Vicinity Motor Corp (VEV) 2018 Q3 法說會逐字稿

Greetings, and welcome to Grande West Transportation Group's Third Quarter Financial Results Conference Call. (Operator Instructions) And as a reminder, this conference is being recorded.

I would now like to turn the conference over to the John LaGourgue. Thank you. Please go ahead.

Good morning, everyone. I'm pleased to welcome you to our third quarter results call. We have our CEO, J.M. Landry here today; our CFO, Dan Buckle; and myself.

Before we get started, I need to notify listeners of forward-looking statements, which will be part of this call today. This call will contain forward-looking statements, which reflect the expectations of management regarding Grande West's future growth, results of operations, performance and business prospects and opportunities. The words believes, anticipates, plans, expects, intends, projects, estimates, and similar expressions are intended to identify forward-looking statements. These forward-looking statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this presentation. Such forward-looking statements are based on a number of material factors and assumptions.

This call does not form part of any offer of securities or constitute a solicitation of any offer to purchase or subscribe for securities. The sole purpose of this call is strictly for information.

I'll turn it over to Dan here to review our financials. Go ahead, Dan.

Thanks, John. Good morning to everyone. I am very happy to be able to discuss our third quarter and year-to-date financial results for 2018. For the sake of this call, I will round figures to the nearest thousand.

Bus, aftermarket parts and other revenue for the third quarter of 2018 was $13,830,000 compared to $25,864,000 in 2017. Our gross profit margin for these sales was 14% for the current quarter compared to 12% for 2017.

Our margins were positively affected by product mix, improvements in cost structure, increased part sales and new leases.

Adjusted EBITDA for the quarter was $615,000 compared to $1,048,000 in Q3 of 2017. We had a net loss of $308,000 for the 3 months ended September 30, 2018, compared to net income of $717,000 in comparative period of 2017.

We had deliveries of 36 Vicinity buses during the quarter compared to 75 buses in Q3 of 2017, bringing our total buses sold or leased to date for the 9 months of 2018 to 161.

Moving to the balance sheet. I would like to highlight that our working capital has remained strong. Our credit facility was fully repaid during the quarter, and our cash balance was $4,871,000 as at September 30, 2018.

And now I will pass it along to J.M. to provide a corporate update and business overview.

Thanks, Dan. Good morning, and thanks for joining us on this call. Before I get into the third quarter highlights and recent developments, I'd like to provide an update on our estimated sales for the year. So we expect to deliver between 180 and 200 buses in 2008 (sic) [2018]. I want everyone to understand that whatever doesn't get delivered in 2018 will spill into 2019. The reason we're giving you those numbers is -- that range is you had asked for as much clarity and timeliness of information as possible. So this is what we're doing. This is the most -- the up-to-date information that we can provide at this point. So it doesn't mean we're not going to get to 200, but we're trying to give you as much information to give you where we -- where the numbers will end up. So we still may be getting at 200, but at least, we gave you what the lower end could be if we don't -- if the deliveries don't happen in this quarter.

So now for the business overview and our third quarter highlights and recent developments. I'm really proud to say that we have reached some very important milestones in the second half of this year. Everybody was waiting for us to have some wins in the U.S., and we're really happy to say that the ball is now rolling. We said we expected to successfully complete an independent mock audit of our Buy America assembly processes and bill of materials by summertime, that is done.

We said we were expected to win some contracts with the state of Georgia, that is done. We said we were expecting more contracts. We have since won contract with the state of Mississippi, that's done. Also another one with the state of Iowa, that's also done. So these were very, very important for us to win. We said that they basically happened pretty much when we said they would happen throughout the year 2018, so on good -- and going on the right track. Successfully winning these 3 contracts in the U.S. during the third and fourth quarter is confirmation that Grande West can compete in the U.S. public transit market and really sets the stage for the further public contracts and awards.

Now that we have those contracts in place, it makes it easy for transit agencies in these states to purchase Vicinity buses. They don't have to go through lengthy bid process, that is already done. We expect firm orders to follow shortly as a result of these contracts.

