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GreenPower Motor Company Inc. (NASDAQ:GP) Q3 2024 Earnings Call Transcript

GreenPower Motor Company Inc. (NASDAQ:GP) Q3 2024 Earnings Call Transcript February 13, 2024

GreenPower Motor Company Inc. misses on earnings expectations. Reported EPS is $-0.17 EPS, expectations were $-0.14. GP isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and welcome to the GreenPower Motor Company Third Quarter Earnings Conference Call. [Operator Instructions] 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 results for the three and nine month periods ended December 31, 2023, and recent developments. 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 our future expectations, plans and prospects which may constitute forward-looking statements for the purpose 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.

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In addition, these forward-looking statements relate to the date on which they are 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 Fraser Atkinson, GreenPower's CEO, to discuss highlights for the quarter.

Fraser Atkinson: Good morning, and thank you for joining GreenPower's quarterly earnings call today. Our School Bus group continued to make great strides in the third quarter. We achieved a significant milestone with the delivery of 4 Type A Nano BEAST school buses that were the first all-electric purpose-built school buses manufactured in West Virginia. Immediately following that delivery, production of the Type D BEAST school bus began in the West Virginia plant, which in the immediate term, will fulfill current orders for 38 BEAST school buses in West Virginia and prepare the production team for the mix manufacturing of BEASTS and Nano BEAST at the facility to meet the projected demand. Presently, we have live orders for 102 of our Type D Mega BEAST, BEAST and Type A Nano BEAST school buses, including our first order from our dealer in the state of New York.

We also have the qualified sales pipeline for 164 GreenPower school buses. On the commercial vehicle side of the business, we had deliveries this quarter that included 10 EV Star Cab and Chassis to the Canadian unit of a global retailer who will upfit the vehicle for fulfillment of their orders to customers in the Greater Toronto market. Having said that, our commercial vehicle group with EV Star Cargo and EV Star passenger vehicles is several quarters behind the school bus group in terms of its order book. We expect to achieve similar growth with live orders, purchase orders and a qualified sales pipeline by leveraging new and existing incentive programs as well as third-party relationships. We've had delays from customers with deliveries of our EV Star Cab and Chassis, with inventory ready to go, we are now working on scheduling deliveries for these.

Collectively, these will create a robust commercial vehicle group, which combined with the School Bus Group, will uniquely position GreenPower in the medium and heavy-duty EV sector. Over the past few years, we've maintained significant levels of finished goods inventory. We don't need to maintain these levels due to stocking orders from dealers who could provide demonstrations and Ride and Drives to their customers, along with a reduced competitive landscape. This is allowing us to shift from fulfilling orders from inventory to manufacturing vehicles pursuant to customer orders. How is GreenPower going to finance an increase in school bus orders and changes with our commercial vehicles, instead of a traditional facility, we needed to secure a facility focused on production financing.

A brand new electric vehicle charging at a charging station with a city skyline in the background.
A brand new electric vehicle charging at a charging station with a city skyline in the background.

This morning, we announced that we've entered into a revolving loan agreement with Export Development Canada, or EDC, for up to $5 million upon all-electric vehicle production for certain customer orders, allowing for multiple advances over a 2-year period with repayments when vehicles are delivered. The revolving nature of the facility provides the flexibility to fund multiple orders and offers incremental capital in addition to GreenPower's existing $8 million operating line of credit and the guarantee of up to $5 million of standby letters of credit provided by EDC. I'll now pass the call to Michael Sieffert, GreenPower's CFO, to discuss our financial results for the quarter.

Michael Sieffert: Thank you, Fraser. For the three months ended December 31, 2023, GreenPower generated revenue of $8.2 million, primarily from the sale and lease of 34 to all-electric vehicles, which included 13 BEAST and Nano BEAST school buses. This is a decline of 36.3% from the $12.8 million of revenue generated in the same quarter in the prior year from the sale of 101 all-electric vehicles, which included one Nano BEAST. Both quarters also included revenue from leases, parts sales and truck bodies. Gross profit was $1.4 million, and gross profit margin was 16.6% compared to $2.2 million and a gross profit of 17.4% in the prior year's quarter. The margin decline in the current quarter was primarily due to an inventory write-down of $408,000, which was included in cost of sales.

The gross profit margin for the quarter would have been 21.6% without the inventory write-down. GreenPower generated a loss for the quarter of $4.6 million compared to a loss of $3.4 million in the same quarter of the prior year. For the nine months ended December 31, 2023, GreenPower generated revenue of $34.2 million, primarily from the sale of 196 vehicles in the current period, which was an increase of 40.1% from revenue of $24.4 million in the first nine months of the prior year, which was from the sale of 176 vehicles. Gross profit was $5.4 million and gross profit margin was 15.7% in the nine months ended December 31, 2023, compared to $4.9 million and a gross profit margin of 20.1% in the same period of the prior year. Inventory write-down of $408,000 included in the current year period reduced the gross profit margin by 1.2% from 16.9% to 15.7%.

The GreenPower generated a loss for the 9-month period of $11.7 million compared to a loss of $11.2 million in the same period of the prior year. As at December 31, 2023, GreenPower had cash of $4 million, which was an increase of $3.4 million since the beginning of the year and working capital of $19.4 million. Improvements in the company's cash and available liquidity since March 31, 2023, were largely due to higher sales and due to focus on collections, which led to lower levels of inventory and accounts receivable. I would now like to turn the call over to GreenPower's President, Brendan Riley, to highlight some of the innovative achievements GreenPower reached during the quarter.

Brendan Riley: Thank you, Michael, and good morning to you all. As Fraser mentioned, the continued strides are being made by our School Bus division. To this end and in our effort to help eliminate smelly polluting diesel school buses, we have been expanding our national efforts through the addition of new dealers and have hired more territory managers to support both our school bus end customers and dealerships alike. A major technical accomplishment of this division during this quarter was the introduction of the new Mega BEAST. It's our newest all-electric purpose-built school bus. We launched the Type D Mega BEAST school bus to meet the demands from school districts requiring V2G and longer range. This 40-foot, 90-passenger, Type D, zero emission school bus delivers class-leading range of up to 300 miles on a single charge.

This is all due to the 387-kilowatt hour battery pack. Its V2G capabilities allow for more stable electric grid and community sustainability in areas which is deployed. I'm pleased to say that the market responded immediately to the introduction of our products and our California dealer Model 1 just placed an order for 25 Mega BEASTs for the Montebello School District just two weeks after we made the announcement of this product. Our Commercial Vehicle division has also produced a new innovative product during the quarter. GreenPower delivered its first EV Star cargo refrigerated van to UC school in California with dual batteries for increased resilience and continual eTRU cooling for the cargo area. It has diamond plate floor and an FDA spec interior area that is smooth, and allows for easier cleaning and sanitation for any of the refrigerated goods.

In the next few months, we are expecting more innovation from this group from the cargo transportation space. At this point, we would like to now open up the call to any questions.

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