Good day, and welcome to the GreenPower Corporate Update and 2022 fiscal year-end conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Michael Sieffert, Chief Financial Officer. Please go ahead, sir.
Thank you. This is Michael Sieffert, the Chief Financial Officer of GreenPower Motor Company. I would like to welcome everyone to our call to discuss GreenPower's corporate update and financial results for the period ended March 31, 2022. I'm here today with our Chief Executive Officer, Fraser Atkinson, and our President, Brendan Riley. During today's call, we may make comments or statements about our future expectations, plans, and prospects, which may constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our annual results and MD&A filed on SEDAR and on EDGAR. In addition, these forward-looking statements relate to the date on which they are made.
We anticipate that subsequent events and developments may cause the company's views to change. GreenPower disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Also, during the course of today's call, we may refer to certain non-IFRS financial measures. Reconciliation of these non-IFRS measures can be found in our MD&A filed on SEDAR and on EDGAR and is also located on our website at www.greenpowermotor.com. I will now provide a brief summary of our results for the year ended March 31, 2022. Recorded revenues of $17.2 million for the year ended March 31, 2022 represented an increase of over 30% of the restated revenue of $13.3 million for the previous fiscal year.
Revenue for the year was generated from the 93 vehicle sales, including 18 BEAST school buses, 11 EV Stars, four EV Star Plus, and 21 EV Star CCs, as well as one EV Star and 10 EV Star CCs for which we provided lease financing, and 28 EV Stars which had previously been on lease and whose leases were canceled and the vehicles subsequently sold. Our cash, including restricted cash at year-end, was $6.9 million. We ended the year with $32.3 million of inventory compared to $12.5 million at the previous year-end. Our gross profit margin for the fourth quarter was negatively impacted by several one-time costs that pushed GreenPower's gross profit margin below our 30% historical run rate.
Briefly, for the quarter ended June 30, 2022, we delivered over 20 vehicles, including three BEAST, and the remainder were a mix of EV Stars, EV Star Cab and Chassis, EV Star Plus, and EV Star Cargo. I'll now pass the call back to Brendan Riley. Brendan, please go ahead.
Good morning, everybody, and thank you today. Some very interesting things that I'd like to discuss today, first and foremost is our Workhorse deal. We are under contract with Workhorse for 1,500 EV Star CCs, which we are selling to Workhorse. Workhorse is putting their own custom, very compelling body on these vehicles, adding some of their own telematics and other features that Workhorse supplies. They're selling these vehicles into the step van market. This is compelling on many levels, but I think most importantly, this is business that GreenPower was not addressing previously. We've not had a plan to enter the step van market.
It's also leveraging the sales of GreenPower, sold the vehicles once to Workhorse, and now Workhorse is selling these vehicles into the marketplace and supporting the vehicles in the marketplace, including contributing to the vehicles. So we really believe this is, you know, I don't want to say found business, but that's kind of a good way of looking at it. This was not part of what typically we would normally do in a business transaction where we would launch the vehicles, train customers, support them. We've got one touch point, and that is Workhorse, which really makes this deal very, very compelling to us and hopefully to the market. The school bus sector has really been a very, very attractive area for us lately also.
Not only did we introduce our Nano BEAST, which you'll see slide here, which is a Type A kind of smaller school bus in addition to our BEAST, but the announcement of the new infrastructure law, which this year alone has already enabled a lot of schools to start buying zero-emission school buses at no cost to them, which includes offsets for infrastructure and other training and other things that make this a very, very compelling space for GreenPower to be in right now. Currently we've got a lot of money in California. We've got money on the federal level. States such as New York and Colorado have announced large amounts of money in this space. GreenPower has addressed the national market by expanding our dealer base across the entire country.
We will have some announcements very shortly on some additional dealers, but that will be an address to the national market and how we're gonna penetrate all these various states with our school bus product. Lastly, we've got something very exciting, and that's that GreenPower was able to deliver on the New Jersey VIP program. It's kind of a clone or a program that's planned in very much in the spirit of the California HVIP program, and this is for the New Jersey area. This program is again very generous and we've started to deliver. I believe we've got seven deliveries already under this program, and they're just starting now. We're very excited to take advantage of the opportunities in New Jersey for that. With that, I'll pass it to Fraser Atkinson.
Brendan provided an overview on the Workhorse arrangement. I think one of the key aspects of this is that you know Brendan in particular and the team have been working on this for almost the better part of a year and our first deliveries start this month. We're literally getting our first set of the EV Star CCs as we refer to our cab and chassis which is the picture on the left there and delivering the first tranche to Workhorse which they will integrate with a product that they brought to market that they branded as the W750. I believe they have two models of this vehicle. That's what they will be selling to their customer. The overall transaction is for 1,500 EV Star CCs as we previously disclosed.
It's important to note that that works out to just a, an average, in excess of 200 per quarter for the next seven quarters that relates to that agreement. As noted on this slide, this is one of the largest, medium or heavy duty EV transactions in that it's not one of these up to a certain number. This is for 1,500 EV Star cab and chassis. It's very exciting for the company, but, in particular, given that we are now entering into the delivery phase, and the first few months will be bringing it up to that average that we note here. It'll be a fairly quick progression in terms of getting to that average of 200 a quarter. Brendan talked about the school bus, the BEAST.
This was our second iteration of our Type D electric school bus, and that's the larger school bus. There's a Type C and a Type D. The Type C is the one with the hood. The Type D is the one that looks like more of a transit flat front. We like the Type D. It's the driver has great sight lines in terms of any kids that walk in front of the bus. The vehicle is maximized in terms of being able for the seating configuration. We really have an industry-leading vehicle for this size of vehicle that can accommodate up to 90 passengers. The Nano BEAST is the smaller vehicle, the Type A electric school bus, and it comes in two models.
