Phoenix Motor Inc. (NASDAQ:PEV) Q3 2023 Earnings Call Transcript

Phoenix Motor Inc. (NASDAQ:PEV) Q3 2023 Earnings Call Transcript November 16, 2023

Operator: Welcome to the Third Quarter 2023 Phoenix Motor Inc. Earnings Conference Call. My name is Jael, and I’ll be your operator for today’s call. As a reminder, this call is being recorded and all participants are in a listen-only mode. It is now my pleasure to introduce Mark Hastings, Senior Vice President of Corporate Development and Strategy and Head of Investor Relations. Please go ahead.

Mark Hastings: Thank you, Jael, and welcome, everyone, to our third quarter 2023 earnings call. I will be joined for the Q&A session after the call by Denton Peng, our Chief Executive Officer. For those of you who are new to our story, Phoenix Motorcars is headquartered in Anaheim, California. Our goal is to be a leader in sustainable and zero-emission commercial transportation with a range of products available to our customers, including shuttle and transit buses, school buses, delivery vans and work trucks. We market our medium-duty vehicles through our brand, Phoenix Motorcars. In addition, we offer a full range of EV chargers and electric forklifts as well as telematics solutions for fleets, EV infrastructure solutions and electric vehicle maintenance and service programs.

We also are currently developing a light-duty commercial vehicle line, which will offer pickup trucks, delivery vans and SUVs, which will be marketed under our EdisonFuture brand. We are not a pre-revenue company like many others in our sector. We were founded in 2003, we delivered our first trucks nearly a decade ago, and our vehicles have logged more than 4 million zero-emission miles on the road. As a result, we have a stable and loyal customer base, and we offer our customers vehicles, charging and telematics solutions and complete vehicle maintenance and service support. For those of you who do not know CEO, Denton Peng yet, he has a long history of more than 20 years in the renewable and clean energy and transportation space. He was a pioneer in the solar business and has founded and led several New York Stock Exchange and NASDAQ-listed public companies.

We will hear from Denton later during our Q&A session. I would first like to say a few words about the exciting announcement we made this morning as we emerge from a very lengthy and detailed process as the winning bidder for the assets of Proterra Transit. Next, I’ll spend a couple of minutes discussing our third quarter financial results, and then we’ll wrap up by taking your questions. The Proterra Transit acquisition will be an important milestone in our company’s history and one that ensures that we remain highly competitive in the zero-emission commercial vehicle industry. And through this acquisition, we will gain ownership of world-class technology and the intellectual property for Proterra’s Transit buses, a large order backlog, significant assets and inventories and most importantly, a team that has successfully scaled operations to become the largest electric transit bus manufacturer in North America.

Proterra accounts for over 40% of all electric transit buses delivered in North America with over 40 million real-world service miles. The 35-foot and 40-foot ZX5 transit buses, which will become part of Phoenix’s product portfolio are built on an innovative ground-up platform using a lightweight composite body offering the longest driving range on a single chart. Combination of Phoenix with Proterra’s transit bus technology will provide significant market synergies in terms of scale, product offerings, customer relationships and market expansion. We still have much work to do before Proterra seeks approval from the U.S. Bankruptcy Court on November 28. But once approved, we aim to close as soon as is reasonably possible. Phoenix will continue to operate Proterra’s transit bus manufacturing location in Greenville, South Carolina, and we will work towards ramping up production of the ZX5 transit bus.

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Q&A Session

Our Anaheim facility will continue to be the hub for our Gen 4 product line. Together with members of Proterra Transit buses’ team, we will benefit from the increased opportunity this acquisition enables and the success of our integration will be driven by how effectively our employees work together to deliver value to our customers and results to our bottom line. We are proud of the Company we have created, and we want to thank our employees for their hard work and for staying focused on our goal to be the leading zero-emission technology provider. We also look forward to welcoming the amazing team at Proterra Transit in Greenville to our family. The entire management team at Phoenix is excited about the opportunities that lie before us all.

We look forward to providing more detailed information regarding our progress in the coming weeks and quarters for not only the Proterra Transit acquisition, but also for our Gen 4 development, our Retrofit Solutions business and the many other exciting opportunities that we are pursuing. Turning to the financials. For the three months ended September 30, 2023, our net revenues were $0.3 million compared to $0.4 million in the same period in 2022. This represented a decrease of 30%. Results in the quarter reflected lower EV lease and maintenance revenues as certain customer leases rolled off during the third quarter compared with a year ago. Revenue from the sale of electric forklifts also saw a modest decline. Our cost of revenues in the third quarter was $300,000, essentially the same as in the third quarter of 2022.

Gross profit in the third quarter of this year was breakeven compared to gross profit of $120,000 in the year ago quarter. SG&A expenses in the third quarter declined to $2.5 million from $3.8 million in the year ago quarter. This decrease was mainly due to cost-cutting initiatives undertaken earlier this year. As a result of all of the above factors just described, the net loss for the third quarter of 2023 narrowed to $2.7 million compared to a net loss of $3.9 million in the prior year period. At our core, Phoenix is an engineering-focused company with patented technologies that address the market’s need for the next generation of zero-emission vehicles. We have constructed our company to be flexible and asset light. We talk a lot about our asset-light business model for those of you who know our company, which makes sense as it is central to everything that we do and something which we think sets us apart from other EV manufacturers.

We have an exciting road ahead with the expected acquisition of Proterra Transit, the launches of Gen 4 and Gen 5 as well as EdisonFuture in the coming quarters and years. We have built a scalable business that endeavors to maximize return on shareholders’ capital while also deploying industry-leading technology. We put together a management team that are seasoned and established in the EV sector, which puts us in an excellent position to execute in the high-growth zero-emission commercial vehicle sector. Thank you to everyone who joined the call today. We appreciate your interest in our company, and we look forward to sharing more about our progress in coming quarters. We now have a few minutes to answer your questions.

Operator:

Mark Hastings: Great. Well, thank you, Jael. Thanks to everyone who listened in today and who is on the webcast. The webcast will be up on the site for some time. So you can go back and refer to it, please let us know if you have any questions, and we look forward to updating you on our progress, both with the Proterra Transit acquisition as well as with our exciting product launches in the coming quarters. Thank you so much. Bye-bye.

Operator: This concludes today’s conference call. You may now disconnect.