The Lion Electric Company (NYSE:LEV) Q2 2023 Earnings Call Transcript

The Lion Electric Company (NYSE:LEV) Q2 2023 Earnings Call Transcript August 3, 2023

The Lion Electric Company misses on earnings expectations. Reported EPS is $-0.05 EPS, expectations were $0.11.

Operator: Good morning, ladies and gentlemen, and welcome to Lion Electric Second Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. [Operator Instructions] I would now like to turn the call over to Isabelle Adjahi, Vice President, Investor Relations and Sustainable Development. Please go ahead, Mr. Adjahi.

Isabelle Adjahi: Good morning, everyone. Welcome to Lion’s second quarter 2023 results conference call. [Foreign Language] Today, I’m here with Marc Bedard, our CEO, Founder; and Nicolas Brunet, our EVP and CFO. Please note that our discussion may include estimates and other forward-looking information and that our actual results could differ materially from those implied in any such statements. We invite you to review the cautionary language in this morning’s press release and in our MD&A, which contains important information regarding various factors, assumptions and risks that could impact our actual results. With that, let me turn it over to Marc to begin. Marc?

Marc Bedard: Thank you, Isabelle. Good morning, everyone. Today, we are pleased to share our Q2 2023 results and key updates that will shape our path to continued growth and profitability. First and foremost, we successfully closed earlier in July a $142 million financing round, providing us with the flexibility needed to execute our growth plans for the foreseeable future. Second, we posted positive gross margins in Q2, which was largely driven by higher revenues and an increase in average selling prices. This also highlights our continuous tight control over the bill of material and other expenses. And finally, not only was Q2 a record quarter in terms of revenues, but we also improved truck deliveries. We will now provide color on each of these items before we open the line for questions.

Let’s start with our recently announced financing transactions. On July 19th, we closed concurrent financing transactions, resulting in gross proceeds of $142 million. Simultaneously with these financings, we extended the term of our $200 million senior credit facility to August 2025. And we also canceled our ATM program. With this key liquidity milestone behind us, we now have the required flexibility to execute our growth plans for the foreseeable future and continue our path to achieving profitability. In this regard, we are gross margin positive in Q2, definitely showing that our business model is scaling well and does not need extraordinary volumes to be successful. This positive gross margin is a significant step towards our overall objective of being EBITDA positive and generating free cash flow.

Let’s now delve into the details of our Q2 deliveries and our purchase orders. During Q2, we posted record quarterly revenue of $58 million with the deliveries of 199 vehicles, including 33 trucks. 14 of the 33 trucks delivered during the quarter were ordered by Bolt, a leader in sustainable logistics and a repeat customer for Lion. Note that the delivery of 50 additional school buses that were ready to be delivered to one of our customers and which the customer was ready to receive was deferred until the final approval of the ZETF subsidy by the Canadian federal government. Delays were mostly due to this application being the first sizable order under the ZETF program to go through the final application process. We expect the subsidy to be approved and those vehicles to be delivered in the coming months, leading the way for several other deliveries under ZETF.

In terms of purchase orders, our appeal book consists of 2,559 vehicles, comprising 304 trucks and 2,255 buses, representing $625 million. Worth mentioning is an order from Campeau for 5 Lion 5 trucks, which we launched in May and is slated for production before year end. Last, our Lion Energy PO book stands at 275 charging stations and related services, amounting to $5 million as we planned, which takes me to an update on the Joliet factory and the battery plant. On July 21, we officially inaugurated the Joliet manufacturing plant, the largest electric vehicle plant for medium-duty and heavy-duty vehicles in the United States. We were honored to host more than 500 attendees, including government officials, such as Governor Pritzker, Senator Durbin and Senator Duckworth as well as customers, analysts, climate change advocates, community and policy leaders.

They all reiterated their commitment to Lion in the EV sector, which has further demonstrated by funding programs such as the EPA Clean School bus program. Round 2 of the EPA program which consists of $400 million in grant funding opened last April. We are working closely with school districts and operators to help our clients secure grant funding under this program. This is just one example out of many others as we are seeing new programs and legislation, including in Texas, Michigan, Illinois, among others. Back to our activities in Joliet. During the quarter, we continue to manufacture alliance units for customer deliveries and continue the setup of school bus working stations and installation of equipment. Everyone on-site at the grand opening was able to realize that the building and all tenant improvements have been completed.

