Company: Vicinity Motor Corp
Listings :TSXV , NASDAQ
Ticker: VMC.V & VEV
Market cap at time of publication: $78 MCAD
Stock price at time of publication: $ 1.97 CAD
Target price: 15-32 CAD by external analysts
Business: Leading supplier of electric, CNG, gas and clean-diesel buses for
both public and commercial enterprise use in the U.S and Canada
Comparable peer : Lion Electric Market cap 2 billion USD
ESGFIRE conducted a Q&A session recently in the beginning of June 2022 with Vicinity Motors VP of Corporate Development. Below you will find a transcript of the call:
ESGFIRE: How does management think about financing needs going forward (either from an equity or debt perspective)? What were the use of proceeds from the latest $12M capital raise?
John: Well, we have a fortified balance sheet from our recent financings, in addition to our cash position and a CAD$20 million line of credit. Our Ferndale facility is now fully funded and we expect shipments to get underway during the second half of the year. Given our expected strong revenue growth and cash provided by operations as we ramp Ferndale, we are comfortable with our cash position and don’t anticipate a need for equity financing at present. Of course, if strategic opportunities or non-dilutive opportunities arise to add long-term diverse revenue streams or attractive supply partnerships, we would consider them.
The $12 million from the last raise at the end of March is primarily to fully fund the Washington State manufacturing and assembly facility which we expect to complete in the second half of 2022.
ESGFIRE: What factors are driving your US$70-90M revenue guidance, which is a significant year-over-year improvement, and to what extent do you anticipate supply chain disruptions affecting sales in 2022?
John: In terms of our guidance, its enabled by the greatly expanded EV product line we’ve worked so hard to assemble. Of course, we have a backlog of US$90 million which as we’ve mentioned included orders for 250 VMC 1200 EV trucks from Canada automotive dealers as well as significant interest in our other EV products.
We’ve been very proactive in attacking potential supply chain pain points, particularly with a reliable source of battery supply, one common problem for EV manufacturers. Our 600-vehicle supply agreement with Proterra supplemented by our existing providers – BMW and Electrovaya – will help reduce if not eliminate that pain point. Yet, just like everyone there are still some supply chain issues to iron out. This is why we strategically pursue having multiple vendors in each category. One of our current strengths versus larger competitors is our nimbleness in this area. There will certainly be some disruptions during the year, the extent to which is difficult to say at this point, but we’re attacking it head on and remain extremely proactive in our ability to realize our revised guidance of US$70-90M in revenue and US$3-5M in adj. EBITDA.
ESGFIRE: What activities are you pursuing on the investor relations front to build shareholder value?
John: Management is very active on the IR front, attending and presenting at a variety of investor conferences to increase awareness of Vicinity in the investment community. We’ve participated in several conferences year to date with additional in the near-term. Recently we added Market Smart, a Canadian IR firm, to focus exclusively on driving awareness in our home market while MZ Group focuses on expanding our U.S. investor footprint. We look for high quality financial media opportunities such as an ongoing engagement with Proactive Investors which reaches an impressive universe of retail investors. We have good relationships and ongoing dialogue with several research analysts to grow our institutional following and continue to look out for innovative new ways to enhance our public market awareness.
ESGFIRE: To what extent do you expect your margin profile to improve as you continue to scale revenue and add new manufacturing capacity in 2022?
John:It is difficult to give blended guidance on margins given it is significantly impacted by product mix. If you look at where we’ve been in the past for margins on specific products, 2020 and 2021 were lower-margin years for us. 2020 because we didn’t sell very many buses. 2021 because we had some issues with supply chains. But if you look back to 2019 margins, we think we’re headed towards that level on an overall basis. We always aim to have overall margins in the high teens after everything is said and done for our overall product mix. But that doesn’t mean that each product is there – some are higher, some are lower.
ESGFIRE: What are some exciting upcoming catalysts that investors should keep an eye on in 2022?
John: The completion of the Ferndale, Washington facility is top of mind, given the impact on our growth and ability to manufacture Buy America compliant vehicles for the U.S. market. That has been a couple years in the making and we’re getting close to the finish line there. Other than that, we feel we have a robust next-generation EV product line positioned well in two large addressable markets where we also have several good sales and distribution alliances, which should solidify our emerging leadership position in the EV space.
Thank you for taking the time to answer our questions John!
We own shares of this company personally.
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