Spruce Power Holding Corp (SPRU) 2021 Q4 法說會逐字稿

Good afternoon, and welcome to the XL Fleet Corp. fourth-quarter and full-year 2021 conference call. As a reminder, today's call is being recorded. (Operator Instructions)

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.

Thank you. Good afternoon, everyone, and welcome to XL Fleet's earnings conference call to discuss the results for the fourth quarter and full year 2021. With me today are Eric Tech, our Chief Executive Officer; Mike Kenhard, our Chief Technology Officer, and the General Manager of our PowerDrive business; Colleen Calhoun, our Vice President and General Manager of our XL Grid business; Chris Goldner, our Interim Chief Financial Officer.

Our call this afternoon includes statements that speaks to the company's expectations, outlook, or predictions of 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 may be required by law. We refer you to XL Fleet's disclosure 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 Eric Tech.

Thanks, Jim, and thanks to everyone for joining us on the call this afternoon. I'm excited to be speaking with you on my first earnings call after joining XL Fleet team on December 1. To begin, I'd like to highlight the reason that I was attracted to XL Fleet and why I made the decision to join as CEO.

I've spent the last two decades of my career helping to lead large global transportation businesses through periods of significant change in the midst of broader industry transformation. I fully recognize that we are clearly in the beginning stages of a massive transformational shift towards electrification in the automotive industry, and more broadly, the decarbonization of the entire commercial and industrial sector.

I also recognize that XL Fleet has a tremendous opportunity to be a significant part of that evolution, providing the company can effectively optimize our talent, technology, and resources to effect that change. [Seats] extremely excited to lead XL Fleet into the next chapter and to align our business to most effectively capitalize on the opportunities in front of us. Most of all, I am motivated by the work we have ahead of us to deliver long-term value to all XL Fleet stakeholders, most notably our customers, partners, and our shareholders.

With that as a backdrop, I'd like to share a little bit about what I've been focused on since joining XL Fleet exactly 90 days ago. My initial goal has been to take a comprehensive look at the entire XL Fleet business. Since joining, I spent considerable time meeting with leaders across our business and assessing the offering -- offerings, strategy, and growth opportunities to ensure that we are maximizing value for all of our stakeholders. As part of the strategic review, I visited each of our core facilities and spent time with the teams there to help me build a holistic view of our business. Well, the strategic review remains ongoing. I'd like to share a few early observations and actions.

First, it is clear that XL Fleet has diversified our solutions portfolio substantially since going public 15 months ago. Issues related to chassis availability and other supply chain friction did impact our ability to sell electrified drivetrains in 2021 as we experienced similar challenges as many other companies across the automotive industry. However, the weakness we experienced in this part of the business was partially offset by our investment in XL Grid business. In particular, our exit -- our acquisition of World Energy Efficiency Services last year has given XL Fleet an entirely new set of capabilities and opened up new market opportunities.

In order to better capitalize on the unique characteristics and opportunities within each of our product lines, I recently promoted Mike Kenhard to Chief Technology Officer and General Manager of our PowerDrive business. Mike is an accomplishment engineer and innovation leader. And I'll be working very close with him and his team as we focus on formulating and executing our strategy moving forward.

Colleen Calhoun will continue in her role as Vice President and General Manager of our XL Grid business. Colleen and the World Energy team have done a great job of integrating into the broader XL Fleet organization and have provided a valuable source of diversified revenue for the company. I look forward to Colleen continuing to grow that business moving forward.

The second priority of mine has been to narrow the company's operational focus in order to more effectively execute on our strategy going forward. This effort involves focusing our resources on what we consider to be the most profitable areas of our business, both near term and long term. As part of this process, I have determined that we will selectively reduce some of the aspects of XL Fleet's hybrid offering by [limit it] to the platforms and applications that are most scalable and provide the most substantial return on investment for both XL Fleet and our customers.

As part of this narrowing focus, we have recently taken some actions to align our (technical difficulty) with our near-term needs. As part of this, we have eliminated 51 positions across the organization. Among other things, this difficult but necessary action ensures that we are operating in the most efficient way possible.

Next, I remain focused on preserving cash and maintaining our strong financial reserves as we focus our business. We exited the fourth quarter with approximately $352 million of cash on the balance sheet. This cash, which was raised as part of our go public transaction, completed in December 2020, positions us with significant financial flexibility. Most importantly, I remain intent on identifying transformational M&A opportunities that will enhance shareholder value while setting the stage for long-term growth resulting from the global needs for decarbonization.

In summary, I have taken actions to align our team, rightsize our business, focus on cash preservation, with an eye on transformational M&A. It is important to emphasize that my strategic review remains ongoing. This assessment, which requires time, will inform and define our path forward.

With that, I'd like to turn it over to Mike Kenhard to provide an update on our operations and near-term opportunities.

Thanks, Eric. I'd like to begin by echoing the message shared by Eric regarding the importance of assessing all opportunities to help set the business up for long-term success. One very recent example of that approach was demonstrated in our recent announcement that XL Fleet has been selected as one of the two finalists for a pilot program being run by the Department of Defense to develop anti-idle technology for military applications. Our team remain hard at work in developing this technology. We look forward to advancing through the process and updating the market on the program status as we are able to.

