GreenPower Motor Company (GPV), a leading manufacturer of all-electric vehicles, reported robust first-quarter earnings for the period ended June 30, 2024, highlighting a significant rebound in demand for its electric vehicles, particularly school buses and specialty vehicles.
The company has capitalized on the growing market for environmentally friendly transportation, reflected in increased orders and an expanding sales pipeline. With a strategic manufacturing presence in West Virginia, GreenPower is well-positioned to meet the rising demand and expects to see its gross profit margins improve as production scales up.
Key Takeaways
- GreenPower Motor Company reports increased demand for all-electric vehicles, with significant orders and deliveries.
- The company is the only OEM manufacturing all-electric Type A and Type D school buses and is poised to benefit from new regulations.
- GreenPower has a strong sales pipeline with orders for 28 Cab & Chassis vehicles in Canada, 20 EV Star Cargo Plus and passenger vans, and 30 school buses for California and Oregon.
- The company expects revenue growth in the upcoming quarters due to increased production capacity and demand.
- GreenPower's West Virginia facility, supported by state subsidies, enhances nationwide production and contributes to workforce training and sales.
- The company ended the quarter with nearly $14 million in working capital and approximately $2 million available on its EDC facility.
Company Outlook
- GreenPower anticipates delivering most orders by the end of the year, contributing to expected revenue increases in subsequent quarters.
- The West Virginia manufacturing facility is expected to drive gross profit margins higher as throughput improves.
- State subsidies and support, including facility leaseback and workforce training, are aiding the company's growth.
Bearish Highlights
- No specific bearish highlights were discussed during the earnings call.
Bullish Highlights
- The company has received follow-on orders for its electric vehicles, indicating potential for exponential sales growth.
- GreenPower's unique position in the electric school bus market is bolstered by California's new regulations, presenting a multibillion-dollar opportunity.
- The company's EV Star Cab & Chassis vehicles are fully paid for, ready to generate cash flow with minimal cash outflow.
Misses
- The earnings call did not disclose any misses or shortfalls in the company's performance.
Q&A Highlights
- CEO Fraser Atkinson emphasized the strategic advantage of the West Virginia facility, describing it as a rent-to-own arrangement with the state.
- The state's role as a major customer and supporter of sales, pilot projects, and workforce training was highlighted.
- GreenPower has secured 80 orders on the East Coast, including New York, and foresees an uptick in sales for its electric school buses, EV Star passenger vans, and specialty vehicles.
GreenPower Motor Company's first-quarter earnings call paints a promising picture for the company's future. With a solid foundation of orders and a strategic manufacturing facility, GreenPower is set to ride the wave of increasing demand for electric vehicles. The company's focus on the burgeoning school bus market, supported by favorable regulations and state subsidies, positions it well for continued growth and profitability.
InvestingPro Insights
GreenPower Motor Company (GPV) has shown resilience in the electric vehicle market, yet it's important to note some of the financial challenges and opportunities that are present. According to InvestingPro data, GreenPower's market capitalization stands at approximately $24.93 million, reflecting the size and valuation of the company in the current market.
InvestingPro Tips reveal that the company operates with a significant debt burden and may have trouble making interest payments on its debt. This is critical for investors to consider, as the company's financial obligations could impact its ability to invest in growth and expansion. Additionally, while analysts anticipate sales growth in the current year, they do not expect the company to be profitable within the same timeframe. These insights suggest that while there is optimism around sales, profitability remains a challenge.
From a performance standpoint, GreenPower's stock has experienced significant volatility. It has seen a notable return over the last week, yet the stock has fared poorly over the last month and taken a big hit over the last six months. This level of volatility could be indicative of market sentiment and the competitive pressures within the electric vehicle industry.
In terms of financial metrics, GreenPower's P/E Ratio is currently at -1.17, and the adjusted P/E Ratio for the last twelve months as of Q1 2025 stands at -1.23. These negative figures highlight the company's current lack of profitability. However, the company's liquid assets exceed its short-term obligations, suggesting that it has the liquidity to manage its immediate financial needs.
