Greetings, and welcome to the Vicinity Motor Corp. Q2 2022 corporate update conference call. At this time, all participants are in a listen-only mode. The 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'd like now 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. Good afternoon, everybody. I'm pleased to welcome you to today's Q2 2022 corporate update conference call. The Q2 of 2022 was marked by additional sales and distribution wins for our portfolio of electric vehicles, further validating our transition to electric vehicles. This traction is a testament to the incredible interest and support we're receiving from enterprise customers and government agencies. From new government incentives for EV adoptions to new financing strategies, such as the Sustainability Partners electric vehicle as a service program, the market is quickly optimizing for an electrified future. Taken together, our backlog grew to over $90 million, the majority of which are for electric vehicles. We delivered 34 vehicles in the Q2 , surmounting supply chain issues in some areas while facing new obstacles than others. The global automotive industry supply chain continues to be stretched.
Until such time that it catches up to demand, we'll continue to work to engineer creative new solutions to address new problems as they arise. Our goal is to continue to provide vehicles to our customers despite this environment, and we'll continue to do so to the greatest extent possible. That being said, given the pressures we are seeing, we are suspending our prior financial guidance as the current supply chain environment makes it difficult to forecast, and it appears many orders may be pushed from 2022 to 2023. Our Ferndale, Washington facility is nearing completion, helping us to meet customer demand and capture market share in the U.S. with an American-built, Buy American Act-compliant product. We also plan on making this the new home to support our electric industrial truck line, starting with the VMC 1200.
We continue to expand our distribution across the United States during the Q2 as well, adding strategic dealers in Hawaii, the Pacific Islands, Alaska, Washington, Oregon, Idaho, Michigan, Indiana, Ohio, and the entire central region of the U.S. The expanded territory will help us build additional traction from established dealers to offer customers an all-electric options that mitigate exposure to energy and carbon costs while providing the range, speeds, and gradeability required in daily real-world operation. Now with that, I'll turn it over to Dan to review the financial results for our quarter ended June 30, 2022. Dan?
Thank you, William. Good afternoon, everyone. I will constrain 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. 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 Q2 MD&A, which is available on SEDAR. In addition, all figures are in US dollars unless stated otherwise. Revenue totaled $11.7 million in the Q2 of 2022 as compared to $15.5 million in the Q2 of 2021. The decrease in revenue was primarily driven by the delivery of 34 vehicles in the quarter compared to 46 deliveries in the Q2 of 2021.
Revenue totaled $14.9 million for the six months ended June 30, 2022, as compared to $37.1 million in the six months ended June 30, 2021. The company delivered 40 vehicles in the first half of 2022 as compared to 113 deliveries for the first half of 2021, with the decrease primarily a result of global supply chain disruptions. Gross profit in the quarter ended June 30, 2022 totaled $1 million or 8.7% of revenue as compared to $1.7 million or 11.1% of revenue for the quarter ended June 30, 2021.
Gross profit totaled $1.2 million or 8.3% of revenue for the six months ended June 30, 2022. As compared to gross profit of $5.1 million or 13.8% of revenue for the six months ended June 30, 2021. Gross margins were affected by product mix and the low volume of buses delivered. Shipping difficulties and global supply chain disruptions in the availability of chassis for our VMC Optimal products and certain bus components continue to delay deliveries. Cash provided by operating activities in the six months ended June 30, 2022 totaled $0.2 million, as compared to cash provided by operating activities of $12 million in the first half of 2021.
Net loss in the quarter ended June 30, 2022 was $3.8 million or $0.10 per share, as compared to a net loss of $0.3 million or $0.01 per share in the Q2 of 2021. Net loss for the six months ended June 30, 2022 was $6.7 million, as compared to net income of $1.3 million for the six months ended June 30, 2021. Adjusted EBITDA loss for the three months ended June 30, 2022 totaled $1.3 million, as compared to an adjusted EBITDA of $0.2 million in the same year-ago quarter.
Adjusted EBITDA loss for the six months ended June 30, 2022 was $3.3 million as compared to an adjusted EBITDA of $2.3 million for the six months ended June 30, 2021. Cash and cash equivalents as at December 31, 2021 totaled $9.4 million as compared to $4.4 million as of June 30, 2022. We have a strong balance sheet, are well positioned to execute, and the fundamentals of our operations remain strong. While we have suspended guidance for the full year 2022, given an uncertain supply chain environment, demand remains very strong, and we are well positioned for a high level of operational execution in 2023. 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, our expanded dealer network, new facility coming online, and strengthened supply chain are positioning us for a ramp-up of production and significant growth in the months ahead as we deliver upon our $90 million US backlog. We continue to believe we're incredibly well positioned to create long-term value for our shareholders as we empower our customers to create more sustainable public transportation system. I look forward to providing additional updates in the months to come. Now with that, I'd like to hand it over to the operator to begin our question and answer period. Operator?
Thank you, William. We'll now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. The first question comes with Christopher Souther with B. Riley Securities. Please go ahead.
