Vicinity Motor Corp. (VEV) Q1 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed strong revenue growth and improved operational performance, but challenges like low margins, inventory monetization delays, and uncertain regulatory timelines for product launches temper enthusiasm. The Q&A highlighted management's lack of specificity on key metrics and delivery forecasts, which may concern investors. While the financial performance is improving, the uncertainties and lack of clear guidance create a balanced outlook, leading to a neutral sentiment. The market cap is not provided, so the stock's reaction could vary based on its size.
Key Financial Performance
Revenue $13.2 million (400% increase year-over-year from $2.7 million), driven by higher deliveries of 44 trucks and 22 buses compared to five trucks and three buses in the same quarter last year.
Gross Profit $1.9 million (14% of revenue) compared to $0.5 million (18% of revenue) in Q1 2023; gross margins were positively affected by higher deliveries and a product mix shift towards higher-margin electric trucks.
Cash Flow from Operations $0.5 million provided in Q1 2024 compared to cash used of $3.6 million in Q1 2023.
Net Loss $3.7 million (negative $0.08 per share) compared to a loss of $2.4 million (negative $0.05 per share) in Q1 2023.
Adjusted EBITDA $0.1 million gain compared to a loss of $1.4 million in Q1 2023.
Cash and Cash Equivalents $4.3 million as of March 31, 2024, compared to $2 million as of December 31, 2023.
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Operating Highlights
VMC 1200 Electric Trucks: Delivered 44 VMC 1200 trucks, contributing to a 400% increase in revenue.
Vicinity Classic Transit Buses: Delivered 22 Vicinity Classic buses, supporting strong demand and backlog growth.
New Dealership Partnerships: Announced four new dealership partners to expand VMC 1200 sales and service coverage across Canada.
Market Demand for EVs: Strong demand for VMC 1200 and Vicinity Classic buses, supported by government incentives.
Production Ramp-up: U.S. manufacturing campus in Ferndale, Washington, ramped production to fulfill a backlog exceeding US$125 million.
Cash Flow Improvement: Positive cash flow from operations of $0.5 million in Q1 2024, compared to cash used of $3.6 million in Q1 2023.
Strategic Growth Initiatives: Focus on onshoring production for Vicinity Lightning bus and expanding dealer network for VMC 1200.
Market Positioning: Positioned for high operational execution with a strong backlog and revenue growth.
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Risk or Challenges
Competitive Pressures: The company faces competitive pressures in the electric vehicle (EV) market, particularly as it expands its dealer network and ramps up production of the VMC 1200 electric trucks.
Regulatory Issues: The business is influenced by government incentives and rebates, such as the Canadian federal rebate of CAD$40,000 for the VMC 1200, which could be subject to changes in policy.
Supply Chain Challenges: There are potential supply chain challenges as the company ramps up production at its manufacturing facility in Ferndale, Washington, to meet a backlog exceeding US$125 million.
Economic Factors: The overall economic environment, including fluctuations in demand for commercial EVs and transit buses, could impact the company's revenue and operational execution.
Financial Losses: The company reported a net loss of $3.7 million in Q1 2024, indicating ongoing financial challenges despite increased revenue.
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Guidance & Outlook
Distribution Network Expansion: Vicinity Motor Corp. is focused on building out its distribution network across North America, having announced four new dealership partners to meet growing demand for the VMC 1200 electric trucks.
Production Ramp-Up: The U.S. manufacturing campus in Ferndale, Washington, is ramping production to fulfill a growing backlog exceeding US$125 million.
Strategic Initiatives: The initial strategic plan includes onshoring production for the Vicinity Lightning bus, augmenting the Canadian dealer network for the VMC 1200 truck, and launching the VMC 1200 into the U.S. market.
Cash Conversion Focus: Vicinity is actively working to monetize its backlog, with an immediate focus on converting $28 million of inventory to cash.
Revenue Growth: Revenue increased 400% to $13.2 million in Q1 2024, driven by higher deliveries.
Operational Execution Outlook: The company is positioned for a high level of operational execution in 2024, with fundamentals expected to strengthen as deliveries ramp up.
Cash Flow Improvement: Cash provided in operating activities totaled $0.5 million in Q1 2024, compared to cash used of $3.6 million in Q1 2023.
Backlog Position: The backlog as of March 31, 2024, exceeds US$125 million, indicating strong future revenue potential.