We plan to gradually ramp-up production in Joliet, including the start of LionG production this year. Our objective remains to have a manufacturing capacity of 2,500 school buses per year in Joliet at the end of this year. Regarding the Lion campus in Mirabel, during the quarter, we transferred and installed an additional portion of the battery production line from JR Automation facility and continue to ramp up the production of our battery packs. Our objective is to bring production capacity to 1.7 gigawatt hour per year by the end of this year. This will be enough to power approximately 5,000 of our vehicles in the mix of school buses and trucks. Our Lion5 truck as well as our LionC and LionD school buses will be the first vehicles to feature our proprietary Lion battery packs.

Our goal is to progressively integrate our Lion battery packs into our vehicles and gradually reduce reliance on third-party batteries. At the end of Q2, we had approximately 2,700 BMW badge impact in inventory. Nicolas will now further discuss our financial performance for Q2. Nicolas?

Nicolas Brunet: Thank you, Mark. I will start with the recent financing. I will then comment on Q2 results, including an update on CapEx, and I will conclude with our liquidity position. After the end of the quarter, we announced imposed financing transactions, resulting in approximately $142 million in gross proceeds. The financing includes a $74 million five-year senior unsecured convertible debenture, bearing interest at 13%. For this portion, we have the option to accrue and defer interest payments such that these payments accumulate to the amount that is owed and convertible into Lion’s share. The debenture is convertible at a price of $2.58 per share, representing a 20% premium to the five-day at the time of transaction announcement.

The second tranche consists of a CAD 90 million or approximately $68 million in five-year senior secured nonconvertible debentures, bearing interest at 11% that will be paid in cash on a quarterly basis. This group of investors was also issued warrants entitling them to purchase 22.5 million common shares at an exercise price of CAD 2.81 per share, representing the 5-day EV at the time of transaction announcement. This capital infusion provides us with the flexibility needed to execute our growth plans for the foreseeable future. Of importance to note, there are no additional financial ratio covenants associated with these financings. Concurrently with this transaction, the maturity of our $200 million revolving credit facility was extended by one year to August 2025.

And last, but not least, the ATM program, which was set to expire in July 2024 was terminated. Moving on to our financial performance for Q2 2023. We achieved record quarterly revenue of $58 million, supported by the delivery of 199 vehicle, a substantial increase compared to Q2 2022, when we delivered 105 vehicles. Specifically, we delivered 166 buses and 33 trucks in Q2 2023, with 171 of these vehicles delivered in Canada and 28% in the US. Our average selling price also trended upwards, positively impacting our gross margins. As Mark mentioned earlier, the delivery of 50 additional buses that were ready to be delivered and for which the client was ready for reception was deferred until final approval of the VTS subsidy by the federal government is upset.

We expect the VTS approval to be obtained in the vehicles to be delivered in the coming months. During Q2 ’23, we also continued to improve gross margins, reaching 0.7% due to the positive impact of increased sales volumes, product mix and higher manufacturing tube. Adjusted EBITDA for the quarter was negative $9.7 million, marking a significant improvement compared to negative $14.4 million in Q2 ’22. Addition to intangible assets, primarily related to R&D decreased to $17.9 million compared to $24.6 million in Q2 ’22. Our total capital expenditures for the quarter decreased to $19.1 million as compared to $44.3 million in Q2 of ’22. $5 million of the expenditures related to the Joliet manufacturing plant and $12 million that Lion Campus. For the remainder of 2023, we expect to incur a total of $26 million in CapEx related to our two growth projects, namely $9 million for the Joliet plant and $17 million for the Lion Campus.

We want to reiterate that for 2024, our capital expenditures are expected to significantly decrease as our large project-related investments will be completed. Let’s now move to liquidity and capital resources. During Q2 2023, we received $8 million in government loans related to the Lion campus and raised $4 million through the ATM program before terminating it in conjunction with the recent offering. Approximately $2 million of the last ATM raised was settled after the end of the quarter. Furthermore, during Q2 ’23, we received initial upfront rebate payments from the EPA of approximately $27 million under the first round of funding of the program. As a reminder, we obtained 292 purchase orders in connection with the EPA Clean School bus program, most directly through vouchers filed by Lion and to a lesser extent, through applications made by free agents, which were converted in the purchase orders of Lion.