For those interested in deeper analysis and more InvestingPro Tips, GreenPower Motor Company has additional insights available on the InvestingPro platform. There are a total of 13 InvestingPro Tips that can provide further guidance on the company's financial health and investment potential. These tips, along with real-time metrics, can be found at https://www.investing.com/pro/GPV, offering investors a comprehensive view of GreenPower's performance and outlook.
Full transcript - GreenPower Motor Company Inc (GP) Q1 2025:
Operator: Good day and welcome to the GreenPower Motor Company First Quarter Earnings and Update on GreenPower Sales Pipeline Conference Call. All participants will be in listen-only mode. [Operator Instructions]. 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.
Michael Sieffert: 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 financial results for the period ended June 30, 2024 and provide an update on green Power's sales pipeline. I'm here today with our CEO, 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 quarterly interim results and MD&A filed on SEDAR and on EDGAR. In addition, these forward-looking statements relate to the date on which they're 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. For additional information on the results of operations for the period ended June 30, 2024, you can also access the audited financial statements and MD&A posted on GreenPower's website, as well as on www.sedar.com or filed on EDGAR. I'll now pass the call over to GreenPower CEO, Fraser Atkinson.
Fraser Atkinson: Thanks Michael. And good morning, everyone. I'm pleased to report that since our most recent quarter, GreenPower has turned an important corner. Our most recent quarter is not indicative of where our business is positioned today. While uncertainty over state regulations and federal incentives, combined with other global economic factors, slowed some EV markets earlier this year, the increase in orders and quotes GreenPower is now experiencing shows that the demand for all electric vehicles is still there and that the market is rebounding with significant growth potential. We have the inventory and the production to meet the increased demand. Consequently, we see a step up in our revenue from our most recent quarter through each of the remaining quarters this fiscal year. Earlier today, we announced deliveries of our all-electric purpose built school buses in California, with follow-on deliveries over the next few weeks in California and Oregon. This activity complements our recent announcement on sales on the East Coast. Brendan will discuss our activities in the school bus sector in more detail later on this call. We have seen a significant uptick in the past few months with our sales pipeline for GreenPower's all electric commercial vehicles, including 28 specialty vehicles for deployment in Canada, which would utilize our current inventory of EV Star Cab & Chassis. This represents inventory we have on our books, generating cash flow requiring little additional cash outflow, markedly improving our liquidity. We've also received orders for EV Star passenger vans in a variety of seating configurations and EV Star Cargo Plus vehicles consisting of more than 20 vehicles. We anticipate delivering most of these vehicles by the end of this calendar year. Many of these orders and quotes have follow-on orders, providing exponential growth with our sales pipeline. Now an observation on our competitive landscape. Our go-to-market strategy consists of the horizontal market for medium duty Class 4 vehicles where we have our own all-electric cabin chassis, passenger vans, shuttle buses, and a range of commercial vehicles, as well as the vertical market for school buses with our Class 4 Type A all-electric Nano BEAST school bus and our heavy duty Class 8 Type D BEAST all-electric school bus. Over the past year, there has been an interesting trend in that the number of EV OEMs with medium duty Class 4 all-electric offerings have been dwindling as measured by the eligible vehicles listed on California's HVIP incentive program. There are fewer Class 4 Type A school buses, fewer Class 4 passenger vans, and fewer Class 4 commercial vehicles listed on the program. We believe this trend will continue over the short term. California has introduced legislation requiring roughly 10% of new purchases of Class 4 vehicles by fleet operators to be zero emission, creating demand for GreenPower's EV Star line of commercial vehicles. This requirement will increase to 75% over the next 10 years, amounting to a multibillion dollar annual market opportunity. We believe this increased demand will flip the supply/demand in favor of EV OEMs within the medium duty Class 4 space, and that we are starting to see the early days of this new dynamic. I'll now hand it over to Brendan for discussion on operations.
