GreenPower Motor Company Inc. (NASDAQ:GP) Q3 2023 Earnings Call Transcript
GreenPower Motor Company Inc. (NASDAQ:GP) Q3 2023 Earnings Call Transcript February 14, 2023
Operator: Good morning and welcome to the GreenPower Motor Company Third Quarter Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Michael Sieffert, Chief Financial Officer. Please go ahead.
Michael Sieffert: Thank you. This is Michael Sieffert, the Chief Financial Officer of GreenPower Motor Company. I would like to welcome everyone to our call to discuss GreenPower's financial results for the period ended December 31, 2022. I'm here today with our Chief Executive Officer, Fraser Atkinson; and our President, Brendan Riley. During today's call, we may make comments or statements about future expectations, plans and prospects which may constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our quarterly interim results and MD&A filed on SEDAR and on EDGAR.
In addition, these forward-looking statements relate to the date on which they're made. We anticipate that subsequent events and developments may cause the company's views to change. GreenPower disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Also, during the course of today's call, we may refer to certain non-IFRS financial measures. Reconciliation of these non-IFRS measures can be found in our MD&A filed on SEDAR and on EDGAR and is also located on our website at www.greenpowermotor.com. I'll now pass the call over to GreenPower's CEO, Fraser Atkinson.
Fraser Atkinson: Thank you, Michael. This was a record-setting quarter for GreenPower. We generated record revenues of $12.8 million in the third quarter, a year-over-year increase of 140% over the revenue of $5.3 million for the third quarter in the previous year. We delivered 101 GreenPower vehicles in the third quarter. With our extensive inventory, the deliveries this quarter are on track to exceed the third quarter. We reported deferred revenue of $12.5 million at the end of the third quarter, an increase of more than 92% from the beginning of the fiscal year. The majority of this, we expect to recognize over the next 12 months, further accelerating our revenue growth. One of GreenPower's strengths and competitive advantage is that we have our own Cab and Chassis and we manage our supply chain.
We refer to the EV Star Cab and Chassis or CC as our EV Star platform which has allowed us to build a range of models for the passenger and cargo markets as well sell our CC to other manufacturers. Our commercial vehicle group had the EV Star Cargo, EV Star Cargo Plus and CC. EV Star and EV Star passengers are for the shuttle and transit sector. These represented the majority of the sales this quarter. Another model utilizing the EV Star platform is GreenPower's Nano BEAST Type A all-electric purpose-built school bus with an all-aluminium body that is stronger than any other body used for the Type A school boxes on the market today. In September, GreenPower's Nano BEAST won the Innovation Award for Best Green Bus Technology from School Transportation News.
This market for all of the Type A school buses is $8,000 to $9,000 per annum. We are well positioned to help operators electrify their school bus fleets with our BEAST and Nano BEAST and are presently working on more than 30 school bus deals in 8 states where our first deliveries will utilize our current inventory. During the quarter, the EPA announced the selects for the School Bus Program with almost $1 billion of funding. GreenPower worked with dealers and school districts across a number of states who were selected to acquire the Type D for $375,000 or Type A school bus for $285,000. These deliveries must be completed by October 31, 2024. GreenPower also has a significant number of opportunities for our all-electric school buses in California, utilizing the standard HVIP poachers which has $250 million of new funding this year, school bus set aside funding with $135 million as well as the CEC Air Quality Management District and BW Trust funding for the purchase of all-electric school buses.
These school box sales will help further accelerate our growth with deliveries commencing over the next couple of quarters. I'll now hand it over to Brendan Riley, GreenPower's President, for discussion on our operations.
Brendan Riley: Thank you, Fraser and good morning, everyone, on the call. At GreenPower, we continue to demonstrate our winning strategy that focuses on our core business, a purpose-built Class IV EVs, leveraging our best-in-market EV Star family of vehicles and our best-in-class school buses. We delivered 84 EV Star Cab and Chassis to Workhorse during the third quarter as we continue to optimize the run rate of deliveries to them. We are currently in the process of delivering an additional tranche of EV Star CCs to Workhorse. Our dealer network has been growing nationally during the quarter for both commercial vehicles and school buses. This reflects the tireless work of our school bus VP, Michael Perez and, that we've added recently, Claus Tritt, to head our commercial vehicle group product and sales efforts.