This one is shown without the curbside rear ADA door or the disability. It would have the disability lift for wheelchair mobility aid, and that's the second model that we have for this vehicle. Next slide. Our sales strategy, a year or two years ago, you would look at GreenPower and see that we had sort of a broad umbrella in terms of our sales and marketing that really was a try to address multiple sectors and multiple industries, all with the same or similar sales and marketing strategy. We determined that for certain sectors, both for the truck sector that the cab and chassis for the Workhorse deal that we previously talked about or for the school bus, you needed a dedicated focus.
You needed the resources, the product infrastructure that really was specific to that particular sector. We have a group led by Joe Angeli and Michael Perez that are focused in this area. The approach is to build a network. The network consists of a combination of dealers as well as getting on state contracts to ensure the maximum outreach into each of the particular markets. Each state is different. You can't have a one-size-fits-all approach across the nation. You have to address each of the requirements by state by state. It's a fairly lengthy process to put the pieces of the puzzle together.
What's gonna drive the school bus sector is, and we talk about the funding, but it's both funding and mandates or money and mandates as we like to talk about. The Environmental Protection Agency program, which was introduced or talked about for at least a year, went live at the end of May, and the application process closes on the first tranche of $500 million for this year, with another $500 million slated for the next four years. This year's funding is currently open in terms of the application process. EPA has said it will close August 19th. They will be issuing award letters through September, and OEMs and the purchasers can start to deliver vehicles as early as October of this year.
We believe we're one of the few companies that has inventory of both our Type D BEAST and our Type A Nano. The funding is up to $375,000 for the BEAST, which is in the picture on the top right there, and then the Nano BEAST, which was the smaller vehicle we saw on the previous slide. The other funding is a significant funding source that California introduced through their HVIP program, a school bus set-aside fund that's $130 million this year and $130 million the next two years.
They opened it at the end of March for 90 days, which took us through to the end of June, and we're now just working through the various applications that have been submitted and waiting for approval letters at which point in time we can commence some early deliveries in the current quarter we're in, which is July to the September quarter. Lastly, on the dedicated sales group, we have announced a number of dealer agreements and states that we have a specific footprint or sales effort in. As Brendan said, stay tuned.
We have a number of other dealers that we hope or expect to complete shortly, given the timeline on the EPA application process, so we can ensure that those applications are submitted and included with the consideration for the funding. Next slide, please. It's one thing to get the sales. The other thing is you've got to be able to produce products. On the EV Star Cab and Chassis, we previously disclosed that we have the capability or capacity to go up to 200 a month.
Having the ability to do 600 a quarter, you know, we can certainly do the 200, plus that are needed in terms of the ultimate run rate on Workhorse in terms of the cab and chassis that are needed for the truck opportunities, as well as for our own needs as we use that EV Star platform or the cab and chassis platform for our EV Star Plus and for our Nano BEAST. On the school bus side, we're gonna be building this product in West Virginia. Previously, we'd announced an arrangement with the state of West Virginia for the acquisition of a facility, the picture of the building in the top right-hand corner there. I was out there last week with the team.
Brendan's gonna be out there next week with the team. We're proud to say that we take occupancy of this place on August first. The current tenant that's in that building, I must say, won't quite be ready to be, they won't be gone on August first. We've worked with them just to have a flexibility in being able to get some of the initial things we need to accomplish in that building, starting at the end of last month through this month. As a result of that, we're planning to bring 10 of our EV Star Cab and Chassis next week into the facility, so that, you know, in August, we're ready to go with the first tranche of our production for the Type A Nano BEAST.
Ultimately, the goal is by the end of next year to have production up in the range of 40-50 school buses per month or annualized at around 500. Just a quick recap on the deal is that the state of West Virginia in conjunction with the city of South Charleston, which is literally connected to the city of South Charleston itself, that they purchased that building, and our deal is that we have lease payments of $50,000 a month that start next spring. We have a nice little holiday that allows us to get up and running and get product flowing out of the facility. Then we also get two different levels of forgiveness on that funding or purchase price.
Such that there's an initial $1.3 million forgiveness on an initial employment level, and then every 100 employees thereafter, another $500,000 that is applied against this. Ultimately, when it's fully paid through either the forgiveness on employment levels or payments of the lease payments, is that then the building is GreenPower's building outright. That's why we refer to this as a contract of lease purchase. The lease ultimately leads to the ownership of the building. Next slide, please. The third component that Brendan talked about was the vouchers.
The vouchers, you know, according, you know, there's a couple points here that you might find of interest is that according to California Air Resources Board, from inception, GreenPower has the second highest redemption of vouchers. Our challenge with the program is that in the past two or three years, it has opened and been sold out literally same day. It has made it very, very difficult to try and have any prolonged sales effort when a program is only available one day a year. This particular year, though, when they introduced it on March 30 th, they had reduced the amount of the voucher per vehicle. We have found that there is still available funds in certain pockets and for certain size of fleets.
It's much more of a robust sales tool like the program was four or five years ago. Brendan referred to the New Jersey program that we were the first OEM to receive a reimbursement of the voucher. I think we were collectively a little surprised with that in that we had a number of vouchers to deliver off of. For various reasons, we thought that at least, you know, one or two other companies would have been ahead of us. Two great validations in terms of how we're able to leverage these state programs. In terms of where we are today, we have 70 approved vouchers for just these two programs without any school buses.