Brendan Riley: Thank you, Fraser. And good morning, everyone, on the call. Two years ago this month, GreenPower took possession of its manufacturing facility in West Virginia. That decision to manufacture there was based on the need to increase the company's production capacity well beyond California to the East Coast. Today, the pipeline of GreenPower all-electric purpose-built zero emission school bus orders has more than 30 vehicles slated for delivery in California and Oregon over the next 90 to 120 days. These orders complement the 88 school buses previously announced for the East Coast. So the east-west strategy of manufacturing and delivering products nationwide as the company envisioned two years ago when the West Virginia plant was added is coming to fruition as planned. Today, according to the listings under California HVIP program, GreenPower is the only school bus OEM that is manufacturing an all-electric, purpose-built, Class 4, Type A school bus and an all-electric Type D school bus. While that has significant impact on incentives in California, it's also notable from a market standpoint nationwide. Combining this fact with our unique production capabilities on both the East and West Coasts, GreenPower is perfectly poised to take full advantage of the mandates which have been implemented in many states and take advantage of the more than $8 billion in monies from state and federal level, all of which are impacting the transition to and deployment of all-electric school buses. During the quarter, GreenPower has been called upon to service an EV product expert and thought leader in the national discussion on EV school bus deployment. During STN Indy and STN Reno, I personally had the opportunity to make the presentations on the contemporary materials and methods and systems and structures for EV school bus safety. In Reno, GreenPower was also asked to participate in a discussion on preparing for the 2030 mandates and the increased regulations coming on diesel with a focus on how to prepare for the change via electric products. We also participated in a roadmap conference at the WRI – that's the World Resource Institute – looking at the barriers to 100% zero emission school bus deployment and how to overcome them. Later today, leading national organization impacting policy related to the deployment of zero emission vehicles in general, ZETA – that's the Zero Emission Transportation Association – has asked me to participate in the discussion on the economic impact and workforce implications of the EV industry. Before closing, I want to amplify Fraser's comments on the commercial side of GreenPower's business. Much like the east-west production strategy on school bus production, that makes us more nimble and more able to respond to market demands and changes. Our combining offering of school buses and commercial vehicles provide the flexibility to weather the conditions Fraser mentioned having occurred in early 2024. We have filled our pipeline, increased our quotes and have seen an increase in commercial demand. Just yesterday, I was at a ride and drive in Oakland with CARB, CalStar and our dealers where I noticed a much higher interest level compared to earlier in the year. Lastly, as it relates to our commercial products, during the quarter, we introduced a very modern refrigerated box that utilizes our EV Star Cab & Chassis. This refrigerated box is called the EV Star ReeferX. It's a modern design and a look that complements the modern EV platform. The EV Star ReeferX is purpose built, fully customized with a lighter body to allow for increased payload, runs off of high voltage and is considered one of the most energy efficient and is now becoming one of the more desirable EV refrigerated boxes. Designed to serve the mid to last mile refrigerated delivery and catering applications, the EV Star ReeferX moves goods that need to be temperature controlled such as frozen foods, flowers, pharmaceuticals, all doing that in the zero emission method. The vehicle's body features one interior wall structure and allows for seamless sanitation, consistent insulation throughout the entire vehicle and a much longer life. Now I would like to return the call to Michael Sieffert.
Michael Sieffert: Thank you, Brendan. For the three months ended June 30, 2024, GreenPower generated revenue of $3 million with a cost of sales of $2.8 million, generating a gross profit of approximately $222,000. Our lower-than-anticipated gross profit margin this quarter was primarily related to overhead costs incurred on the limited throughput in West Virginia and from lower realized gross profit margins on sales of prior model year inventory. We expect the gross profit margins will increase when throughput improves in our West Virginia facility, which will improve the allocation of a plant overhead on a per unit basis. Turning to our liquidity, we raised gross proceeds of $2.3 million before fees and expenses in a unit offering during the quarter and we continue to utilize our operating line of credit and revolving credit facility with EDC to fund investments in working capital. We ended the quarter with nearly $2 million in available liquidity on the EDC revolving credit facility and we've continued to utilize the facility to push forward production for existing sales contracts since quarter end. This facility continues to be an important source of capital for our company. We finished the quarter with nearly $14 million in working capital, including $33.7 million in inventory, of which $13.4 million was finished goods. Many of the opportunities we're currently working on involve sales of existing finished goods inventory, which only require very limited additional capital outlays. Finally, we've been fortunate to have the continued support from GreenPower's directors and officers, who have provided important and much needed financial support for our company over time. I'll now pass the call back to Fraser for some final remarks.
