Vicinity Motor Corp (VEV) 2018 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Grande West Transportation Group conference call. (Operator Instructions)

At this time, it is my pleasure to turn the floor over to your host, Mr. John LaGourgue. Sir, the floor is yours.

Thank you, Jess. Good morning. I'm pleased to welcome everyone to our 2018 fourth quarter and year-end results conference call. For this call this morning, I've got our CEO, J.M. Landry, here; our CFO, Dan Buckle; and myself, VP of Corporate Development.

Before we get started, I need to notify our listeners of the forward-looking statements disclaimer. 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. These forward-looking statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this call. 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 that call is strictly for information.

I will now turn it over to Dan Buckle to review the financial results for the quarter and year-end.

Thanks, John. Before I start, I will point out that I'll be making reference to certain non-GAAP financial measures such as EBITDA and gross margin percentages. Please refer to our disclosures and calculation of these measures in our MD&A.

I'd like to highlight some of our key financial achievements for the year and for the fourth quarter. 2018 was a great year for Grande West with some significant operational accompaniments. We recognized record levels of bus deliveries, revenues, net income, EBITDA and gross margins. I'll concentrate on the yearly results first.

We had record deliveries of 180 Vicinity buses, including 7 new leased buses, for the year ended December 31, 2018, compared to 152 buses delivered during 2017. Our revenue for bus, aftermarket parts and other sources was $70,076,000 for 2018 compared to $54,701,000 for 2017. Our gross margin for the year ended December 31, 2018, was 17% of revenue, which is a significant increase over the gross margin recognized in 2017 of 12%. The margin was positively impacted by the product mix, improvements in our cost structure and increased parts sales. Adjusted EBITDA for the year ended December 31, 2018, was $5,224,000 compared to $770,000 for the year ended December 31, 2017. Net income for the year ended December 31, 2018, was $948,000 compared to a net loss of $416,000 for the year ended December 31, 2017. For the fourth quarter, we had deliveries of 19 Vicinity buses, including 1 new leased bus, for the 3 months ended December 31, 2018, compared to 33 for the 3 months ended December 31, 2017. Bus, aftermarket parts and other revenue for the fourth quarter of 2018 was $8,511,000 compared to $12,508,000 for the fourth quarter of 2017.

We recognized a net loss for the fourth quarter of 2018, $1,154,000 compared to a net loss of $641,000 for the fourth quarter of 2017. Adjusted EBITDA for the fourth quarter of 2018 was $26,000 compared to an adjusted EBITDA loss of $483,000 for the fourth quarter of 2017.

I would also like to quickly highlight our balance sheet at December 31, 2018. We ended the year with a healthy balance sheet and approximately $17 million in working capital with immaterial levels of long-term debt. We've reduced our high-interest debt throughout 2018.

Positive cash flows and results from our operations for 2018 combined with our balance sheet position us for -- very well for 2019 and beyond.

And now I will turn it over to J.M. to discuss our operational highlights.

Thank you, Dan. Good morning, everyone. In the last 2 years, the company achieved record revenue, as Dan was mentioning. And we experienced a decline in our backlog during 2018, mainly due to the lower order intake, which will impact our 2009 (sic) [2019] results and vary from quarter-to-quarter. This temporary lower volume seems to be echoed across the industry. I'll just give you a bit of an example.

We look at BC Transit -- the BC Transit order that just came in recently. That order was originally expected to come in a year ago and be delivered in 2019, and that's something that seems to -- that several of our larger customers, across the board, have been -- after record purchases, have taken kind of a breather and have decided to postpone by a year and some cases, some of their orders. So that's really what's impacting the little bit slower -- or the slower 2019 versus the previous couple record years that we've had.

So that being said, the funding for transit in the U.S. and Canada is still high and is expected to remain high. Our bid activity during the first half of 2019 is off to a good start. It is higher than the same period last year, and we expect that momentum to increase this summer, which should turn into revenue in 2020 and beyond.

Buy America orders are also expected to increase during 2019 for deliveries in 2020. And the end result is we expect our backlog to increase later this year with a goal to surpass $100 million during 2020.

