Greetings, and welcome to the Vicinity Motor Corp First Quarter 2024 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 on the call. Please refer to the company's regulatory filings for a list of associated risks, and we would also like to 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 first quarter 2024 corporate update conference call. The first quarter of 2024 continued our focus on our build-out of our distribution network across North America, and a robust cadence of our deliveries of our VMC 1200 electric trucks and our Vicinity Classic clean diesel buses against our significant backlog. During the quarter, we made successful deliveries of 44 of our VMC 1200 trucks and 22 Vicinity Classic transit buses to our eager customer base. Our performance helped us drive a 400% increase in revenue and positive cash flow from operations, reflecting the VMC 1200 demand from our growing network of dealers across Canada and momentum from our market leadership position with our transit buses.
With that, I'd like now to hand it over to Brent Phillips, who we were recently privileged with promoting to the newly created role of president to lead us in our next phase of growth. Brent joined Vicinity in November 2021, bringing over 30 years of experience in the commercial transportation field, including numerous leadership roles in distribution and manufacturing, including operation, sales, and marketing. Brent will lead us through this quarter's highlights and outline new strategic and operational initiatives that he will spearhead. Brent?
Thank you, Will. It's an honor to be asked to help lead the next phase of profitable, profitable growth at Vicinity. I'll start with our VMC 1200. We recently announced four new dealership partners to meet growing demand, including VMC Laval in Laval, Peninsula VMC Truck Centre in South Toronto, Shift EV Trucks in West Toronto, Jack Carter VMC Trucks in Southern Alberta, and most recently, R. James Vicinity Truck in Kamloops, in Kelowna, British Columbia. These new EV-specific dealerships expand the VMC 1200 sales and service coverage in strategic markets across Canada, leveraging the expertise and built-in base that each partner has in their respective regions. Each partner has exceptional experience and expertise in the automotive market and fleet services, making them well-suited to help fleet operators seamlessly transition to an all-electric future.
For Vicinity, the VMC 1200 carries a healthy margin profile and year-round purchasing habits of the differentiated customer base, and that helps us to smooth the traditional revenue lumpiness of our established transit bus business. VMC 1200 provides an ideal entry point into the developing commercial EV market for dealerships and customers that are attracted by our competitive price point, inclusive of incentives and operational savings. In addition to delivering operating cost savings immediately and contributing to carbon emissions reductions, the VMC 1200 further benefits through Canadian federal and provincial rebates. Perhaps most notable, it qualifies for a Canadian federal rebate nationwide of CAD 40,000 from Transport Canada, with additional provincial incentive programs available up to CAD 92,000 in certain provinces.
In the transit bus business, during the first quarter, we saw strong demand in deliveries for our Vicinity Classic Transit bus line, as it helps grow our backlog and serve as a foundational building block of our revenue mix. Orders during the quarter included follow-on purchase order from Autobus La Québécoise for delivery of 12 Vicinity Classic buses to service cities throughout the province of Quebec. These follow-on orders, in addition to the 8, 8-bus order received in December, validates our reputation for excellence built through the sale and delivery of nearly 1,000 Vicinity Transit buses since inception. Our reputation creates a level of trust that allows for a significant competitive advantage to offer both our legacy and next-generation electric buses in a variety of classes and configurations to an incredibly wide variety of customers.
Our US manufacturing campus in Ferndale, Washington, continued to ramp production during the quarter to tackle the fulfillment of our growing backlog, which, as of March thirty-first, exceeded $125 million.... The facility is designed to meet our current and future production needs, with annual capacities of 850 buses and several thousand electric VMC 1200 trucks. Operationally, I was appointed to the newly created role of president to lead our next phase of growth. To that end, we are focused on driving strategic and operational initiatives to streamline production and increase vehicle sales through our Vicinity Classic and Lightning bus lines, as well as the VMC 1200 truck.
Our initial strategic plan is focused on milestones related to the onshoring of production for the Vicinity Lightning bus in Ferndale, Washington, augmenting the Canadian dealer network for the VMC 1200 truck, as we've covered today, and the formal launch of the VMC 1200 into the U.S. market. As we stand today, we are aggressively building out our VMC 1200 dealer network, continent-wide, and ramping up production in our Ferndale facility. We're actively working to monetize our backlog, including an immediate-term focus on converting our $28 million of inventory to cash. The first quarter, strong revenue, positive cash flow from operations, and robust backlog are positioning us for a high level of operational execution in the quarters ahead. With that, I will now turn it over to Dan to review the financial results for the quarter ended March 31, 2024. Dan?
Thank you, Brent. Good afternoon, everyone. I will keep my portion to a brief review of our financial results. A full breakdown is available in our regulatory filings and in the press release that crossed the wire after market close today. Revenue increased 400% to $13.2 million in the first quarter of 2024, as compared to $2.7 million in the first quarter of 2023. The 400% increase in revenue was primarily driven by higher deliveries, including 44 truck and 22 bus deliveries in the first quarter, as compared to five trucks and three buses in the same year-ago quarter.
