20-F: Vicinity Motor Corp. Navigates Supply Chain Challenges, Reports Fiscal Year 2023 Results

Sentiment:

Annual Results 2 April 2024 5:19 PM

Vicinity Motor Corp. reports its fiscal year 2023 results, highlighting revenue of $19.05 million amidst ongoing supply chain disruptions and strategic shifts towards electric vehicles.

Delay expectedThe company is managing ongoing supply chain disruptions affecting bus manufacturing, which has led to delivery delays.

Worse than expectedThe company faced a net loss of $16.633 million in 2023.The company is managing ongoing supply chain disruptions affecting bus manufacturing, which has led to delivery delays.VMC is addressing a material weakness in its internal control over financial reporting related to the financial statement close process.VMC is working to regain compliance with Nasdaq's minimum bid price requirement.

Summary

Vicinity Motor Corp. (VMC) reported its fiscal year 2023 results, showing a revenue of $19.05 million compared to $18.475 million in 2022.
The company faced a net loss of $16.633 million in 2023, slightly improved from a net loss of $17.948 million in the previous year.
VMC delivered 65 electric trucks and 22 buses in 2023, compared to 38 buses, 11 trucks, and 4 shuttles in 2022.
The company's order backlog exceeded $125 million as of December 31, 2023, with over 75% attributed to electric vehicles.
VMC is actively expanding its dealer network in Canada and the United States for its VMC 1200 electric trucks.
The company completed construction of its Washington Facility, which began production in the third quarter of 2023 and is capable of producing Buy America Act compliant vehicles.
VMC is managing ongoing supply chain disruptions affecting bus manufacturing, which has led to delivery delays.
The company is addressing a material weakness in its internal control over financial reporting related to the financial statement close process.
VMC is working to regain compliance with Nasdaq's minimum bid price requirement.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While there's revenue growth and a strong order backlog, the net loss, supply chain issues, and internal control weaknesses temper the positive aspects.

Positives

VMC's revenue increased to $19.05 million in 2023 from $18.475 million in 2022.
The company's order backlog exceeded $125 million as of December 31, 2023, with over 75% attributed to electric vehicles.
VMC delivered 65 electric trucks and 22 buses in 2023.
The company completed construction of its Washington Facility, which began production in the third quarter of 2023.
VMC partnered with ADASTEC Corp. to create an SAE Level-4 automated Vicinity Lightning EV transit bus.
The company secured new orders for 20 Vicinity Classic Clean Diesel Buses from Autobus La Qubcoise for delivery in 2024.

Negatives

VMC faced a net loss of $16.633 million in 2023.
The company is managing ongoing supply chain disruptions affecting bus manufacturing, which has led to delivery delays.
VMC is addressing a material weakness in its internal control over financial reporting related to the financial statement close process.
VMC is working to regain compliance with Nasdaq's minimum bid price requirement.

Risks

The company is managing ongoing supply chain disruptions affecting bus manufacturing, which has led to delivery delays.
VMC is addressing a material weakness in its internal control over financial reporting related to the financial statement close process.
VMC is working to regain compliance with Nasdaq's minimum bid price requirement.
The company's operations are dependent on its ability to renew existing credit facilities, generate future cash flows, and obtain necessary financing.

Future Outlook

Management expects VMC to maintain its market leadership in Canada and make progress in the U.S., with a positive outlook driven by external pressures for right-sized vehicles and funding availability, despite ongoing supply chain challenges.

Industry Context

The report highlights VMC's position in the competitive North American medium and heavy-duty bus market, emphasizing the shift towards electric vehicles and the increasing number of competitors entering the EV market.

Comparison to Industry Standards

The report mentions competitors such as New Flyer, Nova, Gillig, Rev Group, GreenPower, Motiv, and Lion Electric, indicating a competitive landscape in the bus and electric vehicle industry.
The report notes that VMC's vehicles are ranked Best in Class in the U.S. Federal Transit Administration’s Bus Test Program.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Clawback Policy	The Company has adopted a Clawback Policy, which provides for the recovery of certain incentive-based compensation upon the occurrence of certain events, including an Accounting Restatement.	2023-10-01	The policy is designed to comply with, and shall be interpreted to be consistent with, Section 10D of the Securities Exchange Act of 1934, as amended (the Exchange Act), Rule 10D-1 promulgated under the Exchange Act (Rule 10D-1) and Nasdaq Listing Rule 5608 (the Listing Standards).

