Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- GreenPower Motor Company Inc (GP, Financial) has seen a significant uptick in its sales pipeline for all-electric commercial vehicles and school buses.
- The company has the inventory and production capacity to meet increased demand, which is expected to boost revenue in the coming quarters.
- GreenPower's East-West manufacturing strategy is coming to fruition, enhancing its ability to deliver products nationwide.
- The company has received substantial state support in West Virginia, including subsidies and training programs for employees.
- GreenPower has a diverse product lineup, including the newly introduced EV Star ReeferX, which caters to the mid to last mile refrigerated delivery market.
Negative Points
- The company's gross profit margin was lower than anticipated due to overhead costs and lower realized margins on prior model year inventory.
- GreenPower's business remains lumpy, with deliveries difficult to predict on a quarter-to-quarter basis.
- The company is still reliant on external funding, having raised $2.3 million in gross proceeds during the quarter.
- GreenPower has a significant amount of inventory, with $33.7 million in inventory, including $13.4 million in finished goods, which could pose a risk if demand fluctuates.
- The competitive landscape is challenging, with fewer EV OEMs offering medium-duty class four all-electric vehicles, which could impact market dynamics.
Q & A Highlights
Q: Can you provide an update on the total number of orders in hand, beyond the 78 units mentioned in the press release?
A: We have follow-on orders for many of the initial orders, which are not yet fully approved but indicate a broader pipeline. The magnitude of follow-on orders is greater than the initial tranche, suggesting a much larger interest beyond the 78 units identified.
Q: How should we think about potential gross margin progression later this year, considering the variability in deliveries?
A: Traditionally, our gross profit has been in the high teens. The current quarter's lower margin was due to limited throughput in West Virginia. As we increase production, particularly with the 37 school bus orders, we expect improved allocation of plant overhead and higher gross profit margins.
Q: Can you update us on the finished vehicles in inventory and their types?
A: The largest category is our EV Star cab and chassis, which is depleting rapidly due to recent sales. We also have over 40 EV Stars of various types, including secondhand vehicles, and more than 10 Nano BEAST school buses. We have received additional BEAST units since quarter end.
Q: Are there available subsidies in West Virginia as production increases?
A: Yes, we have numerous subsidies, including state support for employee training, tax subsidies, and a lease-to-own arrangement for our facility. We have received both physical checks and credits from the state.
Q: Are the 80 orders on the East Coast all destined for West Virginia, or have you expanded your footprint?
A: The orders include some that will be going into New York, indicating an expanded footprint beyond West Virginia.
Q: What is the current availability on the EDC facility?
A: We have approximately $2 million in available liquidity on the EDC revolving credit facility, with a drawn balance of slightly over $3 million at quarter end.
Q: Can you elaborate on the impact of state and federal incentives on your sales pipeline?
A: State and federal incentives, particularly in California, are creating significant demand for our EV Star line of commercial vehicles. Legislation requiring a percentage of new purchases to be zero-emission is driving this demand, which we expect to increase over the next decade.
Q: How is the East-West production strategy benefiting GreenPower?
A: The East-West strategy allows us to be more nimble and responsive to market demands. It complements our school bus production and commercial vehicle offerings, providing flexibility to weather market conditions and meet increased demand.
Q: What are the key factors contributing to the recent uptick in your sales pipeline?
A: The increase in orders and quotes for our all-electric commercial vehicles and school buses, along with follow-on orders, is driving the uptick. Our inventory and production capabilities are well-positioned to meet this increased demand.
Q: How is GreenPower positioned in the competitive landscape for medium-duty class four vehicles?
A: We are seeing fewer competitors in the medium-duty class four space, particularly in California's HVIP incentive program. This trend, combined with new legislation, is creating a favorable supply-demand dynamic for EV OEMs like GreenPower.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