We're very proud of our accomplishments for -- you look at the last couple of years, for the second year in a row, we achieved record revenues. We have a strong balance sheet. We have good operating cash. We have higher margins. Many key indicators have remarkably improved from previous years. Our part sales increased 300% from prior year, and we expect it to keep growing.

We made some great new hires as well last year. Dan Buckle, our CFO; and Rob Mowat, our VP of Sales and Marketing are doing a great job in helping position Grande West for its second wave of expansion that we expect is just around the corner.

Last year, we successfully achieved several important milestones. We worked diligently to set up our U.S. assembly processes and increase our U.S. material content. The company announced that it has successfully completed an independent third-party audit of its Buy America assembly and financial bill of materials on its Vicinity bus in order to meet the Federal Transit Administration requirements, the FTA.

Grande West went through -- Grande West -- sorry -- through its U.S. distributor ABG, was successful in winning 3 important state contracts, the first one is the Georgia state bid for Vicinity 30-foot and 35-foot heavy-duty buses. That contract allows for all transportation authorities statewide to purchase Vicinity buses with federal funding as well as all public agencies nationally to purchase with local funding.

This is a huge win for us, as it gives public transit agencies across the U.S. the option to purchase Vicinity buses without having to go out for bid. We currently have several agencies interested in buying Vicinity buses off that contract.

In October 2018, the company announced a new contract to purchase Buy America Vicinity buses by a group of Mississippi-based transit authorities. Grande West, along with its U.S. distributor Alliance Bus Group, was the winning bid for 5-year contract for 30-foot heavy-duty, low-floor buses. The order is for up to 63 Vicinity buses over the term of the contract. Each participating agency has submitted their purchase forecast. Purchase orders will be announced as they are received. Grande West has already received initial orders for a total of 7 buses from 2 customers off this contract for delivery in 2019. The third contract is with the Iowa Department of Transportation for 30- and 35-foot heavy-duty diesel Vicinity buses with the option for CNG. This bid is conducted on behalf of Iowa's 35 public transit agencies and various other Iowa governmental agencies. This bid is in place until October 2020.

So just to recap, last year, we said we would successfully -- we said earlier last year, we would successfully complete a Buy America mock audit, and we did. We said we would win public transit contracts, we did. We said we would get firm orders for Buy America-compliant buses, we did.

Successfully winning these bids and contracts in the U.S. during the third and fourth quarters is confirmation that Grande West can successfully compete in the U.S. transit market. Our focus remains the same. Two of our main priorities are growing our U.S. sales order book and optimizing our U.S. manufacturing. We're making progress in both areas.

Back in Canada, Grande West announced that they would sell vicinity buses directly to customers across all of Canada instead of going through a dealer in Eastern Canada effective October 31 last year. That decision was made to be closer to customers and optimize all aspects of the relationship throughout the life of the bus. That means we sell Vicinity buses directly to customers, we provide technical support, and we sell parts directly. In order to do that, we hired a new customer-engagement manager and a service technician. They are based in Montréal and focusing on business development and customer support in Eastern Canada. That is working out very well for our customers in Grande West and is expected to have a positive impact on our bottom line as well.

Looking ahead, we are very excited about the future. Part of our strategic plan is to reach $500 million in sales in a relatively short timeframe. In order to achieve that goal, we need to expand our product line. So now it's the time to fast-track our 100%, zero-emission electric bus project and lighter-duty crossover bus model.

Remember we temporarily placed those projects on the back burner, not anymore. We're looking to fast-track these 2 projects, and the electric bus is a high-revenue, high-margin-generating product. And our crossover model has potential of becoming a high-volume generator with good margins.

The Vicinity electric bus will place Grande West in an excellent position to capture market share as the demand for zero-emission buses grows. Our crossover bus model will provide Grande West access to the high-end cutaway bus market segment. Municipalities of all sizes across Canada and the U.S., along with private operators in multiple sectors, are looking for more robust, low floor accessible bus to replace their cutaways.