Now on to more good news. In addition to these important wins, we received firm orders for 9 Vicinity buses from a U.S. private operator and approximately $6 million worth of firm orders from 3 new customers in Canada. These Canadian orders further strengthens our Canadian leadership position in our market segment. As most of you know, Grande West has grown tremendously in the last couple of years. Although that comes with some groin pains, it is also a great opportunity to improve on our business processes, which we have done throughout the year and will continue to do in 2019.

The new ERP system that we implemented earlier this year is one of the key elements that will help us streamline processes and drive costs down. We expect to see gradually increasing benefits in 2019 and Grande West announced that as of September 30, 2018, it would sell Vicinity buses directly to customers across Eastern Canada as well as providing parts and service support for these buses. I'm really happy to say that, that transition is going well and the change is meeting all of our objectives.

So in conclusion, our recent successes in the U.S. are the result of a lot of hard work, patience definitely and determination. We believe this is only the beginning, and we remain confident in our business direction and goals.

And then before I turn it over to John, I'd like to add that I was granted 350,000 stock options 5 years ago. I want everyone to know that I will be exercising those options before the expiry date in December this year, and that we also have 2 directors that have stock options that expires at the same time as mine and they also indicated their intention as to exercise those options.

So I thank you very much for your attention, and I will now turn it over to John.

Great. Thanks, J.M. and Dan. We can open up for questions now.

(Operator Instructions) Our first question comes from the line of Ahmad Shaath with Beacon Securities.

Just a couple of questions for me. First on the deliveries and the schedule. Can you just give us a little bit more color on the reason behind the ebbs and flows? Is it just normal course of deliveries? Or is it operational? I imagine it's not operational.

Deliveries for the end of the year.

Yes. Ahmad, this is Jean-Marc. Yes, this is -- no, it's not because of internal -- it's not the challenges we went through last year and has nothing to do on the operations side here. It's totally just customer -- on the customer side for delivery. So no important challenges internally of any kind.

Okay, that's very helpful. And just in terms of the realized price, I guess, I'm not sure how much color you can give us into Q4 depending on, I guess, at least some confirmation you have of the numbers for derivatives in Q4, how should we think about the ASP compared to the Q3? Because I know the first half of the year was stronger on the ASP, so how should we look at Q4 in relation to that? And maybe into whatever in the backlog right now into 2019?

It's Dan here. I can give you a little bit of color on Q4 without giving too much away. Q3 was very similar from a pricing perspective to Q1. Q2 we did have higher pricing and some higher margins recognized in Q2. I would say that from a margin perspective I would expect to see higher than Q3, but probably lower than Q2 for their customers and the product mix we have coming up in Q4.

Okay, that's great color. And yes, you mentioned the margins, that was going to be my next question. And lastly, J.M., this is more for you on the sales side, like how are you -- what are your thoughts about the sales cycle in Canada? And how we should think about the backlog and the sales pipeline in Canada? We have seen some slowdown before the order we got a few weeks ago. So how should we think about that going into 2019 with the kind of backlog you guys have? I think you have probably anywhere between 120 to 200 in 2019, so how should we should think about the backlog for 2019?

2019, really if I -- I'll answer the question in a second. Leading up to the answer is, we've really had record numbers in Canada, late 2017, early 2018, incredible growth. Some of the -- earlier this year, I think I said that to some of the bids that were supposed to come out this year has been pushed out a little bit. We are expecting some pretty good wins to come out early in 2019. So we have -- also into 2019 a little slower in Canada than it was last year or, let's say, over 12 months -- late '17, early '18 was, as I said, record year. So we won't have a record year in 2019, but the Canadian market is still looking very good for us. Our market position and our leadership position in Canada is strong. We're keeping our market share. So an indication, just this last quarter, we added 3 new customers. So we're catching the bulk of what the -- those opportunities that are there in Canada. We are getting the bulk of the orders, so we're not losing traction. It's, as I said, the volume is not the same level as what we experienced last year, but that's just because the market probably caught up a little bit on the orders in the past. So it's slowed down a little bit, but we still see a pretty bright future in Canada. And as I said, the important thing is we are not losing market share, we're not losing -- really not losing any significant number of deals, we're adding new customers, we're keeping our existing customers and we have some nice opportunities for bid that's coming out very shortly. So it won't be -- there won't be a record year in Canada in '19, but still it should be pretty strong in terms of market share and grabbing what's available.

