Earnings Call: Q2 2021

Aug 4, 2021

Good day and thank you for standing by. Welcome to the NFI 2021 Second Quarter Financial Results Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to your first speaker today, Mr. Stephen King. Please go ahead. Thank you, Henry. Good morning, everyone. Welcome to NFI Group's Q2 2021 results conference call. This is Stephen King speaking. Joining me today are Paul Soubry, President and Chief Executive Officer and Pappas Usoni, Chief Financial Officer. For your information, this call is being recorded and a replay will be made available shortly. On this morning's call, we will be walking through a results presentation that can be found in the Investors section of our website. While we will be moving the slides via the webcast link, we will also call out the slide number as we go through the deck Starting with Slide 2, I would like to remind all participants and others that certain information provided on today's call may be forward looking and based on assumptions and anticipated results that are subject to uncertainties. Should any one or more of these uncertainties materialize Should the underlying assumptions prove incorrect, actual results may vary significantly from those expected. You were advised to review the risk factors found in NFI's press releases and other public filings on SEDAR for more details. We also want to remind listeners that NFI's financial statements are presented in U. S. Dollars, The company's functional currency and all amounts referred to are in U. S. Dollars unless otherwise noted. On Slide 3, we have included some key terms and definitions is referred to in this presentation. Of note, 0 emission buses, or ZEBs, consist of battery electric, hydrogen fuel cell electric and trolley electric buses. Equivalent units or EUs is a term we use for both production levels and delivery statistics. The majority of our vehicles represent 1 equivalent unit, while an articulated 60 foot transit bus takes 2 production slots And therefore is equal to 2 equivalent units or 2 EUs. On Slide 4, for those of you new to the NFI story, We are a leading independent global provider of bus and motor coach solutions. Our purpose and mission is simple. We exist to move people. In other words, our products move precious cargo. We are focused on designing, building and delivering exceptional mobility solutions. On this slide, we've also included our stakeholder matrix that drives our strategic decisions and core operating principles that govern our behavior. I'll now pass it over to Paul to recap the call. Thanks, Stephen, and good morning, everyone. I'm now turning to Slide 5. In 2021 Q2, we experienced numerous positives as we executed on our strategic priorities of A, Winning the evolution to the 0 emission mobility B, lowering our cost structure C, strengthening our balance sheet and D, supporting our customers as markets recover and as they transition their fleets. While there has been significant progress related Vaccine rollouts and easing of government restrictions, COVID-nineteen is not yet over. The pandemic continues to impact our people And has created notable supply chain challenges, which in turn is disrupting our production schedule. It's not an excuse we're hiding behind. It's our reality now. We have and we will manage through it. We anticipate supply chain challenges to be transitory. And like most other manufacturers, Exciting growth in active procurements with bids up almost 50% from 2021 Q1. Our North American public sales team is the busiest that it's ever been. In addition to the growth in procurements, we've also seen broad signs of market recovery And unprecedented levels of government support with multibillion dollars planned in public transit investments to come. Although we view funding as the key driver for procurements, It is also worth noting that transit ridership is more than 80% up from early 2020 levels in some of the U. S. Communities. We continue to lead the evolution of Zero Emission and ZEBs are now 16% of our total backlog. We've been awarded large ZEP awards in the United States, England, Scotland and Ireland, and we recently announced entry into the Australian market via strategic partnership. In addition, we delivered our best performance ever on the U. S. Federal Transit Administration's low no grant program. Plus, in 2021 to date, We've launched 7 new zero emission products and we remain on track for approximately 20% to 25% of our annual deliveries this year to be 0 emission. Our company wide transformation initiative launched last year, NFI Forward, is on schedule and continues to meet its targets. NFI Forward is designed to make us a simpler, leaner company with fewer business units and a reduced footprint to drive margin improvement as top line revenue grows. In May, we released our 3rd annual environmental, social and governance report for 2020. The report focused on the 3 main components of NFI's sustainability pledge: a better product, better workplace and a better world. DSG report also introduced NFI's 4 pillar approach, including vehicles, infrastructure, smart connected technology and workforce development, Directly supporting the evolution of Zero Mission Technology, the need for equitable access for mobility and people development that will drive more sustainable future. Once again, we are reaffirming our full year 2021 guidance for revenue of approximately $2,800,000,000 to 2,900,000,000 and adjusted EBITDA of approximately $220,000,000 to $240,000,000 Additional insights will be provided on today's call. I'll now turn it over to our CFO, Patasse Sony to review NFI's Thanks, Paul. Turning to Slide 6. You will see that our backlog decreased slightly due to deliveries in the quarter. Expiry of older options that date back to 2016 and timing of new orders. Our backlog remains at a robust 8,168 EUs With 16% being ZEBs. Our year over year deliveries were up in all product lines, primarily due to the idling of facilities in Q2 2020. Turning to Slide 7. Total revenues increased by 75% year over year, largely driven by idling of production facilities in 2020 and from record quarterly aftermarket revenues. Aftermarket performance was driven by Asia Pacific volumes and significant volume increases in North America, The U. K. And Europe. The continued improvement in Asia Pacific transit markets is a good sign for broader market recovery, Given those markets were impacted earliest by the pandemic, adjusted EBITDA was up by $76,100,000 from the combined benefits of higher deliveries, NFI Forward Savings and the receipt of $18,000,000 in government support largely provided to assist with retention of skilled personnel. Going forward, we expect volume recovery and margin improvement will replace the impact of wage subsidies received. Free cash flow was up by $58,500,000 a 136% increase over 2020 Q2. A significant factor contributing to this increase was NFI Forward Savings of approximately $13,000,000 and additional free cash flow savings of approximately 1,000,000 Liquidity at the end of the quarter was $389,000,000 an increase of $70,000,000 from the previous quarter, primarily driven by working capital improvements. During the quarter, we repaid $46,000,000 of debt for a year to date repayment of $161,000,000 In addition to repaying debt and funding strategic Investments. We remain focused on returning capital to shareholders through dividends. A key priority for 2021 is a focus on working capital. We saw the benefits of this approach as we lowered working capital days by 6 from the previous quarter, generating a $62,000,000 inflow. These improvements have come from better supplier payments, increased usage of purchasing programs and improved collection processes. Going forward, we anticipate continued improvements to working capital metrics. Although supply chain challenges, product mix and seasonality may cause some quarterly variance. Turning to Slide 8. I'll explain some of the dynamics we're seeing with NFI tax exposure. Our North American tax structure includes minimum tax components that are more fixed in nature plus variable components based on profitability and the impact of nonrecurring discrete or onetime items for which we normalize. As discussed at our previous financial results call, for 2021 Q1, on an annual basis, We expect our minimum fixed tax expense will be $18,000,000 to $22,000,000 while our variable taxes will be