Greetings, and welcome to Electrovaya's first quarter 2022 financial results and analyst conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Richard Halka, Executive Vice President and Chief Financial Officer. Thank you. You may begin.
Thank you, operator. Good morning, everyone, and thank you for joining us on today's conference call to discuss Electrovaya's Q1 fiscal 2022 financial results. Today's call is being hosted by Dr. Sankar Das Gupta, CEO of Electrovaya, and myself, Richard Halka, Executive Vice President and CFO. On February 14th, 2022, Electrovaya issued a press release concerning its business highlights and financial results for the three-month period ending December 31st, 2021. If you would like a copy of the release, you can access it on our website. If you wanna view our financial statements and MD&A or our annual information form, you can access those documents on the SEDAR website at www.sedar.com. As with all previous calls, our comments today are subject to the normal provisions relating to forward-looking information.
We'll provide information relating to our views regarding trends in our markets, including their size and potential for growth and our competitive position in our target markets. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and actual results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the company's press release announcing the Q1 fiscal 2022 results and the most recent Annual Information Form and Management Discussion and Analysis under Risks and Uncertainties, as well as in other public disclosure documents filed with Canadian securities regulatory authorities. Please note that all numbers discussed on this call are in U.S. dollars, unless otherwise noted.
Now, I'd like to turn the call over to Dr. Sankar Das Gupta. Sankar?
Thank you, Richard, and good morning, everyone. I would like to start this morning by taking a minute to review our Infinity battery line with its exceedingly good safety and longevity. It is the product going into the electric forklifts and later into electric buses and other applications. Our target for fiscal year 2022 is to have this year our breakout year, target revenues of about $27 million and EBITDA breakeven or positive. This target revenue would be more than double our revenues of $11.6 million in fiscal year 2021, 130% annual year-to-year growth over fiscal 2021. In our press release last night, we are reiterating our target, barring, of course, unforeseen circumstances. Our Q1 numbers were low because some of our major users today have the majority of their income in the December quarter.
Hence, their offtake in the last quarter was nil. Their demand comes through in the nine months from January to September. For example, this year, our major user, one of our major users, has already given us $6 million purchase orders to be delivered in this quarter ending March 31st, 2022, and we expect more in the next two quarters. Our OEM channel partner, Raymond Corp, the premium electric brand of the Toyota group, did sign a strategic supply agreement, and in that agreement they have a minimum purchase plan, which is triggered on January 1st, 2022. That is started last month. We feel they will exceed their minimum purchase needs. Raymond -Toyota, as you know, was named the number one forklift manufacturer in the world for 2021 with about $13.8 billion in revenue.
Raymond is also the largest manufacturer of electric lift trucks in North America. Going forward, we have strong commitments from our OEM partner and key end user customers to reach our targeted revenue for the current fiscal year. We are now operating in over 80 locations, powering electric material handling trucks, and we feel this conservative market is now emerging. Our battery cycle life and safety are critical differentiators for us. They are game changers and fundamental to our current and future success. I will now turn the call over to Richard to review our fiscal 2021 and fourth quarter results in greater detail. First quarter results.
Thank you, Sankar. Revenue for Q1 fiscal 2022 was $1.3 million compared to $2.6 million in the fiscal first quarter ending December 31st, 2020. Electrovaya has not historically experienced seasonality in its business. In recent periods, however, as Sankar pointed out, revenue has been relatively low in the fiscal first quarter, reflecting the preference of certain customers to defer product delivery past the holiday season in order to minimize disruptions at high volume distribution centers during peak periods. We remain confident of reaching our target of $27 million for fiscal 2022 and positive EBITDA and have maintained our guidance. We expect the revenue to increase quarter-over-quarter as we move through the year, barring unforeseen circumstances. Global supply chain challenges continue to impact the company's supply chain for many of its vendors.
This puts strain on the company's ability to meet delivery targets and results in associated cost increase. Steps have been taken to mitigate supply chain interruptions, such as holding additional safety stocks, qualifying multiple vendors, and increased emphasis on onshore supply. Management is monitoring the situation closely and taking corrective action to minimize disruptions as much as possible. The impact of supply chain pressures was evidenced by the gross margin in Q1 fiscal 2022 being 29% as compared to 30% for Q1 fiscal 2021. The decrease in gross margin is due to a number of factors, including product mix, material cost inflation, increased shipping and logistics costs, and foreign exchange movement. Our objective is to maintain gross margin in the range of 30%-35%.
The company ended Q1 2022 fiscal quarter on December 31st, 2021 with $400,000 of cash and had drawn $3.1 million of working capital facility with a maximum availability of $5.5 million, leaving a further $2.4 million available for drawing. The company believes this available liquidity of $2.8 million, plus $1.4 million of accounts receivable and $4.9 million of inventory is adequate working capital to support its operating activities at the anticipated sales level for the 12 months ending September 30th, 2022. We have, however, filed a final base shelf prospectus, which is valid for a 25-month period, during which time the company may increase equity or may issue equity or debt securities in an aggregate of up to $100 million.