Any of the school buses, either on vouchers, which there are a handful, or for school bus set-aside funds, which we haven't released yet, isn't in these numbers. We have 70 approved vouchers on the two state programs, representing, or amounting to $5.7 million, representing sales of $8.9 million, and pending approval for 28 vouchers. If we combine these numbers, that's $13 million of sales that is supported by $7.7 million of vouchers. As I've said, on both programs, we're seeing the ability to refresh these vouchers, as we're delivering on the one end, we're able to refresh and increase or get additional pending approval, or pending vouchers that ultimately become approved vouchers.
Within this mix, there is a fairly significant number of both approved and pending vouchers for our 22 ft cargo. The numbers that Michael alluded to at the beginning of our program here talked about a number of the EV Star Cargos, and this is our 22 ft model, not the 25 ft. We expect to deliver 30, and most of those 30 will be in this month, early part of August, through, that will be part of our September 30 quarter. As we go to our last slide, the summary that we'd like to leave you with is, you know, historically, with the numbers that Michael outlined for you from our year-end was 93 vehicles that generated $17.2 million.
The way to look at our business is that we've got Workhorse that is just starting deliveries in the next week or two. Over the next one or two quarters, we get up to that in excess of 200 a quarter or an annualized of 800 for the year. By the end of next year, we expect to have our West Virginia facility with ± 500 vehicles on the school bus side. The vouchers, we continue to see that contributing to a significant number of near-term deliveries. The sum of all those three provide for an annualized number of in excess of 1,000 vehicles within the next year. It's not that we will achieve that a year from now.
We will be seeing that exponential growth hit in the September 30 quarter and in particular in the December 31 quarter. We believe that will get us through from where we are today into positive cash flow, which is something that will decouple us from really the rest of the EV OEMs that are in the medium- and heavy-duty equipment or vehicle space. That's, you know, being a big part of the core focus of the group, is that really focusing on the business and getting the business to positive cash flow as opposed to having other aspects of the business to talk about that have, you know, have an impact on the business years from now.
You know, all of the hard work that the team has done over the past couple years, you know, is now coming into play with some significant deliveries starting in this month that we're in now. Which is part of the reason we wanted to do the corporate update now to really give that sense of a refresh of the business in the quarter that we've just started. Before turning it to the Q&A, we did announce an acquisition this morning. It was a small cash payment and assumption of the very favorable obligations. The acquisition is of a company called Lion Truck Body that is headquartered in Southern California.
It's actually not that far from Long Beach, which has some advantages in terms of components and the like that we bring through Long Beach from time to time. Lion Truck Body and Brendan was on site yesterday, just tending to sort of final closing matters. I know there's a lot of excitement on both sides. You know, the Lion Truck Body folks who have done traditional bodies, when I say traditional, on diesel, gasoline-powered, and the like vehicles. They're very excited about doing a lot more work on all-electric vehicles. What this does for us is that it expands our ability to better support the truck business.
We have truck customers that are waiting the better part of four, five, or six months to get a body on our EV Star Cab and Chassis. The Instagram account for Lion Truck Body shows cubes and refrigerated vehicles and the like that they say they've done in a matter of a week or two weeks. If we can even get it so that our vehicle can do a turn in under a month, you know, we'll be able to provide a service that nobody else is getting right now in terms of getting electric vehicle with the body that they want for their particular business, that is done in a timely fashion as opposed to, you know, having to wait for and deal with supply chain issues.
Brendan, did you have anything else to add on the acquisition?
Yeah.
I know I've missed a lot of really key points.
No, you did great. Thank you. Pardon me, folks, I've got some allergies kicking in and a cough coming up, so, I beg your pardon in advance. The real, I think, compelling part of this acquisition, besides what Fraser talked about as far as lead time, is that, you know, the EV truck body space is fairly new and really developing. All the truck bodies in the space have been developed for legacy vehicles that have internal combustion engines. To that end, they were developed differently. If you look at the Workhorse product, which is a perfect example, their W750 is incredibly compelling because it's a new body design specifically for an EV.
That makes—it's not like you're just retrofitting a legacy diesel vehicle with you know, batteries and electric motors. You're actually starting from scratch and changing the whole concept, making it a much more compelling, longer lasting, more efficient, what have you, proposition. With the Lion Truck Body, what really fascinated me with the company from day one is Lion Truck Body had already developed a line of aluminum truck bodies, lightweight truck bodies, very efficient refrigerated units, specifically to save weight, decrease production time, and make the bodies more long-lasting. That's something that the truck body space in general, which is a legacy business, hasn't really been able to advance very quickly.
I could go to any of the wonderful truck body companies out there and get a body, but not exactly the body I wanted for an EV, material-wise, design-wise, so on and so forth. All of these improvements are cumulative and make a big impact. It takes a lot of effort to make these small improvements. Acquiring this company really gives us an opportunity to make truck bodies specifically for EVs, GreenPower or even our competitors if they would like our body at some point. Thank you, Fraser. Fraser, I can't hear you.
Sorry. Can you hear me? Okay. Before getting into the Q&A, one question that Michael, Brendan, and I have heard from our stakeholders, so I'll ask a question of us and Michael and Brendan can sort of add to this comment. You know, one of the questions being, "Well, you know, where are you gonna get cash to fund all this business?" There the answer is really, I mean, there's many layers to this, but a big part of our financial requirement will be defined this fall. We don't know how many deals we're gonna get on either the School Bus Set-Aside fund yet or the EPA. The EPA program is structured such that the deliveries that can start in October, you get two years.
We have lots of time to spread that out, but we also have inventory. On some of the initial deals where they can get the infrastructure in place quickly in terms of charging and everything else, we can make those deliveries. We believe we're one of the few, if not the only one, with both the A and the D that can do that. The second thing is that as we talked about through this presentation, is that we're now delivering at a level that completely is at a totally different level than we've seen in any previous quarter. The highest number of vehicles we've ever delivered before is 44 in a quarter in the history of this company. You know, we have a good shot at doing that this month.