In conclusion, we are maintaining our strong leadership position in our market segment in Canada, and we continue to make progress in the U.S. market with private operators and public transit agencies. The external pressures to rightsize vehicles for their applications and ridership levels along with the availability of funding and healthy economic conditions in Canada and the U.S. create an ideal environment for Grande West to prosper. Market conditions are ripe, and the outlook for Grande West growth in the U.S. remains very positive. I want to thank you, and I now turn it over to John.

Thanks, J.M. We'd like to open the floor for questions at this point. Jess, would you mind taking questions now?

(Operator Instructions) We'll go first to Ahmad Shaath with Beacon Securities.

Just firstly on the outlook. I see the backlog has around 170 units. Would you be able to provide us with any color on how do you expect to deliver that over the next 8 months or the remainder of the year, and what's going to be in 2020 of that backlog?

Yes, thanks, Ahmad. We're not going to provide really, really all -- whole lot of guidance on that, but what I will tell you is that we are going to deliver as many as we can. We are focusing -- really focusing on building our backlog to this year, so we have, I think, 2020 will be a very strong year. As I said, 2019 will be softer. We'll deliver as many as we can from our backlog and really keep focusing on building the backlog for deliveries beyond 2019.

From -- in terms of scheduling, from the orders you received, I believe there's 1 or 2 orders that are for 2020 deliveries?

Yes.

So if we back that out, let's say, from a maximum number of -- like what is the ceiling, do you think, from scheduling perspective you can get delivered in 2019?

We already have -- I know you want a specific number. We already have -- we have some buses, obviously, we'll be delivering throughout the year on that backlog.

We have some inventory buses as well that we're going to deliver. I think, though, I won't give you a specific number. What I'll tell you is that it will be -- we'll have some ups and downs or lumpy quarters. But we are going to deliver as many as we can and really keep focusing on building the backlog going forward, and we see a lot of activity. There's really -- I talked about the activity on the bid side. The activity early in this year was much better than last year, and it's really -- we're seeing that pick up and definitely picking up quite a bit starting this summer on both sides of the border. So we are very optimistic and positive about the future, and the other nice thing is we have a really solid 2018, strong balance sheet, good operating cash. We're in a good position to be able to go to a little bit of slower 2019 and really position ourselves for some great expansion going forward.

Fair enough. And I guess you are echoing some of your competitors' comments on the outlook for the overall bidding, universal bidding activity in the transit bus. Isn't that to say that we expect, like, 2019 to be a trough year in terms of deliveries and 2020 to be maybe another record year?

I'd say last 2 years were record years. 2019 is also going to be better than what we've experienced 4 or 5 years ago for sure. 2020, is it going to be a record year? I think what we're going through now, the last couple of years, '19 and '20 and beyond, I think, are going to be much better years than what we've experienced in the early years of Grande West. I think if you look at -- if you want to take the analogy, the bus is moving. If we were in the airline, aerospace industry, we'd say, okay, the aircraft has taken off. Now we're trying to pick up some speed. And it's the same with the bus. The bus is definitely moving. Now it's -- we're trying to pick up some speed. So we're not always going at increasing the speed. But we are definitely moving and going in the right direction. And overall, if you look at the results, how we were able to turn around from really a company that was -- it was doing about $3 million to $7 million in revenue and all of a sudden to increase almost about tenfold in a very short period of time. We've -- our revenues have increased tenfold, our margins have increased. All the indicators are really heading in the right direction. So we'd always like the progression to be constant and never have slower times, but the reality is, in our industry and any other industry, that there's a little bit of a cycle. Now it's -- that's -- there's no indication that the industry is in bad shape. It's actually in very good shape. Funding is at an all-time high on both sides of the border. Long-term commitments in Canada, customer satisfaction level on our side is very high. Our customer loyalty has been very good. So everything is in place really to keep building our company and be very successful. And I think we have the team now to take us there. We've already demonstrated that we're starting to deliver on our commitment from last year. We've shown many indicators are heading in the right direction. So we're trying to be as cautious as we can, also as realistic as we can. You asked us last year to be as transparent as possible. That's what we're trying to do. I can tell you that we're fully committed in growing our business. We're still very, very confident about the U.S. market. We said that the U.S. market was our -- was the biggest opportunity for expansion for us. We still believe that very strongly. And now adding or fast-tracking our 2 projects that we had put on the back burner, our zero-emission bus, fully electric bus, and our smaller crossover, will really give us opportunities to broaden our reach into markets that we really -- we were -- we didn't really -- we couldn't really access. You look at California. They're going strong on -- moving strongly towards electric buses. Even the province of Québec are going 100% electric. So there's lots of areas that are really committed to electric. So I think having electric Vicinity bus is really going to open up those markets for us, and they are huge markets. You look at the smaller cutaway markets, our smaller bus, higher-end cutaway market, that's also growing market segment that we had some. We were getting some sales from that market, but this will really open it up for us. So huge opportunities for success for us, and we see that in the not-too-distant future.