Gross profit in the first quarter of 2024 totaled $1.9 million, or 14% of revenue, as compared to $0.5 million or 18% of revenue in the first quarter of 2023. Gross margins were positively affected by higher deliveries in 2024 and a product mix that has shifted more towards electric trucks at higher margins. Cash provided in operating activities in the first quarter of 2024 totaled $0.5 million, as compared to cash used of $3.6 million in the first quarter of 2023. Net loss in the first quarter of 2024 totaled $3.7 million, or -8 cents per share, as compared to a loss of $2.4 million, or -5 cents per share in the first quarter of 2023.
Adjusted EBITDA in the first quarter of 2024 totaled a gain of $0.1 million, as compared to a loss of $1.4 million in the first quarter of 2023. Cash and cash equivalents as of March 31, 2024, totaled $4.3 million, as compared to $2 million as at December 31, 2023. We believe we are well positioned for a high level of operational execution in 2024, with the fundamentals of our operations expected to further strengthen as we ramp deliveries throughout the year. I'd now like to pass it back to Brent to offer some closing remarks, after which we will, we will begin our question and answer session. Brent?
Thank you, Dan. During the quarter, our accomplishments included continued diversification of our distribution network with new dealerships, ramping up production, a growing sales funnel, and record backlog that includes our transit bus line. Market fundamentals continue to support our bus business strategy as we see continued demand for our classic bus products, as well as through the transition to commercial EV adoption, supported by government incentives, corporate sustainability goals, and lower total cost of ownership and operation for EV buyers. As we move ahead into 2024 and continue to execute against our key milestones, I believe we have built the foundation of a business that can deliver value to its stakeholders and their communities for years to come. And with that, I would like to now hand the call back to the operator to begin our question and answer session. Operator?
Thank you, Brent. 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 speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Robin Cornwell with Catalyst Research. Please go ahead.
Hi. Good afternoon or good morning. I guess still afternoon for you. My first question is for Brent. Could you detail a little bit on the $28 million of inventory that you look to deliver in Q2?
Hey, Robin, this is Dan. So we're not going to give the specific quarterly projections at this time. The inventory right now that we have on hand is a majority truck inventory. We are working through bus inventory fairly quickly right now and delivering on all of our backlog for buses. Right now we have probably just over 280 trucks on hand that we'll be working through, and just under 30 buses to be delivered as at the end of the quarter.
... so that would be in the end of Q2, so 280 trucks?
Sorry, the end of Q1. Those are the end of Q1 numbers.
Sorry, I'm confused on that. When you said 280 trucks to, on hand to be delivered? Does that sound right?
No, Robin, the inventory that we have on hand, not to be delivered. We're not going to give any guidance or delivery forecasts.
Okay. Okay. So I was just trying to get an idea of what the composition of the CAD 28 million, not the time of delivery, but just what the composition of the inventory breakdown.
Yeah, we have a breakdown in the financials and the notes. So there, a portion of that is parts inventory for our aftermarket parts business. And then, like I say, the remaining was about 280 trucks and just under 30 buses.
Okay. Thank you. Sorry for the confusion on my part. Okay, I guess, continuing with Dan, what does your margin outlook look like, I guess with your back into production and, you've got Ferndale, as well now. So what kind of margins are you expecting in, or do you think you could achieve over the next three to six months?
Yeah, that's a great question. Our margins for the quarter were about 14%.
All right.
Ideally, we get to a spot where we're over 20% margins, but realistically, for the next while, 15% margins are really where it would be sitting. But as we start shifting to more and more electric vehicles, the margin profile definitely goes up from there.
Okay. I'll just ask one more quick question. Are there any delays that you're seeing for two things? One, parts and any backlogs, and second, any delays going on with the approval process of grants to your customers?
Yeah, Robin, those are good questions. As it relates to parts, I'd say that we're more or less normalized, which means it's imperfect, either from a service parts availability standpoint or even production parts availability. And I don't mean to be evasive there, but I think that by a large extent, some of the supply chain challenges are largely mitigated. But there can be, you know, just the normal supply chain challenges that happen in business. And then secondly, you know, to answer the second part of your question, can you repeat that part of the question, Robin?
Yeah. There's been a lot of comment about the government grants going out to potential clients of yours and having been delayed or perhaps not being processed at all. Have you heard any or have any commentary on that?
So there's a process to, you know, government funding, of course. There's some built-in, you know, delays in that. I think that some of those delays were initially, you know, maybe underappreciated or unanticipated. But now that we have the grants in place and the process better understood, I think that we've got a pretty clear path to, you know, being able to operate through that, those grant funding delays.