based on a range of 21% to 23% of adjusted pretax earnings. During the Q2, we also saw a tax benefit from currency fluctuations, which lowered our total adjusted ETR. We may continue to see these impacts during the remainder of the year. As foreign exchange rates are very difficult to forecast, we will report the fluctuations in actual results, but we will not provide a forecasting methodology for this component of the tax expense. I'll also note that during the quarter, we had a $6,100,000 tax expense related The impact of U. K. Legislative tax changes that we normalize for our adjusted ETR. On Slide 9, You'll note that net earnings and adjusted net earnings improved significantly from the same periods in 2020. Both metrics were positively impacted by revenue growth, Savings from NFI Forward, support from government wage subsidy and foreign exchange gains. The derivative financial instruments noted on the year to date reconciliation adjusted EPS relates to pretax gains on our interest rate swaps. Turning to slide 10. The NFI Forward initiative remains at or above targets. Included here are a list of projects that we've completed in the 1st year of the program and the projects that we are currently working on to generate further savings. Since inception, NFI Forward has generated $41,500,000 in adjusted EBITDA savings and an additional $2,500,000 in free cash flow savings. Note that the additional free cash flow benefits are on top of the expected cash flow that will be generated from the adjusted EBITDA savings in our normal operating activities. We remain on target with our original plans and anticipate that we'll reach a run rate of at least $67,000,000 in annual Adjusted EBITDA savings by 2023 plus an additional $10,000,000 in annual free cash flow savings. These cost reductions will generate Significant leverage. As markets recover, we'll grow revenues on a lower fixed cost base with expected drop through to adjusted EBITDA. On Slide 11, we reaffirm our guidance for revenue, adjusted EBITDA and cash capital expenditures. I wanted to add a comment on seasonality. We anticipate that revenue and adjusted EBITDA for the Q3 will be down from the same period in 2020 and similar in profile to Q2 2021. This is mostly driven by the impact of supply chain challenges and impacts on production schedule due to timing of customer orders. 4th quarter revenue and adjusted EBITDA are expected to be higher than the comparative period in 2020. A reminder for listeners that in 2021, Q3 will be a 13 week period, while Q4 will be a 14 week period for a total fiscal year of 53 weeks. I would like to now turn things back over to Paul to discuss the factors driving our longer term outlook. Thanks, Pafasu. I'm now on Slide 12. On this slide, we summarize the unprecedented government support for public transit in Canada, the U. S, the UK and New Zealand. A significant amount of this funding is focused on 0 emission buses and infrastructure solutions, where NFI has leadership positions. These announcements are very encouraging, but they are complex and they're still going through the approval, negotiation and employment phase. As such, We do not yet have all the details on when these proposals and funds will actually materialize into financial results and buying and delivering of buses. Turning to Slide 13. What we attempted to do here was present our view of the timing of market recovery as it relates to public and private transit and motor coach markets, essentially a phasing of the recovery from the pandemic. As mentioned, the North American public bid activity is increasing, We anticipate that this trend will continue for the foreseeable future, driven by unprecedented levels of government support. We expect to start seeing an uptick in project awards in the latter part of 2021 and into 2022, and we expect production to significantly increase in the second half of twenty twenty two. North American private coach markets are anticipated to reach 50% of their pre code levels in 2022. Recovery here will be driven by travel and leisure, sports teams, universities, employee settles and colleges. We've already started to see a shift in optimism from private motor coach operators. This market will take longest to recovery from the pandemic. In Europe, the UK and Scotland, Government support and customer demand is driving strong ZEB adoption and overall order activity. We expect to see these markets continue to improve throughout this year into 2022 and beyond. Asia Pacific is currently experiencing higher aftermarket volumes With new vehicle order activity expected to pick up again as the market enters its next purchasing cycle in 2023. Overall, Our view is that the markets will recover in 2022, but it's likely 2023 before we see a return to pre pandemic demand, production and delivery levels. On Slide 14, we provide the latest update on the North American public customer bid universe. As mentioned earlier, active bids where we have submitted or in the process of submitting a proposal, meaning that it had the most significant near term impact on our operations, increased by 48% from 2021 Q1. The forecasted 5 year North American industry procurements developed through detailed discussions with transit agencies and from their published fleet replacement plans is down slightly from the Q1, but this is primarily driven by the shift to increased active bids with agencies revisiting their capital plans as they now gain a better understanding of the new government funding programs available to them. At the end of 2021 Q2, 38% of the total bid universe were 0 emission buses, up 28% from the end of Q1, highlighting the ongoing evolution to 0 emission transit. We continue to see increased usage of purchasing schedules, which include state and national contracts and cooperative agency purchasing agreements. Since 2018, NFI has received more than 600 vehicle awards from these schedules, which highlights their growing importance within North American Transit Agencies as an effective and efficient bus procurement tool. I want to remind everyone that these schedules are not recorded in NFI's backlog as they do not have a defined quantity associated with them allocated to NFI or any other OEM at point of award. Once a customer purchases a vehicle Using one of these agreements, the purchase is recorded immediately as a firm order. Turning to Slide 15. It shows our targets through 2025. We're well positioned for the long sorry, for the near and long term with expectations for growth with $3,900,000,000 to $4,100,000,000 in revenue and $400,000,000 to $400,000,000 in adjusted EBITDA in 2025. Our performance will be driven by our sole focus on buses and motor coaches, where we have deep customer relationships and the ability to deliver highly customized vehicles. In addition, we'll continue to grow in new markets through ADL and ARBOC. We have a proven track record in delivering 0 emission buses, we will lead the market's transition to 0 emission future. We expect that 35% to 40% of the 2025 production will be higher priced And higher margin 0 emission buses, more than tripling our 2020 levels. We have the largest 0 emission bus capacity in North America and the U. K. With growing presence in Europe and Asia Pacific, NFI Forward will create volume leverage as we delever sorry, as we deliver higher revenue on a lower and more flexible This is evidenced by our 2025 targets, including an expected revenue CAGR of more than 8%, but an adjusted EBITDA CAGR of more than 16%. We have one of the largest aftermarket bus and coach parts business in the world, Supporting over 105,000 of our own vehicles in service and others and delivering a recurrent revenue part stream. We're pleased with our performance, and we're confident in our business recovery and our market outlook. I'll now turn it back to Steven to summarize today's discussion. Following that, we'll open the call up for analyst questions. Thank you. Thanks, Paul. Turning now to Slide 16 for a quick recap. We had a solid second quarter performance in a very challenging environment. Although the market is on the path to recovery, there are ongoing challenges from the pandemic, primarily related to the supply chain. We continue to see unprecedented government support for transit, which will help drive order activity and growth. North American public transit bid activity is at pre COVID-nineteen levels, and we expect