Claus has many years of experience in deploying proven sales strategies and building winning sales teams for the light and medium-duty commercial vehicle sector. Claus is also completing the full integration of selling the Lion Truck Body components and bodies nationally through our dealer and direct sales network. Our new refrigerated EV Star Cargo Plus has been completed and this is a first of its kind vehicle to run the refrigeration system directly from the high-voltage battery. This creates a more efficient vehicle which saves cost and weight while improving reliability. This newest member of the GreenPower product line is also eligible for the $40,000 IRS tax credit, as are all of GreenPower EV products. With this new deduction that is part of the Biden administration Inflation Reduction Act, many of our zero-emission vehicles can now be bought across the country at price parity with legacy polluting internal combustion vehicles.
Our West Virginia facility in South Charleston, West Virginia is almost ready to produce our BEAST. That's our battery electric Type D school bus. Over the next months, we expect to manufacture the first built in West Virginia buses ready to bring children to school safely and without polluting the environment. In September, GreenPower began a pilot project with the state of West Virginia to demonstrate our Type D school buses to districts across the state and test the buses in a wide range of conditions. West Virginia purchased 3 BEASTS. Those are the Type D school buses in the second quarter. In November, the pilot project started the second round with a slate of new districts along with a Nano BEAST Type A school bus that was purchased in the third quarter.
In January, we launched the third round, bringing in the total coverage to 25% of all of the school districts of the state. We have demonstrated that our buses can work throughout the state in different regions, different temperatures. This pilot project has also given us valuable data on where we can improve our vehicles for a myriad of customers and applications. Now, I'd like to turn it back over to Michael Sieffert, our CFO, who will cover the quarterly financial highlights.
Photo by Kumpan Electric on Unsplash
Michael Sieffert: Thank you, Brendan. GreenPower achieved its highest ever quarterly revenue of $12.8 million which is an increase of 140% over the revenue of $5.3 million for the third quarter of last year. Revenue was generated from the sale of 1 Nano BEAST, 10 EV Star 22-foot Cargo, 5 EV Stars and 85 EV Star Cab and Chassis. It was also from a recognition of revenue under finance and operating leases and from our truck body manufacturing business Lion Truck Body. Cost of revenues in the quarter was $9.9 million which generated a gross profit of $2.9 million or 22.5% of revenue compared to a gross profit of $27.8 million in the prior year. Gross profit for the quarter was lower than our historical range of 30%, primarily due to deliveries under a high-volume contract and from sales of our EV Star 22 foot Cargo which are both at lower margins.
We expect that our gross profit margin will be at similar levels in the coming quarters due to our expected sales mix. We have seen a continued improvement in our quarterly adjusted EBITDA since the beginning of this calendar year, driven by these higher sales. We saw an increase in our quarterly cash expenses to $4.8 million during the quarter which was an increase of approximately $1.2 million compared to the prior quarter. Approximately 50% of this increase was attributable to higher transportation costs related to a significant increase in vehicle shipments to customers across the United States during the quarter. In addition, we saw a step cost increase in our general and administrative costs as we continue to expand our business in different regions and into new product lines through our acquisition of Lion Truck Body as well as higher professional fees and product development as we expanded into new markets and develop new products.
We finished the quarter with $25.6 million in working capital and approximately $0.6 million available liquidity. The Working capital included $7.9 million in AR, the majority of which was current at quarter end and $46.2 million in inventory which was comprised of over $34.6 million of finished goods inventory, primarily representing EV Star Cab and Chassis, EV Stars, EV Star Cargo and both BEAST and Nano BEAST school buses. Since the quarter end, we've collected a significant portion of the AR that was outstanding at the end of the year and we've raised approximately $3.5 million in equity through our ATM program. We have used the proceeds from these sources to continue to invest in our business platform in working capital investments for upcoming deliveries and our current available liquidity remains well above the level that it was at quarter end after these investments.
Finally, we finished the quarter with preferred revenue of $12.5 million, the majority of which we expect to recognize within the next 12 months. I'll now turn it back to Fraser for a final word before the Q&A.
Fraser Atkinson: Thank you, Michael. To conclude, we've generated significant sales in our past quarter with our commercial vehicles and we expect that with our passenger as well as the school bus sales kicking in over the next several quarters to help further accelerate that along with the organic growth within the commercial vehicle group. Consequently, we are expecting a very solid growth over the next several quarters. With that, operator, please open up the call for questions.
See also 10 Jim Cramer Stocks This Month and Mario Gabelli Stock Picks: Top 15.
To continue reading the Q&A session, please click here.