We have nothing planned at this stage regarding that shelf, but we'll monitor the situation of capital markets and are focused on creating shareholder value. I'll now turn the call back to Sankar to wrap up.
Thank you, Richard. As you've said, we are bullish about our Infinity battery product line, which is commercial today, and we expect 130% increase in revenues over last year. Our focus is on electric forklifts. Our continuing research through our research division, Electrovaya Labs, into next-generation cells and batteries are ongoing in the areas of solid-state cells and clean electrode production. We are seeing good cycle life in our solid-state battery and will report soon on the progress and performance of this patented approach. The company continues to work in the e-bus market and is developing relationships with OEM bus makers. Similarly, in the automated robotic vehicles. The company is making progress with its capital markets initiatives, including receipt of the shelf.
Management and the Board of Directors always monitors the capital markets before any decisions are made regarding the next steps, including any potential U.S. listing. As Richard said, on the finance and working capital side, Electrovaya has an excellent lender who supports the company with working capital of about CAD 7 million, a promissory note of about CAD 6 million, and other financial support such as purchase order financing as needed. This concludes our remarks this morning. Richard and I would now be pleased to hold a question -and -answer session. Operator, please open the line for questions.
Thank you so much. We will now be conducting the question -and -answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for your questions. Our first questions come from the line of Jeffrey Campbell with Alliance Global. Please proceed with your question.
Good morning, gentlemen. Let's start with the first quarter 2022 results. First, was the result, the revenue result consistent with your expectations for seasonality, or was it a little lighter than expected?
I would say it's consistent in terms of seasonality, but the impact of the e-commerce in that quarter was more than, in other words, that they wouldn't take any orders that quarter had a bit more of an impact than it did on previous first quarters. It was in line with expectations. It was lighter than where we'd like it to be, but the good news is it's really just a shift from the first quarter now into the second.
Okay. To that point, if we think of the $27 million guidance that you've reiterated on a percentage basis, the first quarter result was only about 4.6% of that guidance figure, which suggests there's gonna be a lot of catching up for the rest of fiscal year 2022. Can you provide us some sense of how that catch-up arc will progress over the remainder of the fiscal year?
Jeffrey, I don't think I wanna go into any more detail than what I said, is we're anticipating quarter-on-quarter growth. Obviously, it is going to be some hockey stick growth here, which, you know, we anticipate the second quarter being significantly higher than the first. As we move through the year, to add growth on each quarter. Overall, we're comfortable at the $27 million, maintaining that guidance. Breaking it down by quarter, though, is difficult to do, as we have, as I've mentioned, shifting from one quarter to the next quarter, depending on delivery, commitments, et cetera.
Jeffrey, as we had announced, you know, folks are placing orders of $6 million, which was in early January, and they expect the products to be delivered by before the end of March. We see good growth. The December quarter was not as unexpected.
No, that was helpful. Thank you.
Yeah.
Finally, on the gross margin, if it continues to be challenging for the reasons noted, will any of these costs be passed on to customers?
We do look at things such as that. For example, we increased our density, which actually, for the same output, you've actually reduced your material cost. We're looking at measures like that. We're constantly, you know, innovating our product on the supply side. As I mentioned, we have multiple vendors. We've onshored some activities, and actually, we've managed to get some cost reductions there. I think that it is challenging, but I think we're, you know, rising to the occasion. We meet the challenges as they arise.
Yeah. Jeffrey, we had a 7% increase in energy density, so, you know, it reduces all our component costs. We are seeing certain components, like steel and so on, coming down in prices.
Okay. That's helpful. Thank you. I wanted to ask about Vicinity Motors. I know it's early days, but just wondering if the work has encountered any roadblocks, or is it progressing about as expected?
It's progressing as expected. A lot of the electric bus programs will be guided by government policies and such, so we are, you know, we watch what's happening in both Washington, D.C., and Ottawa on these policies.
Did I hear correctly on your prepared remarks that you're in talks with other bus manufacturers besides Vicinity?
Again, Jeffrey, our addressable market for the electric forklifts is very large. It's probably way larger than the bus, and we've got a very focused approach there. Our focus is very strongly on the electric forklift markets.
Okay. Finally, referring to the shelf that Richard mentioned in the prepared remarks, can you provide any color on how those funds might be allocated at some point in the future? Specifically, I'm wondering if manufacturing capability might be expanded outside of Canada at some point.
I think we like to keep all our options on the table. It's certainly something we're considering. Just add one thing that there's a certain credibility it adds to have that shelf available there, that you do have the possibility, if you have a large transaction, to finance it. It was not an easy process to get through the shelf, et cetera, but I think, you know, we've gotten over that bar, and we're pleased to have it in place, but we have no immediate plans for it.
Okay, great. Thanks very much for your time, and we look forward to further wins in the material handling business.
Thank you very much, Jeffrey.
Thanks, Jeffrey.
Thank you. Our next question has come from the line of Shawn Severson with Water Tower Research. Please proceed with your questions.