to see production volumes back to normal in the back half of twenty twenty two. We continue to innovate and disrupt ourselves in the market. We've had numerous new product launches this quarter and we also announced entry into new EV markets in Australia and Ireland. We reaffirm our full year 2021 guidance despite a challenging global environment. We are focused on achieving our ESG goals through initiatives aimed at reducing our internal footprint while creating equitable access to mobility and workforce development. We are leading this evolution to a 0 emission future with strong 2025 targets that would see us drive top line growth and even better margin performance. We'll now open the line for analyst questions. Henry, Please provide instructions to our callers. Thank Your first question comes from Noam Farhi of Laurentian Bank. Your line is now open. Hi, good morning everyone. So my first question is regarding The Manufacturing segment, if I read this correctly, there's a little bit of pressure on the margin side. I'm just wondering is that has to do with the Product mix or is there supply chain pressures? If you could just provide some color on that front. Okay. So let me just make sure I understand. So one of the things that you're asking is from a manufacturing segment side of things, You're seeing some margin pressure. And from that perspective, you're asking about what's kind of causing that margin pressure? That is correct, yes. Okay. So let me just kind of start out and then maybe we can kind of go from there. So I think one of the things that we're starting to see more of is From my perspective is we're starting to see a couple of things. So number 1 is we're starting to see more EVs. And with that EV mix Dynamic, what's happening is we're getting a little bit more top line revenue, but when we talk about margin percentage pressure, we are getting a little bit less on the margin percentage side. That's the way I'm kind of. Noam, just to be clear though, as we get more zero emission vehicles, the EBITDA margin for zero emission buses is actually at this point better than we're seeing for a conventional propulsion. The problem is that the sale price of EV is materially higher and therefore by simple math that the margin percent is slightly deteriorated. We're not viewing that as Fundamental dynamic yet in terms of our competitiveness on Zero Mission. In fact, we're in a really good position there. But just the simple more Top line or the higher sales price has quite a significant impact on a margin percent calc. And, Nomad, just one quick thing too. There was some mix For sure, in the Q2. So we sold more motor coaches and more vehicles in UK and Asia than North American transit. And some of that, yes, it's related to just market dynamics and market recovery and a little bit of the issue too from the supply chain On some of the Eilena facilities and days and stuff like that. So there was a little bit of mix issue as well in the quarter. Okay, perfect. That's great color. And just the second one, it's more about maybe Paul can answer that. There's a good slide on NFI view on market recovery. I'm just wondering, There's a solid bid universe there. What is really has to happen in the North American market for that to sort of translate into Backlog, is that the infrastructure bill or is there like something that needs to happen where it actually gets translated or just like a normal cycle where it will take a few quarters to translate into backlog? Well, it's a really good question. And as we spend every day watching the news and living in Washington and watching what's Go on in terms of the infrastructure build, the replacement for the FAST Act and all those other things. So there's kind of a micro and a macro dynamic. First of all, the transit agencies that through kind of 2018, 2019 2020 that were trying pilot projects on 0 emission buses are Starting to get their heads around the way they want to go, the charging strategy, the size of the fleet, the pace of adoption, Smaller vehicles versus 30 or 45 footers versus Artix and even now double decks and so forth. So there's the micro dynamic of them getting confident in the way they want to And having learned a little bit around the requirements for infrastructure. At the macro level, there is no question That the Biden administration's strategy and policies and plans around dealing with congestion in cities, dealing with 0 emission dynamic and funding the infrastructure has a really massive impact on future demand, but stability of demand. And so there's a lot of people that are Spending a new born amount of time right now trying to understand the timing of that. And the thing that often we try to get across to investors and analysts and stakeholders is Even with an announcement today, for example, on the U. S. Government, the Canadian government, it can be 18 to 24 months before that really solidly trends into Actual build and delivery activity. So the good news is you've got the general market recovery and economic recovery. You've got confidence from an operator and kind of starting to get their heads around the way they want to move to 0 emission, the type of vehicles, the And then you have the macro tailwinds of some pretty serious funding like we have never seen before. So this is why I think between Mike's comments and Steven's comments We kind of continue to see a little bit of noise through 2021, a little bit more solid Order and backlog development through 2022 and then what we think will be the recovery of what was the previous replacement factors, if not a little bit higher in 2023 beyond. This is very helpful. And maybe the last one before I head back into the line. You've entered the Australian market with a partnership. I'm just wondering if you could provide some color on the economics of such partnerships. You did one in New Zealand and Ireland, if some big picture on that. Yes, great point. So Australia, a little bit of history. When we were just New Flyer and Alexander Dennis was on its own and Marco Polo before they had made an investment in New Flyer, There was a company that came for sale in Australia, the market leader. All 3 of us bid on acquiring that business. Marco Polo was the successful player. Alexander Dennis then bought another player in Australia, a smaller business, and it really wasn't a success. And so they backed out of that market. But what they did learn With how the market operates, the provincial dynamics or state dynamics in Australia, the local buy requirements and so forth. What this allows us to do is this partnership with It allows us to actually build body kits and work with that local partner to do final assembly of our buses on a BYD chassis in Australia for the Australian market. And so it's not a new market to us in terms of understanding the market dynamics, but it's a reentry into a market With a proven kind of strategy, the same thing we do, for example, in New Zealand, work with a local build partner to build it for the local market. So it's not a home run, but it's another really solid, we think, interesting market for us to try and diversify from our current Cost base and diversify and grow our revenue base. Okay. No, thanks for the color and that's it for me. Thank you. Thanks. Thank you. Thanks, Lamar. Next question comes from Kevin Chiang of CIBC. Your line is now open. Thanks for taking my question. Paul, you talked about the bidding activity being Elevated here, funding environment is good. I'd be interested to hear if you're seeing any changes in How transit agencies are looking at, I guess, replacing their fleet or building back their fleet post pandemic? Like are you seeing considerations around How many people they want to put in a bus? How they're looking at capacity utilization? And the type of buses they may want to order moving forward and maybe how you view that potential demand profile versus maybe what a transit agency would have typically ordered pre pandemic? Let me start off at kind of a simple statement, Kevin, and then give you a little bit of color. I don't think we're seeing anything different in how they think about the future Of operating their fleet and the mix profile of the size of the vehicles. All of them have strategies for On route service, there are various route structures, there are pace or cadence of buses every X per hour and so forth. They all have their own current