And I guess on that -- I remember when we talked before about the Canadian market, we always thought that the Canadian market can support up to 200 units annually. How does that number look like now with the new information you just provided us? What should we think about the stable run rate of the Canadian market for your segment?

No, I think as you look at the first -- our first -- let's just call it our first real round of wins in Canada as we replaced a lot of the 30-foot buses that were already out there. We've increased total number of 30-foot buses in Canada by gaining a little bit of -- converting a little bit of buses that used to be 40-footers, now they're 30s -- little bit of smaller buses turning into 30, but it was really what we call Phase I first round, okay, let's go get the obvious business with 30-footers that are out there. There are still tons of opportunities for us to go and, what we call, rightsize the fleet. People are still running 40-foot buses in places where it really doesn't make sense. The ridership just doesn't justify a 40-foot bus, and that is you don't have to go very far. You go pretty much in any city that's not a major, Montreal, Toronto or Vancouver, you go in any other small town somewhere, you'll see 40-foot buses that are oversize. So the potential for Grande West is still in Canada very, very large. This is just on the bigger buses. There's a lot of smaller buses also that are getting pretty full. There's lots of municipalities that are getting into transit or expanding transit, we're seeing all over BC. We have -- BC is really a model in Canada, there's transit and anyone that has any kind of decent size population, they have transit and that's a growing trend in Canada. The federal government is supporting transit expansion not just only in major centers but also in small ones -- in smaller areas. So it's -- potential is pretty good. The nice thing now is that we have -- we're positioned in Canada where we have customers across the country. We've been -- we've had those -- many of those customers for a few years now, we've had repeat business. People know us. So now we're just growing and the opportunities, like I said, we went -- we picked the low-hanging fruits, we've replaced the 30-footers that were already out there, replaced some of the bigger buses with a little bit of smaller buses, but that was easy -- to a certain extent easy picking as they were pretty obvious. But there's still a lot of people that are saying we got a major business model, we have to rightsize. So that's what we're -- we think is going to be good potential in Canada. So...

(Operator Instructions) Our next questions are from the line of [Saul Gwen], private investor.

I believe the first tender that Bus won was of BC transit for 60-odd buses. Can you tell me if they've ordered since or is there an order upcoming? And secondly, with the buses you sold to the state of Mississippi and Iowa and Georgia, which is terrific, how many buses were there in total in those 3 states?

Okay, so the first question -- it's Jean-Marc, the first question on the BC transit, I'm not sure where you got the information you told me. But I'll just summarize real quick for everyone. Our first order from BC transit was in -- back in 2013 or so for 15 units, and then I can't remember the exact date but I'll say about 2 years ago, we won a second contract with we BC transit, which was for I think they were identified for about 120 buses, 110 -- between 110 and 120 buses over 5 years. We have since -- in that we have since delivered over probably around 150 buses out of that contract. So it was a 5-year contract. They stated minimum 110 or 120. We're already well over the minimum numbers they gave us, and we're only at the end of the second year of this contract. So total number of buses at BC transit is in excess of 160 right now as we speak. So that probably answers the first question. Second question about the 3 contracts in the U.S. Those are actually contracts that are in place that any of the transit systems that are located in those states can buy off our contract without having to go through a bid process. So those contracts are -- is not a PO. There's 2 different things, there's a contract. You need a contract before you can issue a PO. So now the contracts are in place at the state level. So that means anyone in the state can buy off the contracts, if it's -- that's identified in the contract. And then the next stage is for us to get those POs and we're working very, very hard to get those POs and that's why we announced we're expecting some POs to start coming in very shortly from those contracts. So it's a huge opportunity for us because typically if you get a contract from 1 transit agency, you can only, in most cases, get POs from that single transit agency. In this case, these 3 wins is at the state level. So that really opens it up for us, gives us access to everyone in -- or in most cases get everybody in that -- in those states. So that is a huge win, and we expect some POs to follow very shortly. And POs will be firm orders.