These purchase orders represent a total value of $105 million. As applications in respect of other orders are processed by the EPA, we expect to also be able to receive other upfront payments from EPA. As of June 30, 2023, we had a cash position of $44 million. The borrowing base on our revolving credit facility stood at $124 million, of which $100 million was drawn as at June 30, 2022. Taking into account the required reserves to avoid triggering certain covenants, this translated into immediate borrowing capacity of $8 million, thus bringing our immediate liquidity position to slightly above $50 million at the end of the quarter. As previously mentioned, after the end of the quarter, we received $142 million in gross proceeds from the offering, providing us with the required flexibility to execute our growth plan.

With that, I will pass it back to Mark for concluding remarks.

Marc Bedard: Thanks, Nicolas. Before we open the line for questions, let me conclude by saying that with the financing behind us, we now have the required financial flexibility to execute our growth plans and continue to focus on achieving profitability. Last week marked 15 years of existence for Lion, and let me tell you that we are more excited than ever about the opportunities ahead with now over 1,400 vehicles on the road, having collectively traveled over 14 million miles or 22 million kilometers, Lion is in a unique position to continue to capture market share in the medium- and heavy-duty EV space. Thank you all for joining us today, and we will now open the line for questions.

Isabelle Adjahi: Operator, we will now open the lines for questions. I just want to ask you to limit to two the number of questions asked to allow other participants to ask their questions. You can of course back in the queue fi you have any follow up question.

Q&A Session

Operator: Perfect. [Operator Instructions] Our first question comes from Michael Shlisky from D.A. Davidson. Mike, your line is now open. Please proceed.

Michael Shlisky: Yes. Good morning and thank you for taking my questions. Maybe I’ll start off with a question about bus deliveries and the cadence going forward. I guess, could you maybe give us an update as to how you feel that’s going to progress on here? Do you see ongoing decreases quarter-over-quarter for the next couple of quarters or do you feel like the bus business at this point is the size where it follows the broader bus industry where in the fourth quarter and then the first quarter deliveries will taper off given schools already in session?

Marc Bedard: Yeah. Good morning, Mike. Yeah. With respect to the buses, Mike, you’ve seen the trend in the previous quarters as well. And we’ve said it. The goal is to increase the revenues and making sure we make profit. So we’re very proud that we’re gross margin positive right now. I think that’s the real goal. That being said, though, what you’re looking at the order book and if you’re looking also the results that we have with respect to the EPA and a lot of Canadian programs as well, we’re doing good. We’re doing good. So definitely, we see an increase in the revenues and the number of deliveries in the upcoming quarters. But that’s going to be sequential though. I’ve said it several times. It’s not a switch that you turn on enough, but we definitely see a growth within the next quarters.

Michael Shlisky: Okay. My other question was about your experience center comments you had in the release. Hoping Joliet added one more experience, I believe, to serve that area of the country. How built out is your experience center network at this point? Do you have more you need to build in the near future? And is there a large CapEx for each one as you build them out? Thank you.

Marc Bedard: Yeah. Mike, we have 12 of them right now. And for the foreseeable future, this is good. We do have experience centers in most of the states or many of the states that we are targeting and the same thing on the Canadian side in many provinces. And I think your question was also…

Nicolas Brunet: Yeah. On CapEx. I can take this one, hi, Mike. I’d say it’s quite minimal CapEx to open an experience center, and we should be pretty nimble there. I think that what we need is to rent or lease a facility and have just the required tooling to service the vehicle. So it’s certainly not a significant amount of CapEx when we expand that footprint. Of course, we’re very mindful of capital spend, and we’ll only do so with material deployment.

Michael Shlisky: Okay. Great. Those were my two questions. I’ll pass it on. Thanks.

Nicolas Brunet: Thank you.

Marc Bedard: Thank you, Mike.

Operator: Our next question comes from Dan Levy from Barclays. Den, your line is now open. Please proceed.

Trevor Young: Hi. Trevor Young on for Dan today. Thanks for taking my questions. And congrats on getting back to positive gross margin. I’m sure you have your sights set on the same for adjusted EBITDA. And I was curious if you could just give some directional indications on the bridge towards from here, how to think about it in terms of volume versus other factors.

Nicolas Brunet: Yeah. Hey, Trevor, thank you for your question. Look, I’d say, obviously, we had said it in previous calls, it’s a number one objective here is to be profitable and get the free cash flow positive. We demonstrated today, I think, some significant progress towards this. There remains a lot of room for us to continue to improve on the volume of deliveries on the ASP and on the margin. Of course, while we’re pleased with the trajectory, there can be some volatility along the way, but we’re very pleased with where things are heading. I think you’re seeing that in the numbers this morning.