Let alone that through August and September when the school buses really kick in is that that's just going to accelerate in the December quarter and the March quarter thereafter. That's the second point to make. The third is that, you know, as we've said on the last couple of earnings calls, we can see that this working capital requirement is on the horizon. You know, Michael in particular, but as a team, we have been engaged and talking to and discussing various traditional financing with asset-based lenders and the like that you know are not involved necessarily in requiring any equity, you know, where there is a traditional debt type financing. There isn't anything that we can communicate on that front at this juncture.
You know, all I can refer to is, you know, a previous exercise that we went through two or three years ago, where I remember that I sat along with a couple other members of our team at a conference and being peppered on some recent announcements that we'd made, and everybody felt that, "Well, you're gonna have to go to the market and raise money." I said, "No, that's not the only alternative for us." At that time, you know, six weeks later, we announced that we had secured a $5 million facility from a traditional bank. No equity, you know, a decent financial structure for the company, and it really helped elevate the company to the next level.
You know, we plan our business in terms of, you know, what we need, not just on a month-by-month basis, but over, you know, the next two, three years. As such, you know, the combination of the inventory that we enjoy now that has a significant amount of finished goods that we'll be converting into invoices and cash is really kicking in in this month of July. Coupled with, you know, once we see where we are with the programs this fall, then we can layer that in terms of what our financial requirement is and how we're going to roll that out with our customer base.
It's, you know, I think from a capital markets point of view, what we can do to decouple ourselves from the rest of the pack, which all seem to be moved in more or less the same direction on a given day, is the delivery of vehicles and getting the business to positive cash flow. That is what we see in the next two quarters.
You know, Fraser, you mentioned earlier the Nano BEAST and the BEAST, and it's one thing we found, and I've been traveling coast to coast with that vehicle with Joe Angeli and Michael Perez and our school bus team. You really see the difference between our product and all the legacy products and even the converted legacy products, which are basically the market right now for electric school buses besides ours. Those would be a traditional school bus that's been modified to accept batteries and an electric traction motor.
When we travel, you know, coast to coast basically in the U.S. and going through these different districts, meeting with different dealers and oftentimes the regulators, the folks who decide on the specifications, you really see how compelling our product is on a product basis compared to what is out there with competitors.
The features we have, the fact that we're purpose-built on both platforms, our incorporation of the all aluminum, you know, very lightweight yet stronger body components, some of our compelling design differences, including, you know, a higher floor keeping the passengers out of you know, the crash zone, making a fully flat floor so seating is more fungible, and we've got better ability to add ADA accessibility and what have you without having to worry about humps on the floor and things of that nature. When you compare what we've got to what's out there, it really is a shot in the arm for everybody, including the team that you offer, and people are just wowed by our products.
That's one thing we haven't really discussed on this call is, you know, we've got not only a path to manufacture products, deliver products that I would consider superior to our competitors, but our products, I also believe are superior to our competitors and which really gives us the trifecta of what we need in this space to differentiate ourselves from the entire class that we're in.
Sorry, Michael, if there's no questions, then we can wrap up our.
Yeah, so.
Go ahead.
I'll just pass it over to the moderator. It does look like we have one question in the Q&A queue.
Moderator, could we please go ahead with that one question? If you want to prompt.
Yes.
For further questions, that'd be great.
Yes, sir. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble a roster.
Thank you.
The first question will come from Tate Sullivan with Maxim Group. Please go ahead.
Hi. Hi. Thank you all. Michael, to start just with the quarter that ended in March and the increase in deferred revenue by about $6.5 million, is that related to the Workhorse contract? Can you review the public details of the Workhorse contract, how much they have to deposit ahead of deliveries? And should we forecast those deposits going forward, please?
Yeah. There was a large upfront deposit. I don't believe we mentioned previously exactly how much that was. When you look at that deferred revenue number that you just quoted, that's almost entirely that Workhorse deposit. What that does represent is a deposit for the entire contract. You will see that slowly deplete over the term of the contract, which is to March 2024. However, I think when you're looking at that contract, the right way to think of it is, as Fraser said, you know, on average, about 200 units per quarter. That's gonna be scaling up quite rapidly. We do have first delivery starting in July. You know, 200 per quarter is the right way to think of that contract.
Yeah. Just to add to that, Tate, is that.
Thank you. Fraser,
Sorry. Just to add to that, we've disclosed no financial terms, but Workhorse, it was either Bob or Rick on one of their calls, did disclose that they had made the initial deposit was $6.5 million.
Great. Thank you.
That's all part of the disclosure.
And, and you also.
Yeah. That all ties together.
Go ahead.
Yeah.
Okay. Perfect. You mentioned, Fraser, I mean, in the contract, it's for 1,500 units, but is there some variability potentially to that from Workhorse, excuse me, in terms of the timing that they take those deliveries? Is that dependent on customer orders on their side? Or can you talk about timing of delivery? Or they're contracted already?
Well, there is a mechanism that allows for a variance on a monthly basis, and then that variance is made up over the next several months. If you look at it, you know, if you drew a line and said, "Okay, this is what the agreed on number," it could fluctuate up and down a little bit, but it'll all get to ultimately the endpoint of March 2024 with 1,500 vehicles.
Thank you. Brendan, I think it was you or Fraser, maybe you gave details on the New Jersey HVIP program, being very similar to the California program. Is that mostly the demand that you've seen from the New Jersey voucher program, mostly for EV Star at this point or for buses or both? Can you comment on that if possible?