Legal Proceedings

The Corporation initiated arbitration proceedings regarding ongoing disputes with Optimal EV.

Related Party Transactions

The Company paid $203 in lease payments to a company owned by a director.
Included in accounts payable are balances owing to key management or companies controlled by officers of the Company in the amount of $14.

Stakeholder Impact

Shareholders face potential dilution and market volatility.
Employees may be affected by the company's financial performance and any potential restructuring.
Customers may experience delivery delays due to supply chain disruptions.
Suppliers may be impacted by the company's financial stability and ability to meet its obligations.
Creditors face risks related to the company's ability to repay its debts.

Next Steps

The company is working to regain compliance with Nasdaq's minimum bid price requirement.
Management plans to address this material uncertainty by selling vehicles in inventory and the Company's backlog, collecting accounts receivable, utilizing the Company's credit facilities, extending or renegotiating debt agreements where possible, and, from time to time, and at its discretion, selling common shares.

Key Dates

Date	Description
2008-09-02	Vicinity Motor (Bus) Corp. incorporated.
2012-12-04	Vicinity Motor Corp. incorporated.
2014-04-08	Vicinity Motor (Bus) USA Corp. incorporated.
2015-06-10	Vicinity Motor Corp. entered into a services agreement with a customer to formalize compensation for the services provided in the development of the Vicinity bus.
2017-09-29	Vicinity Motor Corp. entered into a services agreement with a customer to formalize compensation for the services provided in the development of the Vicinity bus.
2017-12-31	Royal Bank of Canada and Export Development Canada entered into a revolving credit facility agreement with Vicinity Motor Corp.
2018-07-08	Vicinity Motor Corp. approved the Deferred Share Unit (DSU) Incentive Plan.
2019-04-16	Employment agreement between Vicinity Motor Corp. and Danial Buckle.
2019-08-23	Employment agreement between Vicinity Motor Corp. and William R. Trainer.
2020-10-23	The terms of the revolving credit facility agreement were amended.
2021-08-27	Equity Distribution Agreement between B. Riley Securities, Inc. and Vicinity Motor Corp.
2021-10-05	Vicinity Motor Corp. entered into the Sales and Marketing Agreement with Optimal Electric Vehicles, LLC.
2021-10-21	Underwriting Agreement between Spartan Capital Securities, LLC and Vicinity Motor Corp.
2022-06-15	The maturity date of the unsecured debentures was extended to October 4, 2023.
2022-09-16	Vicinity Motor Property LLC formed.
2022-09-25	The maturity date of the debentures was extended.
2022-11-07	The Board passed a resolution to adopt the Omnibus Equity Incentive Plan.
2022-12-22	Shareholder approval obtained for the Omnibus Equity Incentive Plan.
2023-02-17	Vicinity Motor Corp. entered into an amended and restated loan agreement with Royal Bank of Canada.
2023-03-27	Vicinity Motor Corp. completed a private placement of unsecured convertible debentures.
2023-05	Vicinity Motor Corp. announced the closing of a new $9.0 million credit facility with Export Development Canada.
2023-09-25	Vicinity Motor Corp. announced the amendment and extension of a C$10.3 million debenture.
2023-10-01	Effective date of the Clawback Policy.
2023-10-25	Vicinity Motor Corp. received a letter from Nasdaq regarding non-compliance with minimum bid price requirement.
2024-04-22	Initial compliance period for Nasdaq minimum bid price requirement ends.
2024-04-16	Credit Facility is currently expected to be renewed and extended.

Keywords

Vicinity Motor Corp, electric vehicles, VMC 1200, Vicinity Lightning, buses, trucks, financial results, supply chain, manufacturing, EV

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