facility strategy. Some of them are fairly advanced on adapting their facilities for either larger vehicles or to adopt The charging strategies and so forth. When COVID started, we saw clearly in some cities, the bus Go to Sunday or holiday service, so the frequency changed dramatically. The route structures really didn't change. Then as we saw them starting to come back, We in some cases, we saw as many buses on the road, but limiting the number of people on the bus. And so again, every city, every area was different How many people were riding, how many first responders or how many essential workers had to get on to those vehicles. But as they now start to get back into load factors starting to increase, ridership going up, The strategy is more around the evolution of the propulsion and their choice of either depot charging only or en route charging, so less batteries but charging more Frequency or in some cases, really starting to seriously look at fuel cell electric vehicles that give them a range benefit. I'm not so sure it's changing the quantum or the type of bus that they want to buy other than the real focus on the propulsion system. What is changing though is the pace now of maybe their fleet renewal. So let's say since 2018 to now, not only the first Part of 2018, 2019, even to 2020 was around what kind of 0 mission do I want, what's my strategy. And then from then on, here's now been kind of survival and adaptation. They're starting to get their heads around what they really think they want. And so when you sit back and think if you or I were running a transit agency in the average city in the U. S, The comfort today that the federal government is dead serious about A, public transit B, about transit in every city available to allow Congestion Reduction and C, a commitment to environmental responsibility and therefore zero emission, it's actually really encouraging. And so if we sat here with Chris and his team and went through the actual bids on the street, it's like we've never had As many active bid opportunities that we have than we have today. In many cases, the quantum of buses per bid is less Because they're getting into that recovery phase, but the number of discrete opportunities is at record levels. That's helpful. Maybe I can look at and I appreciate, I think it's Slide 13 here on your views on the market recovery, I found that to be very helpful. Maybe if I look at it, Your performance in the first half of twenty twenty one, a transition year, you delivered just under 2,000 new I know mix played a role, but that's actually not too far from the total you would deliver in the first half of, I guess, a pre Pandemic year, obviously, with much higher earnings attached to that. So I'd be interested to see how you think about The recovery in earnings with the recovery in volumes, like do you think by 2023, You're kind of back to pre pandemic levels on your way to kind of the $400,000,000 plus of EBITDA by 2025. I'd be interested to As volumes recover, what are some of the marks we should be thinking about in terms of EBITDA as well? Well, it's a really good question. So in fact, I'll take you to Slide 15, Kevin, if you don't mind, just to give you kind of our look at it. Previously, we have given the slide. This case, we actually went back and showed you 2019. And 2019, we only had half of Alexander Dennis in our business. And basically, when you look from 2019 to 2020 and then you look at the start of the trajectory of recovery, We've basically lost 2.5 to 3 years of our lives, if you will, in terms of getting back to pre pandemic EBITDA performance. And so some of it will have a mix dynamic, some of it will have the full year benefit of ADL coming in, and some of it will have the reduction in our Cost and therefore, the improvement in our performance. So we kind of think it our without giving the details of individual Periods past 2021, we think that we're take our 2019 numbers and kind of insert them somewhere in 2023 and so forth, and you'll see us With a very strong trajectory of returning back to what we project to be $4,000,000 to $450,000,000 by 2025. And a reminder of what we talked about last quarter, We didn't just make up a number based on units. We went back to the volume of each of our markets pre pandemic. We took cost out of our business. We added the conversion to 0 mission. We added a little bit of growth based on some of the strategies that Alexander had and that got us to the 4 to 450. So we've kind of looked at that as A prudent, responsible, reasonable, conservative approach to where we can get to. The tailwinds that we're seeing are really positive in terms of funding, but it's not Tomorrow, it doesn't allow for a bus to be bought tomorrow. The other dynamic that all you got to do is read the paper today or click on the Internet. There is not a supplier in the world that doesn't have supply or a manufacturer that doesn't have supply chain challenges. And so in addition to Managing customer demand and build slots, schedules and all that stuff, the supply chain dynamics are really causing our inability to really try and speed up. So we're in a pretty good place today. We're relatively stable. We've got continue to change our master production schedule darn near every week. That's really why we articulated this year as a transition year. Nobody should expect our business to bounce back. But we've given guidance for 2021. As we get closer or past The New Year, we'll give 2020 guidance, and we think it's about a 2, 2.5 year Downgrade, if you will, relative to where we were in 2019, but we're well on our path back. Now the one thing and again, Paul, just to make sure Kevin, I'm understanding you. I think you were looking at 2019 and you were not factoring a full year I think you were looking at 2019 and you were not factoring a full year of ADL, correct? Yes, exactly. You've been taking the 2020 pre pandemic guidance You had issued, I guess, in early 2020. But yes, I guess, the earnings framework is roughly the same. Yes. I think pre sorry, Kevin, pro form a 2019, we would have did about 6,100 units for a full year of ADL. That's helpful. And maybe just last one for me here. I know you do operate in a pretty stringent local content requirement environment, but there's obviously a lot of headlines about the Biden administration's Push to move the overall Buy America percentage to 75%, I believe it is. And I know you already operate in a 70% world, but are you hearing anything of an increase in your local content requirements In the U. S. And is there anything you think you'd have to do to hit that if that is coming on the pipeline? Just a point of clarification, Kevin. There are 2 different things. Buy America is the provisions inside the FTA for the purchase of rolling stock. That's the world we live in. And it went from 60% to 65% to 70% as you just summarized. Buy American is for construction Contracts in the United States. That has nothing to do with the purchase of buses. We have heard nothing in any of our investigations or lobbying efforts The increase in our world past the 70%. So that's the first issue. The second issue is the local procurement requirements. There is some lobbying by various organizations in the United States to try and get local content dynamics. And we have seen none of that yet make its way into again the purchasing of rolling stock. So we have in the past Set up local completion centers or local service centers in Pick 1, Ontario, California or in Washington or a fabrication facility in New York to try and assist with local content. But at this point, we don't expect to have to change our footprint to accommodate any of that as far as we can tell. That's it for me. Thank you for taking my questions. Thanks, Tammy. Thank you. Your next question comes from Cameron Doerthof National Bank. Your line is now open. Thanks very much. Good morning. Hey, Ken. So just a question on supply chain. I mean, I think we're all familiar with what's going on, on the chip shortage and things like that. I guess maybe two questions here. One is, what gives you some confidence that we're going to start to see some normalization in that by the end of the year? And I also wonder if you could talk a little bit about cost inflation, anything specifically there that you're seeing that's affecting you on the cost side? Great, great questions. So just putting context for all of our