Hi. Thanks for taking my question, guys. Maybe we could talk just a little bit about what some of the biggest challenges are right now from the supply, which components and vehicles are most affected? How do we think this dynamic changes as we start to ramp up in Washington and, you know, how you guys are thinking about t he working capital needs as we do ramp up there, given, you know, supply chains are challenged right now.
Yeah. Okay. Thanks, Chris. It's Will here. Yeah. You know, we have not been immune to the supply chain issues. You know, you look at some of our biggest competitors out there, you know, they're building and parking buses for lack of some specific components. You know, we see. It's really the components that have the microprocessors in it, any of the chips. That's where we see some issues. You know, we've had multiplexing issues with one of our suppliers that's holding up some deliveries and just plagued with small problems like that that are affecting you know, getting our buses and vehicles delivered.
Got it. Okay. Basically, the whole fleet is similarly affected or any specific products more so that you guys have?
No, not specifically. The multiplex would be, I guess, the main issue that we see. We have had some issues, you know, much like our competitors out there. You know, I think your second question there was to do with the factory down in Ferndale. You know, we are planning, you know, we should have substantial completion completed, you know, in Q3 here of the factory. You know, it's our intent to get it up and running as quickly as we can. You know, on that note, you know, we have had a couple of issues down there as well. You know, I was just down at the factory, we had a board meeting down there this week.
You know, I might say it's looking pretty nice as a completed facility there. One of the main issues that we're running into there was really with the electrical switchgear. That would be the switchgear that brings the power from the grid inside the building. We got indication that we were having an issue with that switchgear. You know, to what extent and how long, I'm not sure. That, I would say, would be one of the only real issues that I've seen for supply chain with the factory.
Okay. Got it. It looks like we're slated to start delivering some of the VMC 1200s in the Q3 here. You know, the volumes in the back half that you do have visibility for, you know, how they would. Is that vehicle or some of the other ones based on supply chain and order book, just how do we see near-term visibility shaking out, you know, given the challenges?
Well, you know, we're trying to get as many vehicles delivered as we can. You know, we have the order book. That's not the issue. It's just been like we stated, you know, some of the supply chain has not been as cooperative as what we anticipated. The VMC 1200 has not been plagued with the same problems. We are anticipating starting delivery with our VMC 1200 here, you know, towards I would say the end of Q3 here. Beginning of Q4, we'll start delivering it. We have a pretty massive media event teed up for that. You know, we've got pent-up demand for those vehicles and you know, customers waiting for them.
We will do a pretty large media event, try to get the news out here and some of the government officials, particularly for this province, out for the first deliveries.
That's great to hear. I appreciate the color there. I'll hop in the queue. Thanks, guys.
Thank you so much.
Thanks.
Now the second question comes with Poe Fratt with Alliance Global Partners. Please go ahead.
Yeah, good afternoon. I was just wondering on Ferndale, I mean, it's substantially complete. You had a little bit of an issue with, you know, the connection with the grid. When do you think you'll officially roll out the, you know, the first one off that line? And then as far as its current configuration, can you give us an idea of the expected ramp over the next couple quarters on production out of Ferndale?
Yeah. I wish I could give more clarity on that, Paul. It's you know, we're trying to get it going as quickly as we can down there until we find out what's happening with the switchgear. I can't really give the clarity that you're looking for. You know, we are planning on building vehicles out of there. We've got orders for vehicles to come off that assembly line, and we're also gonna make that the home of our electric trucks as well, which has a pretty significant backlog as well. We just have to. You know, we'll hopefully be able to give some more clarity on that here in the near future.
Okay. You said, you know, the uncertain supply chain, and then you mentioned other obstacles. Would the other obstacle be the, you know, the Ferndale and you know, the switchgear, or are there other obstacles that you're trying to address too?
No, I think Ferndale, the only issues that we've seen there and what our contractors brought to our attention is that switchgear. They're trying to work with. It's a large U.S., you know, company that's supplying that switchgear, and they're even trying to look to see if they can find a used switchgear for us to put in there. As we speak, there is no switchgear. We'll keep everybody abreast of it as we find out ourselves.
Interesting. You know, Transport Canada looks like an interesting program, from the standpoint of, you know, the, you know, being approved for that. Is it something that will have an impact in 2022, or are you gonna see more an impact in fiscal 2023 from that program?
That's Transport Canada program's a great program. There's actually a couple of different parts of it. You know, we've applied for both of our trucks and our buses for the program. I think that the truck qualifies for, like, upwards to $ 40000 , which is, you know, quite amazing because, you know, even here in the province of BC, we have a $40 000 credit. In theory, you know, this province alone, you'd buy the vehicle cheaper than you can buy a gas or a diesel truck. We're just trying to get clarity on how the two programs combine together. There's some great incentives coming out of there. That's what we like to see.
We really see that being a big catalyst for pushing our vehicles.
Great. If Dan, if you could talk about working capital is pretty positive in the quarter, it looks like. Is that gonna potentially unwind in the Q3, or can you give us of an idea of the working capital cadence over the rest of the year?