Sure. I'll start, and Brendan can weigh in. It is one of the best in terms of certain classes of vehicles. You know, California is more favorable with some types, and New Jersey is better on others. On the New Jersey side, I'd say the majority of what we have either approved or even in pending relates to our 22 ft cargo. The deliveries that you know, we stated in our presentation today, you know, a big chunk of those through the next month are going to be for the 22 ft cargo into New Jersey. The nice part about that is that you know, we are seeing refresh. I think it was more than 10 in just the past month for the collective programs.
We haven't had that ability to, you know, continually sell off a voucher program for, I'd say, almost four years.
Yeah, that's exactly right, Fraser. What Fraser means by refresh is that this program continues to be available out there. There still are funds on the New Jersey VIP program, and it allows, it's allowing for continuing sales where HVIP would, as we stated earlier, in some cases be out of funds in a matter of hours. You know, it was Christmas for an hour when HVIP came out and, for the New Jersey VIP program, it is the gift that keeps giving.
Okay. Thank you all.
Thanks, Tate.
Again, if you have a question, please press star then one. Our next question will come from Gregory Lewis with BTIG. Please go ahead.
Hey, thank you, and good morning, everybody. I did have a question first around you know, the decision to bring in you know, Lion Truck Body. Obviously, they were a supplier. I guess as we think about building out the business longer, medium, and we'll say the medium term, are there opportunities for GreenPower to continue to kind of acquire other suppliers or maybe even other companies that would kind of make GreenPower more of an integrated OEM?
Absolutely, that opportunity exists. As it relates to, I'll start this off, and Brendan can certainly elaborate further. The Lion Truck Body is something that we needed to do. I mean, it was quite simply that the truck dealers that we're engaged with, not just in California, but across the nation, are, you know, looking at, you know, when they buy a cab and chassis, they're gonna do something with it. They very rarely just turn around and sell it to a customer. They're buying it to then engage or get quotes from multiple different body builders and get the body built.
What we're encountering is that the initial deals that we have been doing, you know, the timeline is up to six months in terms of getting the quote, getting the specs, getting it built, getting it delivered. As Brendan says, and this is one of the keys, is they build it out as if they're building it onto a traditional ICE platform. The body that they're building isn't necessarily integrated with our cab and chassis for an EV. So that, I think, is one of the key things that we see in this Lion Truck Body, is that this will be integrated. You know, instead of the truck body company getting an integration manual from us and then working it through, is it'll be more of a push approach for us dictating exactly how that integration works.
I think that will help accelerate the adoption of, the bodies for the EV platform. In other sectors, going back to your initial part of the question, to the extent that that opportunity will exist in other areas of our business, the answer is absolutely this is something of, interest. We're not interested in overpaying for something that, you know, that we can just, build out in due course. It's, you know, whether you buy or you build is always a question you have to go through on both sides. This particular deal, you know, it's, it, you know, hasn't.
You know, it's very cost-effective, if you will, in terms of the price to GreenPower and gets us into the game right away in terms of not having to build up and sustain a cost that would be a multiple of what this is, you know, this has cost us to get into.
Greg, I'd like to.
Okay. Fraser. Okay, sure.
Greg, can I just give you?
Please go ahead.
An anecdotal example here of a product that we're working on delivering the first of with Lion Truck Body. Refrigerated trucks, you probably know they have a box on the back with a refrigerated unit, and people usually use those to distribute foods, anything that requires cold storage, what have you, in the delivery space. Well, that's an attractive space and, it's ubiquitous across the country, actually across the world. People wanna ship stuff, keeping it fresh and cold. Traditionally, when companies built refrigerated units, they would have to use low voltage refrigerators, which worked with internal combustion vehicles. In our case, our vehicles run at high voltage. That's the fuel of our vehicle, is the high voltage.
We've been able to develop a product with an integrated high voltage refrigeration unit, increasing the efficiency of this product about 20%. This means lower cost of product. This means lower cost of manufacturing in some of the components that goes into it. It means longer range of the vehicle, and it just means lower operating costs of the vehicle long term. Those are the types of developments that you can do when you own it, even though there's a very small addressable market. Hopefully what we can bring out by owning this truck body company is now a new generation of bodies specifically tailored to electric trucks. We think that it'll actually move the industry. Just so you know, Greg, we still intend on continued use of other truck body companies throughout the country.
It's a very regional business. It's not like we're doing this instead of that. This is an addition to other options.
Just following up on that, I guess, or, you know, obviously Lion had more customers beyond GreenPower. Does GreenPower now plan to be a third-party provider to other companies with Lion, or is that something now where this is, you know, gonna be, you know, primarily for GreenPower vehicles only?
No, there's enough capacity to continue to take care of the legacy customers, also the continuing customers. We intend to keep satisfying them as Lion Truck Body has in the past.
And historically.
Okay. Great.
The majority of their revenue was generated from third party. There's very little on a historical basis that was in their numbers that related to a GreenPower sale.
Okay. Okay, great. Just one more.
We're gonna be incremental.
Okay. Then just one more for me. You know, I mean, clearly, we're in a build ramp, you know, heading into, you know, we're in kind of the season for school bus deliveries. Is there any way to kind of think about the ebb and flow of inventory and working capital, I guess for Mike, as we think about like on a seasonal basis, i.e., you know, should we be thinking about, you know, inventory peaking around your fiscal year-end and then kind of moving lower throughout the year before then picking up, I guess, heading in the winter?
Is that kind of a way to think about it, or are we kind of in a trajectory where, you know, at least the growth is in front of us, so it's just gonna kinda keep building higher?
I think the.