Trevor Young: Yeah, we are. That’s helpful. And then just as a follow-up. I noticed the sequential decline in the Lion Energy order book. And I was just curious if the extent to which this reflects deliveries on the order book. And then more broadly, how to think about the energy business in terms of how it breaks out between supporting buses and trucks or if it generally matches the vehicle order book?

Nicolas Brunet: Yeah. Look, let’s start with the second part of your question. The goal of the energy business is to make sure that the clients are well taken care of in all aspects of the electrification of their fleet. And that’s a key component where there can be some issues, not only procuring that equipment, but also installing it right, and coordinating with the utility. And so that’s why we handle that for clients. We have quite a good hit rate in some markets and in other places, in other vehicle classes, clients will procure on their own, and that’s fine as long as it’s well coordinated. I would say as part of the order book, this is something that could have some more chunky orders. And so when we make those deliveries or when we get those orders, we see some up or down swings and it’s certainly not in our view, a testament of the change in the order book for the vehicles or changing the cadence of deliveries, it’s just really one snapshot at one point in time, and we’ve had some sizable deliveries in the quarter, for the charging infrastructure.

Trevor Young: Yeah. That’s very helpful. Thank you.

Nicolas Brunet: Thank you.

Operator: Our next question comes from Rupert Merer from National Bank. Rupert, your line is now open. Please proceed.

Rupert Merer: Thank you. Good morning, everyone. The delay on the ZETF funding, how good is your visibility into that approval process? And do you see this impacting any vehicles that you would plan to deliver in Q3?

Nicolas Brunet: Well, thanks for your question, Rupert. Obviously, we will be very cautious about the timing of those deliveries going forward. That was the first sizable order for school buses on their ZETF. And this is the reason for this delay right now. So it doesn’t put into question the availability of those funds and the willingness of the government to fund those coal buses. But it’s really a matter of timing. So communication is very good with the Canadian government, and there was a lot of steps, let’s say, to go to the final approval. And that’s the reason for that. So I think now there’s a very good understanding from all the parties involved. So, we don’t see that as being an issue going forward. But I think communication is key, and we’re very well aligned with them right now.

And we’re used to work with the Canadian government and also with the federal government, as you see with the success we’re having with the EPA. So going forward, we feel it’s going to be a lot of move there.

Rupert Merer: Okay. But no visibility on timing at this point?

Nicolas Brunet: Well, it could take time. And this is something we cannot predict. But for us, it’s really aligning the manufacturing schedule with the approval of those ones. So, this is basically what was the focus for us going forward.

Rupert Merer: Okay. Great. And then secondly, you highlighted in your disclosures that some revenues were impacted by continuing global supply chain challenges. Can you give us a little more color on this? How many vehicles were impacted by these issues in Q2? And maybe you can give some color on what the specific supply chain challenges are today.

Nicolas Brunet: Yeah, Rupert, it’s going a lot better. A year ago, we were saying that was the main challenge, just trying to manufacture those buses and trust, it’s not. It’s not anymore. I mean we’ve been able to develop a network of suppliers, Tier 1 suppliers, and a great redundancy of suppliers as well. So we’re very proud of that. And no big issue. We’re not out of the woods with respect to the supply chain crisis, but it’s going very well. So we don’t see that as an impact, for us to be able to manufacture our buses and trucks going forward.

Rupert Merer: Can you give us a sense on how many vehicles might be impacted by that issue or the issues?

Nicolas Brunet: I don’t think, you know it’s in the number of vehicles. I think it’s really for us to be able to manage this overall supply chain crisis, and we’re doing pretty good. So no, I don’t think there’s any number of vehicles that were impacted by that.

Rupert Merer: All right. I’ll leave it there. Thank you.

Nicolas Brunet: Okay. Thank you.

Operator: Our next question comes from Chris Souther from B. Riley. Chris, your line is now open. Please go ahead.

Chris Souther: Hey, guys. Congrats on the margin progress here. ASP seemed to be a big driver here of the improvement, given volume came down slightly, but we had the revenue improvement. Can you give a margin walk maybe from 1Q to 2Q with some of the puts and takes related to ASPs and efficiency and kind of what’s driving the ASP improvement? Is it US versus Canada, incremental trucks and just that would be helpful there?

