Vicinity Motor Corp. (VMC) has announced a significant 400% increase in its revenue for the first quarter of 2024, alongside a positive cash flow from operations. The manufacturer delivered 44 VMC 1200 electric trucks and 22 Vicinity Classic clean diesel buses, contributing to this substantial revenue growth.
Despite a net loss of $3.7 million, the company's gross profit reached $1.9 million, or 14% of revenue. With a growing backlog exceeding $125 million, Vicinity Motor Corp. is ramping up production at its U.S. facility to meet demand and is optimistic about improving margins and operational execution throughout the year.
Key Takeaways
- Vicinity Motor Corp. reported a 400% revenue increase in Q1 2024.
- Positive cash flow from operations was achieved.
- 44 VMC 1200 electric trucks and 22 Vicinity Classic clean diesel buses were delivered.
- Four new dealership partnerships were announced to support VMC 1200 demand.
- U.S. manufacturing campus in Ferndale, Washington, is increasing production.
- Company targets margins over 20% in the future with a shift towards electric vehicles.
- Supply chain challenges are largely mitigated, with confidence in navigating government grant delays.
- Formal launch of VMC 1200 in the U.S. expected in the second half of the year.
- The company has outstanding invoices for approximately 20 trucks, dependent on customer financing.
- Recent debt refinancing and working capital line extensions have been discussed.
Company Outlook
- Vicinity Motor Corp. is focused on significant milestones, including onshoring production for the Vicinity Lightning bus and expanding the dealer network.
- The company expects to strengthen operational execution as the year progresses.
Bearish Highlights
- The company reported a net loss of $3.7 million for the quarter.
- Some delays in parts availability and government grants were acknowledged.
Bullish Highlights
- Positive cash flow from operations indicates financial health.
- Strong demand is evidenced by a substantial order backlog and new dealership partnerships.
Misses
- A specific breakdown of the order backlog between buses and trucks was not provided.
Q&A Highlights
- Margins are expected to improve with the shift towards electric vehicles.
- Delays in parts availability and government grants are being navigated.
- The VMC 1200 is on track for a U.S. launch in the latter half of the year, possibly earlier.
- Debt financing updates include payment deferrals without affecting the cash position.
- Working capital line extensions are in progress, with efforts for longer-term solutions.
In summary, Vicinity Motor Corp. is experiencing robust growth and is taking strategic steps to maintain and escalate its market presence, particularly in the electric vehicle sector. The company's executives remain confident in their ability to manage ongoing challenges and capitalize on opportunities in the evolving transportation industry.
InvestingPro Insights
Vicinity Motor Corp.'s recent financial performance, highlighted by a 400% revenue increase in Q1 2024, is further illuminated by real-time data and insights from InvestingPro. With a market capitalization of $37.83 million, the company's growth narrative is corroborated by a notable quarterly revenue growth of 150.27%. This suggests that the company's operational activities and market expansion efforts are translating effectively into increased sales.
InvestingPro Tips indicate that while analysts are optimistic about sales growth in the current year, they are cautious about the company's financial health due to its significant debt burden and weak gross profit margins, which stand at 11.21%. The company's P/E ratio, reflecting negative earnings, is currently at -2.29, and has adjusted to -2.96 for the last twelve months as of Q4 2023, signaling that investors are pricing the company's shares with expectations of future profitability challenges.
Moreover, Vicinity Motor Corp. has demonstrated a strong return over the last month, with a 28.31% price total return, which might attract investors looking for short-term gains amidst high price volatility. This aligns with the company's strategic milestones and expansion into the electric vehicle market, as mentioned in the article.
For those interested in a deeper dive into Vicinity Motor Corp.'s financial health and future prospects, InvestingPro offers additional insights and metrics. There are currently 11 more InvestingPro Tips available, which can provide a more comprehensive understanding of the company's financial position and market potential. To gain access to these valuable insights, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
InvestingPro's fair value estimation of $0.89 USD, compared to the analyst target of $2 USD, suggests a cautious stance on the company's valuation, which investors should consider alongside the positive operational developments reported by the company.
Full transcript - Grande West Transportation OTC (VEV) Q1 2024:
Operator: Greetings, and welcome to the Vicinity Motor Corp. First Quarter 2024 Corporate Update Conference Call. At this time all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Before we begin the formal presentation, I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described on the call. Please refer to the company's regulatory filings for a list of associated risks, and we would also like to refer you to the company's website for more supporting industry information. I would now like to hand the call over to William Trainer, Founder and Chief Executive Officer of Vicinity Motor Corp. William, the floor is yours.
