Greetings, and welcome to the Vicinity Motor Corp. third quarter 2021 corporate update conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. 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 regarding 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 differ materially from those described in the call. Please refer to the company's regulatory filings for a list of associated risks, and we would also refer you to the company's website for more supporting industry information. I would now like to hand the call over to William Trainer, Founder and Chief Executive Officer of Vicinity Motor Corp.
William, the floor is yours.
Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to today's third quarter 2021 corporate update conference call. The third quarter of 2021 was instrumental in our foundation building for 2022, having secured exciting new lines of business, namely EV chassis sales alongside EAVX and low-floor electric shuttle bus sales through our new partnership with Optimal-EV. While revenues from our transit bus business are at times irregular and see some periods of lower deliveries as illustrated with this quarter, per our financial guidance we've released, we're on a trajectory to realize over CAD 140 million in revenue next year, marking what will be a record-breaking year for Vicinity by any measure. Our entry into the high-demand electric truck and shuttle bus market is expected to fill the gaps for periods of lower transit bus deliveries in the future.
We are leveraging our strong momentum to accelerate the launch of next-generation electric vehicle products, including our breakthrough Vicinity Lightning EV and our new VMC 1200 Class 3 truck. The S1 and E1 cutaway product lines from our strategic partner, Optimal-EV, and finally, EV sales for upfitting into next-generation municipal and delivery vehicles alongside EAVX, our strategic partner and business unit of North American commercial automotive leader J.B. Poindexter. The land grab for EV market share is well underway, and we are positioned to gain traction through our long-standing partnerships with North American transit agencies and a continent-wide dealer network.
Given the capital needs to fully fund our Washington State manufacturing facility and these exciting new business lines, namely our exclusive North American distributor agreement with Optimal-EV and our strategic collaboration for chassis sales alongside EAVX, we've made significant moves towards fortifying our balance sheet in recent months, as well to support some of these exciting new growth initiatives. Supplementing our CAD 20 million line of credit with a CAD 10.3 million debt financing and proceeds from a $17 million underwritten public offering. To support our 2022 financial guidance for revenues of at least CAD 140 million and adjusted EBITDA of at least CAD 10 million, numbers which we believe are conservative and provide room for significant potential upside, driven by our continuously strong North American sales momentum.
We have appointed respected commercial transportation veteran, Brent Phillips, as our senior director of sales in North America. Brent is an incredibly well-networked and talented individual, a perfect example of our ability to create a tier one organization and setting up for a successful future. We attended key investor industry events in this quarter as well, namely the SNN Network Summer Virtual Event, the H.C. Wainwright 23rd Annual Global Investment Conference, and the LD Micro Main Event on the investor side of things, as well as the CALACT 2021 Autumn Conference and Expo and the APTA Transform Conference and Expo on the industry side. Both significant industry trade events where we're showcasing our newest, most advanced products for potential customers to familiarize themselves with. Now with that, I'll turn it over to Dan to review the financial results of this quarter ending September 30th, 2021.
Dan?
Thanks, William. Good afternoon, everyone. I will constrain my portion to a quick review of our financial results. A full breakdown is available in our regulatory filings and in the press release across the wire after market close today. Please note, I'll refer to adjusted EBITDA and other non-GAAP measures. For the calculation of adjusted EBITDA and other non-GAAP measures, please refer to the Q3 MD&A, which is available on SEDAR.
Revenue decreased 67% to CAD 2.9 million for the three months ended September 30th, 2021, as compared to CAD 8.9 million in the three months ended September 30th, 2020. The decreased revenue was primarily driven by the delivery of six buses in the quarter as compared to 20 buses in the third quarter of 2020, reflecting low order intake during the first nine months of the pandemic and delivery delays related to shipping and the global supply chain challenges for certain parts currently experienced in the industry. Revenue grew 128% to CAD 49.3 million for the nine months ended September 30th, 2021, as compared to CAD 21.6 million in the nine months ended September 30th, 2020.
The company delivered 119 buses for the nine months ended September 30th, 2021, as compared to 49 buses for the nine months ended September 30, 2020. Gross loss totaled CAD 0.7 million, or -24.9% of revenue in the third quarter of 2021, as compared to a gross profit of CAD 0.6 million or 6.3% of revenue in the same year ago quarter. Gross profit increased to CAD 5.7 million or 11.6% of revenue for the nine months ended September 30th, 2021, as compared to gross profit of CAD 1.2 million or 5.3% of revenue for the nine months ended September 30th, 2020.
The margins for the three months ended September 30th, 2021 were negatively affected by the sales of higher than average cost buses and inventory and the sales of fewer buses compared to the prior year period. The gross profit in the nine months ended September 30th, 2021 was positively affected by sales mix, with 2021 deliveries generally having higher margins than those realized in 2020. Net loss for the third quarter of 2021 was CAD 4.8 million or CAD -0.16 per share, as compared to a net loss of CAD 1.3 million or CAD -0.05 per share in the same year ago quarter.