And our next questions come from the line of Ahmad Shaath of Beacon Securities.

J.M., just a follow-on on the last point we talked about on the rightsizing. So would you say it's fair to say that the rightsizing thesis has taken a little bit longer to play out than you guys have thought or hope for just from what we've seen in Canada and in the U.S. so far? Is that a fair statement you'd say?

I don't know. There's certainly a lot of discussions. It's very, very active in all the conferences and talks with transit agencies. I think people are still trying to figure out. You hear about car ride-sharing and different types of modes of transportation and really transit agencies are looking at their model where it was pretty much, in most case, a one-size-fits-all, which was the larger size bus, and now they're being kind of pressured in all sorts of direction right down to the ride-sharing, which might be just 1 or 2 ride occupants in the vehicle, and they're really trying to figure things out to say, okay, what is the model? I think what's become very clear to everybody in the industry is that it's going to be a mix of a little bit of everything from people walking, people driving their -- riding their bicycles, carpooling, they're talking about micro-transit now, which might be the smaller vehicle that will have a few occupants. They're trying to -- they're testing -- some municipalities are testing different modes. So they're still trying to figure out on exactly how this is going to turn out but it's -- definitely the movement is well underway. It is clear that it's not single size doesn't fit anymore. So the rightsizing -- the term expression, rightsizing is definitely happening. They're still trying to figure out and the nice thing is for us, we're one step smaller than the big one. So it's a pretty easy transition for them for any transit system. So it's definitely going there. Is it taking longer than we would like? Everything takes longer than what everybody would like. But there's no big surprises. You got to start somewhere. If you look at Canada, we've had -- it took a few years to take up. When it did, we're clearly the market leader in that segment now. And the states, we're kind of going in the same path as what we did for Canada. It looks like nothing is happening for a few years and then also we win -- we get our first few wins and we get some POs and then the ball is rolling. But definitely, we see that a lot of the thinking in that movement has already started. It's not something that's in the future that movement to figure out what does transit look like for the future is really happening now. And I think everyone would be -- in the industry would pretty much agree that it will be multiple sizes and transit systems will need to figure out what is the rightsize -- and what is rightsizing for their communities. So we're really, really well positioned to capture that market.

And I guess just one -- a couple of more, and then I'll leave you to it. So in the conversation with the agencies specifically about rightsizing, what are the top 2, 3 issues that come up in discussion with them in terms when you try to convince them to rightsize or you pitch them the rightsizing pitch? And secondly maybe that's related to that -- the entrance of one of your competitors in the market through the acquisition of a smaller bus maker, and how did that impact that conversation on the whole rightsizing conversation?

Okay, so I'll answer your first question, and then maybe you'll help me understand the second part of your question. I'll start with the first one. Customers really the obstacle there is really -- the transit industry has been very conservative. If you look at the last 5 years, things are really changing. You look at the previous 25 years and it has been pretty steady, actually technology really only started kicking in about 8 -- 7, 8, 10 years ago. The early stages where they said we will have different technology that we can put on buses, before that there was not much. It was just many people referred to it as a shoebox. They looked like old square buses and they weren't very attractive, didn't have any technology when you speak of 10 years ago, technology started to come in, 5 years ago people started to say you know what, we can't afford to do things the same way as we did before. So it's a very conservative industry, people -- it's probably reluctant to change. And just doing what they were doing the most part in the past. So that's probably our biggest -- probably the biggest reasons why it's taking time to change, some are adapting to change in technology and new ways of doing things quicker than others. But I wouldn't say it's a major hurdle. And whenever you're dealing with government agencies, the procurement process is much longer than if you're doing business on the private side. It's public funds. There's a process to go through and there's budgets to be approved. So it's a longer process in itself than doing business on the private side. So when you combine all of these things I just mentioned, that's pretty much what explains why it's taking time, and it's really not taking -- it's taking a little longer but it's not outrageously longer than it should be. Second question -- second part of your question, if you could just repeat that part again, because I'm not sure I understood 100% of what you're looking for?