William Trainer: Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to today's first quarter 2024 corporate update conference call. The first quarter of 2024 continued our focus on our build out of our distribution network across North America and a robust cadence of our deliveries of our VMC 1200 electric trucks and our Vicinity Classic clean diesel buses against our significant backlog. During the quarter, we made successful deliveries of 44 of our VMC 1200 trucks and 22 Vicinity Classic transit buses to our eager customer base. Our performance helped us drive a 400% increase in revenue and positive cash flow from operations, reflecting the VMC 1200 demand from our growing network of dealers across Canada, and momentum from our market leadership position with our transit buses. With that, I'd like now to hand it over to Brent Phillips, who we were recently privileged with promoting to the newly created role of President to lead us in our next phase of growth. Brent joined Vicinity in November of 2021, bringing over 30 years of experience in the commercial transportation field, including numerous leadership roles in distribution and manufacturing, including operation, sales and marketing. Brent will lead us through this quarter's highlights and outline new strategic and operational initiatives that he will spearhead. Brent?
Brent Phillips: Thank you, Will. It's an honor to be asked to help lead the next phase of profitable growth at Vicinity. I'll start with our VMC 1200. We recently announced four new dealership partners to meet growing demand, including VMC Laval in Laval, Peninsula VMC Truck Centre in South Toronto, Shift EV Trucks in West Toronto, Jack Carter VMC Trucks in Southern Alberta, and most recently RJames Vicinity Truck in Kamloops and Kelowna, British Columbia. These new EV specific dealerships expand the VMC 1200 sales and service coverage in strategic markets across Canada, leveraging the expertise and built-in base that each partner has in their respective regions. Each partner has exceptional experience and expertise in the automotive market and fleet services making them well suited to help fleet operators seamlessly transition to an all-electric future. For Vicinity, the VMC 1200 carries a healthy margin profile and year-round purchasing habits of the differentiated customer base, and that helps us to smooth the traditional revenue lumpiness of our established transit bus business. VMC 1200 provides an ideal entry point into the developing commercial EV market for dealerships and customers that are attracted by our competitive price point inclusive of incentives and operational savings. In addition to delivering operating cost savings immediately in contributing to carbon emissions reductions, the VMC 1200 further benefits through Canadian federal and provincial rebates. Perhaps most notable, it qualifies for a Canadian federal rebate nationwide of CAD$40,000 from Transport Canada with additional provincial incentive programs available up to $92,000 in certain provinces. In the transit bus business, during the first quarter, we saw strong demand and deliveries for our Vicinity Classic transit bus line as it helps grow our backlog and serve as a foundational building block of our revenue mix. Orders during the quarter included follow-on purchase order from Autobus La Québécoise for delivery of 12 Vicinity Classic buses to service cities throughout the province of Quebec. These follow-on orders, in addition to the eight bus order received in December, validates our reputation for excellence built through the sale and delivery of nearly 1,000 Vicinity transit buses since inception. Our reputation creates a level of trust that allows for a significant competitive advantage to offer both our legacy and next-generation electric buses in a variety of classes and configurations to an incredibly wide variety of customers. Our U.S. manufacturing campus in Ferndale, Washington, continued to ramp production during the quarter to tackle the fulfillment of our growing backlog, which as of March 31 exceeded US$125 million. The facility is designed to meet our current and future production needs with annual capacities of 850 buses and several thousand electric VMC 1200 trucks. Operationally, I was appointed to the newly created role of President to lead our next phase of growth. To that end, we are focused on driving strategic and operational initiatives to streamline production and increase vehicle sales through our Vicinity Classic and Lightning bus lines as well as the VMC 1200 truck. Our initial strategic plan is focused on milestones related to the onshoring of production for the Vicinity Lightning bus in Ferndale, Washington, augmenting the Canadian dealer network for the VMC 1200 truck as we've covered today and the formal launch of the VMC 1200 into the U.S. market. As we stand today, we are aggressively building out our VMC 1200 dealer network in a continent wide, in ramping up production in our Ferndale facility. We're actively working to monetize our backlog, including an immediate term focus on converting our $28 million of inventory to cash. The first quarter strong revenue, positive cash flow from operations and robust backlog are positioning us for a high level of operational execution in the quarters ahead. With that, I will now turn it over to Dan to review the financial results for the quarter ended March 31, 2024. Dan?