That's great, J.M. And this all back from a macro perspective. This -- the funding environment is there, the funding levels are there, but the decision has been -- the decision-making has taken a pause, let's say, in 2018, early 2019. How do you see that role going forward now? What was the cause behind the decision-making being stopped? Like what are the -- what are you seeing from the agencies in terms of planning the fleets and trying and looking into the next 5, 7 years in terms of how they want to purchase their buses now? Is that a driver behind your decision to go into electric and smaller buses? Or what is it -- how is that dynamic evolving?

Great questions. Just maybe I'll start with -- by the beginning of your questioning, so the pause is really when you look at the last couple of years, we had record sales. The bus manufacturers as -- in general, I think had some very strong last couple of years. That means a lot of people bought a lot of buses. And we have some customers that are saying, you know what, I'll just take a breather here for a moment and just integrate all those buses into my fleet. Also think about, are we going to keep buying diesel? Are we going electric? Are we going to CNG? Are we looking bigger buses, smaller buses? A lot of people are just looking at their fleet plan and the future. And as everybody knows, electric buses has been -- for the last few years, has been in a mode of let's try it out and test it and in the early stages. So now people are starting to say, okay, what does our long-term fleet look like? And they're just finalizing those plans. The good thing for us is there's still a lot of diesel bus orders out there. But I think in the future, if timing is prime for us to come out with our electric model, so then it gives us access to a higher-margin product line, and just we'll capturing those opportunities as they come up. We don't necessarily expect the electric demand -- bus demand to skyrocket overnight. But there's definitely -- it seems to be a trend in that market increasing gradually. So we want to be prepared for it. Couple of years ago, we said we were going to hold off, we intentionally did. If you look at the overall number of electric buses sold in America -- in North America, that number is still very small but we expect it to start increasing. We already have a number of our customers saying as soon as you have an electric bus ready, we're in, we're interested. So we have very high hopes and expectations of doing well with our electric Vicinity. And then there is a smaller crossover bus, it's going to be -- this is going to be fairly new to us. It's a lighter-duty vehicle. We've been working in the heavy-duty market segment. The lighter-duty vehicle is a much bigger market than ours. Vehicles typically are replaced more frequently. The life expectancy is not as long as our Vicinity bus or heavy-duty buses. So I think it'll be a great complement to our lineup and definitely will give us access to those customers that maybe one day will finally grow and need a bigger bus like a Vicinity bus, but it'll be access for us to get into those place where those -- the demand might not be at the level where it justifies a Vicinity bus. So we see huge opportunities in that, and I think for us a lot of the customers are going to be the same as the ones we have, and it's going to give us access to some that we didn't have before. Maybe some small operators in some smaller municipalities. So we're really looking forward for those products to be officially launched and start bidding and closing some deals.

(Operator Instructions) We'll go next to Chris Wardle with Leede.

You've kind of answered most of my questions here with the previous question. So -- but what you guys need to do to go electric? What -- now that you're going to go live, is it just mainly a marketing push? Or you have to do something more than that to have the bus ready to be assembled and so forth?