Net loss for the nine months ended September 30th, 2021 was CAD 3.1 million, as compared to a net loss of CAD 3.8 million for the nine months ended September 30th, 2020. Adjusted EBITDA loss for the third quarter of 2021 was CAD 3.5 million, as compared to an adjusted EBITDA loss of CAD 0.7 million in the same year-ago quarter. Adjusted EBITDA loss for the nine months ended September 30th, 2021 was CAD 0.5 million, as compared to an adjusted EBITDA loss of CAD 2.4 million for the nine months ended September 30th, 2020. Cash and cash equivalents as at September 30th, 2021 totaled CAD 5 million, further fortified through the addition of CAD 10.3 million in debt financing and the proceeds from a $ 17 million public offering subsequent to quarter end.
Working capital as at September 30th, 2021 totaled CAD 16.4 million, as compared to CAD 16.7 million as at December 31st, 2020. Our company is in a strong position. We have a strong balance sheet, are well-positioned to execute on our robust 2022 financial guidance, and the fundamentals of our operations are very positive. We remain well-positioned for future growth. I'd now like to pass it back to William to offer some closing remarks, after which we will begin our question- and- answer session.
Thank you, Dan. Looking ahead into 2022, we are incredibly well-positioned to create long-term value for our shareholders. We are intensely focused on delivering upon our robust CAD 140 million 2022 revenue guidance, completing our U.S. manufacturing plant and securing new purchase orders for our ever-expanding line of electric vehicles, addressing the needs of an increasingly diverse customer base as we empower their drive to create a more sustainable public transportation system. I look forward to providing our shareholders with further updates in the near term as we launch new products, announce new customers, and successfully execute on our business plan. I thank you all for calling in, and now I'd like to hand it back to the Operator to begin our question and answer period. Operator?
We will now begin the question- and- answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question today comes from Chris Murray with ATB Capital Markets.
Hey, Dan. Thanks for taking my question here. Maybe we could just start on the visibility on the 2022 targets, the CAD 140 million. You know, you gave a breakdown of some of the units you're expecting between, you know, Optimal, the VMC 1200, the Lightning and the Classic. You know, maybe you can just touch where we are from an order book standpoint, on those units. You know, are there any areas where you still have some work to do between, you know, now and, you know, the end of next year to kinda hit those numbers or, you know, how fully booked is that?
Sure. This is Dan here. If we're looking at next year, we do have some good visibility already into next year. Our backlog is definitely increasing. We don't have all of these orders in hand yet, but if we're looking at our backlog right now, you know, it's near CAD 90 million already for the backlog, where we know that we're getting orders still is on the truck side. We were budgeting for 200 trucks next year, and that's probably light from where we think it's gonna go. That's where we do still see some orders coming in, and the lead time for trucks is a lot lower. Same with the Optimal-EV products. The lead times will be a lot lower.
We're well on our way to achieving that target and hopefully beating it by a significant margin.
Got it. Okay. Yeah, I mean, the 100-unit order for the truck will certainly kind of move that needle. You know, I guess the truck and, you know, the Optimal would be the two areas from a unit standpoint where you think there's the most upside. I'm curious, you know, on the Optimal, you know, what is the initial activity in speaking with your customers about that been like thus far? I recognize it's only been a month, but I'm curious. In the press release you quoted, you know, firm orders and LOI that are consistent with a month ago. What has the initial feedback been there?
Well, I mean, the initial feedback on the Optimal product, I'll let William talk in a second, but we were just at APTA here and showing the Optimal product, and people are excited. They're
Yeah, I
extremely excited.
We had a very good showcase here with the Optimal-EV. I think it probably generated, you know, a lot of attention probably. You know, when we look at the customer base and, you know, who was coming through looking at it definitely was high on everybody's radar to get in to take a look at that vehicle. You know, we really like the vehicle, you know, it's an easy manufacturing, a very short manufacturing timeframe. We're set up extremely well in Elkhart, Indiana. You know, the production levels that we could actually hit out of that factory are 6,000 units-8,000 units per year. It's quite amazing. And the, you know, the actual people looking at it was just. We had great feedback.
That's great to hear. You know, obviously boosted the balance sheet here. How should we be thinking about, you know, capital and working capital needs through the ramp over the next few months and quarters? How much cushion do you think is baked in kinda currently to get towards, you know, cash flow positive, you know, next year?
Yeah. I mean, that's a good question. Obviously we're seeing a lower second half than we had for the first half. That's directly related to just lower intake that happened during the first nine months of COVID. The backlog is there now, and when we are producing for sales, we're producing profitably for all new orders. So it's, you know, we don't really see being cash flow negative for too long here. This is definitely going to be a cash flow positive year in 2022, as you can see with our CAD 10 million EBITDA projections. So, you know, I'm not too concerned there from a liquidity perspective. I still have not drawn on our CAD 20 million ABL, so liquidity here is fine right now.
Okay. Just last one. You know, when seeing with kind of, you know, transit side customers, you know, any kind of update you could provide on, you know, where momentum is, you know, from those customers? Are people, you know, waiting for some of this, you know, infrastructure spending to start to have more visibility? I'm curious, you know, are conversations starting to heat up here, you know, as COVID, you know, starts to improve, or where do we stand?