listeners, the product that we build is not a standard Sure, there are certain parts that are the same in every vehicle, but every single one of them is customized. And we're buying quantum of of parts to put on a vehicle based on a certain batch quantity of each customer. So we're in daily communication with every single individual supplier based on each of those batches. We don't buy microprocessors or chips directly. We buy parts that have them embedded in. So yes, we've had situations where we'll get force majeure letters or we'll get customer supplier notifications of delays and all these other things. But we're not our quantum of what we buy is nowhere near what automotive guys would buy and so forth. In terms of confidence for the rest of the year, We're working based on our suppliers' ability to supply to us. And so in that daily dialogue around do you have 15 of those or 50 of these that we have on order, are we going to get them? This is part of the daily gymnastics that we go through of adjusting master production schedules to meet production output. In many cases, we'll make judgment calls about delaying the line entry of a certain Order based on concerns about supply chain, and we'll make game time decisions about no line entry weeks to clean up WIP or to adjust production schedules, which is why you're seeing us dramatically recover volumes in 2021. In terms of commodity price increases, most of what we're building today was priced and cost a year ago or 1.5 years ago. And yes, there are some commodities that we buy that Steel, for example, I think it's $15 a bus is raw steel. And so we see shorter term cost increases. Almost all of our contracts or the vast majority of them have, at least on the New Flyer side, have purchase price index Elements to those contracts so that go forward builds, we're able to adjust the price based on the cost inflation. There's some risk in those numbers. There's also some opportunities in numbers where we can kind of beat the inflation number. So given the size of our Quantities are batches, individual builds. Our escalation of cost is managed at the micro level contract by contract to try And the impact on our business. And so we think there's no question there's inflation on pretty well everything that we're buying. We think we can manage for the most part that inflation inside our sale price adjustments as we go forward. And of course, everything we're bidding today has reflects the current cost And the current price from our supplier in those proposals. So it's not like it's a massive issue for us, but it is no question something we spend In order to amount of time trying to manage so that we can maintain our margins. Okay. No, that's very helpful. And I guess second question for me is just on the aftermarket. You've had a few quarters in a row here where revenue has been very strong, margin strong. Just wondering if there's maybe You sort of mentioned some retrofit activity in Asia and other things. I'm just wondering the sort of the sustainability of The current revenue run rate and margin run rate in the aftermarket, is this kind of a new baseline for you? It's It's a really good question, Cam. And I'm not trying to be elusive on this one, but it's kind of hard to tell. In Asia, there is no question. We have a big contract in Hong Kong and some others where there's a retrofit that's almost like what we would see historically in North America where we have A refurb type program. It's a quantity of vehicles we're managing with the customer a complete retrofit. So I'm not sure that side of the Asia market is sustainable, but It's been a really good contributor through this period of COVID. In North America, private motor coach and public motor coach Private Motor Coach and Public Transit, I think what we're starting to see is as any of those operators have idled their fleets Through COVID, as they're starting to get back moving, there's kind of catch up mode to some extent in terms of getting their vehicles ready. Some of it replacement parts, some of it, let's call it, tune up parts or whatever, to get the vehicles back into daily operating service. Whether it's sustainable or not, it's kind of it's tied a little bit to the pace at which they recover or replace their fleets, which as we just said, isn't an overnight Issue, it's a 2 or 3 year trend. So as far as we can tell for the next couple of quarters, we've got fairly positive outlook on the aftermarket Volume and margin in North America and in the U. K. For that matter as the vehicles get back on the road. Okay. No, that makes sense. Appreciate the time. Thanks, Jeff. Next question comes from Chris Murray of ATB Capital Markets. Your line is now open. Yes, thanks guys. Good morning. Hi, Chris. Just Not to beat this one to death, but just thinking about the supply chain issues and I guess a couple of pieces of this and maybe even looking out into the rest of the year. So I guess I'm trying to understand what kind of risk we should be thinking about, about you guys actually hitting your guidance numbers and the type of confidence you have about making the deliveries you've got. We've had some issues before where we get into Q4 and stuff has to push out of the year just for some timing issues. And the second piece of this is really how much of this is about external supply versus internal issues, say, with the Kentucky Manufacturing Group. So any sort of color you can give us on your confidence level of But these are actually going to be transitory and we shouldn't be too worried about you guys hitting your numbers. Really good questions, Chris. Let's start let's take them in reverse. KMG was we dropped the ball in late 2018 and into 2019, which caused us a bunch of problems. We told everybody about us rethinking how to manage the facility. We changed the leadership team. We added a bunch of resources to get caught up. And KMG has been profitable now even with the group volumes for about a year and a half. KMG is not our problem anymore. They've been a really, really solid Internal supplier. And quite honestly, as you've seen some from our NFI Forward documentation, we continue to in source more strategic parts Into that building or that facility. So we're not worried about KMG. The external supply is real and it's every day and It changes every day and every product every individual order has different implications. And so we're doing our best to manage that. Again, as I said a minute ago, if you sat every week in Chris' production team meeting, they're making calls about The current cadence of what's on the line, but also the pace at which they'll deploy or line enter new product Based on their gut feel of how good the supply chain is going to be. There is also some areas where our customers told us to hold slots for them. They haven't been able to get all The paperwork and the contract in place, and so we're adjusting what we're line entering based on customer demand dynamics as well. In terms of the and so our external confidence in our supply chain, David White and his team will tell you it's absolute hell today, But it's not that we're not managing our way through it. There are no question problems. And in some cases, we're spending crazy amounts of money to air freight a part in to meet the production line and that's part of some of the cost pressure. Or we're building things online and we'll make a conscious decision not To install a widget on in cell 2, but we'll do it in cell 4, which has retrofit dynamics or inefficiency dynamics or expedite dynamics and so forth. But now would you say, Paul, from a guidance perspective, and I think what we would say right now, just based on some of the discussions we have in our monthly meetings is, We have confidence in the $220,000,000 to $240,000,000 today. Well, this is what Yes, exactly. But it's a very dynamic situation. So Chris, the 4th quarter is no question our strongest quarter expected this year. We don't have this year the real Dynamic, where we traditionally sell a whole bunch of MCI Motor Coaches in December for U. S. Customers to accept vehicles To take advantage of accelerated tax, and so it's largely a transit bus delivery dynamic as well as an Alexander Dennis dynamic. We just reaffirmed our confidence of the 220 to 240, knowing that Q4 is going to be our strongest quarter of the year. So at this point, we're feeling we can continue to deliver. The other