Thank you, Chris. We have -- we already have a lot done. We have in -- I believe, in 2015, we electrified a Vicinity bus as a concept bus to kind of test the technology and see if the platform was compatible. That worked out very well, but it was not a production bus, and it's not a vehicle that we launched. But we -- based on that, we have been able to do a lot of the R&D and a lot of the groundwork necessary to do this. We've also electrified a lot of our accessories. Obviously, we think about the motors and the electric system itself, batteries, battery management systems and motors and axles. But there's a lot more to that. Doors, power steering, air-conditioning, cooling packages, a number of things that need to be electrified as well. All of those accessories on the Vicinity are already engineered. They are already stuff that we prototyped and readied to go, and in some cases, that's part of our standard production buses. So really the work that's left is mostly on finalizing the system itself, the batteries and the motor, but we have a clear path and clear plan on how to do that, and we're fast-tracking that whole project to bring that to market as quickly as possible. So there'll be some news coming out hopefully in the not-too-distant future giving more details on our direction and timing.

So do you need some demo buses here? And if so, when would -- how many, and when would you have them ready to be -- to -- for customers to see and try out?

So we haven't announced it yet. Realistically, the demo, we're going to build our own demos. We are going to also be selling, taking orders before we actually have demos to show customers. We'll be able to bid on some orders. Time line, we are shooting to have something to show customers in 2020, sometime in 2020. So we'll be -- we'll firm up those -- that time line as we go, but we're definitely not talking about a 2025 program or launch or anything like that. The second thing we want to do is -- really we're building this electric bus based on our Vicinity platform, so Vicinity platform has already been to Altoona, so now we are adding the electric portion of it. So we want -- we plan on sending that our -- one of our electric Vicinity buses to Altoona and that should all just be a partial test. Probably won't need to be the whole thing because it's already Altoona tested, so that should expedite the whole process for us, so all good news. And as we said earlier, we're fast-tracking those projects. Our intent is to bring it to market ASAP and start generating revenue with those -- with that product.

And your earlier comments kind of indicated that you haven't really lost business in these past 6 months, say, because of you weren't ready with the electric bus. Sounds like the market is still kind of small but, obviously, you believe that's about to change. Is that a fair comment that you have been losing business because of you weren't ready for that, or?

Maybe I'd just like to say -- I'd like to clarify that. Two years ago, we intentionally decided not to come out with our electric buses. So we knew that we would lose opportunities with electric buses. We haven't lost many bids or orders because of that. We have lost some opportunities. You look at Alberta. The -- in the province of Alberta, there's, I believe, something like 7 electric buses that were purchased. In theory, those could have been diesel buses. The -- in previous years, those would've been diesel. There is some in Québec, but Québec has been buying hybrid buses for 5, 6, 7 or more years already. We were -- we actually did extremely well. We sold 19 diesel buses in Québec, which is -- they haven't bought diesel buses in many years. So they bought 30-foot electric buses. I believe they bought a total of 9. So we -- if we would have had our electric buses, there's maybe 10 or 20 buses in Canada that we could've gotten. But those are fairly small -- overall, those are small numbers. In the U.S., there's probably some, but we still have so many opportunities that we have at our -- within reach with our current product lineup. U.S. is really big on CNG still, and CNG is a very profitable line for us. So huge opportunities for us with the current lineups in the short term. There's no real big concerns. We might few -- we might lose a few opportunities again still until we have our electric bus ready. We might still miss out on a few opportunities. But there's so many out there that we can definitely make up for any small quantity of electric buses that we might miss.

And BC Transit is still focused on CNG at this point in time?

So the CNG, BC Transit has been buying -- yes -- So yes, of course, they should -- I'll rephrase. They were into CNG with 40-foot buses in the past. They've been in CNG for several years now. And this is the first order that BC Transit places for Vicinity CNG buses. So we're very excited about that. It's a nice order, 34 buses. So this will be their first Vicinity CNG bus orders.

Okay. On a separate matter, and then I'm done here. Are we seeing any changes in the competitive landscape for the Vicinity? Any new products or new competitors that are improving their products?

