could with guess help how My probably stackable any next

staffing Robin. Thanks, the question. Yes, working we and here of solutions do. we we good customers Very is internally Yes, some submit. have helping our have on

on border. So, and this of sides is both the

that stacked And federally programs. the different billions we see in we here is, Transport are and and of there’s and provincially, and it’s dollars the just really in have programs in, many where up billions U.S. subsidies coming and it’s Canada Canada. So, other but

navigate have that helps So, we the actually manager the program helps, a agencies it. through

the that U.S. numerous the is does in that fact, year find XXX% one a grant, billion In the you apply what N-oxides of alone was this the stands in with And I U.S. to we’ve low Low-No do the and applications customer called for And of that program. is, for wants funded in the at a this believe program. got it that is for customers, beginning Low-No nice what’s and the ones funded $X

then believe with funded I So, submit right applications you agency every applications, look and we’ve numerous are quarter. and the And at now. partner got just taken the and in the a application,

to some with on maybe get that. have the programs you to, news the that five three, good helps there, that’s the And customers navigate hoping We’re an there’s programs here through. of expert some about But in them little four, we while. different do have one next of down but

on stuff a on are get out positioned a, contract, excited, we limited the that expects Low-No an program CALAC closing is, off here us that to California well X,XXX customers extremely even contract of some The visibility X,XXX the buy we’ve the contract, buses all and buses use some this And the be want And month. we’re off will RFP and kind and to lot off script five-year that as that’ll that just For we’re between for a that’s buying of of of California, well. be would like there off of on what this we’re California visibility that to of say, jumping buses it. to large State hoping of some going got mid-size it’s bill. the

this I’m to hoping get moves it. month So, on some over here

a what a seem purchase like very finance a give these finance, positioning Just the price? – could they that to piece of a actually large question final percent could vehicle of curiosity, you final it the cost programs of final be to

Yes.

to have high the have whatnot take and they Low-No, off or the to agencies. government they it’s emission funding a vehicles, on I to diesel road. be believe And the So XXX% agencies,

that’s a XXX%. So

fund of the is XX% in to are programs On value the They standard FTA the XX%. funded up vehicle. U.S. the that of

Terrific.

Okay. That’s for Thank me. all you.

Thank you.

to At remarks. William his this now turn concludes closing the I’d call our Trainer time, this like over to back for question-and-answer session. Mr.

Thank growth. you. continue If IR firm, we’re Who’d all to be you of U.S. thank to our now. you update for call. happy and look questions, unable thank progress you MZ assist. each please to out any more And operator. the our than joining like you to We to your reach I’d Thank forward earnings to answer of ongoing Group.

gentlemen, for this today’s Ladies you your and conclude teleconference. does our Thank participation.

time this and lines day. your disconnect may at have wonderful a You