Yeah. You know, we feel we're just in the perfect position here right now. Funding is at record highs. You know, we've got the transportation bill that's just finished being passed in the U.S. here, which is, you know, really targeting billions of dollars towards the cleaner, greener transit vehicles. It's on the Canadian side as well, we see, you know, 5,000 vehicles, 1,000 vehicles a year being funded through greener initiatives. We're positioned extremely well.
I think, you know, if we really have a look at the market, coming out of the pandemic and coming out of some lower riderships on the transit side, you know, a mid-size bus now really makes better sense than it ever has in the life of the vehicles. You know, there's a lot of people, a lot of talk from the transit authorities that were coming through the show here where we're rightsizing and funding's in place. We're just well positioned, I think, to grab a lot of this business that's coming out.
Yeah. We should say too that we showed the Vicinity Lightning for the first time at APTA, and the excitement around that was huge. It's, we're definitely poised to have a lot more Lightning sales coming in the near future.
Well, that's great to hear.
Yeah.
Hand it over to you guys. Thanks.
Yeah.
Oh, go ahead.
Thank you.
Our next question comes from Bruce Chan with Stifel.
Hey. Good afternoon, Will, Dan, and John. Thanks for the time here. Just a couple of questions left from my side. You gave some great color on, you know, what we should be looking for next year, and I know we're still focused on building the foundation, but when you think about 4Q, you know, what are your expectations for deliveries? Directionally, are we gonna be seeing, you know, maybe more of the same as what we saw this quarter? Are we gonna see some improvement, some deterioration? You know, maybe just some color there.
Sure. Dan here. It will be slightly better than the third quarter. We guided before that we are looking to do 130 buses for the year. We're at 119 buses right now, so that's, you know, that guidance still stands.
Okay. Got it. That's helpful. And then just thinking about the P&L next year, you know, we have that, I guess, if you do the math, 7% bogey for, you know, EBITDA margin for the end of the year. But thinking through, you know, some of the expense line items, you know, labor inflation, you know, some of your R&D efforts, ramping up that Washington facility, where do you think some of the opportunities are, you know, to potentially get better than that? And where are some of the risks that that might put that, you know, EBITDA number, you know, in question?
I can tell you that SG&A has gone up from the past. If you compare this year's SG&A to last year's SG&A, it's not really apples to apples because we did have a pandemic in full swing last year with no travel. We had government assistance on the salary side, but we're also ramping up our staffing right now to be ready for the increased demand and to actually address our sales network a little more. I would see the SG&A going up for the future. I would say that it would top out at, you know, CAD 800 ,000-CAD 900 ,000 a month, which would be, you know, CAD 2.4 million-CAD 2.7 million a quarter for next year. That would be the largest increase that we would see on the cost side.
Okay. That's helpful. Are you having any problems finding people to, you know, staff up, you know, facilities and kind of prepare yourself for growth next year?
No, not right now. I mean, we just hired Brent as we announced, which was a very big addition to our team. We will probably staff up on the sales side as well, to increase our exposure now in the U.S. and now that we have the Optimal product as well. That's probably where we would look to increase. For our plant in Washington, we don't foresee a ton of issues there. We're in the process of hiring a U.S. production manager right now. Oh, apparently we have. That's hot off the presses. We started to hire there. Yeah, we're starting, and that's the first step to filling that plant and getting the right people in place.
Okay. Awesome. I imagine you're still on track for that sort of mid-2022, you know, start up on that Washington facility?
That's correct.
Yeah. We see the factory actually, you know, the building being completed sometime towards the end of this year, and then we just need to outfit it with the specialized equipment to get into production.
Units will actually be rolling off the floor by mid-2022, at least.
Yeah. We're hoping to have it up by Q2, get some production running.
Okay. Terrific. Just, you know, one final question here. You all have made some great progress with the product portfolio this year, a lot of big changes. You know, when you think about the product white space and your current offering, you know, where do you see opportunity? Are you pretty complete at this point? Or, you know, is there potential to kind of move into some parallel segments? I imagine you're not going sub-Class 3, but you know, maybe some kind of higher classes. Any thoughts there?
Yeah. You know, right for now, we're just focused on that midsize and below. That's where we believe, you know, this Optimal partnership really rounds out our portfolio. You know, we're selling that vehicle in the same customer base that we were selling our existing vehicles into. We're just staying focused on that midsize at this point in time. We really wanna dominate that midsize market.
Okay. Great. Well, that's all for me. Appreciate the time, and hope you all have a great weekend.
Great. Thanks.
Thanks, Chris.
This concludes our question and answer session, and I'd like to turn the call back over to Mr. William Trainer for some closing remarks.
Thank you, Operator. I'd like to thank each of you for joining our earnings conference call. We look forward to continuing to update you on ongoing progress and growth. If we were unable to answer any of your questions, please reach out to our IR firm, the MZ Group, who would be more than happy to help you and assist. Thank you.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.