Dan Buckle (NYSE:BKE): Thank you, Brent. Good afternoon, everyone. I will keep my portion to a brief review of our financial results. A full breakdown is available in our regulatory filings and in the press release that cross the wire aftermarket close today. Revenue increased 400% to $13.2 million in the first quarter of 2024, as compared to $2.7 million in the first quarter of 2023. The 400% increase in revenue was primarily driven by higher deliveries, including 44 truck and 22 bus deliveries in the first quarter as compared to five trucks and three buses in the same year ago quarter. Gross profit in the first quarter of 2024 totaled $1.9 million, or 14% of revenue, as compared to $0.5 million, or 18% of revenue, in the first quarter of 2023. Gross margins were positively affected by higher deliveries in 2024 and a product mix that has shifted more towards electric trucks at higher margins. Cash provided in operating activities in the first quarter of 2024 totaled $0.5 million as compared to cash used of $3.6 million in the first quarter of 2023. Net loss in the first quarter of 2024 totaled $3.7 million, or negative $0.08 per share, as compared to a loss of $2.4 million, or negative $0.05 per share in the first quarter of 2023. Adjusted EBITDA in the first quarter of 2024 totaled a gain of $0.1 million, as compared to a loss of $1.4 million in the first quarter of 2023. Cash and cash equivalents as of March 31, 2024, totaled $4.3 million, as compared to $2 million as at December 31, 2023. We believe we are well-positioned for a high level of operational execution in 2024 with the fundamentals of our operations expected to further strengthen as we ramp deliveries throughout the year. I'd now like to pass it back to Brent to offer some closing remarks, after which we will begin our question-and-answer session. Brent?
Brent Phillips: Thank you, Dan. During the quarter, our accomplishments included continued diversification of our distribution network with new dealerships, ramping up production, a growing sales funnel and record backlog that includes our transit bus line. Market fundamentals continue to support our business strategy as we see continued demand for our classic bus products as well as through the transition to commercial EV adoption supported by government incentives, corporate sustainability goals, and lower total cost of ownership and operation for EV buyers. As we move ahead into 2024 and continue to execute against our key milestones, I believe we have built the foundation of a business that can deliver value to its stakeholders and their communities for years to come. And with that, I would like to now hand the call back to the operator to begin our question-and-answer session. Operator?
Operator: Thank you, Brent. We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Robin Cornwell with Catalyst Research. Please go ahead.
Robin Cornwell: Hi, good afternoon or good morning, I guess still afternoon for you. My first question is for Brent. Could you detail a little bit on the $28 million of inventory that you look to deliver in Q2?
Dan Buckle: Hey Robin, this is Dan. So 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.
Robin Cornwell: So that would be in the end of Q2. So 280 trucks --
Dan Buckle: Sorry, the end of Q1, those are the end of Q1 numbers.
Robin Cornwell: Sorry, I'm confused on that. When you said 280 trucks on hand to be delivered, does that get that right?
Brent Phillips: The inventory that we have on hand not to be delivered, we're not going to give any guidance or delivery forecasts.
Robin Cornwell: Okay. Okay. So I was just trying to get an idea of what the composition of the $28 million, not the time of delivery, but just what the composition of the inventory.
Brent Phillips: Breakdown.
Dan Buckle: Yes, we have -- there is a breakdown in the financials in the notes. So there are a portion of that is parts inventory for our aftermarket parts business. And then like I say, the remaining was about 280 trucks and just under 30 buses.
Robin Cornwell: Okay. Thank you. Sorry for the confusion on my part. Okay. I guess continuing with Dan, what does your margin outlook look like? I guess, with your back into production and you've got Ferndale as well now. So what kind of margins are you expecting, or do you think you could achieve over the next three months to six months?
Dan Buckle: Yes. That's a great question. So 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.
Robin Cornwell: Okay. And I'll just ask one more quick question. Are there any delays that you're seeing for two things, one parts and any backlogs, and second, any delays going on with the approval process of grants to your customers?
Brent Phillips: Yes, Robin, those are good questions. 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. And I don't mean to be evasive there, but I think that by a large extent, some of the supply chain challenges are largely mitigated, but there can be just the normal supply chain challenges that happen in business. And then secondly, to answer the second part of your question, can you repeat that part of the question, Robin?
Robin Cornwell: Yes. There's been a lot of comment about the government grants going out to potential clients of yours and having been delayed or perhaps not being processed at all. Have you heard any or have any commentary on that?
Brent Phillips: So there is a process to government funding, of course, and there are some built, some delays in that, and I think that some of those delays were initially maybe underappreciated or unanticipated. But now that we have the grants in place and the process better understood, I think that we've got a pretty clear path to being able to operate through that, those grant funding delays, and that would apply both for us and for our dealers.
Robin Cornwell: Okay. Great. Thank you. I'll re-queue.