I think I'll start this, Michael. The biggest impact that we can have on that is the throughput. What we're doing in West Virginia, which won't have an immediate impact, but over the course of the next year will have a significant impact, is we see that cutting our total cycle time in half. If we can take a production cycle that was six to eight months and turn it into three to four months, that's what accelerates our inventory in response to that question. That's the biggest impact, the faster we can increase our production.
What we're doing on the Workhorse deal, which will get, you know, better and better over the next couple years on cab and chassis, you know, likewise with the initially Nano BEAST and ultimately the BEAST, is increasing or reducing the production time will, you know, allow us to to turn that inventory that much faster and, you know, get to, you know, a lower inventory level in relation to the cost of goods sold number.
Yeah, I would echo that. The one thing I would add is just in terms of your question in terms of seasonality, I think seasonality would be something that we would expect to see when we're at a more steady state. Just given the rapid growth that we see over the business over the next couple of years, I don't think you're gonna see that seasonality that you spoke about. You know, further Fraser's question, what we are seeing right now is in certain core categories where we are seeing a lot of significant demand, we're seeing fairly rapid depletion of finished goods. Yeah, I think to Fraser's point, overall, you're gonna see quicker turns.
Definitely, you know, you're not gonna see inventory ramp at the same ramp as cost of goods sold or as sales.
Okay, great to hear. Hey, guys, thank you very much for the time and have a nice weekend.
Thanks, Greg.
The next question will come from Steve Emerson with Emerson Investment Group. Please go ahead.
Well, this is following up on Greg's inventory question. What kind of ratio of inventory to revs do you think is appropriate, let's say, end of 2023, end of 2024, as component deliveries normalize and availability improves? Then as a corollary, Fraser, you mentioned you're seeking hard asset lending. How much are you seeking? I would imagine traditional low cost industry, finished goods or inventory financing should be pretty available.
Michael, I'll start then. I think the answer we gave Greg is really, you know, without getting into future financial numbers because we have not issued guidance and our position is till we hit cash flow positive cash flow, we're, and given all the supply chain issues and other things that we've battled over the last couple of years, that's probably been a good call. Until we're at that point, it's hard to give us, you know, hard ratios. It really does come, you know, the inventory in relation to cost of goods sold is impacted by, you know, the repeat deliveries to existing customers. Whether it's a Workhorse, whether it's existing boaters or on the school bus, which we've been holding inventory for the school bus sector.
If I can take a quick aside on that, what I mean is, you know, late last year, early part of this year, when you know, Brendan, Michael, or Joe were talking to school bus customers, they were often looking at you know, the programs and saying, "Well, you know, you know, the feds are gonna come out with some money for these, so I'm gonna wait." We had that with the school bus set-aside fund in California. We had that with the feds. Now those programs are open, but they're not approved.
We're now waiting for, you know, the approval letters to get out and the next tranche will be what deals that we secure, either in California specifically or off the EPA program this fall, can we move quickly relative to the infrastructure that they're putting in place at either a fleet operator or a school district? We have the initial inventory for a number of those early deliveries. California, we're gonna push to get some delivered this summer, and the EPA will be this fall. That'll help change the dynamic between the inventory we're holding and the cost of goods sold right out of the gate. Same thing with Workhorse. You know, Brendan and the team have been working on building up.
You know, we didn't just sign the deal and announce the deal, I believe, at end of February, early March, with Workhorse. You know, Brendan and the team were working on supply chain and securing aspects of that which end up in, you know, the work in process in our inventory. That is, you know, the first part of the relief of that is the deliveries that we talked about in this presentation that are occurring this month. You know, I know Brendan this week was showing a number of things that he's organizing for those deliveries. You know, it's pretty exciting for us that sort of the culmination of all those, not just months, but quarters of work that are reflected in an inventory.
With Workhorse deliveries and, you know, in effect liquidating the inventory we've been holding for folks that were simply waiting to take advantage of programs, you know, you're gonna see us rightsizing our inventory and leading to, you know, a better mix between the inventory we have and the cost of goods sold. Without getting into ratios, that's probably the best explanation I could give you, Steve, on that part of the question.
Well, let me tweak you a little further. One analyst is using an estimated $40 million in inventory March 2023 versus revenue of $26 million, which to me sounds absurd. The following year, $51 million inventory for $46 million revenues, which to me again is totally absurd when normal manufacturing, you'd think no more than 90 days of inventory or inventory in the out year going from $53 million to $15 million. That makes a world of difference on financial viability and any better color or again, the question of how much inventory financing do you believe is appropriate that you're seeking?
Well, I think Michael can get into the details of the numbers you cited, but if I understood those, $26 million of sales, if we just for illustrative purposes said that the cost of goods sold was $20 million and at $40 million of inventory, that suggests that there's like two years that makes no sense at all. What we have said on this call is that, you know, with the Workhorse, the September 30 quarter that we're in right now is the initial ramp, and into the December and subsequent quarters where we're getting into the 200 a quarter, which is the simple math of 1,500 in the order divide by the seven quarters that the deliveries relate to, is more than 200 a quarter.
you factor that in per quarter along with school buses that have sort of a similar type ramp, you know, some initial deliveries this summer for these various funding programs, and then increasing this fall is, you layer that on along with the vouchers, that's a totally different run rate than, you know, than what you've just outlined.
Yeah. Steve, just very quickly, this is Mike Sieffert. I would echo what Fraser just said. To your questions in regards to financing, you know, I'm gonna say what we have said on prior calls and that we are in discussions with a number of different parties. Those would be traditional banks as well as, you know, other non-bank financing groups, which, you know, at this point, we're not able to speak to specifics. Certainly, when we have, you know, something that we can discuss in more detail, we'd be happy to, you know, speak to this to the market. At this point, it's premature.