Nicolas Brunet: Yes, certainly. Hey Chris, thank you. Look, every quarter, the delivery, the mix of the deliveries — excuse me, are mix of big orders that we deliver into as well as vehicles with different options and in different markets, be it Canadian and US. And this quarter was certainly that we demonstrated an improvement in the ASP by a number of things, having a more diversified pool of clients that we delivered to by improving our delivery count in the US and improving our truck deliveries as well. So I’d say that’s a bit of all of the above in what you said. As you see though, we still have a delivery count that’s significantly weighted towards the Canadian market. We’ve talked about delivering vehicles with more options, more energy in the US market, including the EPA program.

There’s a lot of room to continue to grow that. And as well, there’s a lot of room to continue to grow on the truck count. So we feel good about the ASP, but our goal is to continue to improve it.

Chris Souther: Okay. Got it. So sub continue to improve the mix continues to grow in the near term, is there a cadence of incremental fixed costs around Joliet and Mirabel that step up that could impact the gross margins on 3Q, 4Q? I just wanted to get a sense of what you’re talking about with some of the potential volatility on the margin front.

Nicolas Brunet: That’s exactly it. Look, let’s be clear that our goal is to continue to improve gross margin, but all margin and profitability. But the reason I pointed there some potential volatility is on the other side of what I just mentioned around the ASP improvement and the volume, the potential volume improvements as well. There are also more costs that we’re undertaking with the Joliet plant ramps up as the battery plant ramps up. I don’t expect those to impact the long-term trajectory. But in the short-term, they can cause some volatility.

Chris Souther: Perfect. Thank you, guys. [ph]

Nicolas Brunet: Thank you, Chris.

Marc Bedard: Thanks.

Operator: Our next question comes from Craig Irwin from ROTH MKM. Craig, your line is now open. Please proceed.

Craig Irwin: Thank you. So it looks like EPA is going to only $400 million worth of vouchers this year. Last year, they did well over $950 million. So the total number of school bus order seems to be contracting, or at least the financial subsidy for US robust order tracking. How do you think that’s likely to impact order book, you develop over the next year? And is the US market as important for your business as the subsidies from the Canadian authorities and other programs across the US?

Nicolas Brunet: Yeah. Hey. Craig, Nick here. So look, yes, we’re very focused on round two of the EPA program, which is for $400 million. We talked about it in the past it’s a different approach to it. It really is an RSP-type application. That is going well. We’re having some good dialogue and this round is closing late August with some indication of who will be awarded in Q4 and then formal award in Q1. At the same time, it is our expectation that there will be another EPA round on the tune of $600 million for this year. They are talking about $1 billion a year and the $600 million we expect would be in the form of a rebate program as pretty much in the same form as we’ve seen in round one. So we think there is more, coming there.

And there are more programs that are opening in a number of states, including in Illinois, for example, but it’s just one among others. And so just to wrap-up on this, the US side of the business is a very important one for us. We view it as a very strong area of growth potential, and we’re very focused on it.

Craig Irwin: Thank you. That’s all my questions.

Nicolas Brunet: Thank you, Craig.

Operator: Our next question comes from [Indiscernible] from Canaccord Genuity. Lean, your line is now open. Please proceed.

Unidentified Analyst: Good morning everyone. Thanks so much for taking my question and congrats on the quarter. Just a couple of questions from me, to start, can you discuss any opportunities that you see to acquire battery and/or module assets in the marketplace?

Nicolas Brunet: Lean, you mean from third-parties?

Unidentified Analyst: Yes, correct.

Nicolas Brunet: Well, as you know, we do have our berry factoring. And basically, our intention is to rely less and less on the third-party battery packs. On modules, we’re building our own modules. And we are buying sales from Tier 1 OEMs. So that’s the goal at Lion. We do have a capacity of 0.6. Right now, we’re going to 1.7 gigawatt hour by the end of the year, and it’s enough to quit batteries on about approximately 5,000 of our vehicles on an annual basis. So we’re good for now.

Unidentified Analyst: Okay. Okay. That makes sense. And then just one more for me, can you provide any color that can help us understand your updated strategy around continuing to bolster your liquidity position?