Brent Phillips: Thank you.
Operator: [Operator Instructions]. The next question comes from Poe Fratt with Alliance Global Partners (NYSE:GLP). Please go ahead.
Poe Fratt: Hi, good afternoon, and congratulations, Brent, on becoming President. 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?
Brent Phillips: Hi Poe, and thank you for the congratulations. Appreciate the question. So our formal launch, we are aggressively pursuing dealer partners in the United States currently. I think that that is progressing along quite well, frankly, and then that needs to be balanced again against in time with certain U.S. regulatory certifications. That probably is best not to get into the detail of. But that's all timing out and everything's kind of lining up with what we had projected later last year as we rolled out this U.S. launch plan. So I'd say that everything's on track and kind of working along as we had hoped it would.
Poe Fratt: So second half of the year or potentially sooner?
Brent Phillips: It's going to time out to second half of the year, but we may be able to catch it a little bit sooner.
Poe Fratt: Okay. And then this quarter you delivered 44 trucks. Last quarter, you talked about invoicing but not delivering 71. Does that imply that you have around the high-20s still invoiced but not delivered yet? Or I guess another way to ask the question is how many invoices do you have outstanding for the trucks right now?
Brent Phillips: That's a fair question. Dan, do we have an exact number on that?
Dan Buckle: I don't have an exact number, but you're right, Poe. 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.
Poe Fratt: And would you anticipate being able to collect this quarter on those outstanding invoices and then potentially delivering other trucks in the quarter?
Dan Buckle: Yes. Some of that is related to our customers, our dealers, and getting their floor plan and up in place and their financing in place, so if all goes well, yes, but we can't guarantee that, of course.
Poe Fratt: Okay. And understood that, that's why you're not giving any specific guidance. Dan, can you talk about the refinancing that you've done this quarter and including, well, I guess, the debt deferral that you had and then the new debt that you put on the balance sheet? If I do all the math, what's your pro forma cap cash right now on the balance sheet? It should be, I'd say, close to $7 million, $8 million. Is that a ballpark number? Or can you just sort of walk me through the debt financing that you did this quarter?
Dan Buckle: So the deferral did not add any new cash to our balance sheet. That was a deferral of payments that were scheduled for April and July, which have now been pushed out to October. The $2 million we had actually received already at quarter end, but the financing, the documentation was not fully in place, which is why it shows up as a subsequent event. That amount was already in our cash at quarter end, and it was also showing up as a crew liabilities rather than short-term debt just until we got the paperwork completed. So that paperwork was completed shortly after quarter end. So there's no net effect on our increase on our cash position from March 31.
Poe Fratt: Other than potentially in a positive cash flow or change in cash flow?
Dan Buckle: Yes, cash flow, that's correct.
Poe Fratt: And then Dan, can you just update me on the extension or renewal of the working capital line with RBC (TSX:RY) and the Development Corp in Canada?
Dan Buckle: Yes. So we have extended that again. So I believe we have another probably two months on that. And we're working on getting a longer extension for that facility as well, working with RBC and EDC. In finalizing the facility to make sure that it's approved and extended for when we need it.
Poe Fratt: Okay. And I'm not sure if you disclosed this. I had -- what's the order backlog still over $125 million. Do you have a number of the order backlog split between buses and trucks?
Dan Buckle: Yes. I don't have an exact breakdown of that at this point.
Poe Fratt: The last one I had was, about 100 buses and about 1,100 trucks, is that -- does that ring in the ballpark?
Dan Buckle: 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. Plus or minus 10 or 20, probably more like plus for the buses right now.
Poe Fratt: Okay. Sounds good. Thanks for your time.
Dan Buckle: Thank you, Poe.
Brent Phillips: No, well, one of my thoughts as it relates to that Poe, and hopefully you can appreciate this is just from a competitiveness standpoint, some vagueness around, where our successes are coming from is probably best left as a with less detail in it, but nonetheless, we -- that is kind of out there. And we'll continue to talk about that, but probably not get down into the mix and splits.
Poe Fratt: Great. As an analyst, I'd love diagnosis.
Brent Phillips: We're going to get along just fine.
Poe Fratt: Thank you.
Brent Phillips: You're welcome. Thank you.
Operator: This concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Brent Phillips for his closing remarks.
Brent Phillips: Thank you, Operator. I would like to thank each of you for joining our earnings call today. We look forward to continuing to update you on our ongoing progress and growth as we continue our rapid pace of operational execution. If we were unable to answer any of your questions, please reach out to our IR firm, MZ Group, who will be more than happy to assist. Thank you.
Operator: Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
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