No, I'm just saying, if -- we've seen the entrance of one of your competitors in your segment of the market, although in a slightly differentiated product but in terms of size-wise, it's a similar size. How did that impact the conversation, if any, on the rightsizing when you discuss with agencies the rightsizing trend? Do they look at it because it's a large competitor -- large player in the market and it's pushing some of that, doing some of the push work in terms of product for rightsizing? Is that helping you guys? Or is it negatively impacting you?

We see that as very positive. We -- it'd be very difficult to get people to really buy into this if we were the only voice out there talking about rightsizing. So having another major company up there that's got a long-standing relationship in history and well-known in the industry go out there and say, you should be looking at different sizes, actually very good news for us. So we're happy to see that. And the more people talk about rightsizing, even if it's different products -- slightly different products than what we have, the reality is, it's a small ecosystem and it's going to be -- it's going to have everything from the smallest transit or mobility solution to high-capacity rails or double -- or articulated buses and everything in between. So we welcome, and we think it's great news to have other people talking about rightsizing.

(Operator Instructions) Our next questions come from the line of Peter Johnson with Leede Jones Gable.

I have a few questions here. Just picking up on what was just asked with regard to competition and pricing from [tour and rev] out there in the market. Are you finding that difficult to overcome on the pricing side to maintain your margins? Or are you winning contracts? Are you -- that's my first question.

Yes. Okay, so this is Jean-Marc. No, we've been competing with that company, the names you just said and others. We've been winning many of the deals, and we've been pricing -- our prices were lower than those companies. So it's not -- no, there's no big hurdle or no big challenges on that side. We're still getting the margins that we are -- we're always working to increase those margins, but we're still getting some decent margins and able to compete with any of our competitors.

Second question is Altoona testing on the 35-footer, that was supposed to be come in. Are you finding that, that is a drag on some of the contracts that you're trying to get that, first of all it was U.S. content. Now that you've got that, is it a factor in winning contracts? And when do you expect to get your Altoona testing coming in?

No, it not. We're still bidding. The 35-foot is still at Altoona at the -- getting towards the end of the testing. Well, actually we're starting our 35-foot CNG bus testing very shortly as well. So we expect -- actually both the 35-diesel and 35-CNG to be done at the latest, sometime in summer 2019. So it hasn't -- we haven't lost any business because of that. And that's not really slowing us down at this point. We're still bidding and getting some contracts.

Third question is 5-year contract on the 30-foot Buy America for Mississippi, 63 Vicinity buses on the contract over the period. You see that in the MD&A. So that is a PO, definite PO on a 5-year basis?

That is -- No, that is a commitment of what -- it's actually got more specific information on that contract than the other. So this one specifically names agencies and quantities that they intend on buying. We still need to get back 2 POs from them. But if you look at the Georgia state contract, and say it's basically just stating that we have a contract with them and anyone can buy off the contract. But no one, not just for us but overall, no one is coming out and say, I intend on buying these many buses and -- over this period. So this one that you just referred to just has more information -- more specific information about who the end user customer will be and the quantities that they intend on purchasing. So we said that -- I actually said this morning in my comments that we're expecting a PO shortly. So those POs shortly will be from some of those agencies in those 3 contracts.