Fraser Atkinson: Michael, we'll open the lines for the Q&A, and I'll provide a summary at the end.
Michael Sieffert: Thank you. Operator?
Operator: [Operator Instructions]. Our first question comes from Craig Irwin of ROTH Capital Partners.
Craig Irwin: I wanted to maybe unpack a little bit the book of orders in hand. So, in your press release today, you said 28 Cab & Chassis that are going into Canada. I guess 20 EV Star Cargo Plus and passenger vans, and then 30 school buses for California and Oregon. With what's going on in West Virginia, different areas of the country, my intuition leads me to think you've got an order book quite a bit bigger than the 78 units that you're calling out directly. Can you maybe update us on a gross number or a range that you think is fair based on orders in hand or commitments in hand that might be matched with EPA vouchers or HVIP funding?
Fraser Atkinson: Well, that's a multi-part question, so let's start at the top there for you, Craig, is on the specialty vehicles and the passenger vans. In many of those, we have follow-on orders. In other words, we'd be working with them to place the initial order. And then there's a follow-on order for a like or similar number of vehicles. And the follow-ons don't have the full set of approvals where we would put it at the top of our sales pipeline. So it would be lower down in terms of the probability, as we would need to deliver the first tranche and then move on to the second phase, or in even one case, a third phase, for orders that a particular customer is looking for. So the attributes in the second and third tranche aren't quite the same as the first one, but the magnitude of the follow-on is greater than what we're looking at in the first tranche for the specialty vehicles and the passenger vans.
Craig Irwin: To ask the question simply, you called out some specific numbers in your release. Is it credible to say that there's a much broader pipeline than the 78 units you identify that we could have a multiple of that in interest, but as far as commitments…
Fraser Atkinson: That's what I was saying.
Craig Irwin: This is a lumpy business. Quarter to quarter, deliveries are difficult to predict. Very difficult. Can you maybe talk us through what you would see as a natural margin now for your products? Does this differ dramatically between Cab & Chassis and the EV Star Cargo Plus and then the school buses? Do we see sort of richer products on the gross margin side and products that are less profitable? How should we think about potential gross margin progression later on this year?
Fraser Atkinson: Well, traditionally, our gross profit has been in the high teens – 16%, 17%, 18% on a quarterly basis. I think Michael articulated the impact of the current quarter that when you have just a handful of vehicles going through a large facility, as we have in West Virginia, the allocation of the plant overhead has a limited number of vehicles that absorb that overhead. So as we increase throughput, which we are doing right now, we're currently working through the 37 school bus orders in West Virginia. Facility looks a whole lot busier today than it does three, four months ago. So, consequently, we see that as having a favorable impact on that allocation which improves or increases our gross profit over time.
Craig Irwin: Last question for me. In your remarks, you indicated that some of the units you expect to deliver can be served out of inventory, that there's a number of vehicles that are finished in inventory. Can you update us on the finished vehicles and inventory? What type of vehicles are these? Can you maybe share the number of the different types?
Fraser Atkinson: Well, I'll provide the overarching comment, the first part of your question, and let Michael speak to the metrics within the finished goods inventory. For those vehicles, like a specialty vehicle, like a box truck that we would build on our EV Star Cab & Chassis, or similar type vehicle, or even the Reefer that Brendan talked about that was recently launched, all of those are built on our own EV Star Cab & Chassis, and we have an inventory of those. And consequently, that inventory is fully paid. So that allows us to crystallize or utilize the inventory and generate cash flow with little or no cash outflow.