Nicolas Brunet: Yeah. Just well, in terms of liquidity, the short of it is we believe we have the required flexibility to execute our plan for the foreseeable future with the rate that we just did. When you look at what we said about the quarter, we had over $50 million of immediate liquidity at the end of Q2. That’s our cash position and the availability on the revolver. We closed a financing right after the quarter for $142 million in gross proceeds. We have other sources of liquidity that include upfront payments from the EPA, our government loan facility. And in terms of just the CapEx program, what’s really important here is that we have a remaining $26 million to incur on the growth projects for the rest of the year. That leads us, as Mark has mentioned, the 5,000 vehicles of capacity, both on the vehicle side and on the battery side.

And we’re very firm on that. The intention is to drastically reduce the CapEx in 2024. We do not plan to invest in further capacity growth. And so the short of it again, is that we believe we have the required flexibility to execute the plan, and that’s why we shut down the ATM program.

Unidentified Analyst: Got it. Okay. Great. That’s all for me. Thanks so much

Marc Bedard: Thank you.

Operator: Our next question comes from Tian Lagoh [ph] from Desjardins. Tian, your line is now open. Please proceed.

Unidentified Analyst: Hi, good morning. Thanks for taking my questions. I’ll be speaking on behalf of Benoît. First, regarding the certification of the battery pack, you previously expected it will be completed and received an announcement for final certification in the coming months. Can you just provide more color on what does the delay and also want to be out of the way or excess in terms of [indiscernible] Thanks.

Nicolas Brunet: Yes, good morning, Tian. We’re at the end of the test and certification process on our battery packs. And it will be certified within the next few months. So we’re still good. I mean we’re aligning with the need for our battery packs. And as you probably know, we will start and following them on the Lion5. And after that, also on the LionC and the LionD and also on the Lion8 tractor. So time-wise, when we’re aligning the need for those battery packs with the launch of our vehicles, the timing works perfectly, so no new issues.

Unidentified Analyst: Perfect. Thanks. And maybe the news was allowed at liquidating the assets on the motor power. I don’t know if you wish to comment on it, but there is some dilation the arbitration process regarding one like contain and sale liquidation change anything or so?

Nicolas Brunet: Well, it doesn’t. As you know, at this stage, both the arbitration process with Romeo and the court case against Nikola Motors are following their course. And you’re right, Nicolas just announced on June 30 that Romeo is liquidating its assets. And basically, they’re transferring the ownership of all of its assets. And there are some exclusions in there, though, and they did that to a third-party assigned for the benefit of the creators. And right now, we’re basically evaluating all of our options in light of what happened. So basically, those two processes, are just following their course right now as we speak.

Unidentified Analyst: Great. Thanks. Thank you very much for color. I’ll pass the line.

Nicolas Brunet: Thank you, Tian.

Operator: Our next question comes from Sara Deere [ph] from BMO. Sara, your line is now open. Please proceed.

Q – Unidentified Analyst: Hi everyone. Good morning. Just want to understand like what trends are you seeing in the commercial truck market and in discussions with the customers? And the second one is we recently saw J.B. Hunt placing Class 8 commercial truck orders with Nicolas. And were you in all those discussions at any time?

Nicolas Brunet: Yes. Let me start with the first fold of your question. We have 33 trucks delivered this quarter. So, obviously, this is going in the right direction, which is good. And the 14 of those 33 trucks were both. And so it’s more trucks than basically what J.B. just announced a few days ago. But also if you’re looking at the customer list, you will see both in there, and also DHL, IKEA, Dollarama, Amazon, and many others as well. So, a lot of those truck operators, we see the benefit of the total cost of ownership, and they’re starting with a few trucks. We still feel that it’s going to go faster than it did with school buses. And school buses, it took about five years to really take off. And we feel that truck is going to be a little bit faster.

But obviously, with all the crisis that we saw in the last couple of years, there was a little bit of a step back on this side. But we feel now a good momentum with the truck operators, the discussions are very good as well. So, we’re kind of — let’s say, we’re kind of excited that we feel that the number of deliveries will keep increasing. And with respect to your question with J.B., obviously, all the — those communications, these are very confidential. So, I don’t think we can comment on any of those. I mean we’re keeping the relationship with our customers very confidential.

Unidentified Analyst: Got it. Thank you so much. Those are my questions.

Nicolas Brunet: Thank you.

Operator: We currently have no further questions. So, I would like to hand the floor back to the management team for closing remarks.

Marc Bedard: Thanks everyone for joining the call today. We really look forward to continuing with the discussion and feel free to contact us for any follow-up questions you may have. Have a nice day.

Operator: Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines. Thank you.