Excellent. And my last question is, in the past in Canada, some of your acceleration was due to infrastructure grants from the federal government. And I see in the spring budget that for transport they got delayed. Do you have any intel -- because some of those orders were predicated on getting infrastructure grants for transportation and we saw that in the contracts that you signed. Do you have any intel when they're going to release those funds? It might accelerate further orders in Canada.

Budgets, I can start by saying that the federal government has really -- has been very, very supportive of transit projects. And they have long-term plans in place to do so. Budgets need to be approved every year. So there's really nothing on the horizon that indicates that they'll start reducing budgets. Everybody that I speak to when they -- the projects that they're submitting to date, pretty much everything is getting approved. And there's no real dark clouds on the horizon to say that, that's going to change. So we're seeing the outlook in Canada for the next -- almost the next decade is looking very good.

Our next questions come from the line of [Dennis Molding] with [Molding Consulting].

My question is really about results but more in the future. Very encouraging to see the standard contract negotiations being successfully concluded with states such as Iowa. Could you -- do you have any information of other state negotiations that you're either currently involved in or that are coming to the market within the foreseeable future that you are aware of?

Great question. We've been cautious in the past. We've been more open in sharing those what we're working on, and then we realize that all our competition the next day are all on -- knocking on the same doorstep as we are. They're tracking us pretty closely. So we've kind of backed up a little bit on sharing what we're working on. I can tell you that our pipeline is growing every month, the number of opportunities we are looking at, the number of buses, our probability of winning is increasing and is trending in the right direction constantly. So I can tell you that we have some real nice opportunities ahead of us, but we're not going to be sharing the names and that's mostly just for competitive reasons. So sorry, can't give you a lot more details, but it is -- I can tell you that we are -- we still have lots in the cooker as you could say, and we're expecting some continued successes.

My second question is, your profit margins between your Canadian customers and your U.S. customers being that you're working with the distributor in the U.S., how does that affect your financials?

Well, I think what we're looking at right now is we're still looking at the same targets right now for our margins. We've stated that we like to see double-digit margins on our bus sales. That continues on a go forward -- that's our goal. What we'll have to do is -- there's always room for improvement for us on the cost basis. So that -- that's where we would look to improve our margins. But right now, it's too early to say for the first buses that we're going to be selling into the U.S., what our margins are going to be like from a forecast perspective. But we don't expect to see margins that are way less than we have right now.

Okay. Final question on the market in the private sector such as the 9 that you have reported, what percentage of our rank does it play in yours or your distributor's marketing efforts to the private sector and all the people running airport shuttles and tourist buses and so on versus the state transportation kind of agency marketing?

This is Jean-Marc. We have been going after the private sector in the U.S. for a few years now. We've done quite well now. I would say most of our efforts are focused on public side. Obviously, we haven't put the private business opportunities aside but clearly a lot of our energy is going towards the public sector sales.

And our next questions are from the line of [Al Feldman], who is a Private Investor.

I have a question for Jean-Marc. I just want to -- I'm encouraged by the rightsizing of the contract -- U.S. contracts as well, that's all very good information. My question to you is, how do you plan to grow the aftermarket business side of things?

The aftermarket for us parts sales. As a revenue source, that is actually growing quite rapidly. If you look at our numbers a couple of years ago, that parts sales for -- annual part sales, we're doing more on a monthly basis now than we did entire annual sales. So a couple of reasons for that. We have lot more buses now on the road than we did before. And also, a lot of the buses we did a few years ago are not -- no longer under warranty. So then parts sales now are -- is actually revenue. So we definitely feel that parts business is going to increase as we -- as the buses get older and we have more buses out there. So we see this as a very strong side of our business that's going to be -- should give us some steady -- fairly steady revenue and over time it would be increasing and those are at pretty good margins as well.

Just a word -- like just the question is, how big of the percentage of the aftermarket business is your model right now? And where do you see that in the next couple of years?

I think, we have -- those are in the statements.

Yes, we do have a breakdown of other revenue and our box revenue, but I would say that it's tough to even actual growth model for our parts business right now, but obviously, we do expect to see that increase as we start selling more and more buses.