The next question will come from Jon Ogg with American Research. Please go ahead.
Good morning, gentlemen. Fraser mentioned the capacity of manufacturing 500 buses in a year. At $350,000, that's $175 million in revenue. Could we be seeing revenues in excess of $200 million a year or two from now?
I like the way you've framed that, Jon. The only correction I'd make is that you'd need to blend in the A with the D. If you took, you know, the way that Brendan and Michael and I look at this is that, you know, our MSRP on our Nano BEAST is, you know, under $300,000. Our Type D is over $300,000. But if you have, you know, a mix of A's and D's in any given period, then, you know, on average a $300,000 number is a fairly reasonable number to apply. 500 in terms of our target by the end of next year on an annualized basis times that $300,000 would be $150 million of revenue per annum. Absolutely.
Just on school buses, not on any other business that we have in front of us.
Jim Justice of West Virginia announced a new state-of-the-art steel factory. Is there gonna be an incentive for GreenPower to use West Virginia suppliers? Will such steel factories help you with your supply chain?
Well, you should go with either myself or Brendan on our next trip. 'Cause when we're in the car, we're like, you know, we drive by some of these, you know, I mean, there are some big facilities there. You know, the Gestamp, which is just across the street from us, in World War II, they manufactured almost all the ammunition for the various U.S. services. So, you know, there's some big facilities there, and, there's several that, we have our eye on, once we get established and once we get built up. Going back to Jim Justice's comments, you know, it's a great state.
You know, every time we're there, it just reaffirms our decision to not just have a facility there, but more importantly, a partnership with somebody who's gonna really help us out. You know, when we did the D.C. event, we have to give, you know, a nod to Joe Manchin's office and, you know, Senator Capito's office, that they were super helpful in helping us get that set up, which brought so many different parties, including, you know, both parties from both sides of the aisle, into an event that resonates with everyone that has, you know, in particular schoolchildren.
You know, getting back to the Governor, he's, you know, he's a big fan of what we're doing, and he really sees a need to push the kind of business and industry that we're in.
Yeah. Jon, we are currently customers of Constellium. We use Constellium aluminum for the bodies of all of our school buses. There is a Constellium facility that manufactures the aluminum that we use in the building of our school buses in West Virginia. The answer is yes, we are already gonna be leveraging some West Virginia manufacturing.
Can you gentlemen please comment about the Jupiter Wagons agreement in India? Jupiter Wagons just announced that they have gotten a significant contract for the infrastructure for mass transit system. Do you have any comments to your new relationship with them?
Well, I'll make one other, you know, Brendan can speak to the, you know. I mean, we're very actively involved in, you know, getting our right-hand drive homologated to their market and, you know, the initial demo. I'll let Brendan speak to that. The other thing to add is that they just went public on the Indian market, so, you know, they've really increased their profile. What you've just referenced along with their capital market strategy is all new in relation to when we originally entered into, you know, a relationship with them to move forward our right-hand drive EV Star cab and chassis.
Yeah. Fraser just really hit the nail on the head. We are still working on, you know, the vehicle specifications, finalizing the build, and setting up demonstrations for the first vehicles, the prototypes that are going out in the market to demonstrate. I expect to have an update for the market soon. We just don't have that information right now.
Do we have an update on the Forest River deal?
The Forest River deal is, Forest River has purchased five of our vehicles. They have not completed the integration of a new body onto the GreenPower cab chassis. When that integration is complete and testing validation goes on, we'll see where that goes. Right now, we're still working with Forest River on fully integrating. You know, they had to develop an entire new bus body for a cab chassis. That is, I think has taken longer than at least we had hoped. I will update you as soon as I have more visibility on where that relationship is going.
I think it highlights in our acquisition of Lion Truck Body that you just can't take an existing body and throw it on a EV platform. It just doesn't work that way. They've kinda learned the hard way 'cause they thought, "Well, we'll just take our Starcraft body and put it on the CC." Doesn't work. They didn't abandon the project. They took a step back and said, "Okay, we've gotta do a proper integration." Our team has been involved with them throughout that process. But we've taken the approach that we'll tell the market that when they've got the five done and what next steps there will be when they've got the five done.
My last question is also a statement. I wanna congratulate you on your fundamentals being bicoastal in manufacturing plants in Porterville as well as in West Virginia, and being able to reach out into the marketplace and diversify your product line and offer CCs to even the people like Workhorse. My last question is the institutions, are they recognizing your increase in fundamentals? Is the institutional interest in the GreenPower stock increasing?
No, they don't recognize it, but yes, we've seen a significant uptick in our conversations, and we do, from time to time, do non-deal roadshows and, you know, utilizing various web services and attending conferences. You know, the last couple months has seen a very renewed interest in what we're doing as people can see that our company is going through a transition from, you know, the quarterly deliveries to, you know, a very different model in the coming year.
Going back to your comment about the manufacturing. I appreciate your comment in that regard and also the fact that what we're doing is we have a view that, you know, if you build a manufacturing facility and spend hundreds of millions of dollars, at the end of the day, that's coming from shareholders. A big chunk of that is going to come from the equity market. You know, Brendan and I, we spent a lot of time looking for a factory-ready facility that could build a decent number of units. The key is we can do that same thing somewhere else too. You know, this creates a center of excellence for school buses. It gives us an East Coast distribution.
The state of West Virginia is literally south of the state of New York, which has almost 50,000 school buses out of the 485,000 in the nation. All of those things speak, you know, to how, you know, the location we've chosen there, but also the building and the partnership. We can also, in due course, do that elsewhere. Ultimately, you know, in a year or two years down the road, that same sort of approach can be duplicated outside of North America.