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Shareholder Return Plan
Shareholder Return Plan: The company has not announced any share buyback program or dividend program during the call.
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Key Q&A
Q:Could you detail a little bit on the $28 million of inventory that you look to deliver in Q2?
A:We're not going to give the specific quarterly projections at this time. The inventory right now that we have on hand is a majority of truck inventory. We are working through bus inventory fairly quickly right now and delivering on all of our backlog for buses. Right now, we have probably just over 280 trucks on hand that we will be working through and just under 30 buses to be delivered as at the end of the quarter.
Q:What does your margin outlook look like?
A:Our margins for the quarter were about 14%. Ideally, we get to a spot where we're over 20% margins, but realistically, for the next while 15% margins are really where we'd be sitting. But as we start shifting to more and more electric vehicles, the margin profile definitely goes up from there.
Q:Are there any delays that you're seeing for parts and any backlogs, and second, any delays going on with the approval process of grants to your customers?
A:As it relates to parts, I'd say that we're more or less normalized, which means it's imperfect, either from a service parts availability standpoint or even production parts availability. Some of the supply chain challenges are largely mitigated, but there can be just the normal supply chain challenges that happen in business. Regarding government grants, there are some delays that were initially underappreciated or unanticipated, but now that we have the grants in place and the process better understood, we have a clear path to operate through those delays.
Q:Can you just highlight what you mean by the formal launch of the VMC 1200 in the U.S.? What's the timing on that, and what has to happen before there's the formal launch?
A:Our formal launch, we are aggressively pursuing dealer partners in the United States currently. That needs to be balanced against certain U.S. regulatory certifications. Everything's on track and kind of working along as we had hoped it would.
Q:Does that imply that you have around the high-20s still invoiced but not delivered yet?
A:There are probably 20 something trucks out there that we've invoiced and we're waiting to collect on and ready to put the bodies on those trucks and deliver.
Q:Can you talk about the refinancing that you've done this quarter?
A:The deferral did not add any new cash to our balance sheet. The $2 million we had actually received already at quarter end, but the financing documentation was not fully in place. So there's no net effect on our increase on our cash position from March 31.
Q:Can you just update me on the extension or renewal of the working capital line with RBC and the Development Corp in Canada?
A:We have extended that again. I believe we have another probably two months on that. We're working on getting a longer extension for that facility.
Q:Do you have a number of the order backlog split between buses and trucks?
A:I don't have an exact breakdown of that at this point.
Q:The last one I had was, about 100 buses and about 1,100 trucks, is that -- does that ring in the ballpark?
A:100 buses we've started delivering on, but we've also taken new orders for buses. So it's probably still hovering around that figure.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the exact breakdown of the order backlog between buses and trucks, stating they did not have an exact number at that point. Additionally, there was vagueness in the response about the timing and details of the formal launch of the VMC 1200, as well as the specifics of the refinancing and cash position.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Poe
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chain challenge
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detail
distribution network
extension
financing
flow cash
focus
grant
increase cash
inventory hand
invoice truck
launch VMC
month
operation
part availability
phase Vicinity
place
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process
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role President
service
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truck Vicinity
VEV Transcript
Vicinity Motor Corp. (VEV) Q1 2024 Earnings Call Transcript
Unknown5-14
The earnings call revealed strong revenue growth and improved operational performance, but challenges like low margins, inventory monetization delays, and uncertain regulatory timelines for product launches temper enthusiasm. The Q&A highlighted management's lack of specificity on key metrics and delivery forecasts, which may concern investors. While the financial performance is improving, the uncertainties and lack of clear guidance create a balanced outlook, leading to a neutral sentiment. The market cap is not provided, so the stock's reaction could vary based on its size.
Vicinity Motor Corp. (VEV) Q4 2023 Earnings Call Transcript
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Vicinity Motor Corp. (VEV) Q3 2023 Earnings Call Transcript
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The earnings call presents a mixed outlook. Financial performance shows significant revenue growth and improved margins, but concerns remain about short-term debt, litigation risks, and uncertain U.S. market entry. The Q&A reveals some positive insights like a strong order backlog and dealer network expansion, but also highlights uncertainties in truck deliveries and litigation impacts. These mixed signals, combined with the lack of market cap information, suggest a neutral stock price movement over the next two weeks.
Vicinity Motor Corp. (VEV) Q2 2023 Earnings Call Transcript
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VEV Report
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