Okay, great.
And that would apply both for us and for our dealers.
Okay, great. Thank you. I'll queue. That's it.
Okay. Thank you.
Again, if you have a question, please press star, then one. The next question comes from Poe Fratt with Alliance Global Partners. Please go ahead.
Hi, good afternoon. Congratulations, Brent, on becoming president. Can you just highlight what you mean by the formal launch of the VMC 1200 in the U.S.? You know, what's the timing on that, and what has to happen before there's the formal launch?
Hi, Poe, and thank you for the congratulations. Appreciate the question. So our formal launch, we're aggressively pursuing dealer partners in the United States currently. I think that that is progressing along quite well, frankly. And then that needs to be balanced again against and timed with certain U.S. regulatory certifications that probably is best not to get into the detail of. But you know, we're, that's all timing out, and everything's kind of lining up with what we had projected later last year as we rolled out this U.S. launch plan. So I'd say that everything's on track and kind of working along as we had hoped it would.
So second half of the year or potentially sooner?
It's going to time out to the second half of the year, but we may be able to catch it a little bit sooner.
Okay. And then, you know, this quarter, you delivered 44, you know, trucks. Last quarter, you talked about invoicing, but not delivering, 71. Does that imply that you have, you know, around the high 20s still invoiced but not delivered yet? Or I guess another way to ask the question is, how many invoices do you have outstanding for the trucks right now?
That's a fair question. Dan, do we have an exact number on that?
I don't have an exact number, but you're right, Poe, there are probably 20-something trucks out there that we've invoiced, and we're waiting to collect on and ready to put the bodies on those trucks and deliver.
Would you anticipate, you know, being able to collect this quarter on those, you know, outstanding invoices and then potentially delivering other trucks in the quarter?
Yeah, some of that is, it's related to our customers or dealers and getting their floor plan up in place and their financing in place. So if all goes well, yes, but can't guarantee that, of course.
Okay. Understood that, you know, that's why you're not giving any specific guidance. Dan, can you talk about the refinancing that you've done this quarter? And, you know, including, well, I guess, the debt deferral that you had, and then the new debt that you put on the balance sheet. You know, if I do all the math, what's your pro forma cash right now on the balance sheet? It should be, you know, I'd say close to $7-8 million. Is that a ballpark number, or can you just sort of walk me through the debt financing that you did this quarter?
So the deferral did not add any new cash to our balance sheet. That was a deferral of payments that were scheduled for April and July, which have now been pushed out to September to October. The $2 million we had actually received already at quarter end, but the financing, the documentation was not fully in place, which is why it shows up as a subsequent event. That amount was already in our cash at quarter end, and it was also showing up as accrued liabilities rather than short-term debt, just until we had the paperwork completed. So and that paperwork was completed shortly after quarter end.
Okay.
So there's no net effect on our increase on our cash position from March 31st.
Other than potentially, you know, positive cash flow or, you know, change in cash.
That's correct.
Thanks a lot.
Yeah.
And then, Dan, can you just update me on the, you know, the extension or renewal of the working capital line with RBC and, you know, Export Development Canada?
Yes. So we have extended that, again. So I believe we have another probably two months on that. And we're working on getting a longer extension, for that facility as well, working with RBC and EDC in finalizing the facility, to, to make sure that it's, it's approved and, and extended, for when we need it.
Okay. I'm not sure if you've disclosed this, you know, what's the order backlog's still over $125 million. Do you have a number of the order backlog split between buses and trucks?
Yeah, I don't have an exact breakdown of that, at this point in time.
The last one I had was, you know, about 100 buses and about 1,100 trucks. Is that, you know, does that ring in the ballpark?
The 100 buses we've started delivering on, but we've also taken new orders for buses. So, you know, it's probably still hovering around that figure, plus or minus, you know, 10 or 20, probably more like plus, for the buses right now.
Okay, sounds good. Thanks for your time.
Thanks.
No, well, one of my thoughts as it relates to that, Poe, and hopefully you can appreciate this, is just from a, from a competitiveness standpoint, you know, some vagueness around, you know, where our successes are coming from, is probably best left as a, you know, with, with, with, with less detail in it. But, nonetheless, that is kind of out there, and we'll continue to talk about that, but probably not get down into the mix and splits.
Great. As an analyst, I love vagueness.
Well, we're gonna get along just fine.
Thank you.
You're welcome. Thank you.
This concludes our question and answer session. I'd now like to turn the call back over to Mr. Brent Phillips for his closing remarks.
Thank you, operator. I would like to thank each of you for joining our earnings call today. We look forward to continuing to update you on our ongoing progress and growth as we continue our rapid pace of operational execution. If we were unable to answer any of your questions, please reach out to our IR firm, MZ Group, who would be more than happy to assist. Thank you.
Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.