I have one last question for you. I believe it was in 2021, your Fraser was asked a question in regards to battery and range of battery. I believe, Fraser. Excuse me, I'm not trying to put words in your mouth, but I believe you said something along the lines that, you know, we wanna find the best quality battery with the best range that's on the market. Are your vehicles being set up to where you could just replace those longer distance battery in them?
Well, I'll start and Brendan can expand on this, is that we use a chemistry LFP, lithium iron phosphate. Coincidentally, you know, Tesla, which has traditionally used a lithium ion approach with their batteries, when they hit the market in China with their model three, they determined that their cost structure was upside down with their approach. What did they do? They went to LFP for their model three. It's stable, it gives a great charge, discharge curve in terms, you know, and it gives the charging cycles that we need. It's still a little heavier than some of the other chemistries, but it frankly, you know, Brendan and I, every time we talk to people or talk amongst our group, you know, it just.
We're always happy with the approach we've taken with the underlying chemistry. In terms of who does manufacture those is, for us, it's key to make sure that, you know, we buy a lot of cells that go into the two packs that make up our 118 kWh that go into our EV Star platform. It's absolutely critical that they have, you know, the same. You know, the more they're the same, the more reliable they're going to be, and the more reliable the charging and discharge is going to be, as opposed to having, you know, one or two cells that are off or out of spec in terms of the voltage. You know, now you have a problem from day one.
We've learned that in terms of our own experience with some deployments where you work it back and you determine that, you know, the consistency of the spec, you know, was off on one or two cells that we install in our battery packs. I think Brendan and, you know, I won't name all the different team members, but, you know, there's one in particular that works with Brendan that, you know, they've just done a great job of managing supply chain so that our costs on the battery cell side just hasn't exploded, which some of our competitors have encountered, as you can see in, you know, their numbers or their cost of goods sold is equal to their revenue, and they're not able to generate a GP.
You know, there's a lot that goes into the decisions, but, you know, it's, you know, the truism that we stick to is that, you know, having a really highly reliable battery cell that is consistent with each cell that we buy.
Yeah. Jon, Fraser's exactly right. It's the reliability factor. You know, you can talk about range all day long, but in the commercial space, the vehicle has to charge and discharge efficiently and reliably. Before we make any changes to what's really working well, we have to do a very involved validation. We are validating higher capacity, which is higher energy density and higher power density, batteries. But we have not made a decision to change that battery yet because we've not validated it to the point where we're comfortable. Just to give you an example, we have EV Stars that are already pushing 200,000 miles without losing less than 5% of initial battery capacity.
We have EV Star that, you know, are getting very old and well used, that are in the field, that are run every day. Basically, they're either on the charger or driving customers, making money for somebody. That is, from my perspective, so compelling from a cost and reliability standpoint, that it's gonna take a lot for us to make any quick changes. We don't wanna chase the range dragon, as they call it in our space. We really wanna make sure that we follow reliably, safely, all that, the most. To answer your question, yes, we do have a form factor and a platform where we can add just pop in a different pack. The battery management system is in the pack and pop those in and have longer range.
That is a possibility and something we could do.
Yeah, just you didn't ask this question, John, but just to extend the discussion from the actual battery and what that means, translating it to the real-world application, is that our EV Star platform is, you know, it could address other classes, but it addresses the class four market, and that has a gross vehicle weight or GVWR of 14,300 lbs or 6,500 kilos. So that's sort of your top level. The curb weight, if I put it sort of down here, is, you know, a number that gives you, before we put anything on as far as the body on that EV Star Cab and Chassis or platform, gives us 7,900 lbs to work with. You put more batteries on, that 7,900 is less. That's the trade-off.
Our competitors, they don't have a platform or a chassis that they built from scratch that is a clean sheet or a skateboard design that optimizes all of that sort of stuff. You know, it's in many cases in the school bus space, for example, most of our competitors are buying a E-450 from Ford that is competing with our Type A Nano BEAST. We build our body with an aluminum frame. It's very lightweight, and it's got a better strength. It's safer. We put a body on that gives you, at the end of the day, a maximum capacity where we can have, you know, a wheelchair lift in with a rear entry, you know, rear curbside door with different seating configurations. You know, we don't have to worry about limiting that.
We can do all that in our Nano BEAST and still be within that gross vehicle weight with the number of passengers that we're able to offer. That's the combination that we are able to deliver with the EV Star platform, is we can give the combination of range as well as the payload.
Well, speaking of quality, I believe it was two years ago when GreenPower had their bus Altoona rating. I believe two years ago, you were the highest-rated Altoona-rated bus from all your competitors. I believe you were 10 points higher, or maybe it was eight points higher than your closest competitor. Even though it's been two years, does anybody have a higher Altoona rating on their bus than GP?
I haven't looked recently, but I'm glad to be.
I check regularly. I still believe we are the highest score that they've published so far of any medium or heavy-duty bus of any type. Thank you for the plug, Jon.
Well, I think you have so much stuff going on in your company, and it's interesting when I see these other rating agencies. They don't seem to look at the entire picture and your breadth and depth of your business model. I appreciate your time, gentlemen. Thank you for answering all my questions. Congratulations on your increase in fundamentals, and you guys have a great weekend.
Thank you, John. I note that we have no other questions, which is great because we have a hard stop shortly. We appreciate everybody who participated as well as listened in on our call. I think collectively we can say, you know, stay tuned. You know, can't wait to be updating our stakeholders in terms of those initial deliveries and the successes we see on the various school bus activities as well. Once again, we really appreciate our shareholders, our stakeholders' support.
Thanks, everyone.
Thank you.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.