Thank you. Good morning, gentlemen. My question surrounds the $27 million for the year. How much of that is in hand, let's say, or in known orders? I'm trying to understand, let's call it turns business, right? That comes in a shorter period of time that is in the $27 million, let's call it backlog. We're trying to understand if that is a backlog of confirmed orders. To, you know, to understand the variability of the $27 million.
Shawn, in the electric forklift business. We have a clear sight on that $27 million. In the electric forklift business, people put in the orders and they expect the product in the next eight weeks or 10 weeks. For example, the $6 million order position which we received in January is expected to be delivered in the next couple of weeks. On the $27 million, we do have a good line of sight.
Yeah. Morning, Shawn. I would just add that we have very good visibility on that. It comes from a couple of sources. First, we're in discussions with the end users. They've indicated their volumes that they are looking to purchase through the year and anticipated deliveries. As Sankar says, you don't see the PO till they're ready for it. They've given us very clear indications and commitments that that's what they're going forward with. The other thing that I would add is that also as our distributor, Raymond, they're also in discussions with customers, and they have indications of the volume of orders there. As well, they release the orders to us when it's ready to go to customers.
All -in -all, in the intelligence that we have, which is direct with customers and through Raymond, we have a high degree of confidence in that $27 million. I don't want to give you a specific dollar figure of what we have in hand, because it does change quite rapidly.
Great. Thank you for the explanation. The next question is on retrofit for lithium-ion batteries. Give us progress report and update there and, maybe what you'd expect through this fiscal year.
You know, the $27 million, Shawn, includes both batteries for new electric lift trucks as well as batteries for retrofits or upgrades to the lift trucks.
Okay. All right. Thanks. I didn't know if that was all OEM orders, but that includes what you know about retrofit as well.
Yes, that's right. With the OEMs, we also receive retrofit orders to the OEM as well.
Okay.
Orders on the side.
Okay. Just lastly, I wanted to touch on solid-state batteries a bit and, you know, think about, you know, a little update there and, you know, what should we be looking for remainder of your fiscal year, call it this calendar year, in terms of, progress reports or milestones that could be coming from that effort?
The cycle life of the solid-state batteries is the most important thing. The batteries are focused for electric passenger cars and which needs certain cycle life. We will update our cycle life data and progress hopefully soon in a separate press release. So far, we are bullish on the progress of the work going on at Electrovaya Labs.
Great. Thanks. I'll take the rest of my questions offline. Thank you.
Thanks, Shawn.
Thank you. Our next question has come from the line of Gianluca Tucci with Torrent Capital. Please proceed with your questions.
Hi, good morning, guys. Thanks for taking my question. So it's been over 12 months now that the company has inked the supply agreement with Raymond. Can you speak to the nature that agreement has evolved or how that connection has evolved? To the degree of transparency, how has that improved today versus 12 months ago?
You know, Gianluca, Raymond is a large company, so this is a new business venture for them. They always felt they needed to develop all their infrastructures, whether it's website, building up their sales organization, et cetera, that it would take a few months. Which is why their purchase agreements really were starting on 1st January 2022. That. So I think that progress is going well. We are now just on the product side, we are very well integrated with their vehicle both digitally, mechanically, electronically, and electrically. Their sales team is, I think, doing well, and we're very pleased with it.
Yeah, I think that, you know, out of the gates, there was a learning curve to go up, which both organizations went through in 2021. I think we're feeling very, very strong about the relationship right now. I can tell you it's operating smoothly, and we have a much better transparency into the orders in the pipeline there.
That's great. Yeah. Good color. Thank you. On your guidance of 27 for this fiscal, can you like, you know, split that out between e-bus? Like, does the company expect some e-bus orders at the end of this year, or is it principally on the forklift side? I guess, how's the outlook on the e-bus for 2023?
Gianluca, I think the potential here, the addressable market and the exciting opportunities that we have in the material handling sector, we are laser focused on that. That is our growth engine in 2022. That is where we're very clearly focused. e-bus, you know, we'll see how that develops, but we don't see that as an immediate addressable market as we do with forklifts. We have an opportunity sitting there right now working with the largest OEM in the industry. We built some really good relationships, and I think this is a year that we really leverage all that. We need to keep laser focus on where our value is created.
That's excellent color. Thank you. On the solid-state, you did talk about it in your prepared comments. A potentially upcoming, like what are the next milestones for that division and that I guess Labs piece of the business to accomplish?
You know, the big milestone is the cycle life. This solid-state battery, the energy density is very high, and it's, you know, the projected energy density is high. It's really perfect for the electric passenger cars, which needs low cost, low initial cost. Typically, these passenger cars, electric passenger cars, need certain cycle life. This has been difficult to meet with other solid-state cells and batteries. We will give our progress. The progress so far is good. We will give a more fulsome information on the progress shortly as the results comes out.
Excellent. Thanks, guys. I look forward to this year.
Thank you very much, Gianluca. You have a great day.
Thanks.
Thank you. That is all the time we have for questions today. I would now like to turn the call back over to Dr. Sankar Das Gupta for any closing comments.
That concludes our call. Thank you for listening this morning. We look forward to speaking with you again, after we report our fiscal second quarter results. Have a wonderful day.
Thank you very much.
Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.