dynamic, which is a little bit odd in this situation, if we under deliver on certain volumes, we get an opportunity to Potentially get a little bit more wage subsidy that helps us retain some of these skills. So it's a bit of a circular discussion. As of today, we stand behind our 220 to 240 for this year. Okay. That's helpful. And then I think maybe just even to follow on a little bit on Cam's question about the aftermarket. Look, guys, margins, that's the first time I've seen a percentage margin with a 2 in front of it in a few years. So part of the I mean, the question is also part of that was also about the integration of all the different platforms. And so I'm just trying to understand kind of like, yes, you've got some timing things in there, but how much of that is, call it, the NFI Forward Plan or just Kind of cleaning up and integrating on a common platform that you think is in that margin that might be longer term structural? Well, there's no question. As I said to Cam, there's some there's definitely some campaign stuff. And if it's not in Hong Kong, Brian Dusman for Chris will find a customer in North America that's working on an up retrofit campaign about Driver barriers for upgrading certain things in the vehicles. Your point on NFI Forward, it wasn't just about manufacturing facility We made a conscious decision to reduce the number of stocking locations, and I think it's gone from 22 to 9 or 10 in North America. In addition, we took Alexander Dennis' North American parts business and ARVOX part business and put into NFI parts. So what Brian Dusan has been able to do is to kind of reduce and strengthen the quality of his distribution machine and put more parts through that. The recovery of the markets has definitely helped the drop through. But Chris' overhead as a percentage of sales is a couple of points down than what it was a few years Which reflects exactly that. Let's get really efficient at distributing aftermarket parts. The other thing that's actually kicking in, and we've been talking about this for a long time, More than any of other competitors, what Brian Zusnip's team has done at Edify Parts is trying to actually change or expand the way we sell parts. So there's no question we get a phone call, yes, windshield wiper, sure, we'll sell them to you today. But the ability to put programs in place with customers, Minmax levels at consigned inventories, vendor managed inventory programs or even now we're flirting with some of these parts per mile type contracts On scheduled maintenance parts are really starting to help the performance of the business because it's now about planning parts delivery as opposed to guessing and quoting and hoping we're winning. So I think some of that stuff is no question sustainable in that business. The movement to 0 emission on parts is going to have a long term effect because you'll have less parts being But that isn't today. That's years to come and we're planning for that as we speak. Okay. That's my questions for today. Thanks guys. Thanks, Chris. Your next question comes from Maggie MacDougall of Stifel. Your line is now open. Good morning. Hi, Maggie. Good morning. Following up on the conversation around outlook, guidance, But leaving most of the commentary as is, I'm just curious how we should be thinking about work in progress and inventory cadence For the balance of the year, you've got some initiatives to reduce working capital days and You've also got, I guess, I'd call it a bit of an unpredictable or lumpy supply chain. So Should we be thinking about the potential for increased work in progress for Q3 falling in Q4 as you enter into that Strong quarter? Or is it just kind of following historical pattern? Yes. And maybe I'll just start out, and then I'm sure Paul and Steven can jump in. So maybe I'll just talk a little bit about cash flow and then jump into the working capital as well. So at a very high level, if start thinking about Maggie, if we start thinking about what we expect to spend on capital this year, we're kind of still looking at that $50,000,000 range, the guidance that we provided. There's a couple of things here from the inventory side that I'll kind of mention here. So number 1 is, our goal at the end of the day is To get back to the normal working capital days, which is which should be in the low 50s over time. And I think we're kind of in that 60 range right now. So We're kind of dealing with some of that. There's a couple of things here. Inventory levels for us, we do expect those to be heightened on the private coach and some of the supply chain issues from our perspective. But I guess some of these supply chain issues will kind of give us a little bit of a raise, but we're still trying to get into that Sub-sixty percent, obviously before the year end is up. And we kind of think about that from a 13 point working capital average, which As you know, that's the internal metric we use, which is a very difficult metric to achieve from a target perspective. Maggie, we've made really good progress on reducing some of the working capital. When we started the year, as you know, as everybody knows, we were worried about the fixed The finished goods sitting in our motor coach pool, the private sales team in North America as well as the Alexander Dennis sales team In the U. K. Have been able to actually really move some of those finished private motor coaches. So that's been a positive contributor. It's not like we warehouse spare parts to build buses. We build by parts To put onto a specific bus. And so it's not really around the parts issues, more around the pace and cadence of delivery of products through the factory. And so given some of the supply chain dynamics, we have seen definitely noise at our ability to finish and deliver a vehicle. But we kind of think we're in the worst of it right now. And as we head through the end of this year and into the first quarter and first half of next year, that, that will see Even better performance on our working capital side. Yes. The only thing I think I'd add there is probably on the back half of this year, probably a bit of a working capital investment. I don't know if it's something in the $20,000,000 to $30,000,000 for the back half of twenty twenty one because all the factors the guys talked about. If it's inventory levels, more sales of 0 emission buses, some of the supply chain challenges. But overall for the year, I think it's a Positive working capital benefit, but a little bit of an investment in the back half of twenty twenty one. Great, thanks. And then just in terms of how we should monitor the situation, given we don't have The level of detail that you guys have, should we be thinking about the clearing up of the chip shortage and the chassis shortage As being kind of major markers for an indicator around your supply chain issues abating Or is it a bit too nuanced to be able to look at a couple of larger parts markets and determine how things are going? Well, it's a great question, and I wish we had the fidelity to understand how the chip Shortages affects the sub suppliers and then our suppliers and then us. And so we're not really deep inside that world. We know when we phone a supplier whether they can deliver us to schedule And to the quantity that we need. There is no question that, that global dynamic has as it gets healthier, there's no question that will help us. The second issue is the whole freight and logistics dynamics, the whole Suez Canal dynamic, the pushing back of the global movement of freight and so forth, Parts, not that we buy a light offshore, but parts being stuck in containers and different things has had an issue on our business. And so as that Kind of clears itself as a macro indicator. There is no question that will only help our individual business. So I don't know if that helps you. The chassis shortage is directly a result in 2 issues. 