Sure, sure. Yeah, we do have cash at this point, and we still have a credit line open to us of $ 20 million Canadian through our ABL line that currently we have not drawn upon. From a working capital standpoint for operations, we'll be fine. We still do have some CapEx coming up for completing the plant, but we're substantially complete there. At this point in time, you know, we're looking okay from a working capital's perspective. If we do foresee anything in the future, you know, we still have the capability to take on more debt if we had to in the future. We see no needs for any financings or anything at this point in time.
Would you give us a full year 2022 CapEx number then, if you wouldn't mind?
I would say for the remainder of the year, we probably have about $3 million to spend.
Okay. It'll be a little bit north of $10 million total for the year.
That sounds about right.
Okay, great. Thanks for your help.
Thank you.
Thanks.
Once again, if you wish to ask a question, please press star then one. The next question comes with Robin Cornwell with Catalyst Research. Please go ahead.
Thank you. Hi, Will, Dan. I have a question on the supply chain. Are batteries an issue with the supply?
No. Batteries have not been the issue for us. We entered into some nice supply agreements with a couple of different battery manufacturers. We got BMW, and we got Proterra Batteries, and even a third one in there as well. That has not been an issue at all for us, Robin.
What about, there's a lot of complaints on shipping costs. Not just backlog of shipping, but the actual cost of shipping starting to increase very dramatically. Have you had any issues with that?
Yes, we have. Shipping costs, it has peaked. I think it peaked out earlier this year. We follow that on a daily basis. I was just discussion with Dan this morning on how it was coming down on a global platform, which is really good for us because we do shipping, quite a bit of shipping.
With all these issues, have you had any orders that have been lost?
No, we have not. We haven't lost one single order.
Oh, terrific. Now the switchgear that you're talking about, can you tell us a bit more about what that is and how-
Yeah. I was surprised too when you know when we got the letter from our contractor there that said they're having an issue with the switchgear. The easiest way for me to explain it is you have the power grid that comes off of the power poles, and you need to get that power into your building. It has to go through what they call a switchgear that converts it over to the right voltage and amperage to come into the building. That has become an issue. That's a U.S.-made part, and it's become an issue. Now, we may be able to put a smaller switchgear in, or they're trying to find us a used switchgear that's out of a mothball building right now.
The switchgears, of course, have microprocessors in them, and this has been the issue. I think, when did we find out about it, Dan? Just recently.
Just recently.
Yeah. Just within the last week or two, we found out that they're having an issue with the supplier.
Okay. Well, that's too bad. My next question is based on these new subsidy programs. Because there are multiple levels, I guess they call it stackable, have you any plan to help your clients or even potential clients to navigate through these programs and probably save them some time, with maybe your experience on how these programs could be stackable and help them navigate through?
Yes, we do. Very good question. Thanks, Robin. Yeah, we have. Internally here, we have some of our staffing is working on solutions and helping the customers submit. This is on both sides of the border, so we have the Transport Canada and other subsidies and programs here in Canada, and it's coming in, you know, federally and provincially. In the U.S. is where we really see it. It's just billions and billions of dollars that are stacked up, and there's many different programs. We actually have a program manager that helps the agencies navigate through it. In fact, I do believe we've got numerous applications, and one of the nice ones in the U.S. is what's called the Low-No program.
It was funded with $5 billion at the beginning of this year alone for that program. What that does is that Low-No stands for Low or No Emissions . The customers, you find a customer that wants to apply for the grant, and this is 100% funded in the US. You partner with the agency and submit the application, and then the applications, I believe, are taken a look at and funded every quarter. We've got just numerous applications in right now. We're hoping to, you know, get some good news on some of them here in the next little while. That's one of the programs down there. There's about 3, 4, maybe 5 different programs you have to navigate through.
We do have an expert that helps the customers with that. You know, for us, we're excited. You know, jumping off script here on some of the stuff, you know, we've got the large California contract just closing as well. That'll be a lot of the customers that are gonna be buying off of that program will wanna use this Low-No bill. The California, the CALACT contract, we're hoping to get some visibility on that even on some limited visibility this month. It's a... What would we say?
Like an RFP that's out there, and the state of California expects to buy between 5,000 and 8,000 buses off of that, all mid-sized buses, off of that, 5-year contract, and we're extremely well positioned for it. I'm hoping to get some news out there this month on it.
Just a final question, curiosity. Could you give a percent of the final cost of a vehicle that these programs could actually finance? Like, they seem to be positioning to finance a very large piece of the final purchase price.
Yeah. On the Low-No, I believe it's 100% funding to the agencies. They have to be government agencies, and they have to take you know, high-emission vehicles, diesel or whatnot off the road. That's 100%. On the standard FTA-funded programs that are in the U.S., it's 80%. They fund up to 80% of the value of the vehicle.
Terrific. Okay. Thank you. That's all for me.
Thank you.
At this time, this concludes our question and answer session. I'd like now to turn the call back over to Mr. William Trainer for his closing remarks.
Thank you. Thank you, operator. I'd like to thank each of you for joining our earnings call. We look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please reach out to our US IR firm, the MZ Group, who'll be more than happy to assist. Thank you all now.
Ladies and gentlemen, this does conclude our today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.