The landscape hasn't changed much. It's still the same competitors. There's possibly some startups. There's -- the startups have typically been on the -- in the last few years, we've seen them mostly on full electric buses. They're not direct competitors, but they are -- the startups -- anything that's new startup seems to come from the electric side, and they're not necessarily bus builders. They might be technology companies that want to introduce their technology and end up building a bus or some kind of a vehicle. But nothing for us that really is -- that we see as a real threat or obstacle. On the rest of our competitors, it's still the same as usual. Players haven't changed. I don't think -- and really when you look at results, no one -- we've kept our market share pretty much. Our leadership position, no one's really gained any real momentum and certainly not anything that really affected us in any significant way. So we're not seeing any real clouds ahead. Our strategy is clear. We're still very competitive. We have a growing customer base, a growing loyal group of customers as well, repeat business. So we are in very good shape to compete in Canada and in the U.S.

(Operator Instructions) We'll go next to Peter with Leede Jones Gable.

Peter, you there?

Sir, I get no response from his line. We'll go next to [Michael Lawrence.]

Can you please speak a little about the plans for changing the listing to NASDAQ?

I'll take that. This is John LaGourgue here. We don't have any current plans to list on the NASDAQ. Yes.

And we'll move next to Chris Wardle with Leede.

I'm back. Can you also comment -- can you comment on the -- I didn't want to hog the puck there. So have you guys lost any business because you don't have a greater manufacturing facility into the U.S.?

Well, that's a hard one to answer. We -- probably, I would say. Laws are making that a slow process may be. But it's like anything we -- when you're starting, there's a lot of competition. There's lots of, the first ones to place the orders. There's always going to be, do you want to be the first one? So it's always a little bit tougher when we start. I think once -- already have seen that we have 3 contracts in place, 3 substantial contracts in place. Those are major wins and then we have POs for 2 customers. So I think definitely, we've proven to the market that we can compete in the U.S., so that's a first great step at something that the last year we said was very important we needed to do. So we've accomplished that. So we definitely see from now going forward it should get a little bit easier as time progresses. So it's -- as I said, it's a hard question to answer. We probably lost some but definitely nothing that we can't overcome. I think it's just keep doing what we're doing. Customers' reception, reaction to our product is absolutely outstanding. There's not a whole lot of buses like that out there who are heavy-duty. Most of our competitors are lighter duty. So the customers are -- this is really -- we're hitting it on the head with meeting their customer needs. It's basically same in Canada. When we started, people were seeing this and then said, there's really -- this is what we were looking for. And the market reacted very well and showed us with POs and repeat business that this bus really is the right bus at the right price. And the same for the U.S. We -- our pricing strategy and the quality of what we offer, offers great value for customers. It meets the demand or a need. So we're still really, really well positioned to succeed in the U.S. We just got to keep working hard. And obviously, competitors are not just going to roll over and let us come in. So we are -- we have big competitors, and we'll keep working hard, and we're very confident we're going to get our fair share of business and market share in the U.S. then.

Okay. And then can you comment on what is your next step as far as potentially having a greater manufacturing presence in the U.S.? Do you need to see more orders? Or is it something more working through some sort of finding the right facility or so forth to make that move?

Yes. So we -- when we announced our U.S. manufacturing, we said that it's pretty much like a springboard to something bigger and better over time. But we wanted to start with a modest, low -- fairly low investment initial and just build a backlog and build the order book, so that's really what we're focusing on. We've put a lot of efforts and energy into our assembly processes in the U.S. Our U.S. content, all that -- a lot of great work has been done. The facility we have is good to start, and then we're going to be looking over time once we have the backlog, then we'll be looking at the -- possibly, other arrangements for manufacturing. But for now, we'll keep working what we have.

We'll go next to Peter Johnson with Leede.

[Jean-Marc], can you hear me?

Yes, gentleman.

Four questions for you. Altoona 35-foot accreditation; MARTA, your development opportunity in Atlanta; infrastructure grants for transportation was cut back in the federal budget in Canada. And whether that's having an effect or whether they'll start to trickle in? And my last question is on the new projects that you have in expanding your business, who will be the manufacturer? Will it be Weichai still looking after your electric and your lighter duty? So in any order.