1 in North America, ARBOC buys chassis And in some cases, the chassis are basically given to us by our dealer, who then we build a body on it and sell it back to them. And that is directly a chip supply issue to the Fords and the GMs and so forth that supply those chassis. The other dynamic is Alexander Dennis in the UK bodies BYD chassis. And so the ability for BYD to build a chassis, Batteries, frame structure, microprocessors where they're required and then ship that from China to the UK Well, from Europe to UK are some of the challenges associated with that supply. There's no question we hope that and expect to see that start to clear up Throughout the rest of the year and into next year, which then it goes back to the market demand increasing on our business and the reliability and stability of our own supply chain, Which is why we continue to say 2021 is kind of a transition for us. Had we not had the supply chain dynamics, we'd be probably in a different place in terms of Being far more sure or confident of the ramp up of our business. And then as I said before, we still have issues where customers are The pandemic had a massive issue impact on a transit agency. And so the ability to plan their fleet replacement, the ability to make sure that they have funding, the uncertainty and yet Positive news of the federal government funding are all tailwinds that will help us. But if you walked into the middle of a transit agency today, there are still Lots of pressures and dynamics around deployment, recovery of their fleets, strategy around deployment of 0 emission charging things and so forth. A little bit of Helter Skelter to some extent. Thanks a lot. I really appreciate your responses. Just one final thing for me. I noticed that your Infrastructure Solutions division is starting to sort of pick up some steam. I recognize it's pretty small, but I'm really curious, how that offering plays into your conversations around the ZetiB transition As you discuss planning with these transit agencies around replacement fleet, etcetera. And If you've noticed any pattern standing out whereby that has actually given you a bit of an advantage versus maybe some of your competitors in that market? Well, I think it's an important observation because the first number of deployments a couple of years ago, we were very frustrated trying to build a bus, Delivering the bus to a customer and then the infrastructure side of it or the charging side of it not being ready or appropriate or easily to operate. And so We got into that business maybe half good luck and half the foresight of trying to think about how to provide more of a solution than just a vehicle. It has grown year over year and continues to grow. We're currently I think in one of our slides, we had a stat in there about 44 individual initiatives that we're bidding on where we're selling a vehicle and trying to tag the infrastructure side of it with it. I think Chris Austin will give me a stat that says kind of for every 10 buses or 10 bus contracts, maybe 6 times or so, We'll actually sell the infrastructure associated with it. And so that's an important part of our business, not only from a customer sat And a customer confidence in deployment perspective, but also it's now, to some extent, a profit opportunity for us. The growth of the business is something where we're spending a lot more time on. All you got to do is check the news or go on the Internet and everybody's talking about mobility as a service or Charging as a service and where is the energy going to come from and whether they'll bundle the buses with and so forth. That's an area we're spending a lot of time on trying to understand Where we migrate from just a vehicle provider to a solution provider and how deep do we get into that. It's been a really good business. I have to tell you as well, Putting the chargers in and then providing the customer support on terms of troubleshooting their fleet, but also the chargers has allowed us to learn an awful lot About how to make more reliable, more robust buses going forward. It's going to be an area that we're going to continue to focus. Every one of our competitors talks about it, but I think we've got a real leg up where we've actually had many, many situations of deployment And lots of lessons learned, whether it's depot level charging or en route charging. Thanks again. Have a great morning guys. Thanks, Maggie. Thanks, Maggie. Next question comes from Mark Neville of Scotiabank. Your line is now open. Hey, good morning guys. Maybe just a follow-up on supply chain issues. I guess Certainly, the follow-up on Maggie's question, I guess, just thinking about the cadence of recovery, you had mentioned, again, you maybe you're ordering much smaller batches in some of the auto ODs. In your opinion, is that like a good or bad thing? I'm just trying to think, do you sort of lead or lag sort of the recovery we might see in auto again? Just trying to Sort of trying to figure out how to handicap the cadence of the recovery? Yes, it's a really good question that I wish I had the answer for you. Some days we think, hey, We only need 50 of these widgets and so surely they can find a way to get 50 and get us our parts. Then we hear about fields of 150,000 F-150s somewhere waiting for Certain number of parts or components to build the bus or to build the truck or finish the truck and deliver it. So I'm not sure we really know the answer to that. In many situations, as you know, Mark, we don't get to choose our supplier. Many of them are specked by our customers. So we're kind of At the will, if you will, of our suppliers' ability to source that stuff. I think in net net, the smaller quantities that we need are probably allowing us to be a little bit more flexible in getting things here or there. So the chip in getting things here or there. So the chip shortage is one of it. But we can't underestimate there are also a number of suppliers like We had one supplier, and I think it was, I can't remember, doors or windows or some darn thing, where they had a COVID breakout. The place was shut down for weeks. Well, wait a minute, we're waiting for windows or doors to build a bus. What are we going to do? So that stuff is still real. And who knows if we'll have a real 4th wave of COVID, but in some of the parts of the U. S, for example, we've seen suppliers have real challenges to get us the parts. And it has nothing to do with Microprocessors are chips. So it's just a it's a really uncertain time right now, both the combination of COVID and the supply chain dynamics and the chip supply. I think net net, our smaller batch quantities gives us that ability to be a little bit more nimble. And quite honestly, Chris is really Trying to be prudent about what he puts online based on what he knows is scheduled or is coming in, in the confidence of supply chain. You'll remember in 2019, our balloon our whip ballooned because KMG couldn't deliver parts, and we kept Hoping and managing and trying to get those parts that we built up disproportionate WIP. Chris is not doing that right now. We're adjusting the input based on what we have known Or have high confidence in the supply chain. And I'd rather take a little bit short term pain or short term muted Revenue to make sure that we don't balloon our whip or we don't spend disproportionate cost trying to resolve those problems until that whole thing kind of works its way over the next year or 2. Okay. One of the things, Paul, and you'd probably add real quick just, Mark, is we are taking a lot of trying to help with the supply chain issues And kind of balancing that out, there's a lot of inventory coming out in that latter half of the year, especially on the MCI Side of things. So I think we'll probably see a little bit of balancing out of that with that and with ABL. So to kind of help us there. Sure, sure. When I'm thinking about the 2021 guide, how much of that, I guess, at this point would be sort of presold? And But the real risk is, again, maybe you don't maybe you come at the low end or don't hit the number for the year, but it's really just an issue where it gets pushed into 2022. And if that's the case, I mean, are there any penalties for late deliveries with the transit authorities or the other customers? Are they sort of working with you through the supply chain 95% of our what we need to build in the back half of the year is effectively contracted work. There's a few slots we still have that we've either got to secure it for this year or push it out into next year. But we don't have We have had and we manage individual contract signings and timings and so forth. Our issue for the back half of the year is more around The timing of what we put online and the confidence in the supply chain as opposed to lost work to somebody else. So if Chris delays the deployment of a certain product online in 2021, it's because he doesn't have confidence that he get the paperwork