Okay. Second question is, what if anything is being done on electrification development with Grande West? As there are trends starting in the industry with a number of your competitors jumping on board. Where do you see that going? And if there's anything, any developments so far?

Yes. We've had -- this is Jean-Marc. We've done quite a bit of work on the design and engineering of electric propulsion on our Vicinity bus. We have intentionally not launched electric Vicinity yet officially to the market and the reason was just the last couple of years we've had so much growth and so many projects underway at the same time that we didn't want to add electric on top of that because that's a pretty important, pretty big undertaking. That was part of the reason. The other part of the reason is if you're looking out there now there's something like probably around 300, don't quote me in the number because that number might have changed a little bit, but there's may be 300 to maybe slightly over 300 buses that were sold in North America electric, and even was 400, it's a fairly small number. And lot of customers are saying they got -- they receive special funding for pilot projects. Customers are telling us they are testing technology. We've seen some municipalities buy from 3 different suppliers at the same time. So okay, I'll buy so many of yours, same for the other company and the other one and they're just testing it. We are focusing on growing our business on many different fronts, and we've decided not to go out and be part of that testing -- first round of testing. So basically it was just first round of funding for this is special funding, pilot project funding. People are trying to figure out where this is going to go. So we're letting all of the other companies out there figure that out with -- between the customers and the suppliers and who wants still a bit further ahead testing period, we've kind of done then we will move forward and launch our electric Vicinity with what's -- what the industry wants.

Sure. Sure. I think you're bang on with that statement. My last question is in regards to marketing. I seem to see a plenty of excellent characteristics on the Vicinity as far as the Altoona testing clouds durability and Altoona the best-in-class fuel economy. Just curious if you could speak a little bit to the marketing on how you get that pointed message out there to people or if it's just straight customer presentations?

We've done -- most of our marketing and our selling has been done direct. If you look back a couple of years ago, we didn't have massive budgets to go out and do massive marketing campaigns and fancy marketing. So a lot of it was just through corporate and sales presentation and sales directly, marketing done through sales and show -- trade shows. So that's how we've been marketing in the past. We are -- we do have some things in the go now to -- because we're focusing on North America larger broader market. We are working on some things now that we'll be making some adjustments on that side on the marketing to make it a little bit broader reach. But we're still a little bit conservative on spending too much money on massive fancy marketing campaigns.

And our next questions come from the line of Peter Johnson with Leede Jones Gable.

Atlanta, Martha manufacturing assembly facility in Atlanta. You talked about starting in June, July of going to buses and ramping up production at 10-a-month. Can you elaborate a little bit of your production schedule? And how you see it and the timing of that?

Yes. So we in addition to what you just said -- what you just said this is correct, that's what we said. We also said that we would be adjusting our production rate with orders. So orders being a little bit longer to come in, we've slowed down activities. There's no off-sense in having full production going without the Buy America orders. So what we have been doing is we've -- the orders that we've taken, we've kept building buses and what we've got to date are non-Buy America orders. So we've been building the buses the same way we've been doing before and we'll really, really be ramping up our Atlanta operations once we get Buy America orders. That is really going to be the driver of when we get into full production in Atlanta. It will be Buy America only.

How many buses have you produced to date for the private sector out of that facility?

No, that's what I just said. I tried to answer, I guess, my message wasn't clear. So I've said all the private buses we've still been producing and are old model, so not out of Atlanta. We've done some...

Okay. I missed that, sorry.

Yes, yes, no problem. So we've done some buses gone through Atlanta but that was mostly for training purposes and line set up and line balancing and logistics. But they weren't really for any kind of production. It was more for training purposes and setup.

Thank you we reach the end of our question-and-answer session. I'd like to turn the floor back to management for any closing comments.

All right. Well, once again just like to thank everybody for joining us today on this call. If anybody has any questions, please feel free to contact me, and we'll take care of those. And looking forward to the next call.

Thank you very much.

Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. And thank you for your participation.