Okay. So Altoona, MARTA, funding in Canada and manufacturing, right?

Yes, and your manufacturing in the U.S. facility that's just...

U.S. versus China, okay. Altoona, 35-foot bus is moving along well. That is expected to be completed probably towards the end of summer. So we're getting towards the tail end of testing. MARTA, that is the Atlanta transit system. Your question on that was what repeat orders, future plans?

You haven't had any orders from them as yet, and was the development opportunity similar to what you were doing with BC Transit, and it's been a long time coming, and we haven't seen any POs out of MARTA.

Yes. Correct. That is also one of the -- when I was saying some of our customers -- some of the customers have delayed . MARTA had plans to purchase. And they have sizable numbers on the table of purchases. And that was within the last couple of years, we've been working on that. And then they decided to postpone the purchase of those. They went with some bigger buses in different routes. And they decided that their community shuttle bus fleet would stay the same for now. It's still their desire to modify their setup and increase those numbers. But it has -- for now, it has been postponed. So we still have 10 buses there that have been on the road for -- I lost track of time, it's probably 1.5 years. They are going extremely well. The performance is very good, and the relationship with MARTA, everything is going very well. But their future plans, we still expect there's still some very nice opportunities with MARTA. They just won't be right now. Funding for Canada. We're not seeing our customers, and now, we're not seeing the impact of any reduction in Canada. If anything, we were in the -- there was a show, an exhibition, the trade show in Toronto this week. We've had beyond-expectation traffic and interest. A lot of people said, "Okay, we're ready now. And how quickly can you deliver?" And so a lot of new customers in the pipeline. So very strong, no indications of any kind of weakness or slowing down on funding. If anything, people are saying, "How quickly can you deliver?" So now it is just a matter of getting those under contract and getting a firm order from them. But the outlook is very good. The same on the U.S. Our VP of sales, Rob Mowat, was actually in Toronto this week and had to leave right after his show yesterday to go to another show in the U.S. So extremely busy marketing our product. And the interest is -- there's no signs of any weakness or slowing down on the funding side at all. Question #4, you said new products are assembled here in the U.S. or assembled overseas? Our goal is to assemble Buy America buses. So the orders that we have that have federal funds involved in the U.S., those are Buy America. We call them Buy America orders but they need to meet the Buy America requirements, so final assembly needs to be done in the U.S. and the U.S. content -- parts content needs to be over the limits of minimum requirements, so we plan on focusing on those orders first. Where it makes sense, we can build any of our buses in the U.S. But in some cases, if they are non-Buy America requirements, we may build them overseas and just focus on our Buy America orders until we really have our system optimized, our processes optimized, and then we'll build volume as we go. But there's no need to really get all the volume through the U.S. We still have both options available to us. Does that answer your question?

The monocoques come from China from Weichai?

The frame? Yes. The frame.

The frame and the monocoques and the shell?

Yes, we -- they have. But we are also looking to assemble those and have the ability to assemble those or build them in the U.S. as well. So we'll have 2 options. The goal is to have both options.

We'll go next to Ron Kaulbach with Gryphon Investment Counsel.

Just a minor question on your electric setup going forward. Will you be having a removable battery tray configuration where you'll probably save some money for the end buyers by having these on a charging station, so that they can keep on going 24/7? Just wanted to have your opinion on that.

We'll be -- as we move ahead here, we'll be giving -- providing more details on our electric bus and also on our crossover. At this point, we haven't announced the details, but we are definitely taking into account the customer needs and efficiencies because you have to maintain the buses after. So we'll be able to answer that question publicly a bit later on. But yes, I leave it at that for now.

And we have no further questions at this time.

Good. Well, thank you very much, everyone, for joining our call. We really appreciate your time, and we look forward to talking to you again very soon. Thank you very much and have a great day. Thanks.

Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for participation. You may disconnect your phone line at this time and have a great day.