in time from the customer Or that he can get the supply chain to do it efficiently. But it's not really lost work at this far into the year. And I think from your point also, I think there's penalty wise that's immature. Yes, we do have every contract has some element of liquidated damages. In many cases, The vast majority of the cases, we're able to manage that with a customer by promptly advising and working on delivery windows and schedules and In some cases, a few concessions here or there. We do have LDs, liquidated damages at times, but it's not a material number in any way, shape or form. Great. And if I can ask just one more question, I guess longer term. Paul, you mentioned that as you transition, sorry, The aftermarket opportunity maybe becomes smaller, but as your infrastructure solution business grows and your installed fleet of charging and all that grows, does that become a Potential offset or is it an aftermarket opportunity down the road as well? Thanks for the time. That's a super insight I think that comes directly for what we talked at our Investor Day part of this year. There's revenue streams that we're starting to get or starting to look at that we never had historically. And In the parts business, not just the transactional sales, but all the things Brian and team have done in terms of vendor managed inventories and now potentially parts per mile contracts and those kind of things Are going to give us revenue streams that will displace some of that transactional parts nature. The Infrastructure Solutions, Again, it's a revenue stream we never had before that now allows us not only the sourcing of it potentially to do some servicing or monitoring or managing of it. In fact, most of Crystal Art's field service team today are actually not just helping with the deployment of the infrastructure, but actually troubleshooting and servicing on behalf of the customer. Our trick is going to be to figure out how to convert that from a customer support dynamic into a go forward revenue stream. But that's exactly what we are trying to do, Which is why when people say to us your parts business is going to go and we say, well, that to some extent, that's true over time. There's less Moving parts in a zero emission vehicle. I will caution to say the vast majority of the propulsion parts today, we don't sell. Allison has their own distribution network. Cummins has their own distribution network. We don't sell a lot of that stuff. We sell some. So we're going to lose a little bit there. We're going to lose a little bit of brake revenue, For example, because of the really efficient use of a zero emission vehicle, you don't use the brakes as much. But there are other revenue streams that we've got today and that we're pursuing that we think can supplant that for the longer term outlook. Next question comes from Jonathan Lamers of BMO Capital Markets. Good morning. I noticed the finished goods inventory on the balance sheet was down at the end of Q2 from Q1. Has there been any change in the private coaches inventory? And how confident are you that the private markets will start improving toward that to 50% of pre COVID levels by Q4? Great observation, Jonathan. You'll remember at the beginning of the year, one of our biggest concerns as We finished through last year as we idled the production line of both the private motor coach in North America and the private motor coach in the U. K. Through the Plaxton brand. And our concern was we would have too many finished goods of new buses or new coaches and used coaches. The sale of the entire pool of the used coaches has proved to be Extremely important and very, very strategic. And because today, we're starting to see a little uptake in the purchasing in the U. S. Of Motor Coaches, I'll admit earlier than we thought they would be. And so Chris and team has done a really good job of burning down some of that excess Finished goods as has the Teva in the UK, to the point where we're actually now really trying to put on the calendar when we'll restart our production lines for Commercial coaches in North America. And we're looking at the end of the year is probably the point where we'll be able to do that. At any one point in We'll probably have plus or minus 50 new private motor coaches on the shelf, it will depend on the timing of the year when we sell them. Chris is actually projecting now to have that he's got that down quite materially from what we had originally. And by the end of the year, we may be down to as little as 25 pre owned sorry, new motor coaches on the shelf. And that's exactly what's burning down the finished goods inventory. Thanks. And there's been quite a few questions on the revenue guidance. I'd just like to follow-up to make sure I'm not missing anything. If Q3 is lower than last year, Then to achieve the low end of the range, my math suggests Q4 revenue would have to be Well above 2019 Q4, even after adjusting for the 14th week that we'll have this year. Does that make sense if J Coach production is still down? Well, we're still selling finished goods, so that will contribute even though the production It is down. There's a volume dynamic and there's a mix dynamic. And as you know, every time we sell a zero emission vehicle, whether it's battery or fuel So electric, it has 1.5 times the revenue of a conventional vehicle. And I think, Jonathan, the only thing I'd add there, when we're talking about Being down year over year, we're mostly looking at the EBITDA margin. So on the revenue side, it may be Kind of up year over year on the top line. Yes. And I think we're going to be getting a lot more ADL as well, right? So I think there's some dynamics there that we're That we've got to push, especially for the end of the year, which obviously is a little bit of that dynamic with the supply chain. And right now, we feel confident we'll get it. But obviously, we're monitoring that daily. Okay. And last question for me. I thought the Latest news from the U. S. Federal Government over the weekend was fairly encouraging with respect to the long term outlook for funding. At least based on what's on paper today, the $100,000,000,000 plus that's listed in Slide 12 of your presentation, Do you believe that that would provide for transit volumes to recover to the 6,000 unit range and for the higher prices of 0 emission buses? Yes. I mean, I think we totally think so. I think one of the best things about The government funding that's coming through is its multiyear funding. So similar to the FAST Act 5 year funding program, which gives a lot of confidence to the transit agencies about their outlook of what's coming and what they can procure and that the funding is going to be available. And I think, yes, from what we saw in both the Bipartisan Infrastructure Act and in the Invest in America Act, the one that's in the House and then the one that's in the Senate, they're both over 5x more funding for 0 emission buses And additional funding for more loan agreements and additional funding for more infrastructure. So across the board, there's definitely been a, I would say, A lot more focus from government on the cost the higher cost of a 0 emission bus versus a traditional propulsion bus. And that's in the U. S, UK and Canada too, where we've seen some major announcements from the Canada Infrastructure Bank, dollars 400,000,000 in Ottawa, dollars 450,000,000 in Brampton, Again, all reflecting that they fully expect they are going to have to pay more for a 0 emission bus versus a traditional propulsion bus. So I think Our view is, yes, definite the funding as proposed would support getting the market back to those pre pandemic levels. Thanks for your comments. Thanks, Jonathan. Okay. Henry, are there any other questions? No further questions on the phone. Please continue, sir. Okay. Well, I think we'll wrap it up. So thanks everyone for joining us today. Thanks to Patna and Paul as well and thanks to all the analysts for your questions. Just wanted to let our listeners know that we are launching a new website with a new investor section, should be done within the next couple of weeks in August. And thank you everyone for your time today. All the information discussed today can be found on the Investors section of our website. We will now terminate the call. Have a great day. This concludes today's conference call. Thank you for participating. You may now disconnect.