Separately, the team is currently assessing opportunities to deploy the same or similar technology to applications outside of the potential DoD award. We believe there could be a range of commercial variations that are possible for this technology, partnering with companies, customers, and perhaps fleets as they work to decarbonize and deliver sustainability across their businesses.

In addition, as we recently announced, XL Fleet recently received an Executive Order from the California Air Resources Board in order to sell our all-electric refuse truck we are jointly developing with Curbtender into the California market. We have made significant progress on what will become the company's first all-electric commercial application. We look forward to being able to commercialize the product once it's ready for production. We remain optimistic that will happen by the end of 2022 as previously stated. As part of streamlining our business and narrowing focus on the most profitable opportunities, we've decided to not move forward with our investment in eNow related to the electrification of refrigerated trailers.

With that, I'd like to turn things over to Colleen Calhoun to discuss our XL Grid business.

Thanks, Mike. Our acquisition of World Energy Efficiency Services, completed in May, brought significant diversification and expansion of our service offerings and set a strong foundation for our evolving XL Grid strategy. The World Energy team performed better than expected in 2021, achieving $20.5 million of revenue for the full year, with $7.7 million in the fourth quarter. It is important to highlight that World Energy does experience some seasonality, which typically includes higher revenues during the fourth quarter due to sales cycles and other dynamics in the market.

The team continues to demonstrate their ability to execute effectively and efficiently as evidenced by the completion of 637 energy service projects throughout the year. We were excited to achieve our first cross-sell project between XL Fleet and World Energy during the quarter. This project included 12 charging stations to power 10 Ford F-series pickups equipped with XL Fleet plug-in hybrid electric drive systems that Apex Clean Energy deployed in its services fleet earlier this year. This project is a great example of the significant opportunity provided as fleets transition to electric, triggering new needs related to EV charging.

We recently expanded our footprint into New York, specifically Central and Upstate New York, and look to capitalize on the growing demand for electrification and decarbonization opportunities in this region. Looking ahead, we see significant opportunities for further organic and inorganic growth. And we are actively pursuing opportunities in both, which includes World Energy's project backlog of approximately 200 projects at the end of the year. XL Fleet is committed to investing in the growth of the World Energy business and are expecting to grow the team by approximately 25% in 2022.

I'd like now to return it back to Eric.

Thanks, Colleen. As we recently announced, we have appointed Chris Goldner as our Interim Chief Financial Officer following the resignation of Cielo Hernandez from her position as CFO to pursue other opportunities. We appreciate the contribution of Cielo since joining in April of last year and wish her success in her future endeavors.

I'm extremely confident in Chris's ability to lead our finance organization during this period of transition. Chris brings more than two decades of financial leadership experience, including significant experience at public companies and public accounting. Until his appointment, Chris served as XL Fleet's Corporate Controller following his joining in August. We have a process underway to identify a permanent replacement and confident in our ability to bring on strong talent to drive advancement and change across XL Fleet.

Now, let me turn it over to Chris to walk through the financials.

Thanks, Eric. Revenues for the fourth quarter of 2021 totaled $8 million compared to $3.2 million in the third quarter of 2021, and $10.9 million in the prior-year period.

Revenue in our XL Grid division totaled $7.7 million, which was driven exclusively by projects in our World Energy Business. Revenue from the sale of drive systems in the fourth quarter of 2021 totaled approximately $300,000 compared with approximately $600,000 in the prior quarter, and approximately $10.9 million in the fourth quarter of 2020. We reported gross loss for the quarter of approximately $1.6 million, compared with gross profit of approximately $700,000 last quarter and gross profit of approximately $2 million in Q4 of last year.

Adjusted EBITDA totaled negative $14.6 million, compared to negative $14.2 million in the third quarter of 2021 and negative $1.8 million in the prior-year quarter. Research and development costs totaled $3.3 million. SG&A totaled $15.9 million, up from approximately $12.7 million last quarter and $2.8 million in the fourth quarter of 2020.

On a full year basis, we reported total revenue of $15.6 million, including $12.8 million from XL Grid and $2.8 million from the sale of drivetrain systems. As a reminder, World Energy contributed approximately 7.5 months of financial performance following the business's acquisition on May 17, 2021. For the full year and including the portion of the year we did not own World Energy, the business generated approximately $20.5 million, which was slightly ahead of plan and triggered the performance-based earnout announced as part of the acquisition. At December 31, we had cash and cash equivalents of $351.7 million compared to $329.6 million at the end of 2020.

I'll now pass it back to Eric.

Thanks, Chris. I'll tell you what, it's been a busy three months and we have a lot of work ahead of us. But I'm motivated by the process and committed to a successful outcome. I value the collaboration that I'm having throughout our company and the contributions and focus from all of our leadership and team members. I know they share my motivation and urgency to execute our strategy and achieve our goals on behalf of all XL Fleet stakeholders. We look forward to providing further updates on the strategy and vision in the coming months.

With that, I would now like to open up the lines for Q&A. Thank you.

(Operator Instructions)

As there are no questions, this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Eric Tech for any closing remarks.

(technical difficulty) much for participating in today's call, and for your interest in XL Fleet. Everybody, have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.