Michael Sieffert: This is Mike here. In terms of our finished goods inventory, the largest category right now would be our EV Star Cab & Chassis, although that's a category that is depleting quite rapidly, which is a positive thing due to the sales that we've seen over the last little while. So we anticipate that that's going to be declining over time. We also have approximately or over 40 EV Stars of various types. That does include secondhand vehicles that we have repossessed or have been returned after lease. And then the other major categories would be our Nano BEASTs. We have over 10 of those. And we have received additional BEASTs since quarter-end. So at quarter end, we didn't have many BEASTs available for sale, but since quarter-end, we have received additional BEASTs that we're now in the process of delivering.
Craig Irwin: It's good to hear the customers are showing increased enthusiasm.
Operator: Our next question comes from Tate Sullivan of Maxim (NASDAQ:MXIM) Group.
Tate Sullivan: Brendan, did I hear you mentioned more state subsidies in West Virginia as production increases? Or have you already received those subsidies or have to apply for any? Can you cover that landscape, please?
Brendan Riley: I'm sorry, Tate, I couldn't clearly hear your question.
Tate Sullivan: Do you have available subsidies in West Virginia as production increases?
Brendan Riley: We do. We have numerous subsidies in West Virginia on top of subsidies we enjoy with the state for training employees where the state actually covers cost of new hires that go through the GreenPower and BridgeValley training program. We have tax subsidies. We have multiple subsidies in West Virginia that that we'll be able to continue to take advantage of over the next few years, up to and including the fact that our building in West Virginia is essentially a rent to own option where the state has purchased the building and we are buying it through the lease payments.
Tate Sullivan: Have you already received actual checks from the government or does that come as you increase production or the offsets to taxes? How do most of those work?
Brendan Riley: That would be a question from Michael Sieffert to answer, I believe, on whether we've received the physical checks or if they're credits.
Michael Sieffert: I think in terms of the support we've received from the state, how I would characterize it is that they are the major end customer for a lot of the units that we're selling. So we are clearly selling to school districts, but the state itself has supported those sales and it has also supported, very importantly, some pilot projects which have helped us develop and improve our vehicles as well as prove their ability to operate in some of the challenging conditions that exist there. So you have mountainous terrain, you have winter conditions and so all of that has been helpful. And as Brendan mentioned, we do have a sale leaseback on a facility there, which, again, is the facility that we've been able to produce. Finally, we have received support from the state in the form of training our workforce. And so, we're employing, I think, currently over 40 individuals at that point. And the state has been supporting, importantly, some important training for those staff. So we would characterize this as a great relationship and one that I think works well, certainly, for our company, but hopefully the state sees benefit in terms of employment that we're offering there.
Fraser Atkinson: Tate, we have received checks.
Tate Sullivan: Fraser, with the 80 orders on the East Coast, are all of those school buses? Are all those destined for West Virginia or have you increased your state footprint for school buses since starting production in the West Virginia facility?
Fraser Atkinson: I believe that includes some orders that will be going into New York.
Brendan Riley: Correct.
Tate Sullivan: Last for me, Michael, did you say $2 million of availability at the end of the quarter on the EDC facility? Did I catch that…?
Michael Sieffert: That's correct. Approximately $2 million. It's on our balance sheet of slightly – a drawn balance of slightly over $3 million at quarter-end. And it's a $5 million facility.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Fraser Atkinson, Chief Executive Officer, for any closing remarks.
Fraser Atkinson: Thank you. To recap, we have seen a significant uptick in the past few months with our sales pipeline for GreenPower's all-electric school buses, EV Star passenger vans and specialty vehicles which utilize our current inventory of EV Star Cab & Chassis. The latter represents inventory we have on our books, generating cash flow, requiring little additional cash outflow, markedly improving our liquidity. Many of these orders and quotes have follow-on orders providing exponential growth with our sales pipeline. We have the inventory and the production to meet the increased demand. Consequently, we see a step up in our revenue from our most recent quarter through each of the remaining quarters this fiscal year. Thank you all for your support. And this ends today's call.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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