XL Fleet Corp.
Q3 2021 Earnings Call Transcript

Published: 15 Nov 2021

[Operator:]

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to the XL Fleet Corp's Third Quarter 2021 earnings conference call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. For opening remarks and introductions, I would like to turn the call over to Jim Berklas, General Counsel and Vice President of corporate development for XL Fleet. Please go ahead, sir.

[Jim Berklas:]

Thank you. Good afternoon, everyone? And welcome to XL Fleet earnings conference call to discuss our results for the Third Quarter of 2021. With me today are Tod Hynes, our founder and President, and Cielo Hernandez, our Chief Financial Officer. Our call this afternoon includes statements that speak to the Company's expectations, outlook, or predictions in the future, which are considered forward-looking statements. These forward-looking statements are subject to risks and uncertainties, many of which are beyond our control, which may cause our actual results to differ materially from those expressed in, or implied by, these statements. We undertake no obligation to revise or update any Forward-looking statements, except as maybe required by law. We refer you to XL Fleet's disclosures regarding risk factors and Forward-looking statements in today's earnings release, our annual report on Form 10-K, and our other securities and exchange commission filings. With that, I will turn the call over to Tod.

[Tod Hynes:]

Thanks, Jim. And thanks to everyone for joining us on the call this afternoon. I'd like to begin with the review of third quarter and recent key highlights. We generated third quarter total Company revenue of $3.2 million. Down from $6.3 million last year and $3.7 million last quarter. The decline versus last year was primarily driven by ongoing industry-wide supply chain issues that continue to impact our drive train business, partially offset by growing contribution from our XL Grid business. Despite impacts at the revenue line, we generated gross margin of 22% up from 12% in the prior year, and compared to approximately 26% last quarter. This improvement in margins relative to last year was driven by contribution from our XL Grid Business, which generally carries higher margins versus our Drive System business. We also continued to expand our offering platform. In August, we announced the availability of our hybrid electric system on popular versions of RAM pickups, including the 2500 and 3500 heavy-duty models. We were excited to unveil this new giggle offering at this year's past expo, where it was met the great interest and enthusiast. In addition to exciting platform growth, this new addition to our lineup of offerings, also represents the first electrification product to be available for RAM Commercial, which is the line of commercial pickup trucks. Also, during the quarter, we announced that our hybrid electric drive system is available on the Isuzu NPR HD, low-cab forward vehicle. This vehicle is widely used in a range of industries, including last-mile delivery, beverage distribution, utility work, and food service. In our XL Grid business, we completed our first-quarter, with full-period contribution from our world energy business acquired in May. We believe our XL Grid business continues to represent a significant growth opportunity for our Company, and reflects a widening set of electrification solutions for our customers. From a demand perspective, we continue to see growing interest in fleet electrification. This includes pent-up demand from municipalities and other agencies whose budgets have been significantly impacted by COVID-19 related slowdowns. We've seen some positive momentum building in our order pipeline, from customers who are beginning to receive vehicles from their manufacturer orders. We'll continue to work with customers to help them on live chats and inventories wherever possible. As a macro and economic environment continues to improve, interest from these parties continue to grow, particularly for deliveries in 2022. We also expect to experience continued growth in demand on the back of the recently cast infrastructure bill. As part of the bill, Congress has committed to significant support for the continued growth and buildup of vehicle electrification, including up to $7.5 billion of grant funding for electric vehicle charging infrastructure. We have sought policymakers support of this bill, including the Build Back Better legislation, that contemplates even more funding support for the vehicle electrification industry. Overall, we believe XL fleet is highly differentiated across 3 key attributes

[Cielo Hernandez:]

Thanks, Tod. Totaled $2.2 million compared to $6.2 million in the prior-year period. Key drivers behind the annual decline included negatives, including microchip shortage, which have lead nearly all automakers to the route of paused production of the new fleet chassis, impacting our dry system business, partially offset by contribution for our acquisition of World Energy, in our XL Grid business. Revenue from this scale of slices spent in the third quarter compared with $6.3 million in the third quarter of 2020, due to negative impact to shortage leading to the lack of the . Revenue in our XL Fleet division totaled $2.6 million, which was driven by the first 2 quarter contribution of the World Energy acquisition completed in May 2021. We generated gross profit for the quarter of approximately $700,000 compared to approximately $800,000 in Q3 of last year. Adjusted EBITDA totaled -$14.2 million compared to -$6 million in the prior year quarter. Research and development costs totaling $2.3 million. Our G&A totaled $12.7 million up to, from $5.3 million in the prior-year quarter, and approximately $28 million in Q2. To increase western driven by the continued assumption of both clean technology, and facilities, to support our growth strategy, and making as added expenses as is with the addition of more energy. As of September 30th, we've had cash and cash equivalents of $367 million compared to $384 million last quarter and $330 million at the end of 2020. Our Balance Sheet remains as part of our business in December 2020. And as those prices of our public earlier this year. We really saw our balance sheet strength position as with flexibility and a competitive advantage, as we continue to execute on our growth strategy. Over the next several year, including the potential portfolio and strategic M&A. I will now pass it back to Tod.

[Tod Hynes:]

Thanks, Cielo. Looking ahead, the unprecedented supply chain challenges impacting a number of global industries, is expected to continue into the fourth quarter, and extend into 2022. Despite these challenges, we remain well-positioned to further invest in our business to capture growth opportunities. And finally, I wanted to comment on the recent announcement that the Board of Directors has appointed Eric Tech as XL Fleet's new Chief Executive Officer, effective December 1st. Eric tech is an industry veteran who brings nearly 35 years of experience. I know I speak on behalf of the entire XL Fleet team, that I'm excited to partner closely with Eric as he joins our Company, and helps us lead the next phase of electrification for our customers. Also want to thank Dimitri Kazarinoff for his hard work over the last 2 years to help grow the Company. That concludes our comments for today. Thank you very much for participating in today's call and for your interest in XL Fleet. Have a great day.

[Operator:]

This concludes today's conference everyone, you may disconnect your lines at this time. Thank you for your participation and have a great day.

[End of Q&A:]